What next for Myanmar-West relations?

In business, a strong reputation is rarely guaranteed. Goodwill matters greatly, and must be defended to ensure an organization’s continued success. The same is true for nation-states. Stature is essential in procuring trade, investment, and broader support for one’s economy. Unfortunately for Myanmar, its brand is suffering.

Almost five years after international newspapers adorned their front pages with messages of hope for Myanmar after Aung San Suu Kyi’s National League for Democracy (NLD) romped to power, the country is again heading to the polls, this time with much less fanfare.

Back in 2015, Suu Kyi was a darling of international media. The then democracy icon’s rise to the de facto leadership of Myanmar, ending decades of military rule, was expected to transform the country from a pariah state to a liberal democracy. A headline in Time celebrated the “Dawning of a New Democratic Era” in Myanmar. A UN video declared simply, “Democracy Wins.”

Ahead of elections slated for November 8, Suu Kyi’s Myanmar can now count significantly fewer friends among the international community. Activists, journalists and policymakers the world over have lost faith in her. Political and economic reforms have been thin on the ground. Her government has also been heavily criticized for turning a blind eye to atrocities committed by the military against the country’s Muslim Rohingya minority.

This has made operating in Myanmar an ESG (environmental, social and governance) minefield. The NLD’s arrival was meant to usher in a new era, integrating the country into the global economic system. But investors and diplomats have been cautious.

Foreign direct investment shot up as the party came to power, but has disappointed since. Meanwhile, the European Union has threatened to revoke preferential trading arrangements on account of the military’s operations.

The NLD has introduced reforms to liberalize Myanmar’s economy. New laws have created inroads for foreign investors to start and invest in operations in the country. More cash has also gone into marketing the Southeast Asian nation as an investment opportunity. Yet ongoing weakness in the country’s nascent business environment, including the widespread role of the military in its private sector, has held back activity.

While the international community has largely been put off, China certainly has not. It has signed deals with Myanmar to incorporate the country into its Belt and Road mega-project. It is also less troubled by the reputational challenges of operating there.

However, five years on from Suu Kyi’s victory, Myanmar’s ties with the so-called “Western world” appear to be unraveling.

The core difficulty for the international community lies in taking a tough stand against the treatment of Rohingya, and the botched peace process more broadly, and ensuring that in doing so, it does not end up reinforcing the country’s democratic backsliding. Indeed, though meant with the best intentions, sanctions, calls for embargoes, and a spotlight on the ethical issues of operating in or with the country could make influencing Myanmar’s development harder.

Even with the right mitigations, Western businesses are likely to think twice about interacting with the country. The high-profile nature of Myanmar’s ongoing civil war with ethnic minorities, the military’s belligerence, and Suu Kyi’s indifference make the reputational risks particularly high for both politicians and corporates.

Economic sanctions blocking the country to Western custom meanwhile could only tilt it toward less discerning, and more authoritarian, trading partners.

The more standoffish Western businesses and diplomats are with the country, the harder it will become to transfer best practices and support jobs growth, innovation, and liberalizing reforms. With Suu Kyi’s NLD looking likely to gain another term, the international community may need to refresh how it manages relations with Myanmar in terms of its current trajectory toward China.

That should begin with recalibrating expectations. An Asia Barometer Survey this year showed that Myanmar citizens now have among the lowest support for democracy among the Southeast Asian countries surveyed. The bulk of the population felt democracy was indecisive, was ineffective at maintaining order, and resulted in poor economic performance.

In reality any nascent democracy with Myanmar’s history of racial and ethnic division, military mismanagement, and impoverishment would have struggled to turn things around rapidly. Yet it is likely that the international community’s cart-before-the-horse celebrations in 2015, coupled with the narrative of Suu Kyi as a savior, played a role in undermining democratic values in the country through sky-high expectations.

The West must build on the notion of long-termism in Myanmar. Technical advice to support education, digital literacy, and the role of technology to build efficiency in the country’s bureaucratic government, would help provide the building blocks for democratic uplift.

Meanwhile more targeted sanctions against the military and its enterprises, rather than nationwide economic measures that threaten the income of regular citizens, would be a pragmatic approach to maintain pressure against abuses in the country.

Diplomatic criticism of the government could also go more behind close doors. This could help preserve ties with the country. It might also help quash the rising skepticism citizens have of the international community. Indeed, many see Suu Kyi as a defender of the country’s sovereignty against the West’s criticism.

International governments and Myanmar authorities could also work more closely together to help drive bilateral trade and investment. This might include supporting foreign firms not only to navigate the complex ESG risks, but also to contribute positively to the country’s socio-economic development.

Of course much will depend on the will of the Suu Kyi government, if it is re-elected, to heed any renewed Western overtures. Many have already accused her of leading government in a highly rigid and centralized manner.

Nonetheless, if the West does seek to help shape the future of Myanmar, it will need to ensure it has a seat at the table. And that may require it to walk a diplomatic tightrope between calling out the country’s ills, while simultaneously offering a helping hand.

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Source : Asia Times

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