Burma's Resource Curse

ERI recently traveled to the Central European University in Budapest, Hungary for two courses related to the “curse of natural resources,” attended by scholars and practitioners. The courses - Governance of Natural Resource Revenue and Integrity Reform and Corruption Control – included intimate discourses with leading experts such as Paul Collier and Janek Radon. From this experience, ERI’s Burma Project intends to develop grassroots trainings on the curse of natural resources and the governance of natural resource revenue, in order to increase the capacity and awareness on the complexities of making a resource curse a resource blessing in a future and free Burma.

For years scholars, activists, and world leaders have grappled with the problems associated with a defining catchphrase of the last decade of development: the curse of natural resources.  The concept comes out of a wide body of academic research that suggests a causal link between an abundance of natural resources and any number of poor development outcomes, such as poverty, poor economic growth, authoritarian rule, and civil war. In many ways, countries that are rich in natural resources simply do worse. That is, people in resource rich countries tend to suffer more.

Burma is one of these countries. Natural resource abundance not only helps prop up authoritarian rule, it also leads to large-scale oil, gas, and mineral extraction projects with “project-level” earth rights abuses, such as forced labor, land confiscation, displacement, and environmental degradation. These project-level earth rights abuses are also correlated with the systematic denial of civil and political rights, which prevents the people from taking a stake in their social, political, and environmental fate: this is Burma’s resource curse. (Also see Capitalizing on Conflict, Another Yadana, Total Denial and Total Denial Continues.)

In 1988, Burma transitioned from the unsuccessful “Burmese Way to Socialism” to an unsuccessful open market economy, which is also controlled by the military. Three months after the crackdown on the nationwide pro-democracy uprising, the junta passed Law #10/88, which opened Burma’s economy to foreign investment in order to promote the “development of [the] national economy.” This policy enables the SPDC to control the flow of FDI coming into Burma, and shareholding capacity has been reserved for the military and their families.

Natural resources dominate the macro-economy of military-ruled Burma. As of March 2006, foreign direct investment (FDI) in the oil and gas sector reached US$2.635 billion, or roughly 35 percent of all FDI. Most investment comes from Burma’s neighbors - Thailand, India, and China - all keen to exploit the country’s natural heritage to serve their energy markets and expand their growing economies.

Natural gas is the military’s largest export earner and the country is estimated to have Southeast Asia’s largest natural gas reserve. In 2006, sales of natural gas to Thailand alone accounted for US$2.16 billion, which represents a 50% increase from the previous year due to the rising gas and oil prices, though not an increase in export volumes.1 The junta is currently developing the Shwe natural gas project in western Burma with Daewoo International (South Korea), the Korea Gas Corporation (South Korea), Oil and Natural Gas Corporation Videsh (India), and the Gas Authority of India (India). The gas in this project alone has an estimated worth between US$37-52 billion.

But where does this money go? There is a complete lack of fiscal transparency in Burma, and any serious campaign of inquiry by a citizen of Burma would likely be defeated with violence or imprisonment. Some estimates suggest that the junta spends approximately 40% of its budget on military expenditures, but there is in reality no reliable data on exact expenditures or on revenue flows in Burma. Aside from the revenue that very likely lands in the private bank accounts of the ruling elite, we infer that military expenditures are relatively high from the size of the military - double that of Thailand, four times the size of Britain’s - and the UNDP’s documentation of the junta’s comparatively low expenditures on social services and welfare, which in 2006 ranked the country last in the world in terns of public health expenditures. According Sean Turnell, a Macquarie University economist, “however it’s measured, Burma’s defense spending will likely always be grossly understated."2

The curse of natural resources was popularized by one of the world’s leading economists, Jeffrey Sachs, when he and his colleague Andrew Warner determined that resource rich countries tend to develop more slowly in terms of GDP per capita.3 Since then, economic explanations for the curse abound, suggesting it works narrowly through economic channels. Other correlations and possibly causal relationships have been explored - between an abundance of natural resources and gender inequality, the likelihood of civil war, corruption, and others. It is now widely agreed that the curse of natural resources occurs through problems of governance,4 something the people of Burma have been aware of since the military assumed power in 1962. What gradually followed that shift in power in 1962 was a complicated and tragic decline in all development indicators and widespread violations of basic human rights. After 1988, an increase in large-scale resource extraction brought an increase in abuses connected to a plethora of new development, including natural gas, dam, and mining projects, mostly in ethnic areas. Human rights abuses have generally increased in Burma.5 To date, there are no signs of improvement.

Understanding the complexities of these problems, EarthRights International implements a three-pronged mandate that focuses on the law – holding corporations accountable for complicity in earth rights abuses – training – building the capacity of students, activists, and organizations at the grassroots level through training -  and campaigning – conducting regional and international advocacy campaigns with directly affected people to raise awareness and ultimately protect the earth rights of the people of Burma.

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ERI would like to thank Revenue Watch, TIRI, and the Central European University
for their generous support in the monthy of July.

 


1. Associated Press, “Myanmar Gas Company Accounted for 43 Percent of Country’s Exports Last Year” 04 June 2006.

2. In David Fulbrook, Asia Sentinel “Burma’s Generals On a Buying Spree” 18 December 2006.

3. Jeffrey Sachs and A. Warner (1997) “Natural Resource Abundance and Economic Growth” (Harvard University, Harvard Institute for International Development: Cambridge, MA); Jeffrey Sachs and A. Warner (2001) “Natural Resources and Economic Development: The Curse of Natural Resources,” European Economic Review, 45 p.827-838.

4. See Paul Collier (2007), The Bottom Billion (Oxford University Press: Oxford); see also Rosser, Andrew (2006) “Escaping the Resource Curse” New Political Economy, Vol. 11, No. 4, December 2006.

5. For documentation of abuses in Burma see for examples among many, EarthRights International (www.earthrights.org) Free Burma Rangers(www.fbr.org), Human Rights Watch (www.hrw.org 2002-2007), Amnesty International (www.amnesty.org 1997, 2000, 2002, 2003), The Karen Human Rights Group (www.khrg.org), Shan Women’s Action Network (www.shanwomen.org), the Shwe Gas Movement (www.shwe.org), the Salween Watch Coalition (www.salweenwatch.org), Chin Human Rights Organization (www.chro.org), Kachin Development Network Group (KDNG; 2007), and for resources, The Online Burma Library (www.burmalibrary.org). 1996-2007), The Free Burma Rangers (www.fbr.org), Human Rights Watch (www.hrw.org 2002-2007), Amnesty International (www.amnesty.org 1997, 2000, 2002, 2003), The Karen Human Rights Group (www.khrg.org), Shan Women’s Action Network (www.shanwomen.org), the Shwe Gas Movement (www.shwe.org), the Salween Watch Coalition (www.salweenwatch.org), Chin Human Rights Organization (www.chro.org), Kachin Development Network Group (KDNG; 2007), and for resources, The Online Burma Library (www.burmalibrary.org).