Nearly a year after the military coup in Myanmar, a new political economy is emerging, even as the economy tanks and the human rights context worsens.
Close to a year after the coup, the new political economy of Myanmar under renewed military rule is starting to take shape as recent developments in the energy and telecommunication sectors indicate.
On 21 January, TotalEnergies and Chevron announced that they would exit the offshore Yadana gas field and associated Mottama gas pipeline. This came as a blow to claims by the Myanmar junta that it is in the process of normalising the economy. The announced departure of the largest Western investors from Myanmar is a highly significant move that further saps the State Administrative Council (SAC)’s legitimacy. This outcome is the result of months — if not years — of advocacy campaigns by international and Myanmar nongovernmental groups, and it has been overwhelmingly supported and welcomed by the Myanmar people.
Now the question remains as to what comes next. Under existing contractual arrangements it appears that the stakes held by the two Western firms will be taken over and shared pro rata between the other two shareholders in the project, Thailand’s PTT and the state-owned Myanmar Oil & Gas Enterprise (MOGE). This could mean that within six months, which is the timeline TotalEnergies has laid out for its exit as the operator of the field and pipeline, the two Asian firms would see an increase in equity and revenue at no cost.
If indeed PTT takes over the operation of the Yadana field and pipeline to ensure the continuous supply of gas and electricity to Thailand and Myanmar, and accordingly pays MOGE both financially and in gas similar to the current contractual arrangements, then flows of funds to the regime will not be affected by the departure of the two Western firms. Some have described the move as an actual ‘own goal’ for opponents to the junta, given that PTT and MOGE will be much less amenable to external pressure than TotalEnergies and Chevron.
Calls for Western sanctions against MOGE are thus continuing. Advocacy groups had apparently sought to pressure the US and French governments into crafting restrictive measures that would have compelled TotalEnergies and Chevron to deposit funds earned from the Yadana project into accounts where the money would have been frozen, or possibly made available to the parallel National Unity Government (NUG). TotalEnergies had announced it would support and abide by such sanctions. However, as western governments were not forthcoming with those measures, the French firm and Chevron announced they would pack up and leave.
It remains to be seen whether the United States, possibly in coordination with the European Union, will now want to adopt sanctions that would prevent PTT from paying MOGE, and what these sanctions would look like. There is reportedly pushback against this plan in various Western administrations as Thailand would surely disapprove. Bangkok is seen as an essential partner in terms of humanitarian access and delivery through the long border it shares with Myanmar and where several Ethnic Armed Organizations (EAOs) as well as People Defence Forces (PDFs) close to the NUG operate.
The latest version of the (cybersecurity) law notably criminalises access to virtual private networks (VPNs), another sign the junta is bent on creating its own ‘great digital firewall’.
Pertaining to the telecoms sector, a media article released on January 21 reported that the SAC is seeking to have a majority stake in Telenor’s business sold to a local company. The Norwegian firm is one of the biggest foreign investors in Myanmar, and had said in July last year that it was selling its operations in the country. The report said the potential buyer could be Shwe Byain Phyu, which has interests in petroleum trading and retail as well as mining. The firm reportedly has long-standing links to military business interests.
The firm would take over the Norwegian telecoms operator together with Lebanese group M1, the would-be buyer Telenor had originally put forward. This does not come as a surprise as the military surely sees the telecoms sector as a strategic one it wishes to control. If the transaction indeed proceeds as reported, the telecoms sector would see only one independent operator — Ooredoo Myanmar, which is owed by Qatar’s Ooredoo. MPT is partly state-owned, while MyTel is partly military-owned.
Relevant to the telecoms sector is a media report also on 21 January that the SAC is resuming discussions on a draft cybersecurity law it attempted to pass in February 2021 but changed course after robust pushback from several parties, including the domestic business community. It bears watching whether this time again a front will be put up that will affect the decision of the regime. The latest version of the law notably criminalises access to virtual private networks (VPNs), another sign the junta is bent on creating its own ‘great digital firewall’.
As ASEAN’s engagement of Myanmar has yet to yield fruit, calls for sanctions and isolation continue. The country’s economic and human rights context is also worsening as a a new political economy emerges. In its September 2019 report to the United Nations’ Human Rights Council on the economic interests of the Myanmar population, the Independent Fact-Finding Mission on Myanmar had written in its conclusions and recommendations that ‘[r]emoving the Tatmadaw from Myanmar’s economy will entail two parallel approaches.’
The first approach is negative, and will require ‘the economic isolation of and disengagement from Tatmadaw associated companies.’ The second approach is positive, and will involve the promotion of ‘economic ties and engagement with non-Tatmadaw companies and businesses in Myanmar’. This would help build and strengthen ‘the non-Tatmadaw sector of the economy.’ Looking ahead, it appears neither of these parallel approaches will unfold in the near term in Myanmar.
Romain Caillaud is an Associate Fellow at the ISEAS – Yusof Ishak Institute.