Security and Economic Development in the Asia-Pacific Region

Editor's Note: On Marcy 26, Lex Rieffel testified before the Canadian Standing Senate Committee on Foreign Affairs and International Trade on economic developments in the Asia-Pacific region.

Agenda: Study on security conditions and economic developments in the Asia-Pacific region, the implications for Canadian policy and interests in the region, and other related matters.

At the outset, I wish to thank the committee for this opportunity to testify on the situation in Myanmar, still called Burma by many people. Then an important caveat:  I do not consider myself to be an expert on Myanmar because I do not speak the language and have not lived there for more than a few months. However, my first visit to Myanmar was in 1967 and it has been the main focus of my policy research at the Brookings Institution since 2007.

By contrast, I know much more about Indonesia because I speak the language and lived there for two years.  I also lived in Vietnam for a year while serving in the U.S. Navy and in India for two years while serving in the U.S. Peace Corps. Economic development was my major in college in the early 1960s and has been my lifelong preoccupation.  My recent work on Myanmar has focused on its economy: trying to draw lessons from experience in the rest of the world that could contribute to a successful transition from conflict to peace and from authoritarian rule to democratic rule.

I will just make four points in my opening statement.

Point One.  The success of Myanmar’s transition depends above all on ending the internal conflicts that have plagued the country nonstop since independence in 1948.  These are conflicts between the ethnic Bamar people—who are believed to represent at least 60 percent of Myanmar’s total population of perhaps 55-60 million people—and a score of different major ethnic communities and many more minor ones.

Achieving peace is clearly the top priority of the Thein Sein government and some recent reports on the status of negotiations are encouraging.  However, as politicians, you know that the last mile is often the hardest.  While the outside world seems to believe that a peace deal can be concluded before the national election due to be held at the end of next year, my best guess is that it won’t happen that quickly.

Two implications.  First, it is important to have realistic expectations.  Pressure from the outside to conclude a deal quickly could be counterproductive.  Second, the biggest contribution that outsiders can make to the peace process might be to back off.  We have seen, for example, that some efforts to promote economic development in ethnic minority areas with the best of intentions have been seen as threatening by the minorities being helped.

Point Two.  In the process of building a democratic political system, Myanmar has adopted a constitution that creates the three branches of government with many classic checks and balances. 

When the Thein Sein government took office three years ago, almost everyone expected the legislature to simply rubber stamp the laws presented by the government.  Instead, dominated by the personalities of lower chamber speaker U Shwe Mann and opposition leader Aung San Suu Kyi, the legislature has become increasingly powerful, directly challenging the executive and overriding it in some key instances.

From the perspective of good governance and economic development, this pattern worries me.  I have seen a similar pattern develop in Indonesia since its transition to democratic rule began in 1998.  Some of my Indonesian friends tell me that the legislature is the biggest obstacle to economic progress in their country.  I see many of the same cultural and political forces developing in Myanmar.

One implication.  The natural instinct in countries like the United States and Canada to promote the strengthening of the legislative branch in Myanmar relative to the executive branch may actually result in a longer and bumpier route to a just and prosperous society.

Point Three.  Like Canada, Myanmar is a country blessed with an abundance of natural resources.  Since independence, however, these resources have been more of a curse than a blessing.  They have been a key factor in the conflict between the Bamar majority and the ethnic minorities, for example.

Over the past 65 years, as Myanmar has been exploiting its natural resources it has been neglecting its human resources, which were among the most impressive in Asia at the end of World War II.

In my view, the success of Myanmar’s transition will hinge critically on its ability in the coming years to build up its human resources and reduce the extraction of its natural resources to sustainable levels and with better methods.

Three implications.  First, anything Canada can do to encourage the development of Myanmar’s human resources is worth doing.  Second, anything Canada can do to discourage unsustainable extraction of natural resources by foreign investors is worth doing.  Third, anything Canada can do to support the government of Myanmar’s goal of becoming a full participant in the Extractive Industries Transparency Initiative is worth doing.

Point Four.  A year ago I co-authored the first study of foreign aid to the Thein Sein government.  The title was Too Much Too Soon?  Our short answer was “Yes.”

We have seen other cases where aid donors rushed into a country in transition and “smothered it with love,”  This unhealthy pattern is visible in Myanmar today and it would be a great tragedy if foreign aid becomes one of the factors driving Myanmar’s transition off the rails.

The basic problem is that there may be fewer than 20 officials in the Myanmar government who have the authority to implement policy decisions.  This small group of officials is being overwhelmed by foreign visitors.  They are not spending enough time on policy analysis and even less time on policy implementation.  And it is getting worse for three reasons: chairing ASEAN this year, the elections next year, and the burden of aid project implementation that will start hitting in the next year or two.

One implication.  Anything Canada can do to reduce the burden of foreign aid—such as more donor coordination and more multi-donor trust funds—would be helpful.

Thank you again and I look forward to your questions.