The trigger for Burma’s crisis is primarily economic rather than political. Although the main focus of the thousands of Burmese who have been taking to the streets is a demand for an end to the army dictatorship, it was the economy that propelled most of them to risk their lives.
When havoc hit Thailand and Indonesia 10 years ago, precipitated by a series of bank crises and devaluations, the impact on Burma was relatively minor, thanks in part to the country’s closed economy. But globalisation has moved on and the isolation which the country’s military rulers chose can no longer protect them. The country has failed to grow fast enough to satisfy its people’s rising aspirations, while key imports such as energy have gone up dramatically in price.
Burma depends heavily on imported diesel. The government tried to hold the line by subsidising the price for consumers but last month it cut the subsidies, forcing an immediate rise in bus and other transport fares. The price of the bottled gas which most households use for cooking also shot up.
Although Burma is blocked under sanctions from getting loans from the International Monetary Fund and World Bank, both bodies had recommended last year that the fuel subsidies should disappear. The government was running a huge budget deficit in trying to cover them. Then it printed money to overcome the deficit, thereby creating inflation of over 20% last year. This August it finally took the IMF medicine, inadvertently sparking the current crisis.
The army generals have spent far less on education and health than almost any other country in Asia. Only 0,9% of the gross domestic product went on education in the last years of the 1990s, compared with an east Asia average of 2,7%. Health was even worse, getting only 0,3% of GDP compared with 1,7% in East Asia as a whole. Forty-three percent of children under five were malnourished, in contrast to only 20% elsewhere in the region. Figures have improved slightly since then, but one in every three children under five in Burma are still underweight.
The country has good economic potential, with generous mineral resources, plentiful supplies of fresh water and much uncultivated land. It used to have a well-educated population and its position between India and China could be turned to its economic advantage. But sanctions, even though frequently violated in the energy infrastructure sector, have starved Burma of foreign investment.
The so-called Burmese Way to Socialism which the first military junta advocated in the 1960s was abandoned in the late 1980s, and at least three-quarters of the country’s production comes from the private sector. But controls on the banking sector and difficulties in getting imports have prevented the same kind of dynamism seen in other countries in the region.
More than half the population is still engaged in agriculture but restrictions on importing fertiliser have made it hard for farmers to prosper and raise their yields.
Again because of sanctions as well as the government’s poor economic policies, Burma has not developed the same kind of boom based on making brand-name clothing and shoes that other low-wage Asian economies have enjoyed. – Guardian Unlimited Â