Myanmar’s head of state recently met with the U.S. president in a landmark visit to Washington. The visit shows how far Myanmar has come from being a pariah state just two years ago. But transitioning from authoritarianism to democracy and from a planned to a market economy brings unprecedented political, social, and economic difficulties. Can President Thein Sein’s administration deal with these challenges and, if so, how?

Lex Rieffel of the Brookings Institution and David Steinberg of Georgetown University joined Carnegie’s James Schoff in a discussion about Myanmar’s future, the prospects of political and economic reform, ethnic-religious conflict, and the role external actors can play in encouraging reform. 

Political and Economic Reforms

  • Helpful Economic Reforms: Despite the priority placed on political reform, Rieffel argued that economic reform has been more successful. He offered a number of examples, including the transition to a market-based exchange rate, full current account convertibility, the removal of trade-impeding sanctions, a massive reduction of foreign debt, the return of the country’s diaspora, increased openness, and decreased fear. However, he warned that enduring distrust of monetary value, banks, and government officials could impede economic policymaking. 
  • Small Gains: Rieffel estimated that 80 percent of the people of Myanmar had seen very little rise in their standard of living. He suggested that this is due to a backward-looking agricultural policy (a sector that supports 70 percent of the country), overly exploitative natural resource policies, slow bank regulations, and low tax revenues. Infrastructure development has been hampered by land rights disputes and over-zealous land acquisition by the government. Although urban areas have seen obvious improvements, Asian economic development has been traditionally based on increases in rural households’ income increases, he added. This lack of improvement in living standards could lead to political instability.
  • Necessary Military Reforms: For Myanmar to become a true democracy, the military must loosen control over social mobility, so that all citizens (including ethnic and religious minorities) can advance in all sectors of society, Steinberg said.  He argued that admitting minorities into the military would help the military build Myanmar’s missing national ethos. 

Ethnic-Religious Conflict

  • Entrenched Discrimination: The majority population is highly prejudiced against the Rohingya, explained Steinberg. The Rohingya, who have never been classified an official ethnic minority. They continue to be seen as foreigners and have a very low standard of living. Steinberg argued that the military and police need to be trained in citizens’ rights. The problem of controlling the free speech of ethnic Burmans who agitate for violence against Muslims is an issue that all democracies face, Steinberg noted.
  • Minority Challengers: Ethnic minorities are forming their own political parties that could challenge the Burman-majority NLD party for control over minority areas during the 2015 elections, Steinberg added.  Political instability is not in the best interest of Myanmar’s government, as deterioration into martial law could stop the reform process. 
  • Politics of the Census: According to Steinberg, the upcoming UNDP census in Myanmar is meant less to document the total population and more to record the ethnic breakdown of the population. However, Rieffel added that for economic policy-making, the difference between a population of 50 million and 60 million is indeed significant and worth documenting. Minorities claim to represent a greater portion of the population than the official statistics indicate, but an accurate count could be difficult given the fluidity of the Thai-Myanmar border.

The Role of External Actors

  • Foreign Aid: Foreign aid and consultation have come too much, too soon, and policy implementation has been unable to keep up, Rieffel said. He suggested the United States should step back and focus foreign aid on education, where it is very hard to do harm. Substantial educational improvement is also necessary for the tourism industry, one of Myanmar’s great hopes for economic growth. The Myanmar government has also permitted the re-opening of some foreign-led educational institutions, an encouraging indicator of political openness.
  • Sanctions: Both Rieffel and Steinberg strongly opposed sanctions (with the exception of certain military sanctions), arguing that sanctions have brought no benefits to the people of Myanmar and reduced their ability to affect change in their own government.
  • Mediation: Intervention in ethnic-religious disputes should be conducted carefully, because there is concern in the Myanmar government (fueled by precedent in other countries) that Western actors might support a minority insurrection, explained Steinberg. While Washington would prefer that Thein Sein and Aung San Suu Kyi establish a cooperative relationship, they are still domestic rivals, he added. 
  • China and the United States: China remains Myanmar’s most important relationship, stated Rieffel. While China is concerned that enhanced U.S.-Myanmar (or U.S.-Aung San Suu Kyi) relations are part of a U.S. plan to undermine China’s presence in Myanmar, Rieffel felt that the Obama administration’s Myanmar policy has been highly successful in part because it has tried to reassure China. Chinese nationalism could jeopardize a “win-win-win” outcome for the three countries, he concluded.