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Stalled hope? The resource conflict risk to Myanmar’s political and economic transition

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In 2011, Myanmar’s President Thein Sein’s quasi-civilian government initiated one of the most ambitious economic and political transformation campaigns of the last 50 years.

Gone are the days of international isolation. Sein has painted a vision of Myanmar shedding its pariah status and swiftly transitioning from one of the region’s least developed countries to a dynamic, emerging Asian Tiger. This is a challenging task after almost five decades of autocratic military rule, severe impoverishment and destructive armed ethnic conflict.

The reformist agenda has the potential to steer Myanmar away from historic insecurity and economic stagnation. With sanctions either removed or eased, new comprehensive aid packages signed, diplomatic relations rebooted and new bilateral defence ties on the table, a space has opened for Myanmar to build rule of law, initiate civil and political rights reform and develop a more inclusive and equitable economic growth trajectory.  

These rags to riches aspirations give great hope after false starts in breaking from military dictatorship. But they also conceal complex, multidimensional political and economic challenges. Leveraging significant endowments of natural resources to achieve sustainable security, lasting political settlements with ethnic states and economic growth that supports human development will be difficult.

This briefing paper assesses the trajectory and significance of resource conflict risks and threat multipliers in Myanmar. The principal findings include:

  1. Despite poor institutional settings, increased foreign direct investment is unlikely in of itself to increase local or regional resource conflict. Investment industry, type of local business partners, ability to secure social licence, and specific project footprints will all shape the contribution of FDI to resource conflict.
  2. Select armed ethnic group’s demands for a federal political system are highly likely to intensify in absence of public finance reform, more transparent resource revenue management and greater fiscal devolution to states hosting projects. This is likely to result in the fracturing of some ceasefire agreements, increased ethno-religious communal violence, localised project sabotage and magnified security risks for business investments.
  3. Increasing military securitisation of key energy infrastructure assets, such as pipelines and hydrodams, is highly likely. They are the lifeblood of Myanmar’s fragile economy and will continue to be strategic targets if project revenues are allocated solely to the military and military-affiliated businesses.
  4. Armed ethnic groups, particularly in Kachin and Shan states, are likely to attempt expelling the Tatmadaw (Myanmar armed forces) from these positions or engage in project sabotage in response to land seizures, human rights abuses, environmental degradation and arbitrary arrests.
  5. The number of internally displaced persons is unlikely to decrease in the next 12 months, and those trying to return home are likely to experience continued dislocation from land as a result of opportunistic land grabs.
  6. Protests over land grabs and particular infrastructure projects are likely to escalate if parliament does not act on the recommendations of the Farm Land Commission.
  7. Conflation of localised, isolated or project-based resource conflicts within broader ethno-religious confrontations and communal violence is could possibly be a threat multiplier and expand the geographic scope of conflict.
  8. Armed ethnic groups or nationalist forces could possibly exploit local conflicts and marshal existing tensions around religion, nationalism, development disparity and ethno-political competition to attempt nationalising conflict as a strategy to leverage greater political power. However, the ruling Union Solidarity and Development Party (USDP) and elements of the military could possibly attempt to mitigate this risk through a divide and conquer strategy to reduce any existing semblance of ethnic group solidarity.

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