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Foreign Policy

Myanmar: Capturing the Essence of U.S. and Chinese Policy Priorities

Sep 12 , 2016
  • Erin Murphy

    Founder and Principal, Inle Advisory Group

U.S. and Chinese strategic interests in Asia—particularly through globalization and economic connectivity—have been highlighted during recent and upcoming high level conferences, including the G20 summit in Hangzhou, the East Asia Summit (EAS) in Laos from September 6-8, and the 70th session of the UN General Assembly in New York starting September 15th. The relationship between the two powers, as well as their bilateral ties within Southeast Asia, have been shaped by perceptions and misconceptions of each other and their geostrategic competition for influence and economic, diplomatic, and military gains. The U.S. and China have both sought to make economic inroads through development assistance and major projects. These efforts to cement their legacies as critical Pacific powers are quite visible in their respective engagements in Myanmar.

China’s hosting of the G20 summit serves to demonstrate that the country is an economic leader and a stable financial force not just for the region, but for the world. This fact is underscored by the lingering effects of the global 2008 financial crisis, Brexit, and the contentious issues and debates surrounding the U.S. presidential election. In a February interview, State Councilor Yang Jiechi noted that China sought to bring G20 members together to oppose protectionism and reach consensus on promoting and coordinating development of a multilateral trade system, propelling global trade growth, and enhancing international investment policy cooperation. For the U.S., participation in the G20 summit and EAS solidifies the centerpiece of the Obama Administration’s foreign policy: the rebalance, or pivot, to Asia. Its strong inter-connective economic agenda is focused on the Trans-Pacific Partnership, improving the global economy, and providing the highest standards of corporate engagement, especially in developing countries. Similar to China, the U.S. also shares the goals of bringing together leaders to engage in the region and address global growth while ensuring the shared benefits of globalization.

The core strategies of both China and the U.S. through the G20 and EAS are fully demonstrated in their relations with Myanmar. Myanmar recognizes its place in the region, and it understands the necessity of developing strong and stable ties with its neighbors, particularly China, as well as with the West. Engagement with the country is a significant element of several large powers’ geopolitical development strategies, including India’s Look East policy; China’s One Belt, One Road policy; Japan’s East-West Corridor; and the U.S. Pivot to Asia. While the U.S. had a strained and more confrontational relationship with the former military government, China maintained “a special relationship” with Myanmar throughout its several periods of military rule. Prior to the civilian leadership transition, China provided the junta political protection in the international community in exchange for favorable economic treatment, including trade policies, earmarked tenders, and major projects in Myanmar’s extractive and energy sectors. Despite increasing diversification in foreign investment sources since the civilian government under President Thein Sein took office in 2011, China remains one of the top investors in the economy, and this will continue thanks to going agreements and massive energy and infrastructure projects. However, bilateral ties between the countries have deteriorated in the past few years due to growing anti-Chinese sentiment. Concerns about the scale of Chinese interests and its involvement in exploiting Myanmar’s natural resources persist—the Chinese Myitsone Dam project, which was halted due to public outcry by Thein Sein in October 2011, still remains suspended.

Following the transition to civilian leadership, the bilateral relationship between the U.S. and Myanmar began to improve through high level visits, nascent assistance and cooperation, and the suspension of the most restrictive U.S. financial sanctions, allowing businesses to more fully engage in the Myanmar economy for the first time since 1997. U.S. officials called for responsible investment, emphasizing that U.S. companies not only bring the “gold standard” in corporate governance, but could offer examples for local businesses and other foreign investors to follow. U.S. support for the democratic transition in Myanmar falls squarely within its pivot to Asia and is a key legacy issue for both President Obama and former Secretary of State Clinton.

The suspension of the Myitsone Dam and increasing U.S. engagement in Myanmar sparked concern in China that the U.S. was at least partly responsible for anti-China sentiments and attempts to “encircle” China. Growing suspicion of U.S. involvement not only caused bilateral tension, but has prompted China to rethink its relationship with Myanmar, particularly following the election of the National League for Democracy (NLD) and its leader, Aung San Suu Kyi. Aung San Suu Kyi has also recognized the changing dynamics, but acknowledged that Myanmar cannot abandon China as it embraces the West—the economic ties are too deep and the countries are geopolitically and culturally intertwined. Suu Kyi’s policy, as well as that of Myanmar’s powerful military, will ensure that Myanmar’s needs come first and that the country is neither pro-China nor pro-U.S., but rather pro-Myanmar.

Aung San Suu Kyi recently visited China in her new roles as State Counsellor and Foreign Minister. She met with President Xi Jinping, Premier Li Keqiang, and the Chairman of the Standing Committee of the National People’s Congress, Zhang Dejiang. Her meetings centered on key bilateral issues, including peace talks and tensions with armed groups located on the border, as well as economic cooperation. In a joint statement issued August 20, Aung San Suu Kyi declared that Myanmar welcomes China’s One Belt, One Road initiative and cooperation throughout the Bangladesh-China-India-Myanmar Economic Corridor. Both countries agreed to enhance their economic cooperation, but decisions on China’s controversial mega-projects, particularly the Myitsone and Salween dam projects, were delayed until the new Myanmar government can fully assesses their environmental and social impacts as well as resource sharing agreements. Under the Myitsone Dam agreement signed by the previous junta government, China would receive up to 90% of the power generated by the dam, despite Myanmar’s chronic energy woes and desperate need for electrification.

In mid-September, Aung San Suu Kyi is set to visit Washington to meet with President Obama, Congress, and the business community on the margins of the UN General Assembly. According to a recent press report, the U.S. is considering further easing its sanctions to provide more opportunities for U.S. engagement in the emerging economy. U.S. businesses have consistently argued that the remaining sanctions overly complicate investment and prevent them from entering the market to push economic development and contribute to the livelihoods of the Myanmar people. The U.S. has highlighted in its discussions on TPP—and since its initial easing of Myanmar sanctions—that its businesses set the “gold standard” for responsible investment and business operations. The U.S. is focused on expanding opportunities for further trade, investment, and commerce between the two countries, including by adding Myanmar to its Generalized System of Preferences for duty-free treatment of goods. Some argue that such increased engagement would counter China’s rise in Asia and further cement U.S. presence in the region, particularly in Myanmar, for the long-term. As with China, the final scope and scale of U.S. involvement in Myanmar hinges on the desires of Aung San Suu Kyi and the NLD and what they perceive to be the right type of economic engagement.

The U.S. and China have a lot to offer the region in terms of development assistance and corporate investment—if each country’s stated goals in both the G20 and the EAS hold true, Southeast Asian countries, especially Myanmar, stand to benefit greatly. The overarching strategies of One Belt, One Road and the Pivot to Asia will only be successful if they take into account the concerns, development goals, and desires of the countries they are directed toward and impact. As is readily apparent in Myanmar, countries in the region no longer desire to be pawns in a geopolitical economic game, but rather active and collaborative partners to ensure fair benefits for all—as opposed to the zero sum outcomes most prevalent in the past.

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