Harsh Burmese rule hurts business elite

RANGOON, Burma — Last month at one of Rangoon’s leading social clubs, Burma’s elite gathered for an annual Christmas Eve party.

Powerful business people dressed in crisply pressed sarongs sipped the more expensive grades of Johnny Walker blended Scotch whisky, nibbled appetizers served by obsequious waiters, and watched a private performance by one of the country’s most famous rock stars.

But even here in this rarified atmosphere, there was no escape from the increasingly harsh realities of everyday life in military-ruled Burma.

In recent months, the already-anemic Burmese economy has withered as the government increased its control over business, arbitrarily seizing assets from some investors and precipitating a run on Burmese banks, and new American sanctions have hurt some industries.

“The economy is just getting worse. Foreign companies are pulling out, and I have to switch jobs all the time to keep making money,” said one businessman at the club.

“I’ll do anything to emigrate. … Or maybe Bush will invade Burma?” he asked despairingly, downing four straight whiskeys.

Not only is an invasion unlikely, but despite tough measures by the Bush administration intended to pressure the military government in Rangoon, overall American influence here appears to be waning as well.

As the junta, known as the State Peace and Development Council (SPDC), has reasserted its grasp over the economy, so too has it strengthened its hold over Burmese politics in recent months, making its position more impregnable than at any time in decades.

The Burmese government is close to signing cease-fires with the last armed insurgents holding out against the junta.

Burmese political strategists say the SPDC has also been building tight relationships with its Asian neighbors, who are now allowing the junta to marginalize opposition leader Aung San Suu Kyi — under house arrest — and try to destroy her party.

Perhaps of most concern to U.S. officials, Burma seems to be developing close links to another rogue state, North Korea.

“The U.S. is now isolated from the political scene in Rangoon,” said an analyst based in the capital.

The junta seems to have convinced insurgents fighting the government and many Asian nations to stop pressuring Rangoon: They are abandoning Mrs. Suu Kyi while she’s under arrest, and striking their own deals with the regime, the analyst said.

“It’s incredible,” said a Western diplomat here. “The regime attacks a Nobel Prize winner, and their relations improve with this part of the world.”

Mrs. Suu Kyi’s party, the National League for Democracy (NLD), won a landslide victory in the last free election in Burma, in 1990, but its outcome was voided by the military. Since then, Mrs. Suu Kyi, who was awarded the Nobel Peace Prize in 1991, has been in and out of house arrest.

In 2002, the junta freed her, but last May thugs backed by the regime attacked her and her traveling companions, killing as many as 100 people, and the NLD leader was put under house arrest again.

Until last year, such a consolidation of power by the junta appeared unlikely. Though the hard-line government never seemed close to abandoning power, cracks had begun appearing in its dominance.

But last summer, hard-liners reasserted their dominance within the junta, pushing aside pragmatists who may have favored a transition to a civilian government. In a government reshuffle, Khin Nyunt, the leading SPDC pragmatist, was made prime minister, a role outside the main military apparatus, and thus less powerful.

The hard-liners thought they would quickly win international aid after talks with the NLD, said one Burmese political analyst. When they didn’t, they turned on Khin Nyunt and decided to finish with Mrs. Suu Kyi, locking her up, closing her party offices across Burma, and jailing many other NLD members, including the elderly deputy NLD leader, Tin Oo.

And after last year’s crackdown, the junta played its hand skillfully.

The United States responded to the attack on Mrs. Suu Kyi by banning all Burmese exports to the United States, worth roughly $350 million in 2002. But the SPDC appears to have convinced neighboring China that it can be the most important foreign player in Burma, and is using China to prop up its rule.

Last year, China gave Rangoon a $200 million loan package, wrote off many of Burma’s debts, and sold it a range of new military hardware at discounted prices, all of which soften the blow caused by the U.S. sanctions.

No Chinese officials have criticized the attack on Mrs. Suu Kyi.

“The Chinese are everywhere now,” complained one Rangoon resident, pointing to buildings in Rangoon where Chinese companies have offices. “Now it seems like there are more Chinese restaurants in Rangoon than Burmese restaurants.”

Indeed, Chinese firms, many with backing from Beijing, finance much of the construction in downtown Rangoon, which is studded with new high-rise buildings as well as with large numbers of beggars.

The military government has also effectively wooed other Asian nations that used to criticize the junta when it mistreated the NLD but are quiet now.

“The U.S. passed sanctions [last] summer, but not one other country here [in Southeast Asia] signed on,” said one analyst in Rangoon.

In Thailand, whose Prime Minister Thaksin Shinawatra’s family corporation has business interests in Burma, the government has softened its policy toward Rangoon. In recent months, Mr. Thaksin has advocated “constructive engagement” with the junta, given Burma low-interest loans worth nearly $45 million, and used the Thai army to crack down on Burmese pro-democracy groups previously based in Thailand.

Other countries have followed suit.

Worried about Chinese influence in the region, India, formerly a haven for Burmese dissidents, has also responded to SPDC entreaties. Prime Minister Atal Behari Vajpayee has begun meeting with Burmese officials, and New Delhi has offered Rangoon low-interest loans.

Other Southeast Asian nations, many of which are preoccupied with domestic issues, have said little about the SPDC’s tougher policies.

And Rangoon has gotten closer to Pyongyang. “Ties between North Korea and Burma are clearly growing,” said one Asian defense analyst.

The Far Eastern Economic Review reported last year that Burma is buying missiles from North Korea and may be obtaining North Korean assistance in building a nuclear reactor.

Meanwhile, through clandestine talks, the junta also appears to be persuading the biggest ethnic insurgency in Burma, the Karen National Union (KNU), to lay down its arms.

The KNU, until recently an ally of Mrs. Suu Kyi’s NLD, fought the central government for more than 50 years. Now, it “is thinking really seriously about what they can get [from the government in a cease-fire],” said Aung Naing Oo, an expert on the Burmese opposition who is based in Thailand.

Aung Naing Oo said the junta has assiduously wooed KNU leader Bo Mya, even quietly shipping the Karen chief packages full of his favorite fish sauces from Rangoon.

Other political strategists say the Thai government has pressed the KNU, which is based in Thailand, to sign a cease-fire.

On Dec. 23, marking the New Year on the Karen calendar, Karen elders in Rangoon said at a holiday celebration that Karen “guns would be quiet for the first time in five decades,” say people who attended the festivities.