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The regime's withdrawal to its new command bunker and administrative capital of Naypyidaw near Pyinmana has been accompanied by intensified hostility to any perceived opposition. The embattled National League for Democracy is coming under renewed pressure, and has been threatened with a total ban because of alleged terrorist links. A major offensive against the Karens, partly to clear the Pyinmana hinterland, has been in progress for the last two months, driving a further wave of refugees to the Thai border. The government has ignored urgent appeals from the Karen leaders for ceasefire talks, and appears bent on imposing a final solution of the long-running Karen rebellion.
There is no good news on the economic front. Printing money to meet recent pay rises of up to 1000 per cent for the armed forces and civil servants will give a further impetus to inflation. The unofficial rate for the kyat has fallen to 1350 to USD1. Exports are showing only a very slight increase over the previous year, and annual growth will be lucky to exceed 1.5 per cent, despite official claims of a much higher figure.
The present leadership clearly has no interest in moving along the so-called road map to democracy, or making any concessions to the opposition. The much deferred and toothless Constitutional Convention, only the first stage in the reform process, has been adjourned again until the end of the year, with nearly half its chapters unfinalised. Even a rising tide of ASEAN concern has had no effect. The Malaysian Foreign Minister's visit on behalf of ASEAN was postponed for two months and then cut short to one day when he was not able to meet Aung San Suu Kyi (still under house arrest) or other opposition figures; he was told that she and the NLD no longer had any influence. The regime is also seeking to minimise any opportunity for foreign, particularly Western, influence and has imposed new restrictions on the work of UN agencies and NGOs, obliging some to consider withdrawal. In the face of the deteriorating situation in the country, the United States and other Western countries are considering reference to the Security Council.
While the regime has little regard for most of the international community, including its ASEAN partners, it does have a strong interest in relations with its two big neighbours. In recent months it has had high level visits to or from China and India, which both have strategic and economic reasons for fostering links with Myanmar, despite some concern about the potential impact on them of instability there. So long as Myanmar can rely on their tolerance and support, it is relatively immune to Western pressures. Thailand also is pursuing economic opportunities in Myanmar, like the current agreement for joint development of hydropower dams on the Salween River to supply electricity to Thailand.
The regime's economic dependence on China, a major source of trade, arms and investment is underlined by the planned sale to PetroChina of 185 billion cubic metres of gas over 30 years from 2009. The gas will come from the offshore field (Block A1) in the Bay of Bengal, being developed by a Daewoo/Indian consortium. India planned to purchase gas from this field via a pipeline through Bangladesh, but Myanmar is giving priority to the deal with China, which will involve an 800 km pipeline to Yunnan province. The Chinese are also planning a pipeline from Sittwe (Akyab) to Kunming to facilitate oil imports from the Middle East, and road and rail links through Myanmar to the Bay of Bengal. For the regime's part, proposed gas sales to China will provide new revenue to insulate it from Western sanctions. However, Myanmar has told India it will have sufficient reserves as additional blocks are developed to meet both China's and India's needs, and India is now investigating a pipeline route north of Bangladesh, which could also service gas fields in Tripura and Assam.
WATCHPOINT: Will increasing international focus on the situation in Myanmar, and the possibility of Security Council consideration have any effect on the regime?
About our company:
AFG Venture Group is an Asia and Australia based corporate advisory and consulting firm with over 20 years experience in creating alliances, relationships and transactions in Australia, South East Asia and India; including a 15 year history of corporate and equities advisory in Australia, undertaking merger, acquisition, divestment, fund raising and consulting for private and public companies.
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