Committee on International Relations
U.S. House of Representatives
Washington, D.C. 20515-0128

Department of State Report

Identifying Resources for the Reconstruction of Burma

          Summary: 

The Burmese Freedom and Democracy Act of 2003, Public Law No. 108-61, requires the Secretary of State to provide a report "identifying resources that will be necessary for the reconstruction of Burma, after the State Peace and Development Council (SPDC) is removed from power, including - -  

(A) the formation of democratic institutions;

(B) establishing the rule of law;

(C) establishing freedom of the press;

(D) providing for the successful reintegration of military officers and personnel into Burmese society; and

providing health, educational and economic development."  

This report identifies important resource areas that will require consideration in the event of change in Burma. It describes the situation existing in Burma and suggests a mechanism to plan for enhanced assistance programs. Designing a plan now to assist all peoples and regions in Burma will further efforts to build a more modern and viable democratic society in the future. 

The United States, in consultation with other donors, Burmese democracy representatives, Nongovernmental Organizations (NGOs), and international institutions can develop a planning framework that would target those areas of need for increased assistance if and when the opportunity for removal of sanctions and development of more broad-based programs occurs through a change in the situation in Burma. Four broad areas of direct assistance, in varying degrees, could be the focus of efforts by the Department of State, U.S. Agency for International Development, and other agencies, including the Departments of Justice, Treasury and Defense:  

Assistance for the development of democratic institutions, including media, rule of law, and administration of justice; 

Economic and development assistance; 

Security and law enforcement assistance; 

Health and education. 

Resources and programs to support initiatives in these areas, some of which exist on a minimal level, would require significant augmentation. U.S. resources could be utilized to develop solid assessments of need, solicit and coordinate other donor and Burmese inputs, and provide U.S. technical expertise in areas where providers have an established record of accomplishment. International Financial Institutions (IFIs), the United Nations, regional organizations and other donors could all be involved in program development. Utilizing NGO and Burmese expertise from within the expatriate community and eventually from within Burma itself could help to energize development planning. One potential danger is that proceeding to develop plans outside Burma could exacerbate tensions between those in the democracy movement who have remained in Burma and those who are now in exile. 

Existing limitations on U.S. assistance to Burma will have to be taken into account in the event of a change. Section 570 of the 1997 Foreign Affairs Appropriations Act sets restrictions on U.S. assistance to the Government of Burma until Burma makes "measurable and substantial progress in improving human rights practices and implementing democratic government." Exceptions are made for humanitarian assistance, counternarcotics efforts, and human rights and democracy promotion. The Burmese Freedom and Democracy Act of 2003 similarly calls for a ban on imports from Burma until the government makes "measurable and substantial progress toward implementing democratic government." Both pieces of legislation also direct the U.S. representatives to international financial institutions to vote against any loan or other assistance to Burma. All of these restrictions can be waived if the President determines that a waiver is in the national interest. 

Discussion  

          Some observers regard democratic change in Burma as unlikely in the near term. Recent unilateral movement on the part of the military coinciding with nascent steps to broaden engagement with the government by neighboring countries have led others to believe that political change is on the horizon. Regardless of these opposing views, it is useful to describe the current situation and begin identifying future resource requirements. A lack of reliable data and questions of absorptive capacity make it impossible to quantify reliably the costs associated with developing Burma once change has occurred. It is more realistic to identify basic requirements and areas of need rather than provide finite levels (or dollar amounts) for possible programs.  

The situation in Burma presents the United States and the international community with unique challenges. Burma is ruled by a military junta with a horrendous human rights record. The inhabitants of Burma save for the privileged few (the military and their supporters) survive with limited freedom, minimal access to information, and few opportunities to improve their lives. The average citizen of Burma has little experience outside this capricious system, has little hope for change, and limited prospect for better circumstances through either education or economic improvement.  

For over fifty years, the military has been concerned with maintaining control of central Burma while attempting to subdue the various ethnic based insurgencies. In 1948, only the capital city itself was in the firm control of Rangoon authorities. Subsequent military campaigns brought more and more of the nation under central government control. Since 1989, the GOB has entered into ceasefire agreements with at least 17 insurgent groups. Some of these groups -- such as the United Wa State Party/Army, Mong Tai Army, Kachin Independence Organization/Army, and Karen National Union -- were among the largest insurgent groups operating in the country. There are at least 20 other non-ceasefire groups that remain opposed to the GOB. The most active are the Shan State Army-South which has between 2,000-3,500 troops and the Karenni National Progressive Party, for which we have no recent figure. The remainder of the non-ceasefire groups are small with estimates ranging from 100-200 men each.  None of these groups control large stretches of territory.   

Subsequent to her release from house arrest in May 2002, Aung San Suu Kyi and senior members of the National League for Democracy (NLD) were again incarcerated following a government-orchestrated ambush of her motorcade in May 2003. Before this incident, she had generated strong showings of popular support during several rallies in northern Burma. The May incident led the United States and other nations to increase pressure against the government. However, at the end of 2003 Aung San Suu Kyi and other senior NLD leaders remained in detention, and their offices were closed.   

The government has made successful efforts to improve its relations with its neighbors, e.g., by joining the Association of Southeast Asian Nations (ASEAN) in 1997. Rangoon has continued commercial ties with Thailand and has broadened its two-way trade with China, in purchasing of military equipment and consumer goods from China and by exporting commodities (timber and other resources). Through its investment, trade, and counternarcotics efforts, China has increased its influence in Burma. In the past few years, India has radically altered its Burma policy, moving away from an approach similar to that of the U.S. toward one focused on solving ethnic insurgency problems and balancing China's influence. The members of the Burmese junta perceive the United States as a potential military threat and some observers see the development of a people's militia as a response to this perceived threat. 

The SPDC's "road map" to democracy has recently garnered some support in Thailand and within the region. A meeting initiated by the Royal Thai Government in mid-December 2003 opened discussions on the "road map" between Burmese officials and international representatives. Indications that the government may be considering changes that would lead toward a more open system have been met with cautious optimism by some. Many, however, have commented that the SPDC's plans are meaningless without the full participation of Aung San Suu Kyi, the NLD leadership and ethnic minority groups. Some observers have noted the potential for a split between ethnic groups who may choose to participate in the government's plan and the democratic opposition that so far remains on the outside. 

Burma's economy has been described as being "in a shambles" for almost a generation. Central planning and control with gross inefficiencies hamper all sectors of the economy in this resource-rich country. The underground economy helps maintain a subsistence-level existence for the population. The country's official export earnings from natural gas, timber, seafood, and agricultural products are supplemented by off-book earnings from the illicit trade in gems, drugs (often produced in areas that remain outside control of the government), timber, and other commodities that flow out of Burma and support the import costs of durable goods.  

The economic situation has further eroded with the imposition of U.S. sanctions. Since the attack on Aung San Suu Kyi's convoy on May 30, the United States has implemented a ban on Burmese imports, a ban on the provision of financial services to Burma, and an asset freeze on certain Burmese financial institutions. The European Union expanded an existing asset freeze and visa restrictions but did not impose additional economic measures. Other countries, including Japan and Canada, have also taken measures to increase pressure. 

Corruption in Burmese society, trade, and economic affairs hovers only slightly below the surface in almost all aspects of daily life. During Burma's socialist period from 1962-1988, the underground economy flourished in the absence of a free market. By the mid-1970s, most Burmese and observers of Burma noted that the underground economy in black market goods accounted for approximately 45 percent of Burma's overall economic activity. Though private enterprise has been legal since 1988, in succeeding years, the informal (underground) sector has expanded and broadened, in trade in both legitimate and illicit commodities. Some estimates allow that the black market today could be over three times larger than Burma's regular economy. Burma ranks number 129 (out of 133 countries) on the International Corruption Perceptions Index compiled by Transparency International in 2003. Revamping the economic system and countering pervasive and ingrained corruption present a significant challenge. 

Health care infrastructure in Burma is poor, and government spending devoted to health issues is extremely low. IMF figures estimate health care spending as low as 0.1 percent of GDP and less than three percent of government spending through the late 1990s. High infant mortality rates, lack of adequate medical facilities and insufficient numbers of trained personnel are common problems throughout the country and are especially severe in the country's dry zone and in ethnic minority areas. The overall poor healthcare conditions include a poorly documented but clearly worsening HIV/AIDS problem. Other diseases such as malaria and tuberculosis remain endemic throughout Burma. Drug abuse and malnutrition are also widespread.  

Similarly, the educational system has slumped to a level where many children receive almost no adequate schooling. Educational funding is only 0.3 percent of GDP, well below regional levels. The government has closed universities and, occasionally, other educational institutions for political reasons. According to many experts, the officially reported literacy rate of 85 percent (in 1995) is overestimated.  

Many individuals have departed Burma either for political reasons or for better economic opportunities. Thailand hosts more than 140,000 ethnic Karen and Karenni refugees from Burma in nine camps along the Burma-Thai border. A large number of Burmese migrants also live and work (often illegally) in Thailand.  

The SPDC, the Burmese military, and the government-affiliated Union Solidarity and Development Association (USDA) form the ruling apparatus. All SPDC members, and most government ministers, are military officers. The military has expanded from under 200,000 personnel in 1988 to over 400,000 in 2001 (including paramilitary forces). Military spending is difficult to assess accurately, but is assumed to be the largest portion of the government's annual budget. Over the past several years, China has provided loans for the purchase of military equipment.  

International assistance to Burma has been limited by the international community in response to the junta's violent suppression of democracy demonstrations in 1988 and subsequent refusal to recognize the victory of democratically elected representatives in the 1990 elections. Burma currently lags behind other aid recipients in Southeast Asia. United Nations figures note that Burma received approximately $76 million in foreign assistance in 2000, and the World Bank estimates that assistance to Burma stands at only three dollars per-capita. In comparison, aid to Cambodia is $33 per capita and assistance to Laos $45; in East Timor it is $259. The various IFIs are constrained from extending new loans to Burma because of the country's persistent arrears. U.S. sanctions prohibit support by the United States for any assistance programs. Burma's foreign debt currently hovers around $6 billion.  

Japan declared a moratorium on new foreign aid following the May 2003 attack on Aung San Suu Kyi and her supporters. Burma more recently has received concessionary loans and tied aid from both China and India. The United States funds NGO-implemented food, health, and education projects for Burmese refugees in the camps along the Burma - Thailand border, as well as healthcare activities for Burmese and Thai living outside the camps in the same areas. Since 2002, the U.S. has supported HIV/AIDS prevention programs inside Burma. In addition, the U.S. provides English-language training inside Burma, and funds scholarships for Burmese outside the country and training in communications for others on the border. These projects are managed by both the Department of State and the Agency for International Development. Department of State international narcotics control funds have supported UN alternative development programs and a small crop substitution project in Burma's Kachin State organized by a group of U.S. World War II veterans.  

Four major resource areas would need to be considered when planning for enhanced programs for Burma.  

1. Assistance for the development of democratic institutions, and the media

This would include programs to create a modern civil and criminal justice system and promote democracy and the rule of law. Initiatives that could balance grassroots democracy projects with governmental legal initiatives in a complementary manner would be important. Projects to assist new Burmese authorities with conflict resolution skills and develop means to reconcile former antagonists through transitional justice initiatives could be implemented. To advance democratic initiatives, assistance would be needed to conduct civic and voter education, and to establish anti-corruption programs within government institutions. Priority programs should aim at expanding access to electricity, modernizing telecommunications, expanding Internet access and broadband links, and promoting information dissemination. A broad-ranging program to train (or re-train) officials and reduce or eliminate excessively bureaucratic structures and regulations would be required to assist in good governance. Effort will be required to reconcile plans and capacities developed outside Burma by exiles with capabilities developed by residents in the country.  

Emphasis on inclusion of minority ethnic group concerns will be important. The ethnic groups throughout Burma, but mostly concentrated in border areas, must be fully integrated in any development plans and in programs that have an impact on their economic conditions and security. One of the most difficult challenges facing any new government in Burma will be forming a government that can respect the rights and interests of minority groups.  

2. Economic and development assistance

Economic assistance could focus on two key areas: policy reform and infrastructure development. It should come via bilateral assistance, through public-private partnerships, and with the assistance and support of various international institutions. 

On the economic policy front, as the IMF has repeatedly pointed out, there are several structural economic reforms essential for economic recovery that should be inaugurated quickly and which would not, in the short term, require large amounts of structural adjustment assistance. Policy reforms could help revive foreign investment and allow Burma to play a more positive role on multilateral issues, such as liberalizing trade and controlling money laundering.  

Infrastructure development, especially in ethnic minority areas, is essential to promoting economic development. In this campaign, revitalization of "hard" infrastructure, such as roads and power plants must be accompanied by development of "soft" infrastructure - such as rebuilding the moribund private banking system and encouraging capital markets. Micro-credit programs, which the UN and some NGOs are already managing on a small scale, could be expanded. There is also a desperate need for capacity building among economic and financial officials. This applies as well to the private sector, which currently puts a premium on personal connections while skills remain undeveloped.   

3. Security and law enforcement

Future needs and requirements for the maintenance of a military force should be carefully analyzed, while the issues of demobilization and re-integration into civilian society will be relevant to political stability. Modernization of the country's police forces under civilian control is crucial to ensure public safety and order (in the context of a free society). Police training could be coupled with complementary improvements to judicial systems. Assistance to draft and implement new laws and regulations and train the judiciary could be provided. Providing assistance with improving border controls will permit a future government to address issues of trafficking in persons and illegal logging more effectively.    

4. Health and Education

Successful assistance programs to promote democracy, build the economy, and develop a secure environment for all residents of Burma will depend on both quick impact and long-term programs to improve basic healthcare and education.

Improving educational opportunities for all will underpin Burma's future success. This must go hand-in-hand with income-generation opportunities that will allow more children to go to school and not the fields. The second item of concern is the HIV/AIDS situation and the severe problems of other endemic diseases. A third concern, malnutrition, especially among children, and problems of food access in certain areas of the country should be addressed immediately.  

Planning Activities 

In putting together a Burma development strategy, several factors should be considered. The most important of these is finding a way to utilize all potential donors. No single donor will be able to underwrite completely the major program costs that would be required to build Burma. In the short term, the international community could begin providing assistance through existing in-country organizations. Several major international NGOs and the UN (and its specialized agencies) maintain offices in Burma and would be the logical starting point to implement amplified programsurs. U.S. resources could then be concentrated in major areas where programming is underway and can reasonably be expanded as opportunities arise.  

Because of the lack of reliable socio-economic data, on-scene assessments of needs in the sectors described above will be an immediate requirement. Since 1988, donors including UN agencies, IFIs, NGOs, Burmese expatriate experts and democracy groups have undertaken some planning. However, the poor statistics now available hinder development of a clear picture of needs. In the interim, assistance programming directed toward countries that either have emerged from recent conflict or are emerging democracies can provide some useful models. 

Future U.S. direct assistance to the government might best be concentrated in programs where U.S. agencies have the most experience, especially initiatives to promote democracy, human rights, rule of law, and counter HIV/AIDS. Longer-range programs, especially broader economic reform, major educational improvements and larger infrastructure development initiatives should be planned with and assisted by the IFIs and other multilateral and sub-regional organizations, including ASEAN.  

In a future democratic Burma, modest amounts of initial funding for regenerated, new, and/or expanded U.S. programs could be requested in the form of supplemental appropriations. However, assistance levels in the regular appropriations would be a better way to support new and revitalized programs. Initial U.S. programs could be heavily weighted toward delivery of technical assistance and should not require initial funding in large amounts. U.S. leadership and expertise should serve as a catalyst for IFI and other donor support.  

Conclusion 

Successful assistance efforts already underway or completed in newly emerging democracies can be a guide to a plan for future assistance to Burma. With assistance from the international community, Burma, with its resources and potentially highly productive population, should be able to build a modern society and economy, one that could re-assume the regional leadership position it held in Southeast Asia two generations ago.

Possible Program Initiatives

The following are U.S. programs that could be implemented in each of the four key areas. 

Democracy and Media Programs

·       Public diplomacy exchanges such as Fulbright Fellowships, Humphrey Fellowships, and the IV program for Burmese professionals and academics.

·       Training programs in mass media, NGO development, government relations; Global Training for Development and Strategic Technical Assistance for Results with Training (START). Programs to assist in development of an independent media.

·       Legal training in cooperation with other donors. Support for rule of law programs similar to those in the former Soviet Union, Central Asia, and China.

·       Enhanced support to programs to support free and fair elections, improve the education process and assist with drafting a new constitution and laws consistent with international standards of justice.

·       Programs to support training for human rights NGOs, public defenders, women's groups, and other political and labor organizations.

·       Programs to help develop political parties.

·       Programs to facilitate and provide technical assistance leading toward enhanced Internet access as infrastructure improvements permit. 

·       Programs to improve controls and deter human trafficking. 

Economic and Development Programs

·       Grants for small and medium enterprises to advance private sector development and create micro-lending programs to develop credit unions, small businesses, and promote a formalized market-based economy.

·       Training and exchanges and fiscal reform initiatives. Training to introduce performance-based budgeting to government ministries.

·       Programs like the Good Governance Program (GGP) in Central Asia to bring together private business, U.S. experts, and NGOs to promote business ethics and develop organizations like Chambers of Commerce.

·       Programs to build capacity of moribund business associations, reduce the influence of the informal economy, and support women entrepreneurs.

·       Programs to advance the rights of workers and to foster the development of free, independent unions.

·       Training of government officials to enhance regulatory mechanisms, develop financial markets, and improve the private banking system.

·       Advisory and technical assistance programs designed to streamline outdated or oppressive economic policies, implement fundamental economic reforms, and develop adequate financial and economic oversight mechanisms.

·       Programs to develop and/or modernize commercial law regimes, contracts, and civil law and promote the concept of private property.

·       Agricultural reform and technical assistance programs.  

·       Programs to target environmental problems and resource concerns, especially timber, fisheries and other at risk natural resources.

·       Programs to provide exchange opportunities for agricultural specialists and farmers.

·       Activities to promote U.S. investment and trade.

·       Programs to enhance business development and marketing.

·       Initiatives to improve economic opportunities and income security for workers, protect basic worker rights, improve workplace environments and combat child labor.

·       Energy-sector-related programs to assist with modernizing electrical production and extraction of oil and gas, in conjunction with private sector initiatives.    

Security and Law Enforcement Programs

·       Programs to support enhanced law enforcement and drug control activities, including crop substitution and alternative development as needed. 

·       Programs to reform and modernize the criminal justice system.

·       Programs to analyze and develop needs assessments for Burmese law enforcement and to provide technical assistance and training for police.

·       Assist with prosecutorial procedures, develop new laws and legal methodologies to enhance criminal procedures and rule of law.

·       Permit the enrolment of Burmese students in programs at the U.S.-Thai International Law Enforcement Academy (ILEA) in Bangkok.

·       Provide human rights, civil procedures, and rights training.

·       Implement training and consultations on export controls and border security.

·       Coordinate assistance for removal of land mines.

·       Anti-terrorism programs.

·       Improve capacity to investigate and prosecute trafficking in persons crimes. 

Health, Education and Humanitarian Programs

·       Programs to combat HIV/AIDS. Programs underway in Burma would be expanded in coordination with other donors.

·       Programs to target other problems like malaria and tuberculosis.

·       Joint efforts to improve drug-demand reduction, education, and treatment programs.

·       Programs to develop and support Burmese medical programs and to enhance and re-build the health care system.

·       Programs to enhance primary health care, maternal care, and child care efforts to include professional exchanges, practitioner training, and health system improvements.

·       Educational outreach through training and exchanges including support to NGOs.

·       English-language programs.

·       Training for secondary-school educators, fellowships for university level instructors.

·       Technical assistance for the implementation of grants from the Global Fund.