Renewed conflict in Rakhine state highlights important structural risks to Myanmar’s reform project. Military influence over politics in Rakhine could ensure that the Rohingya dilemma remains a burden for many governments to come.
Myanmar appears to be a ‘Jekyll and Hyde’ nation. On the one hand, political reforms and liberalisation point to an increasingly positive FDI outlook. Touted as the next ‘tiger economy’, Myanmar is set to maintain strong growth rates until 2020. It was recently praised by the IMF for its economic progress, and is now operating free of US trade sanctions.
On the other hand, the recent trouble in Rakhine has reinforced concerns that Aung San Suu Kyi’s National League for Democracy (NLD) is not in for an easy ride. Relations with Rohingya minorities are at their lowest point since 2012. That year, intercommunal violence left hundreds of Rohingya dead and forced around 140,000 into internally displaced person (IDP) camps.
A return to violence
On October 9th, Islamist militants launched attacks on border offices in western Myanmar. The President’s Office blamed those attacks on Aqa Mul Mujahidin, a Taliban-trained Rohingya jihadist group with alleged funding from the Middle East. Fears on an Islamist insurgency provided the necessary pretext for security forces to launch a sweeping counterinsurgency operation against Myanmar’s Rohingya Muslims. Soldiers have allegedly entered villages and forcibly removed thousands of villagers from their homes, marking a significant escalation in violence since 2012.
The UN has called for probes into the military’s intervention, threatening negative exposure which could harm Myanmar’s prospects for international support and investment. It is not impossible that the threat of sanctions may again be leveraged to incentivise UN-directed reforms around this issue.
There is also the outside threat of more sophisticated forms of violence. According to the International Crisis Group (ICG), October’s coordinated attacks demonstrated ‘an unprecedented level of planning in a conflict that has to date seen little sign of organised violent resistance’. Given those militants’ potential backing from Taliban forces, this unrest could foreshadow a coordinated string of attacks. Militants could target key political, military and economic infrastructure to gain leverage and try and force the government into making political concessions.
Vested interests in Rakhine conflict
Whether or not such violence does materialise, this upsurge in violence in Rohingya represents a major test for Myanmar’s new government. The extent to which it works with the military to find a solution will provide a crucial clue as to the possibilities for genuine reform.
As GRI reported almost one year ago, despite the NLD’s massive mandate, the military is still central to Myanmar’s government. Decades of distrust between both groups will continue to impede the efforts to establish a strong central governance agenda and hinder socioeconomic progress.This will prevent the oppression of Muslim minorities in Rakhine from being easily overcome.
The ICG warned that the powerful Buddhist-nationalist lobby will also constrain any attempts to appease the Rohingya. This group has exploited therecent violence to revive a wave of national anti-Muslim sentiment. It is responsible for actively excluding the Muslim community from economic participation, and continues to endorse policies that restrict the Rohingya’s movement in Rakhine, including a ban on entering the commercial area in the capital Sittwe. In essence, the Buddhists view the conflict in Rakhine as a necessary byproduct of the continued exclusion of the Muslim community, even though reduced political tension could provide enhanced economic stability.
Chinese companies and other investors
According to an influential monk, the former military government exploited the instability in Rakhine for economic opportunity, particularly from China. There were for instance reports of a ‘blank cheque’ being offered to Chinese investors in Kyaukpyu, an important coastal town in Rakhine state.
This arrangement will likely continue in spite of the NLD’s desires for cleaner governance. Under national law, the military maintains control of three government ministries, including the Ministry of Home Affairs – which is responsible for land acquisition deals.
Chinese companies have a record for investing in areas with human rights problems, and have shown a willingness to invest in Rakhine despite the state’s treatment of the Rohingya. In contrast, instability in Rakhine has deterred other foreign investors from speculating. Plans for the Ponnagyun SEZ on Sittwe’s outskirts purportedly fell through because the South Korean investor was deterred by continuing state violence.
This is of course not to say that all Chinese companies are to blame. However, a vicious circle could emerge, whereby the deteriorating situation in Rakhine encourages an overwhelming concentration of Chinese firms less affected by human rights concerns. In this scenario military influence will continue to thrive.
The best option is therefore for the NLD to promote a multilateral investment platform for Rakhine. Here, multiple strategic partners across different countries would act together to determine a culture of responsible investment in Rakhine, and Myanmar generally. The Shwe gas field, several miles off the Sittwe coastline, may provide a model to follow. Shwe is a multilateral mega-project with stakeholders from China, India, Myanmar and South Korea. With gas production worth potentially billions of dollars, each stakeholder will be encouraged to protect their investment via ensuring consistent, secure and stable investment conditions.
Overall, the revival of Rakhine conflict represents a stern test for Myanmar’s new government. If it gives into the military and allows state violence against the Rohingya to persist, this will provide a crucial sign of the limits not only to a sustainable solution in Rakhine, but also to Myanmar’s ability to market itself as a reformed character deserving of international support and investment.