Myanmar's Transition: Openings, Obstacles and Opportunities

17. Prospects for a Policy of Engagement with Myanmar: A Multilateral Development Bank Perspective

17 PROSPECTS FOR A POLICY OF ENGAGEMENT WITH MYANMAR A Multilateral Development Bank Perspective Adam Simpson* The Asian Development Bank (ADB) is the region’s most significant multilateral development bank (MDB), providing financing and expertise that supports projects and programmes across Southeast Asia. Since the mid-1980s, however, neither the ADB nor the World Bank has provided significant direct assistance to Myanmar.† Although it is in arrears to both banks — approximately US$450 million to the ADB and US$373 million to the World Bank — these arrears could be waived, as has been done for other countries, if a political consensus of donor countries was reached. The real reason for the lack of engagement stems from the sanctions regimes against Myanmar of the major Western donor countries, particularly the United States. Through its Greater Mekong Subregion (GMS) project,1 the ADB still provides small amounts of indirect technical assistance to non-government actors in Myanmar, but because of the sanctions, this is relatively insignificant compared with the direct assistance provided to other non-democratic GMS states such as Laos and Vietnam. Much of this Prospects for a Policy of Engagement with Myanmar 301 indirect assistance relates to proposed “economic corridors” such as the East-West Economic Corridor (EWEC), a GMS Flagship Initiative that aims to facilitate trade and investment and reduce poverty across Myanmar, Thailand, Laos, and Vietnam (Asian Development Bank 2010d; 2010e). While the MDBs and Western interests stay away, the economy of Myanmar has been dominated by Asian corporations, primarily from China and Thailand, investing in Myanmar’s burgeoning cross-border energy market (Simpson 2013b). These investments are undertaken with little social or environmental assessment, making the ADB’s procedures, such as its social and environmental safeguards (Asian Development Bank 2009b), virtuous in comparison. Any kind of investment in Myanmar is difficult, however, due to the challenging international and domestic political environments that face both private and public actors (Cheesman, Skidmore and Wilson 2010; Roberts 2010). The long-term effectiveness of MDBs can be dependent on the perceived integrity of their reputations as good institutional citizens, and as public organizations they face a large array of competing interests and elements that require consideration. In particular, they are judged on their ability to raise communities out of poverty. As the regional bank, the ADB has the potential to make a significant contribution to Myanmar’s future poverty alleviation and development, but the bank has been criticized for promoting inequitable development even in less authoritarian environments (see, for example, Oehlers 2006; Raman 2009; Rosser 2009; Simpson 2007), so the challenge to promote equitable development in Myanmar remains significant. To engage successfully with Myanmar, the ADB must satisfy both its donors and the Myanmar government that it is promoting development in the country. Western donor governments, however, also require evidence of positive political change before they will agree to fund projects in Myanmar. The ADB has, therefore, been hesitant to engage in Myanmar’s domestic political debates, yet it has met with opposition leader Aung San Suu Kyi, who is potentially open to ADB engagement if it demonstrably benefits the general population. These activities could include assisting the exchange rate unification process or updating the country’s agricultural programme, although the GMS economic corridors programme has the advantage of an existing framework and greater integration with the region. Most activist groups argue, however, that the ADB should avoid further engagement until there are significant improvements in human rights in the country (Bourne 2011). Although the long-running civil conflict still rages in the east of the country, and new areas of conflict such as in Kachin State have 302 Adam Simpson opened up, the domestic political environment in Myanmar has eased significantly following the flawed national elections in November 2010. These elections resulted in the transfer of formal political power from a military junta to a “civilian” government, although many of the most powerful new politicians are former generals. There are still limitations on political and economic freedoms in Myanmar that would qualify it as authoritarian under some measures, but according to past and present International Labour Organization (ILO) Liaison Officers based in Yangon, there is now a “new level of scrutiny” of government that has accompanied the new parliament (Horsey 2011, p. 4).2 Throughout 2011 the new government, led by President Thein Sein, instigated a number of progressive democratic reforms and the entrance to parliament of Aung...