Ryan Harvey

Invisible Hand, Iron Fist: The IMF in Burma/Myanmar

In History, News, Thoughts & Analysis on August 28, 2007 at 5:43 pm

The image of hundreds of thousands of people in the streets of a military-regime always brings the people of the world a little closer together. The massive protests erupting across Burma/Myanmar recently even got statements out of the mouths of some of the world’s most feared leaders. When the iron fist finally came down on these people, and the rifles of the military-regime’s foot soldiers were fired in the crowds, one can only hope that somehow these people find the strength and fearlessness to hold their ground, with the fewest casualties possible.

BACKGROUND

The protests began on August 15th after the military-government cut fuel, food and energy subsidies, resulting in enormous price increases. This move, totally unannounced to the people of Burma/Myanmar, hit hard. Bus and taxi fares doubled immediately in Rangoon, Mandalay and Moulmein. Manual workers and day-laborers in these cities, who make less than 2,000 kyat, or $2.00, a day, will now pay more than half their wages on travel. Food prices in Rangoon have risen dramatically: Rice by 10%, meat by 15%, eggs by 50%, and noodles by almost 300%. Electricity costs rose by %200 and Gas prices by %500… overnight.

Student protests, eventually joined by activists from the democracy movement, risked their lives in small crowds calling for lower prices. It wasn’t until thousands of Monks, reacting to the effects of the subsidy-cuts on everyday people who they rely on for food, took to streets that the protests became a mass movement against the whole regime.

The world has watched for weeks now as the military has cracked down, killing hundreds and jailing thousands. Monks and others arrested are being hauled off to forced-labor prisons.

Some say the subsidy-cuts could be a plan by some within the junta to oust General Than Shwe by creating a political crisis. Others point out that the military-junta is spending too much on construction plans for its new reclusive capitol Naypyidaw, which will include an internet and communications-technology center much like California’s Silicon Valley, and are desperately cutting corners in other sectors. Other construction projects in Naypyidaw, like bridges, dams and a nuclear reactor, are consuming huge amounts of government money.

But how involved are other countries in this affair?

THE IMF’S ROLE

As with any economic/political crisis in an impoverished country with a corrupt government, the International Monetary Fund is involved. The IMF has long-advised the Burmese junta to open its economy to investment, privatize its energy sector, and cut subsidies for, you guessed it, fuel, energy and food.

In fact, The IMF and World Bank’s annual visit to Burma/Myanmar was one week away when the subsidy-cuts were initiated. The two groups have closed off all new loans to the regime since 1987, not because of their human rights abuses or lack of “democracy”, but because they failed to meet IMF standards for investment. Now it seems like the regime is trying to win over the IMF, perhaps to open its market to multinationals like General Pinochet did with his dictatorship in Chile.

The regime in Burma/Myanmar has a long history of keeping diesel prices artificially far below market value, and even after the subsidy cuts diesel remains cheaper in Burma/Myanmar than anywhere in the region. As diesel use has increased, so has the amount paid in subsidies. The IMF recommends a total privatization of Burma/Myanmar’s fuel distribution system, where diesel, oil and gas would be sold to a major corporation which would buy it wholesale from the government and then sell it back to the public.

But this would only be profitable to the corporation if subsidies are cut: The price for wholesale fuel barely falls below the retail price of subsidized fuel. So cutting these subsidies makes the energy market more desirable to private sector businesses and investors.

The military-regime has also been trying to reduce spending and increase revenue, as it has traditionally fought its economic problems by printing more money. In the early fall of last year the IMF warned the regime to reduce this deficit or economic development projects would suffer, blaming “weak economic policies and low investment”.

Burma/Myanmar’s economic tsar, General Maung Aye, initiated an intensified campaign of tax collection two years ago to conform to IMF standards. In response to this intensification, the IMF reported last year that Burma/Myanmar’s deficit had dropped to 4% of the GDP as their tax revenue collection increased. This was still not a significant enough change for many Burmese economists, who prefer the government cut its own spending. The regime is notorious for corruption, using taxes and other supposedly public funds to enrich elite Generals and their cohorts. And when financial crises hits, like most corrupt rulers, the Generals cut social services to the people and continue spending and pocketing huge amounts of money.

CORPORATE INTEREST

Behind every IMF economic suggestion is a line of corporations with interests in the region. These are always major players, eager for a country to open its markets to privatization so they can dominate the economy or reap huge profits through investment. The privatization of global energy markets is one of the main tenets of the IMF, and cutting subsidies for fuel brings Burma/Myanmar significantly closer to the IMF standard of a “liberalized” economy. It also means Burma/Myanmar is cooperating with the suggestions of the IMF and the energy corporations they advise for, possibly leading to future loans and project-funding from the World Bank.

In partnership with the Burmese military, Unocal and Total Oil of France oversaw the construction of a pipeline in the 90’s to carry gas from Burma/Myanmar to Thailand. During the construction of the Yadana pipeline, Unocal and Total hired Burmese soldiers to push villagers off their land, many suffering deporation, rape, torture, and murder in the process. Several of these villagers, who were forced to work as slave-laborers building the pipeline, took both Unocal and Total to court in 1995 for crimes against humanity. Unocal, now Chevron, is still one of Burma/Myanmar’s biggest investors, bringing millions of dollars annually to the regime. It is worth noting that U.S. Secretary of State Condoleezza Rice sat on the Board of Directors at Chevron throughout the construction of the Yadana pipeline. Chevon bought Unocal officially in 2005.

On behalf of several other Burmese citizens who were forced as slave-laborer to build the pipeline, Belgium pressed these same charges against Total. The case was closed in 2005 in an out-of-court settlement but was reopened as this new wave of repression hit. Total has also faced legal action in France for its use of slave-labor in Burma/Myanmar.

The China National Petroleum Corporation, China’s largest oil company, has also been highly involved in Burma/Myanmar’s oil and gas policies and even increased its investment in 2001. In 2004 it entered into production sharing contracts with the regime’s Ministry of Energy for offshore exploration of oil and gas. CNPC’s subsidiary PetroChina signed an agreement in 2005 with the regime for the supply of natural gas to China. Several Indian firms also have huge stakes in Burma/Myanmar’s oil.

Ivanhoe Mines, headquartered in Canada, is the largest foreign mining investor in Burma/Myanmar and operates the Monywa Copper mine in a joint venture with the military-regime. Rail and energy infrastructure for the Monywa Mine was built by slave-labor. Ivanhoe and the Japanese firm Marubeni were major funders of this project, which brings over $40 million a year straight to the Burmese military.

Another case to point out is Citibank, who owns a large stake in Swift, a financial services company run by some of the world’s largest banks. When the United States imposed official sanctions against the Burmese military-state in 2003, taking away their ability to trade in dollars, Swift responded, bringing four Burmese banks into its network and giving them economic access, via the Euro, to global trading and investment. This did not violate the sanctions officially but certainly constitutes doing business with a sanctioned-regime.

WORLD RESPONSE

All the countries with major economic involvement in Burma/Myanmar, China, Russia the U.S., the EU and the countries of ASEAN, promote a public view of the slaughter of innocent people in the Burma/Myanmar, and the economic hardship they bare because of the military-regime, as an internal matter.

China and Russia argued that the issue shouldn’t event have a place at the recent UN security council’s agenda, while people like Condoleezza Rice, after years of business deals with the junta, make one-time public statements calling for “restraint from both sides”, as if there are two sides to these massacres.

By maintaining the myth of “internal problems”, these leaders are attempting to wash the blood, and responsibility, from their hands and encourage the rest of the world to not look in to the matter too deeply.

The IMF and a number of global businesses have a direct hand in all that has and will happen to the people of Burma/Myanmar. Fighting against these institutions and businesses in our own countries is a way we can help. If the governments of the world will not respond with anything meaningful then, as always, it is up to people to effect change from below, targeting both the violent regimes that repress people domestically and the economic institutions that create world-poverty globally.

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