Donors Must Coordinate Plans Now to Ensure Burma’s Survival Later

It is impossible to predict with any precision how Burma’s violent political upheaval will be resolved. What is certain is that Burma will need major assistance from the international community if the country is to regain a measure of stability.

Once the richest country in Southeast Asia, Burma has been on the United Nations’ list of least-developed countries since last December. The decline was decades in the making.

There were great economic expectations on Burma’s independence from Britain in 1948, but inefficiencies, corruption, political bickering and insurrections sapped the state’s strength. Shortly after the military coup of 1962, Burma’s economy sank after a frenzy of nationalization as intense as ever seen in a non-communist state. At the same time, Burma, always neutralist, turned isolationist, attempting to cut its people off from the outside world. The result was economic chaos.

The government recognized the need for economic reforms in the early 1970s. Efforts were made and foreign support was once again provided, but the changes were only ephemerally ameliorative. They did not change or challenge the Burmese “way to socialism,” nor did they separate the political structure--a single-party state on an Eastern Bloc model--from economic needs. Politics dictated economic policies, with disastrous results.

Now Burma is bankrupt. Bereft of foreign exchange, its debt-service ratio is between 77% and 90%, its industrial production is minuscule, its official exchange rate is one-seventh the black-market rate. The state requires smuggling to provide for its populace. Once a world leader in rice exports, Burma has been suffering shortages, extraordinarily high prices and rice riots. Inflation is extensive.

The present political crisis has roots as deep in a troubled economy as in an anachronistic political structure.

Whatever government emerges from the maelstrom of demonstrations and killings that has engulfed urban Burma must institute the liberalization of the present system into a more economically rational one that will draw on the full resources of the state. It will also require considerable foreign assistance. Even the Burma Socialist Program Party has recognized this need for change. All opposition groups also have called for such changes.

Palliatives will no longer work. Civil servants exist on salary levels that were marginally adequate in the 1950s; today they are ludicrous. Everyone is involved in the black market or with smuggled goods, just to survive. In 1971 unemployment was a serious problem as the public sector could not expand and the private sector was not encouraged. The situation is worse today, and economic frustrations combine with political ones to encourage urban violence.

The exchange rate must be adjusted, public-sector agencies must be justified on economic grounds and restructured, the private sector encouraged, foreign investment sought, imports increased, exports fostered, and smuggling and corruption controlled.

Such measures would result in short-term inflation and economic dislocation that can be met only through foreign assistance, which will have to be increased substantially. Japan and West Germany, the two major bilateral donors, and the World Bank and the Asian Development Bank, as well as small donors like the United States, all have important potential roles.

If, however, donors wait for the dust to settle, it may be too late. There will be a critical, but brief, period during which economic help must be provided at a level effective in stopping inflation and improving the economy in the short term if Burma is to survive.To await a new government and its requests for assistance, and then to allow each donorto go its uncoordinated way to choose projects from a priority list, will not do justice to Burma and its internal needs or to the donors and their international roles and obligations.

It is important to start now in the midst of this ferment to bring donors together informally to discuss priorities and a coordinated effort in support of economic, political and social progress. Such discussions need not be binding on any party, and may be done at the working level.

The lessons from the Philippines’ experience are instructive. It took about a year after the Aquino government came to office for the donors to decide priorities and to negotiate levels and types of assistance. There were problems in the Philippines in deciding how the money would be distributed, and they are likely to be much worse in Burma, but careful planning among the donors, drawing on the wealth of economic talent among emigre Burmese economists and scholars, would lessen the problems of absorption and timing.

No support should be provided until the international community is assured that the Burmese have set their political house in order and expressed real concern in dealing with economic problems. As a small donor, the United States has a role not necessarily in huge volumes of aid but in support of the process of positive change and in specialized fields like technical training. U.S. interests in the region--in Thailand, in a prosperous and stable Burma and in the Burmese anti-narcotics program--warrant such action.

Burma’s economic turnaround will not be easy. There are deep suspicions of the roles of foreigners--both those in Burma, like the Indians and Chinese, and those abroad. The Burmese have not liked outsiders watching their economic performance and advising on policies. Yet many in Burma know that the needs are so great, and the opportunity may be so fleeting, that these fears must be put aside. It does mean, however, that assistance and advice must be proffered with discretion, sensitivity and deftness.