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177 Chinas Myanmar Dilemma

177 Chinas Myanmar Dilemma

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CHINA\u2019S MYANMAR DILEMMA
Asia Report N\u00b0177 \u2013 14 September 2009
TABLE OF CONTENTS

EXECUTIVE SUMMARY...................................................................................................... i I.INTRODUCTION............................................................................................................. 1 II. BEIJING NAVIGATES MYANMAR\u2019S POLITICS..................................................... 2

A. BILATERAL RELATIONS...............................................................................................................2
B. UNITED NATIONS.........................................................................................................................4

1. The Security Council veto...........................................................................................................4 2. Beijing\u2019s reaction to the Saffron Revolution...............................................................................6 3. Ensuring aid after Cyclone Nargis...............................................................................................8 4. Detention and trial of Aung San Suu Kyi....................................................................................9

C. CHINA AND THE OPPOSITION........................................................................................................9
D. CHINA AND THE ETHNIC GROUPS...............................................................................................10
III. DRIVERS OF CHINESE POLICY............................................................................... 14
A. BORDER STABILITY...................................................................................................................14

1. Narcotics....................................................................................................................................14 2. HIV/AIDS..................................................................................................................................15 3. Gambling...................................................................................................................................16

B. ECONOMIC CALCULATIONS........................................................................................................17
1. Chinese investment and economic assistance............................................................................17
2. Yunnan and the \u201cGo West\u201d campaign.......................................................................................18
C. STRATEGIC INTERESTS...............................................................................................................19
1. The \u201cMalacca dilemma\u201d and the Indian Ocean.........................................................................19
2. Arms sales and technical assistance...........................................................................................21
IV. RISKS OF CHINESE POLICY..................................................................................... 22

A. WEAK GOVERNANCE IN MYANMAR...........................................................................................22 B. THE COST OF INVOLVEMENT IN EXTRACTIVE RESOURCES.........................................................23 C. RESENTMENT TOWARDS CHINA.................................................................................................24 D. BEIJING POLICY UNDERCUT BY LOCAL ACTORS........................................................................25

V. LIMITS TO CHINESE INFLUENCE.......................................................................... 26

A. HISTORICAL DISTRUST...............................................................................................................26 B. EXPLOITING BILATERAL COMPETITION......................................................................................28 C. CHARACTERISTICS OF THE MYANMAR GOVERNMENT................................................................30 D. ASEAN.....................................................................................................................................31

VI. IMPLICATIONS FOR INTERNATIONAL APPROACHES.................................... 33 VII.CONCLUSION............................................................................................................... 35 APPENDICES

A.MAP OF MYANMAR.........................................................................................................................37 B.HIGH-LEVEL OFFICIAL VISITS BETWEEN MYANMAR AND CHINA.....................................................38 C.FOREIGN DIRECT INVESTMENT FLOWS............................................................................................39 D.LOCAL INTERESTS: LOGGING AND CROP SUBSTITUTION..................................................................40 E.ABOUT THE INTERNATIONAL CRISIS GROUP....................................................................................42 F.CRISIS GROUP REPORTS AND BRIEFINGS ON ASIA............................................................................43 G.CRISIS GROUP BOARD OF TRUSTEES................................................................................................46

Asia Report N\u00b0177
14 September 2009
CHINA\u2019S MYANMAR DILEMMA
EXECUTIVE SUMMARY

Each time global attention is focused on events in Myan- mar, concerned stakeholders turn to China to influence the military government to undertake reforms. Yet sim- ply calling on Beijing to apply more pressure is unlikely to result in change. While China has substantial political, economic and strategic stakes in Myanmar, its influence is overstated. The insular and nationalistic leaders in the military government do not take orders from anyone, including Beijing. China also diverges from the West in the goals for which it is prepared to use its influence. By continuing to simply expect China to take the lead in solving the problem, a workable international approach will remain elusive as Myanmar continues to play China and the West against each other. After two decades of failed international approaches to Myanmar, Western countries and Beijing must find better ways to work to- gether to pursue a wide array of issues that reflect the concerns of both sides.

The relationship between China and Myanmar is best characterised as a marriage of convenience rather than a love match. The dependence is asymmetric \u2013 Myan- mar has more to lose should the relationship sour: a protector in the Security Council, support from a large neighbour amid international isolation, a key economic partner and a source of investment. While China sees major problems with the status quo, particularly with re- gards to Myanmar\u2019s economic policy and ethnic relations, its preferred solution is gradual adjustment of policy by a strong central government, not federalism or liberal democracy and certainly not regime change. In this way, it can continue to protect its economic and strategic inter- ests in the country. In addition to energy and other invest- ments, Myanmar\u2019s strategic location allows China access to the Indian Ocean and South East Asia.

But Beijing\u2019s policy might ultimately have an adverse effect on Myanmar\u2019s stability and on China\u2019s ability to leverage the advantages it holds. Political instability and uncertainty have resulted in a lack of confidence in Myanmar\u2019s investment environment, and weak govern- ance and widespread corruption have made it difficult for even strong Chinese companies to operate there. Myanmar\u2019s borders continue to leak all sorts of prob- lems \u2013 not just insurgency, but also drugs, HIV/AIDS

and, recently, tens of thousands of refugees. Chinese companies have been cited for environmental and eco- logical destruction as well as forced relocation and human rights abuses carried out by the Myanmar military. These problems are aggravated by differences in approach be- tween Beijing and the provincial government in Yunnan\u2019s capital Kunming, which implements policies towards the ethnic ceasefire groups.

At the same time, resentment towards China, rooted in past invasions and prior Chinese support to the Commu- nist Party of Burma, is growing. Myanmar\u2019s leaders fear domination by their larger neighbour, and have tradi- tionally pursued policies of non-alignment and multilat- eralism to balance Chinese influence. Increasing compe- tition among regional actors for access to resources and economic relationships has allowed Myanmar to counter- balance China by strengthening cooperation with other countries such as India, Russia, Thailand, Singapore, North Korea and Malaysia. The military government is intensely nationalistic, unpredictable and resistant to ex- ternal criticism, making it often impervious to outside influence.

While China shares the aspiration for a stable and pros- perous Myanmar, it differs from the West on how to achieve such goals. China will not engage with Myan- mar on terms dictated by the West. To bring Beijing on board, the wider international community will need to pursue a plausible strategy that takes advantage of areas of common interest. This strategy must be based on a realistic assessment of China\u2019s engagement with Myan- mar, its actual influence, and its economic and strategic interests. The West could better engage China to encour- age Myanmar\u2019s government to commit to a truly inclu- sive dialogue with the opposition and ethnic groups. In addition to talks on national reconciliation, dialogue should also address the economic and humanitarian cri- sis that hampers reconciliation at all levels of society. At the same time, China should act both directly and in close cooperation with ASEAN member countries to continue support for the good offices of the United Na- tions as well as to persuade the military to open up.

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