Wednesday, December 5, 2012

No More Demo-Activists, Burma Needs Berkeley Mafia!

Francis Fukuyama at Rangoon Airport (22 Aug 2012).
The second leg of my recent trip took me from Mongolia to Myanmar (it’s not an easy itinerary getting from Ulaan Baator to Naypyidaw, believe me). I was there to teach a short course on private sector development with my former SAIS colleague Roger Leeds.

This curriculum, which Roger and I have developed under the grandiose title of the Leadership Academy for Development, is based on HBS-style cases of efforts to promote private sector growth through public sector reform–either governments getting out of the way, or actively intervening to help business.

It’s aimed at younger mid-level public officials in developing countries who are not old enough to have yet been completely corrupted, but are still in a position to act as reformers at some future point in their careers. We taught a shortened version once to a group of civil society activists and parliamentarians in Yangon, and then to a number of bureaucrats in Naypyidaw.

The first question anyone asks who has been following the remarkable events in Myanmar over the past year is, Is the democratic opening for real? Of course, nothing can be taken for granted and there are many scenarios under which the Burmese military could resume its dictatorship.

But many people in the country said that the opening has been under way for a long time, and reflects a fairly broad consensus within the military leadership. What got things rolling was the former military commander-in-chief Than Shwe, who didn’t want to have happen to him what happened to his predecessor Ne Win when the latter stepped down as military ruler.

As a consequence, Than Shwe forced the conservative generals into the parliament, moved the better ones into ministries, and put the military itself under the command of relatively junior officers who were beholden to him. This put the military’s third in command and a man in line to be president, Thura Shwe Man, into the parliament as speaker.

Burma's ex-dictator Senior General Than Shwe.
These shifts paved the way for the rise of former general and current President Thein Sein, who has overseen the release of Aung San Suu Kyi from house arrest, release of countless political dissidents, and the by-elections that took place last March that led to the entry of more than 40 members of ASSK’s National League for Democracy (NLD) into parliament.

Indeed, the remarkable shift in power from the military and president to parliament has actually created problems for reform, since the current parliament is full of both former military officers (many of whose seats are guaranteed by the Constitution), and their civilian allies in the military-linked Union Solidarity and Development Party (USDP).

They are aligned with the crony capitalists who got rich working with the military government over the past decade, and they are now, among other things, holding up a new foreign investment law that the country desperately needs in order to kick-start economic growth once sanctions are lifted. Many of the current economic elite fear foreign competition and have been using economic nationalist arguments to limit future foreign ownership.

There was plenty of evidence of old-style crony capitalism in Naypyidaw, the new capital of Myanmar since 2005. Naypyidaw is a very bizarre town, built it would seem largely to avoid any possibility of anti-government demonstrations.
Francis Fukuyama at Sedona Hotel.
The ministries are all spaced kilometers apart, linked by enormous, empty avenues. We counted 20 lanes in the road in front of the president’s palace, which is a building several times the size of the White House.
The hotel we stayed at was modern, attractive, and almost totally empty; on the same street, there were at least half a dozen new luxury hotels under construction.
They were being built for the Southeast Asian Games that will take place in Myanmar next year, as well as the ASEAN summit the year after. Apart from these two events, however, these hotels are totally unviable commercially; they are only being built as a result of incentives being offered by the government to their business allies.
The resilience of civil society in Burma is remarkable, despite all the years of political repression. I was introduced to a string of people who had spent 10, 12, 18 years in prison. Among the former prisoners was the translator of my books into Burmese, a former Communist who over the years had opened up to other points of view.
The NLD headquarters in Yangon was a hive of activity, though I was unfortunately not able to see ASSK herself. The fact that so large a degree of citizen participation exists in a country that has been one of the world’s most repressive dictatorships is nothing short of amazing.
While I have a relatively jaundiced view of economists these days, it struck me that what Myanmar really needed now was not more democracy activists but some competent economists like the Berkeley mafia that advised Indonesia.
Suharto's Indonesian Economists (Berkeley Mafia).
The country’s needs are incredible in virtually every sphere. There is no banking system, to begin with; all transactions have to be carried out in cash and foreigners are advised to enter the country with crisp American bills with which to settle their accounts.
Outside of Naypyidaw, the country’s infrastructure is crumbing; it is hard to move goods across the border, and electricity is highly irregular outside of the monsoon season. There is a tremendous shortage of human capital as a result of the country’s isolation: among other things, Burma stopped teaching English back in 1964, and closed Rangoon University for three years after the student protests. We witnessed a tremendous hunger to learn about the outside world, one that will take more than a generation to fill.
I mentioned in my last post that Mongolia and Myanmar have something in common besides being Asian countries beginning with the letter M: they are both neighbors of China, for whom fear and loathing of China has been an important driving force.
The mining boom in Mongolia has been driven by the insatiable Chinese demand for commodities; the government has been pushing a “Third Neighbor” policy of strengthening ties with the United States and Europe so as to get out from under its two big neighbors China and Russia.
Fukuyama Lecture in Rangoon Sedona Hotel (23 Aug 2012).
So too with Burma: Chinese companies have been critical, especially since the imposition of US sanctions, for developing that country’s energy sector. It appears that the massive Myitsone Dam project on the Irrawaddy River, 90 percent of whose output would have been exported to China, was one of the factors driving the military government to open up to the West (and to its own people). There was strong opposition to this project on environmental and nationalist lines, prior to its cancellation by President Thein Sein.
The democratic opening in Myanmar is a huge step forward, but one that could easily be reversed. The authors of this new policy have to be able to show some quick gains from the country’s new partners in the West if they are to sustain momentum for change. But the rebuilding project is monumental at this point.
In too many recent attempted democratic transitions, pro-democracy forces have failed to make the shift from being civil society activists to being organizers of political parties that could contest elections, and then to being partners in government who could actually make and implement public policies. The Burmese will need a lot of help in all these respects.