When Aung San Suu Kyi emerged victorious in national elections in Myanmar, there were widespread expectations that given her iconic image in the west, her Government would receive substantial economic assistance from the US and the European Union. Suu Kyi had two priorities on assuming office.

The first was to establish ethnic peace in Myanmar, where minority groups have resorted to armed insurrection. President Thein Sein, who headed the Government earlier, had negotiated cease-fire agreements with a number of these groups. But, a number of influential and powerful groups continued with their revolts.

Suu Kyi’s second priority was to create conditions for accelerated economic growth. Illusions that she may have entertained about receiving substantial western aid were not fulfilled. Myanmar has, however, done well on her second priority, by diversification of agricultural production, while achieving a growth rate of around 8 per cent.

Rather than appreciating Suu Kyi’s efforts to seek ethnic peace, western powers and Islamic busybodies such as Turkey and Malaysia chose to pressurise Myanmar for alleged violation of the human rights of its Rohingya Muslim population. Japan and India have shown understanding of Myanmar’s internal problems. China embarrassed its Southern neighbour by offering to “mediate” in the Rohingya issue. It is, however, China’s approach to Myanmar’s ethnic problems which is forcing Myanmar into a tight Chinese bear hug.

How China prevails

The long-running ethnic insurgencies in Myanmar now involve the dominant majority Bamars facing 22 armed groups, comprising ethnic minorities. Amongst the strongest of these groups are the United WA State Army (UWSA) with 25,000 well-armed cadres and the 5,000-strong Kachin Independence Army (KIA), which operate across the India-China-Myanmar tri-junction. These groups receive weapons and logistical support from China.

The KIA has backed India’s north-eastern separatist groups such as ULFA and the NSCN (Khaplang), in consultation with government officials in China’s neighbouring Yunnan province. The Chinese have equipped the UWSA with sophisticated weapons, used in Myanmar’s insurgency-ridden Shan State. Cross-border attacks by the UWSA are a major instrument of China to pressurise Myanmar.

China also regards Myanmar as a land bridge to the Indian Ocean. It was initially concerned about the reportedly pro-western Suu Kyi’s election victory. However, Beijing skillfully used its security and economic leverage to ‘persuade’ Suu Kyi to give it a significant say in her quest for peace agreements with armed separatist groups. China shielded Myanmar from western criticism in the UN, on the issue of Rohingya Muslims.

It also used short-sighted western aid policies to acquire considerable leverage within Myanmar. It reportedly persuaded the UWSA recently to accept a ceasefire. It is acting similarly with the Kachin Independence Organisation (KIO). China’s envoy to Myanmar has “facilitated” talks with the KIO – a development India should closely monitor. China now has an ability to significantly influence Myanmar insurgent groups.

Large Chinese infrastructure and mining projects in Myanmar have come up since the early 1990s, with scant regard for environmental degradation and displacement. Myanmar’s first Constitutional President, Thein Sein, was compelled to suspend a $3.6-billion hydroelectric project called the Myitsone dam because of public protests.

Apart from displacement of thousands, this project involved the transmission of 90 per cent of the power generated to China. Suu Kyi, however, personally and controversially approved, amidst widespread local protests, a Chinese-backed copper mine project, giving the Chinese partner a 30 per cent share of profits.

Another controversial Chinese project is the development of the Bay of Bengal port of Kyauk Pyu, involving an estimated Chinese investment of $7.3 billion. Beijing is looking at a 70-85 per cent equity stake in this project. Alongside the port is a proposed 4,289-acre Kyauk Pyu Economic Zone, where China has sought a 51 per cent stake, with an investment of $2.1 billion. China is reportedly agreeing to not press its demands for the Myitsone hydroelectric project if Myanmar agrees to its terms for projects in Kyauk Pyu. China could, thereafter, assume control of the Kyauk Pyu port and use it for berthing its naval vessels, as it has done in Gwadar. Its navy recently held joint exercises along Myanmar’s shores.

India has continued its engagement with Myanmar, with both Army Chief General B. P. Rawat and Foreign Secretary Jaishankar visiting Myanmar recently. The Indian Armed Forces have traditionally had friendly relations with their Myanmar counterparts. Both countries face problems of armed separatist groups using each other’s soil. Problems for India have now increased, because of covert Chinese support for India’s north-eastern separatist groups.

India at a disadvantage

India has to recognise the reality that it cannot match China in weapons supply, or in a range of infrastructure and industrial projects. India, for example, cannot match Chinese supply of JF 17 fighters manufactured in Pakistan, as our much-touted Light Combat Aircraft has not yet been operationalised.

Likewise, our public sector infrastructure projects such as the Sittwe Port, the Kaladan Corridor linking our landlocked north-eastern States to the Bay of Bengal at Sittwe, or the proposed 1800 MW hydro-electric project, have either been delayed or abandoned.

While diplomatic efforts enabled us to get a stake in successful offshore gas exploration, we lost access to the gas because of our inability – and indeed inefficiency – in devising measures to transport/transfer and utilise the gas, which is now transshipped to China by a pipeline. Private sector projects to use Myanmar’s vast bamboo resources for the paper industry, or investment in the agricultural sector have similarly been delayed, or failed. The main area which has won us gratitude is vocational training and education facilities for Myanmar personnel.

We need to review and restructure our economic cooperation with Myanmar, with an increasing focus on assisting the populations living close to our borders through imaginative schemes for education, health, communications and small/village industries.

The rupee could be made legal tender for such cross-border projects. This could be undertaken in close cooperation with Japan and the Asian Development Bank and duly integrated with new measures now being considered for giving momentum to Regional Cooperation through BIMSTEC. Larger industrial and agricultural projects in Myanmar are best left to market competition, and not undertaken through monopolistic public sector involvement.

The writer is a former High Commissioner to Pakistan