Myanmar largest Indian aid recipient after Afghanistan

Myanmar's president Thein Sein, on a groundbreaking visit to India, inspects an honour guard at Rashtrapati Bhavan (India's presidential palace) on Friday

by Ajai Shukla

Business Standard, 15th Oct 11

China’s smaller neighbours have long been wary of the imposing proximity of the Middle Kingdom. In 1946, when Vietnamese resistance leaders considered Chinese help in throwing off the French colonial yoke, Ho Chi Minh believed China was the greater threat. Dismissing the suggestion, the canny Vietnamese leader famously declared, “The last time the Chinese came (to Vietnam), they stayed a thousand years… I prefer to sniff French dung for another five years than to eat Chinese dung for the rest of my life.”

Myanmar’s president, Thein Sein, currently on a groundbreaking visit to India, is hardly immune to such fears. With his authoritarian regime driven by a global deep-freeze into Beijing’s sweaty embrace, the growing Chinese presence in Myanmar, looms uncomfortably large especially in the northern region that borders China’s Yunnan province. Myanmar’s decision-makers in their purpose-built capital, Naypyidaw, have begun balancing that unequal relationship. After a year of bold internal liberal reforms, Thein Sein is reaching out to the international mainstream beyond ASEAN. His springboard is New Delhi, which maintained relations with Myanmar in the face of international pressure, including criticism from Barack Obama in a speech to India’s parliament last November.

India’s forbearance has been vindicated. Over the last year, Myanmar’s civilian (but military-controlled) government has liberalised the media, eased controls over the internet, and begun releasing political prisoners. On Tuesday, a government-appointed human rights body --- a novel concept in Myanmar --- publicly called for the release of “prisoners of conscience”. In a move towards reconciliation, dialogue has begun with the face of democracy in Myanmar, Aung San Suu Kyi.

All this increases India’s comfort in hosting President Thein Sein; the joint statement issued after his meeting with India’s prime minister today welcomed Myanmar’s “progress in moving towards an open and democratic framework.” Also gratifying to India would be Myanmar’s decision last month (in response to domestic opposition) to suspend work on a $3.6 billion hydroelectric dam that was to supply power to China. Beijing insists that the differences will be settled, but this is a jolt to China’s ambitious infrastructure ambitions in Myanmar, including a corridor of roads, railways and pipelines linking Yunnan, in China, to Kyauk Phyu port in the Bay of Bengal.

India, meanwhile, is stepping up its role in building Myanmar’s infrastructure. During talks in New Delhi today, India granted Myanmar more than $800 million worth of lines of credit for infrastructure projects, including “railways, transport, power transmission lines, oil refinery, OFC link, etc.” A major Indian thrust is emerging in the development of Myanmar’s agriculture sector, including irrigation projects. Myanmar is emerging as the biggest recipient of Indian development aid after Afghanistan, where India has committed $2 billion.

This is a positive new direction to New Delhi’s engagement with Naypyidaw, which has often been hamstrung by issues relating to insurgencies in India’s northeast. Four Indian states --- Arunachal Pradesh, Nagaland, Manipur and Mizoram --- share a 1,643-kilometre land border with Myanmar’s Kachin and Chin states and Sagaing division. After their independence, India and Burma (“Myanmar” came into usage only in 1989) agreed to continue the British tradition of allowing border tribes to move and trade freely within a 40-kilometre belt on either side of the border. But the Naga insurgency ended that; with Naga militants transiting through Burma to and from training camps in China’s Yunnan province, New Delhi unilaterally imposed a permit system in 1968.

In 1994, as relations warmed after a quarter century of chill, New Delhi and Yangon signed the Indo-Myanmar Border Trade Agreement. This allowed for a Land Customs Station (LCS) at Moreh, in Manipur, which permits three forms of trade. Residents of the 40-kilometre border belt can barter locally produced goods worth up to US $1,000, with a simplified documentation system. Secondly, barter trade is permitted in 22 items up to a value of $20,000, provided the traders have an Importer Exporter Certificate (IEC) from the DGFT. Thirdly, any Indian trader can export goods to Myanmar through LCS, Moreh as regular export in accordance with the Foreign Trade Policy.

Today both countries agreed to expand that commerce. Another LCS will be established between the two countries. A “Trade and Investment Forum”, incorporating businessmen from both countries, will “expand the basket of goods under border trade, [and arrange the] visit of an Indian banking delegation to Myanmar to facilitate better trade and payment arrangements, etc.”

As Myanmar opens up to India, New Delhi’s immediate challenge is to win over politically alienated factions in its own northeastern states, which threaten to play spoiler in physically connecting India with Myanmar. Access to the Moreh LCS in Manipur is controlled by a multitude of Kuki and Naga tribal factions, with National Highway 39 --- running through Nagaland and Manipur --- blockaded for months at a stretch. In the circumstances, ambitious Indo-Myanmar projects like the Kaladan Multi-Modal Transit Project, which seeks to connect Myanmar’s Sittwe Port with India’s northeastern states like Mizoram, will remain hostage to internal conflicts within India.

President Thein Sein, who began his three-day state visit to India on Wednesday with homage at Buddhist shrines in Sarnath, Kushinagar and Gaya, is accompanied by practically his entire cabinet and the Chief of General Staff in the Ministry of Defence. He returns to Myanmar tomorrow after a morning visit to the Indian Agricultural Research Institute.