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The BurmaNet News: December 31, 199



Subject: The BurmaNet News: December 31, 1998

------------------------ BurmaNet ------------------------
 "Appropriate Information Technologies, Practical Strategies"
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The BurmaNet News: December 31, 1998
Issue #1170

HEADLINES:
==========
WSJ: ISOLATED MYANMAR GETS A DOSE OF ASIAN TURMOIL 
BKK POST: INVESTORS TURN HEEL FOR HOME 
BKK POST: TIES WITH BURMA JUNTA "NECESSARY" 
SPDC: A BLUNT AND INEFFECTIVE FOREIGN POLICY WEAPON 
SCMP: JUNTA MIFFED BY US DATA ON OPIUM OUTPUT 
AP: BRIG. GEN. TIN OO DEAD AT 71 
THE NATION: ABUSES ON BURMESE REFUGEES UNCONSCIONABLE
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WALL STREET JOURNAL: ISOLATED MYANMAR GETS A DOSE OF ASIAN TURMOIL
28 December, 1998 by Barry Wain 

YANGON, Myanmar -- When Myanmar, formerly known as Burma, joined the
Association of Southeast Asian Nations in 1997, it expected an influx of
foreign investors and tourists. Instead, it got a dose of the economic
turmoil that has devastated much of the rest of Asia.

While the country's backwardness insulates it against the worst of the
contagion, it still has been hit hard. Growth has slowed, the nation's
currency, the kyat, has collapsed and foreign investment has plummeted.

Power cuts have reduced factory output, gasoline rationing has been
reintroduced, and the cost of living has soared. Foreign-exchange reserves
remain critically low, despite extreme measures to conserve them.

The economy is in a "poor state," according to an Australian Embassy
report. Meanwhile, Stuart P. Larkin, an independent analyst based in Yangon
-- formerly Rangoon -- is pessimistic about the medium-term outlook,
predicting higher inflation and unemployment and a further decline in the
kyat.

"The regional economic crisis will continue to affect the economy for
another one to two years," he says.

Myanmar has been shunned by much of the international community since the
military suppressed a democracy movement and seized power in 1988. The West
and Japan stopped most aid in 1990, after Aung San Suu Kyi's National
League for Democracy, which swept the general election, wasn't allowed to
take office.

Ms. Aung San Suu Kyi, a Nobel Peace laureate with an influential following
abroad, opposes economic and commercial engagement with Myanmar. The
country relies heavily on China for aid and arms.

Yangon can't obtain funds from international lending agencies to rebuild
its dilapidated infrastructure. The U.S. last year banned all fresh
investment, and it continues to block assistance by the International
Monetary Fund, the World Bank and the Asian Development Bank.

The ruling State Law and Order Restoration Council dissolved itself in
November 1997, sacked 14 ministers while retaining the four top leaders and
started investigating some of the ousted officers and senior bureaucrats
for corruption. The replacement State Peace and Development Council, or
SPDC, announced a renewed focus on economic development.

But the SPDC hasn't been able to persuade most countries that it intends to
restore democracy and hasn't made much headway in Myanmar's transformation
from central planning to a market-oriented economy. While the regime began
the transition 10 years ago, critics say its approach is half-hearted and
piecemeal.

The government continues to control the currency and to dominate the
nonfarm economy, operating companies that account for about 25% of gross
domestic product. Despite tax and other privileges, state-owned enterprises
generally are inefficient and their collective losses shave an estimated
two percentage points off economic growth.

Only a few of the 69 state enterprises scheduled for privatization in 1995
have changed hands, largely because private capital is scarce and some
ministers have maneuvered to retain control.

Statistics in Myanmar are notoriously unreliable, not least because the
parallel, or black, economy is estimated to be as large as the recorded
one. While that causes headaches for economists, it enables many people to
survive through undeclared border trade, the smuggling of jade and other
precious stones and timber, barter and drug trafficking.

The government's decision to abandon socialism initially sparked frantic
building in Yangon and the appearance of consumer goods and cars. But
critics say it brought little lasting benefit to the majority of people.
The IMF says real incomes for the year to March 31, 1996, were no higher
than they were a decade earlier. The government couldn't afford its
ambitious infrastructure-spending spree, so it printed money to plug the
holes in the budget, fueling inflation.

The absence of stock and capital markets in Myanmar and the lack of free
convertibility of its currency has shielded the country from the full
impact of the regional meltdown. But officials say foreign direct
investment fell more than 53% to $771 million in the past fiscal year from
a year earlier because of the dislocation.

The government still contends economic output grew 6% last year and should
hit 6.5% this year, but the IMF reckons it expanded only 4% last year and
will slow to a "grim" 2.5% in the medium term, unless there is "a
significant policy overhaul."
 
****************************************************************

THE BANGKOK POST: INVESTORS TURN HEEL FOR HOME
30 December, 1998 by Nussara Saetsawang 

It was seen as a last business frontier, but along frontiers all too often
danger lurks-in Burma's case the snowballing economic crisis. 

The plummeting Burmese economy has shaken the confidence of Thai investors
and they are packing their bags and leaving, or at least freezing, projects
in a country they once saw as Southeast Asia's new business frontier. 

Loxley, after supplying telecoms equipment to Burma for five years, has
decided to call it quits next year after losing faith in the economy,
according to a senior officer. 

'We have to leave the country," said the officer, who requested anonymity. 

Before Loxley reached its decision, several other Thai firms, engaging in
activities as varied as port and road construction to cement production,
had already abandoned or put on hold multi-billion-baht projects in the
country 

But the hardest hit has been the banking sector. Rangoon once could boast
having the representative offices of six Thai banks, but now there is only
Krung Thai Bank. 

Part of the Thai withdrawal stems from the insolvency of parent companies
at home after the battering of the 17-month-old financial crisis and its
devastating effect on the corporate and banking sectors. But there is no
doubt that the poor state of the Burmese economy, which has been further
weakened by the domino effect of the regional crisis, is making matters
worse. 

Loxley, for example, which also runs a trading business in Burma, is
uncertain about the ability of the Rangoon government to repay its debts
because of a shortage of hard currency, said the officer. 

The Burmese economy has depended largely on foreign direct investment since
the country adopted a market-oriented policy in the early 1990s.
Investments from member states of the Association of Southeast Asian
Nations, led by Thailand, Malaysia and Singapore, top the chart, together
accounting for more than 50 percent of all foreign direct investment in
Burma. 

Unlike their Asean counterparts, Western firms were discouraged from
investing by their governments and public opinion at home over the military
regime's failure to respect human rights and democracy. 

Similar to Thai companies, many investors from Malaysia and Singapore,
which too have been hard hit by the regional crisis and Burma's own
economic problems, also are on their way out. 

"Burma is now at the crisis stage. [This is because] Asean investors have
withdrawn or delayed their investment," said one Thai commerce ministry
official. 

Burma and Laos were admitted to Asean last year, joining Brunei, Indonesia,
Malaysia, the Philippines, Singapore, Thailand and Vietnam. 

In addition to the decline in investment, Burma is suffering trade
problems. Its heavy reliance on the import of capital goods such as
machinery and equipment, and its reduced earnings from the export of
primary products, means Burma has notched up huge trade deficits in recent
years. 

According to the Economist Intelligence Unit, the deficits rose steadily
from $570 million (20.5 billion baht) three years ago to $1.02 billion
(36.7 billion baht) in 1996 and S$1.19 billion (42.8 billion baht) last year. 

The ruling State Peace and Development Council hoped sales of gas to the
Petroleum Authority of Thailand under the Yadana natural gas project -
eventually expected to produce annual incomes of $180 million-$200 million
(6.5 billion-7.2 billion baht) would correct the imbalance. 

But this opportunity is diminishing due to the delay in gas delivery while
the PTT tries to negotiate with developers for a relaxation of
late-acceptance penalties while work on the power plant in Ratchaburi is
still to be completed. 

The Yadana development consortium, led by Total of France, is to develop
525 million cubic feet a day from a gas field located about 240 km south
off the Burmese coast in the Gulf of Martaban. The PTT has yet to pay for
an estimated five million cubic feet of gas it has received since July. 

Despite the grim outlook, the [Thai] Export-Import Bank remains confident
in Burma's business future and is willing to finance independent projects
there. 

Burma will regain its economic momentum because its human resources and
legal system are more developed than those of some other neighbouring
countries, according to Nampung Wongsmith, the first vice-president of the
state-owned bank's export credit insurance and foreign investment department. 


"If Burma gains, we also gain," she said. "This will also improve relations
between the two countries." 

While acknowledging that the two-tiered foreign exchange regime posed
setbacks, Ms Nampung said the bank preferred investment projects that would
generate hard currency. 

The official exchange rate in Burma is six kyat a dollar, but the market
rate, which is commonly used for daily businesses, is about 360 kyats. 

One negative repercussion of the current drop-off in Thai investments in
Burma could be the hampering of Thailand's attempt to use economics as a
leverage in its relations with Burma. 

Foreign policy makers in Bangkok subscribe to the idea that economic
interests can facilitate political cooperation and can eventually but
gradually bring about political change in Burma. They played a part in
convincing Thai investors to go to the country. 

One analyst said the decline in Thai investments and the delay in the gas
purchase could upset hardliners in the ruling junta, who may not see any
use in respecting mutual economic interests that no longer exist. They
could eventually turn aggressive towards Thailand on sensitive matters. 

This could lead to a renewal of conflicts previously kept at bay, including
border disputes, drugs and other security issues, he warned. 

"When the ebb-tide comes, the stump emerges," he said, referring to a Thai
proverb which means wrong doings emerge when the truth is revealed. "The
Thai government cannot ignore these sensitive problems." 

Ill-defined demarcation of the 2,400-km-long Thai-Burma border has long
caused suffering for Thailand in terms of casualties, raids and influxes of
refugees, now numbering about 100,000 on Thai soil, when the Burmese army
launches offensives against minorities. 

But Chaiyachoke Chulasidwongse, a Burma expert with Chulalongkorn
University, doubts whether the shrinking of the Thai economic presence in
Burma will prompt Rangoon to resurrect long-standing political problems. 

Thai bargaining power is unlikely to be affected by the crisis, he said,
because Burma has few alternative partners and recognises its long-term
economic interdependence with Thailand.
 
****************************************************************

THE BANGKOK POST: TIES WITH BURMA JUNTA "NECESSARY"
31 December, 1998

General Surayud Chulanont says it is still necessary to build up personal
relationships with the Burmese military junta. 

The army commander-in-chief, who is due to visit Rangoon in February, said
yesterday he knew Lt-Gen Khin Nyunt, the intelligence chief and
secretary-general of State Peace and Development Council, personally. 

He added he had once met Gen Than Shwe, chairman of the council, during the
latter's visit to the Lop Buri special force centre which he commanded.
 
****************************************************************

SPDC US EMBASSY: A BLUNT AND INEFFECTIVE FOREIGN POLICY WEAPON
29 December 1998 from <okkar66129@xxxxxxx> 

[Information Sheets issued under the email addresses MYANPERSP@xxxxxxx and
OKKAR66129@xxxxxxx match those issued by the Directorate of Defence
Services Intelligence (DDSI) in Rangoon, and can be assumed to reflect
official SPDC opinion.]

EMBASSY OF THE UNION OF MYANMAR WASHINGTON, DC 

PRESS RELEASE 18/98

Sanctions: A Blunt and Ineffective Foreign Policy Weapon 

The past year was a tumultuous one for the world. From the Asian financial
crisis to the death and destruction visited upon nations due to natural
disasters as well as wars of attrition, it is clear that these are not
normal times. The situation is compounded by the fact that the foreign
policy of big and powerful countries are held hostage to internal politics. 

In recent years as single-issue constituencies, notably those claiming to
promote human rights, environmentalism, ethnic or religious causes have
gained influence in local politics, sanctions have become a policy tool of
choice. Some countries employ them to suit their needs. In the US even
state and local governments have began to dabble in the politics of
boycotts. Several local entities have been persuaded to believe that
adopting "selective purchasing laws" that prohibit public agencies from
purchasing goods and services from companies doing business with Myanmar
would promote human rights. 

The ensuing debate on sanctions however has made it clear that state and
local enactment in the US restricting business ties with Myanmar is pure
madness. It has been pointed out that it is not only unconstitutional but
also immoral. Not surprisingly, in Boston last month, chief US District
Court Judge Joseph Tauro struck down the Massachusetts law barring trade
with Myanmar because it was not in keeping with the constitution. 

Article VI of the constitution provides that the laws and treaties of the
US are "the supreme law of the land" and prevail over, or preempt, state
and local enactment. In passing judgment the Judge noted "the Massachusetts
law was designed with the purpose of changing Burma's domestic policy. This
is an unconstitutional infringement on the foreign affairs powers of the
federal government." The National Foreign Trade Council and several US
businesses who are better informed and have more expertise in foreign
affairs have advocated a more pragmatic approach. They urge constructive
engagement in which increased economic cooperation between the two nations
would bring mutual benefits on a broad range of issues. 

The growing use of economic sanctions to promote foreign policy objectives
is deplorable not only because it is unconstitutional but because it does
more harm than good. Sanctions have always fallen short of their stated
purposes. Unilateral sanctions are clearly ineffective. Despite sanctions,
countries like Iran, Cuba, Libya, Iraq and Myanmar remain strong and
resilient. The reason is not hard to fathom. Today we live in a global
village and in a global economy unilateral sanctions are blunt weapons at
best. Any slack created by the withdrawal of US companies is taken up by
competitors. Unilateral sanctions invariably impose greater costs for US
companies than on the target countries. Where it hurts is that sanctions,
more often than not, produce undesirable results. For example those
severely affected by the US sanctions in Iraq are the infants and the
elderly, not least the sick and the infirm among them. 

In the case of Myanmar sanctions are ill-advised. All that they have
accomplished is to take away jobs from workers employed in the garment and
tourist-related industries. The people of Myanmar have lived under self-
imposed isolation for 26 years and are conditioned to severe shortages of
consumer goods and other luxury items. They understand the hardship
boycotts entail and fully appreciate what the government has done in the
past decade to strengthen the fabric of the nation, to open up the economy
and to ensure an orderly transformation to a democracy. Now that peace
reigns in the country they are looking forward to a more prosperous future
in an open-market economy. They have begun turning faltering steps into
firm strides and resent those who put obstacles in their way. In the
circumstance, the people are wary of the antics of Aung San Suu Kyi and her
supporters in the West who call for sanctions and attempt to rock the boat.
As a result she is anathema to Myanmar. So much so that her own supporters
are quitting the party in droves and the remaining members no longer dare
to strut about in their uniforms as they once did. 

Now that sanctions against Myanmar have proven to be ineffective the idea
of offering carrots in the form of a UN-World Bank assistance is being
floated. According to the plan US $ 1 billion would be forthcoming if the
government agreed to a dialogue with Aung San Suu Kyi. It is obvious that
those making the proposal are aware of neither the role of the
international organizations in promoting sustainable development nor the
principles on which the Myanmar government stands. Myanmar will neither
succumb to the lure of carrots nor be cowered by the threat of sticks. 

However, as a member of the UN since 1948 and the World Bank since the
early 1950s, Myanmar has always appreciated the ideal of multilateralism
and the objectivity with which both organizations bring to their work.
Myanmar hopes that obstacles can be overcome and cooperation to improve the
lives of the peoples of Myanmar can be resumed.

****************************************************************

SOUTH CHINA MORNING POST: JUNTA MIFFED BY US DATA ON OPIUM OUTPUT
30 December, 1998 by William Barnes 

Could Afghanistan - not Burma - after all be the real mother lode of the
global heroin trade? 

That is what the junta in Rangoon is claiming, accusing the US Government
of grossly overestimating opium production in Burma. 

The claim is hardly surprising for a dictatorial Government that also has
the chutzpah to reckon it is working towards a multi-party democracy. 

But some Western narcotics officials admit the US figures are controversial. 

"There has been a long debate. There has been a suspicion that the American
figures for Myanmar [Burma] are overestimates and the figures for
Afghanistan underestimates," an expert on the region said. 

The regime, in its first stab at a comprehensive survey for a decade,
calculates that poppy planting covers 64,000 hectares. This is about the
same figure as in 1988. 

The Americans use satellite photography and say the area of poppy
cultivation is more than 2.5 times that. 

The Burmese authorities also deny the US claim that opium production
doubled in 1989, the year after the junta was formed, extending military
rule since 1962. 

"Production may be up but it can't double," Colonel Kyaw Thein, a narcotics
spokesman, told the Asian Wall Street Journal. 

Critics of the regime claim that heroin output in the troubled Shan state
has exploded because the army has made "don't ask, don't tell" ceasefire
deals with the major drug trafficking groups. 

There is evidence that Burma's economy has been propped up by laundered
narcotics profits and army personnel have taken bribes. 

But if the regime can throw doubt on the higher US figure, it will make its
relatively puny drug seizures look brighter and undermine Western claims
that it is conniving with drug barons. 

American officials stand by their production figures. They say that several
times in recent years US narcotics agents have run joint inspections of the
Shan state with the Burmese. 

One observer said the US estimates were "elaborate, but still a desk job.
Ultimately, we really don't know". 

The solution, he said, was for the satellite survey to be backed up by
thorough ground research. 

The United Nations Drug Control Programme is making a start by attempting
to survey areas around its pilot schemes for poppy crop substitution. 

Bad weather will show in the upcoming US State Department world drug survey
to have brought opium production down to about 1,700 tonnes, after hitting
2,500 tonnes in 1996. 

Afghanistan produced 1,230 tonnes in 1996, according to the US report.
Poppies covered 38,000 hectares that year, compared with Burma's 163,000. 

But the yield per hectare is up to 10 times higher in Afghanistan than in
the Shan state thanks to better irrigation, fertiliser use and, perhaps,
more skilled producers.

****************************************************************

ASSOCIATED PRESS: BRIG. GEN. TIN OO DEAD AT 71
30 December, 1998 

YANGON, Myanmar (AP) -- Brig. Gen. Tin Oo, who was once general secretary
of Myanmar's ruling party, died of a heart attack at his home today, family
members said. He was 71. 

Tin Oo was removed from office in 1983 and sentenced to life imprisonment
for misuse of state funds and property, but was released after six years. 

Tin Oo was a powerful figure in military intelligence under the rule of
Gen. Ne Win, who overthrew a civilian government in 1962 and imposed
one-party military rule over the country, also known as Burma. 

The Burma Socialist Program Party impoverished what had once been the
richest country in Southeast Asia. 

In 1988, the people staged a revolt against military rule that was bloodily
suppressed. 

Ne Win and his party then stepped aside in favor of a younger generation of
officers who introduced a more market-oriented economy while keeping a firm
lid on dissent. 

Tin Oo spent his retirement devoted to religion and meditation. He is
survived by his wife and three grown children.

****************************************************************

THE NATION: ABUSES ON BURMESE REFUGEES IN THAILAND UNCONSCIONABLE
30 December,1998 

Letter to the Editor

I, too, am writing to express my concern over the protracted silence of the
United Nations High Commission for Refugees in Bangkok in the face of
ongoing abuse of Burmese refugees by the Thai Government, Army and police
force, and in particular the recent abuse of 27 refugees by Thai police and
immigration authorities. UNHCR in Bosnia or in parts of Africa have no
difficulty finding a public voice to express their concerns over the
mistreatment of refugees. However, here in Bangkok we can only gather from
the protracted silence that Emilio Bonifacio has her own agenda, and
refugee recognition and protection are obviously not a part of it. It's not
as if it hasn't been pointed out to UNHCR that there are gross shortcomings
in the area of refugee protection on its part and that of the Thai
government. Non-government organisations attempting to assist the Burmese
refugees in Thailand have time and again expressed their dismay privately
to UNHCR in Bangkok over the issue of a lack of recognition and protection
for these refugees. 

This year concerns went public in the publications of a number of Global
NGOs working with the refugees. In fact, the issue of a lack of protection
and recognition for Burmese refugees in Thailand has become so pressing
that Human Rights Watch, a highly respected monitor of human rights abuses,
felt called upon to write a lengthy report entitled Unwanted and
Unprotected: Burmese Refugees in Thailand. 

That report documents a long standing policy of large scale forced
repatriation of Burmese refugees by Thailand as a part of economic
cooperation between Thailand and the Burmese dictatorship The report cites
the Thai Ninth Army Division as the primary offender, and goes on to say
that the appalling treatment of refugees in this region [south of Three
Pagoda Pass] appears to be linked to the construction of the Unocal-Total
gas pipeline. 

The silence of UNHCR in Bangkok in the face of overwhelming evidence of
refugee repression and refoulement is shameful. It is obvious that UNHCR is
unable to recognise or protect the refugees from Burma - or they are simply
unwilling to do so. In either case, it is time for a change of personnel
and of policy. Since UNHCR in Bangkok has decided not to address the
concerns, it is time that people make them known to the High Commissioner,
Sadeko Ogata, in Geneva. The message needs to be simple and clear: "In the
face of mounting concern over the lack of recognition and protection of
Burmese refugees in Thailand, there needs to be a change of personnel and
policy at the Bangkok level." 

As for the Thai Government, it is time to let it know unmistakably that
efforts to profit economically by abusing refugees is unconscionable. Since
it appears that forced labour, forced relocation of people, and now forced
repatriation of refugees are strongly linked with the gas pipeline project,
there needs to be consideration of a voluntary international boycott of
Thai products if Thailand takes delivery of the gas. To fuel its industry
while handing the Burmese military dictators US$400 million a year to buy
yet more weaponry to use against villagers, is no more acceptable practice
than investment in Burma by corporations which are now under boycott in a
number of US cities. 

An overlooked refugee from Burma

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