<i>Economic mismanagement behind Myanmar protests</i>
The first sign of the recent protests in Myanmar cropped up with the sporadic display of the people's anger within the country in February 2007, when a small group calling themselves the Myanmar Development Committee called on the military junta to address consumer prices, lack of health care, education and the poor infrastructure. On August 15, 2007, the junta decided to increase the price of fuel by 100 percent and raise the price of natural gas by 500 percent, putting additional inflationary pressure on an economy already facing estimated inflation levels of 17.7 percent in 2005 and 21.4 percent in 2006. The regime, which has a monopoly on fuel sales, had previously subsidized price. Similar to the event of February, the people once again took to the street to protests on August 15, which drew a significant number of Buddhist monks. Violence finally broke out on September 26 as the security forces and protesters clashed. The demonstrations were by far the largest since 1988 when huge protests involving students, workers, monks, and the urban and rural populace challenged the military dictatorship, demanding democratic rights and improved living standards. The army responded by gunning down hundreds of protesters, jailing opposition leaders and suppressing any form of political opposition. An estimated 3,000 people were killed by the military and many more were detained and tortured. Within days of price hike, the public transport fare jumped, the cost of essential items rose between 10 percent and 50 percent. Eggs, cooking oil, rice and poultry increased by an average of 35 percent. The hike hit the people of Myanmar hard. Even before the latest price rises, inflation was running at more than 30 percent and 90 percent of the population lived below the poverty line of US$1 a day. An unemployed economics graduate told the Sydney Morning Herald: "Many people can no longer afford to send their children to school. They're down to one meal a day, it's that bad. As a result many are malnourished and they're falling ill. But then they can't even find the money for medical bills. Sure, we had difficulties before, but the price rise broke, the camel's back. Living standards have gone down. The middle classes have become poor, and the poor become destitute." Last year, the International Monetary Fund (IMF) and World Bank, citing the critical deficit budget of the military junta, made recommendations along the lines of the subsides cut as a part of a larger package of reforms. Ambitious projects like construction of a new capital Naypyidaw and the proposed information technology capital Yadanabon, along with appreciable pay rise for civil servants and a strong army of 450,0000 accounting for 30 percent of the annual budget, put ominous stress on government reserves. The junta approaches such deficits by printing paper currency, culminating in inflationary heaviness seen today. To control the deficit, the junta has reduced spending on areas such as, health and education and imposed some ad hoc efforts as increased tax collection. But, the high rate of corruption and the thriving fuel black market prevails. Myanmar is also the second largest producer of illicit opium in the world and has developed into a major supplier of methamphetamines. Myanmar's economy now is molded in such a manner by the junta that it is dependant and focused on the export of its resources. It appears that the junta has short-lived experience, and its priority lies in the boosting of military power. It has produced a situation in which little value is added to any resources producing an economy dependant on imports and exposed to volatile resource prices. It has managed resources and foreign investment poorly; planned hydroelectric projects will likely be forced to export electricity due to poor domestic infrastructure to handle the increased load; the insignificant domestic refining capacity to cope crude oil will have no option other than to export. Myanmar is dependent on diesel imports for its entire economy. The information technology project of Yadanabon is an example of the economic oddity that the junta often embarks without proper planning. Yet, another junta project that will not result in any significant economy is Jatropha (physic nut tree) plantation. The fragile status of the banks and junta's restriction on withdrawals raises echoes of the bank crisis of 2003, which is likely to cause even further economic hardship for the people, as they are hit by the unchecked inflation and declining savings. Myanmar's natural gas represents 1.4 percent of the world's reserve. This attractive scenario and close proximity is a happy hunting ground and perhaps a bonanza for neighboring countries like China, India, Thailand and Malaysia to satisfy their ever-growing energy appetite. China is the world's second largest oil importer after US. China is an important strategic and economic partner. It provides weapons and diplomatic support to the military junta and is involved in developing the country's infrastructure. In return, China is seeking rights over the country's oil and gas, beside strategic access to Myanmar port and military bases. During the first seven month of 2007, China-Myanmar trade reached US$1.1 billion up by 39.4 percent compared to the period last year. Two-way trade between India and Myanmar is increasing and India has provided loans and aids to the junta in a bid to win favor. This year Indian oil company ONGC made a bid to buy Myanmar's gas but was outbid by Petro-China. Indian interests own 30 percent of various offshore drilling operations and India is also a weapon supplier. Thailand has especially profited from its tolerant attitude towards the junta and its crackdown on Myanmar rebels. Trade between the two countries grew by 5 percent over the past year reaching about US$3.3 billion. Myanmar's import included gasoline, fishing equipment, motorcycles, building materials and exports largely consisted natural gas. Thailand is investing in a huge US$6 billion hydroelectric project. These strategic and economic partners are a relief to the junta for its bloody foreign currency. The recent protests could be similar to the last major uprise of July 1988 (known popularly 8/8/88) as the underlying cause of the revolt was economic chaos that resulted in violent repression by the military. Therefore, a comprehensive program of stabilization and reform needs to be undertaken; as of to day it remains bleak. With the military keeping a fortification on power since 1962, any peaceful political permutation the dominating military precedence the intervention and control in country will likely return Myanmar to state-sponsored economic mismanagement. The author is a Columnist and Researcher.
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