Burma’s economy gasps under junta’s stranglehold

http://www.mizzima.com/edop/anslysis/1782-burmas-economy-gasps-under-juntas-stranglehold.html

by Mungpi
Sunday, 01 March 2009 22:10

New Delhi (Mizzima) – The Burmese military junta’s allegation of sanctions being the key to the country’s economic deterioration is merely an excuse and is totally baseless, an Australian economist said.

Sean Turnell, an Associate Professor at the Department of Economics in Australia’s Macquarie University said sanctions do not hinder Burma’s military rulers from exploring ways to improve the economy of the country.

Turnell said, imposing or lifting sanctions does not make much difference economically to the already impoverished Southeast Asian nation, because the economy of Burma has long been sliding downhill before sanctions were imposed. It continues to slide under the military rulers, who are not competent in managing the economy.


Burma’s military rulers have time and again blamed the country’s economic deterioration squarely on sanctions imposed on the country by the west. Burma’s Prime Minister Thein Sein told the visiting UN special envoy Ibrahim Gambari that political stability in the country would require the lifting of sanctions.

Thein Sein told Gambari, during his latest visit to the country in early February, that economic sanctions affected human rights and caused unemployment, tainted the economy, social affairs, education, health and the living standard of the people.

But Thein Sein’s argument seems to be baseless, according to Turnell, who in an email interview to Mizzima, said, “The critical economic issue in Burma, is government policy and economic management, not sanctions. If sanctions were lifted but no improvements were made to these, Burma would not be much better off.”

According to Turnell, despite the economic sanctions imposed by the US and EU, the generals, if they were smart, could still implement several economic reforms beginning with reducing military expenditure, which according to the International Institute for Strategic Studies, account for over 40 percent of the national budget.

Turnell also said the generals could float the currency to end the dual exchange rate, liberalise credit markets by eliminating interest controls, and providing legal certainty to micro financing, which will help in uplifting people from poverty.

Burma being an agro-based economy could recapitalise the Agricultural Development Bank, and remove any remaining procurement and other restrictive policies on agriculture, he added.

He further said allowing the Central Bank to have an independent policy would strengthen financial institutes. The junta should also stop arbitrary property seizures, which is common in rural areas of the country.

But he said, currently the junta is more or less dependent on the sale of its natural resources including natural gas, oil, timber, and precious stones and are not exploring other ways of economic reformation.


Grave poverty

The international community including the United Nations and even many Burma watchers agree that Burmese people, after decades of economic stagnation and impact of natural disasters such as Cyclone Nargis, are faced with severe poverty causing humanitarian crisis in the country.

The situation has led several Burma watchers to think that sanctions on the country are not in the best interest of the people.

While the Burmese military junta’s charge that sanctions are the root cause of economic stagnation in the country is baseless, it also proves the general’s admitting that the country is facing severe economic crisis.

So, the question is, even when the generals know that the country’s economy is deteriorating further, why are they reluctant or what are the general’s concerns in implementing economic reforms?


Reluctance for reform

According to a Burmese economist, Prof. Khin Muang Kyi, who now resides in Singapore, Burma’s military generals fear that by opening up the economy they might lose control.

Every economy is related to politics of the country, and in implementing economic reforms, at times, requires giving up control over certain sectors of the economy, which the military generals are loath to do, Khin Maung Kyi said.

Khin Maung Kyi, a retired lecturer of the National University of Singapore, said the general’s would rather sacrifice the peoples’ desire of economic development than lose their stranglehold on political power.

“They [the generals] want to control everything, and would not give a chance to experts because they fear losing even one sector of the economy, as they feel that this opening might threaten their power,” he said.

“Economic reforms in Burma, therefore, will not be possible unless there is a political solution first,” Khin Maung Kyi said. “The people will continue suffering.”

According to Turnell, who has long had an eye on Burma’s economy, the Burmese generals while they are incapable of managing the economy have not accepted suggestions by experts in the past and “there is absolutely nothing to suggest they will in the future.