Modern-day Myanmar (known as Burma until 1989) holds one of the most strategic geographic positions in the entire Indo-Pacific region. Its coastline along the Bay of Bengal and Andaman Sea is roughly 2,000 kilometers (1,250 miles) long. It is on this western coast where early European traders and missionaries first set foot in the 16th century and began creating a lucrative commercial network in Lower Burma. On land, the country's borders total 6,000 kilometers, forming a horseshoe-shaped boundary that is the longest among mainland Southeast Asian states. Perhaps most important, Myanmar's location closely connects it to China and India, the region's biggest geopolitical powers.
These beneficial boundaries have not always been a blessing. Instead of facilitating the country's connection to the region and beyond, they have generated perennial conflicts, particularly between Upper Burma and the more commercially oriented Lower Burma beginning with the introduction of seaborne commerce. This deep-seated geographic division contributed to the regime's suspicion of trade, mercantilism and external influence that could threaten its control over the coastal areas of Lower Burma. This uneasiness can be traced to the mid-18th century, when the Burmese kingdom in Upper Burma, after its annexation of the Bago region on the southeastern coast, forbade seaborne export to European merchants of many key resources, including teak, rubies and precious metals. This prohibition continued intermittently into the early 19th century, until the British occupation of Upper Burma and the formation of the colonial territory that now constitutes modern-day Myanmar.
British colonialism and Japanese occupation during World War II heightened Burma's insecurity, and the withdrawal of colonial powers after the war quickly revealed its fragile state. Internal threats emerged in the borderlands, where insurgency and religious violence came to characterize the country's colonial legacy. The porous periphery, made so by rugged highland terrain remote from the central government, along with extensive ethnic and religious connections in the border areas that the ruling Buddhist Bamar often lacked, convinced successive Burmese leaders to prioritize national integrity and regime security over external relationships. Over time, the country's resource-rich and untamed borderlands formed a kind of wall, symbolizing Myanmar's international isolation.
The Path Toward Isolation
Compared with many of its postwar neighbors, Burma had a relatively sound economy as well as abundant resources and a strategic location. This contributed to a belief among its early leaders that the country was poised to become a prosperous state with a greater international role. Indeed, after Burma achieved independence from the United Kingdom in 1948, the civilian government under U Nu was eager to prepare the nascent nation for economic growth and global prestige.
This period saw active diplomatic maneuvering on the international stage by the country's leaders, who based their foreign policy on a foundation of neutrality and friendship with as many countries as possible. The central government also assumed a leading role among the newly independent postwar countries in resisting alignment with any one side during the Cold War. This vision was most evident in the mid-1950s, when Burma led the Bandung Principles initiative, which gave the country an active role in the Non-Aligned Movement. On the economic front, Burma shared similar development indicators (such as GDP per capita and average income) with its neighbors, including China, Indonesia and India, and was not far behind Thailand.
Several factors influenced Burma's post-independence nation building. The need to reassert control over colonial institutions and the desire to transform the country into a socialist welfare state led the government to adopt a centrally planned economic system and begin nationalizing foreign-owned land and assets. These measures were intended to help the leadership assert control over the country and ensure internal stability. Instead, economic policies resulted in a period of rising inflation, diminishing liquidity and fluctuating levels of rice and mineral exports (which was not uncommon among new postwar nations). A third trend may have had an even greater long-term effect. Ethnic insurrections in border areas spilled into Myanmar's central lowlands and were compounded by a communist insurgency and infiltration by elements of China's exiled Kuomintang army in Shan state, which borders China's Yunnan province. The inability of Burma's civilian government to effectively deal with these domestic and external threats ushered in an era of military rule.
Once in power, the military government, led by Army Chief of Staff Gen. Ne Win, had an even greater suspicion of foreign intent, given the country's historic vulnerability to foreign incursions and porous land borders occupied by ethnic forces that could be exploited by neighboring powers. Two significant cases in point were Thailand's suspected maneuvering of Burmese ethnic forces, particularly the Karen, in the 1960s to resist communist forces along the Thai-Myanmar border and, from the 1960s to late 1980s, China's direct aid to the Communist Party of Burma and Burma's Wa and Kokang insurgent groups.
The regime's intense concern with ensuring national security also allowed the military to maximize its power and extend its control into economic and political affairs. Under the military's 1962 proclamation of the Burmese Way to Socialism, the state policy was to deliberately steer the country toward greater isolation and institute a strict command-style socialist economy, largely independent of the global economy. From 1962 until the late 1980s, Myanmar's once-flourishing border and seaborne trade was discouraged and the country relied almost entirely on itself for national sustenance.
A Cautious Outlook
These years of isolation and economic mismanagement under military rule were, of course, detrimental to the country. The economy nearly collapsed, generating social unrest and mounting pressure from the West for regime change. Average GDP growth slipped from 6 percent per year in the 1950s to no more than 2 percent in the 1980s. Export earnings were about 2 percent of GDP, compared to 40-50 percent in the early 1950s, and amounted to only 0.3 percent of the regional total. The once-close economic race in East Asia in the 1950s saw a formidable gap form by the 1990s. In 1990, India's per capita GDP was double that of Myanmar's, while Thailand's was five times bigger and Malaysia's seven times.
Severe internal and external pressure forced Myanmar's military government to adopt an open-door policy and implement cease-fires with insurgent groups in order to preserve regime security. With Western sanctions still in place and armed conflict still occurring in the borderlands, this strategy failed to transform Myanmar into an economically robust regional player, although it did help rebuild ties with neighboring countries and regional powers that would eventually boost Myanmar's economic growth. China and Thailand, in particular, largely ceased their support of insurgents and dissidents and developed relationships and economic ties with Myanmar based on their interest in the country's energy and other natural resources. By the mid-1990s, trade with neighboring countries, including China, Thailand, India, Malaysia and Singapore, accounted for roughly three-fourths of Myanmar's total trade and foreign investment.
In 1992, Myanmar participated in the launching of the Greater Mekong Subregion Economic Cooperation program, which marked the country's departure from its neutralist stance on foreign policy. Also during the 1990s, Myanmar joined the Association of Southeast Asian Nations and the Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation, among other regional economic initiatives.
The New Frontier
By the early 2000s, Myanmar's need to look beyond its near abroad, coupled with an imminent transition within the ruling military leadership, provided the impetus to carry out the current stage of political and economic reform. This time there is greater hope for a successful transition. Myanmar is widely seen as the region's newest investment frontier, and its atrophied economy has shown signs of growth. Between 2009 and 2013, foreign investment increased 131 percent. The country has a sizable workforce of 35 million out of a total population of 59 million, and this workforce has a higher literacy rate than those of nearby Bangladesh, Laos and Cambodia, as well as a comparatively low minimum wage of $32 per month. These advantages, combined with the country's proximity to China, India and Thailand, make Myanmar — despite its underdeveloped infrastructure and business environment and lack of regulation — an attractive low-end alternative to China as the latter moves up the manufacturing value chain.
Since opening up, Naypyidaw has implemented a host of new laws and policies to streamline the bureaucracy, ease restrictions on foreign and private investment and invigorate nascent financial sectors. Also underway are a number of connectivity projects, including the ambitious Kaladan multimodal transport project westward to India, a deep-water port and special economic zone in Dawei on the southeastern border with Thailand and a host of roadway and mining infrastructure projects.
But as much as the emergence of Myanmar could unleash trade and establish connections across East Asia, it could also reinforce Naypyidaw's long-standing need to integrate with its ethnic periphery, where insurgents still control areas that are vital for the country's investment and trade prospects (the government has already adopted a strategy of reconciliation by offering some economic and political concessions to these ethnic groups). Ultimately, if Myanmar fails to achieve national reconciliation, the regime's fear of external threats and an international perception of unsettled internal divisions could drive the regime toward another phase of national hibernation.
- Part 1: Myanmar Confronts its Geography
- Part 2: Myanmar's Quest for Unity Faces Challenges
- Part 3: Myanmar: Emerging with a Wary Eye
- Part 4: Myanmar Pushes for Control Over its Restive Border Regions
