Saturday, September 29, 2007

Economics Connected To Myanmar Unrest

Asia Times: Economics at the root of Myanmar protests
New York Times: More Deaths in Myanmar, and Defiance

Widespread violent protests in Myanmar have flared due to increasing anger over the country's economic conditions. In response to the protests, the ruling military junta chose Myanmar police Brigadier-General Than Han to control civil unrest. The Myanmar government significantly reduced national fuel subsidies. As a result, the price of diesel fuel skyrocketed by a reported 100%, which produced a fivefold increase in the price of compressed natural gas, and placed even more inflationary pressure on an economy which already had an inflation level of 21.4% in 2006. The junta's plan for reform includes the end of fuel subsidies in an effort to reduce the pressure of global fuel prices.

The International Monetary Fund and World Bank recommended a subsidy cut due to Myanmar’s extremely high budget deficits. Recent pay raises for civil servants and the military, combined with cash outlays for a new administrative capital and a proposed new technology capital have weakened Myanmar’s capital reserves. Typically, Myanmar has printed more money to pay for its expenditures but this has only added to inflationary pressures on its citizens. Furthermore, the junta's restriction on withdrawals from banks will probably cause even more economic hardship for Myanmar.

Myanmar’s inability to plan for successful economic progress has significantly affected the economy. It has created the economy's dependence on imports while exporting its own resources without strengthening its own economic development. The result appears to be a deterioration of Myanmar’s ability to maintain an infrastructure that supports a growing economy.

After almost 45 years of military control, Myanmar’s economy remains unable to adequately provide for its population. In 1988, Myanmar faced a similar economic crisis and the military stepped in to suppress the revolt by its citizens. This recent economic crisis is following that same pattern. It appears the military will not be able to manage Myanmar’s economy in a productive fashion for its citizens.

Discussion Questions:
Will pressure from other Asian countries help reduce Myanmar’s current military/economic conflict?

At the White House, Yang Jiechi (China’s foreign minister) was asked to exert pressure on Myanmar’s rulers to change Myanmar’s repressive policies. Do you think China’s intervention would be a help or a hindrance?

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