Preparations for speaking engagements in China as part of my doctorate research into the Belt Road Initiative (BRI), have revealed that Myanmar is increasingly finding itself as the key interface between two major infrastructure initiatives in the region.
Whilst much has been written on Myanmar’s importance in the BRI, little attention has been given to the emerging tensions raised by the competing Freedom Corridor (FC), initially created by India and Japan and now openly supported by the US and Australia (referred to as the Quad).
Myanmar is seen to have strategic geopolitical importance, this will only be realised once its regional infrastructure is put in place. Initially within the China BRI, India and Myanmar were seen as part of the BCIM corridor. This corridor linked China, India, Bangladesh and Myanmar, delivering energy and trade security to China by providing access to the Indian Ocean and bypassing the Malacca Straits. In principle, the corridor made sense, however did not anticipate India’s response to the China / Pakistan developments. As India debated the inclusion of Kashmir, questions were raised regarding the true intent of China. Debate quickly moved to military and economic dominance in the region. India’s concerns translated into the birth of the FC. The countries involved in the FC are quick to point out that their initiative is not to compete with the BRI, but to offer an alternative to it. These claims suggests the West aligned Quad is aware of China’s significant economic and commercial power and fear retaliation.
However, for all intents and purposes these are two competing initiatives hoping to win favour in Myanmar. Both are focused on building and locating infrastructure in the region, thus providing alternative logistics arrangements. However, duplicate infrastructure projects become commercial risks as they need trade volume to remain viable. There are risks that duplicate infrastructure could create ‘white elephants’ in terms of ports and railways.
China’s response to the FC highlights the value it sees in Myanmar, and has replaced the BCIM economic corridor with the newly created China/Myanmar corridor. The advantages for China that this new corridor has over the BCIM includes:
- Reduction of transnational border bottlenecks,
- Providing China with maritime access to the Indian Ocean,
- Building on existing projects that seals energy security.
Myanmar also benefits as there is commitment to building new road and rail infrastructure connecting towns and cities other than Kyauk Phyu / Yunnan. Included in the package would be electrification that would allow for commercial activity to take place as well as connecting these centres to export markets, so has the potential to lift people out of poverty.
These competing initiatives will test the resolve of the Myanmar government, particularly as recent press suggests that the government is about to make significant changes as it tries to stamp out corruption and bureaucratic red tape. Whilst it was agreed that the BRI is an important catalyst to improve logistics connectivity in the trade dynamic between West and East, there also appears to be cracks emerging within the BRI “people to people” soft diplomacy objectives. A common theme was the lack of local involvement where major infrastructure has been built. There has been a lack of local employment opportunities and participation on Chinese projects as they have used Chinese contractors in the past. This was acknowledged by the China delegations and they claim that they are working on addressing built up resentment at the ground level, particularly in Kyauk Phyu in Myanmar. Part of rebuilding the trust is China’s financial and resourcing support for the peace process in general and in the Rhakine state in particular. This may well alter the shape of developments as this is in stark contrast with the West applying further sanctions on Myanmar.
With an increasing focus on stamping out corruption and environmental damage those areas supportive of the India / Japanese initiative are also under a cloud of suspicion. For example, recent reports quote the Mon state chief minister as acknowledging that there is corruption in the state. This is not made easier when a major marine infrastructure project partner in the state, Surbana Jurong subsidiary SMEC, has recently been banned by the World Bank on charges of bribery and corruption. SMEC has also been accused of violating human rights and being complicit in aiding environmental degradation in the Mongton Dam development in Shan state.
Myanmar is blessed with its key location, where two significant infrastructure initiatives converge. Both have issues to deal with and this gives the Myanmar government an opportunity to secure benefits for the country. However, the key difference between the BRI and the FC is the commercial and financial backing arrangements for projects. The FC focus on commercial returns may see long delays in project finance whilst the BRI focus is on strategic returns, may allow Myanmar to emerge from poverty a lot quicker. The machinations of choice are interesting, but Myanmar has real options that give it breathing room to tackle the peace process and corruption to grow socio-economically.