Burma

The State of Myanmar

David I. Steinberg

• Publisher: Georgetown University Press
• Year: 2001
• Print ISBN: 9780878408931, 9780878408429
• eBook ISBN: 9781589012851
• Topic: Politics & International Relations
• Subtopic: International Relations
• Index: Politics & International Relations

Long isolated by rigid military rule, Burma, or Myanmar, is one of the least known, significantly sized states in the world. Possessed of a rich cultural history yet facing a range of challenges to stability and growth, it has struck the imaginations of those concerned not only with geopolitical or trade affairs but also with poverty, health, and human rights. David I. Steinberg sheds new light on this reclusive state by exploring issues of authority and legitimacy in its politics, economics, social structure, and culture since the popular uprising and military coup of 1988.

Exploring the origins of that year’s tumultuous events, Steinberg analyzes a generation of preceding military governments and their attempts to address the nation’s problems. He focuses on the role of the military, the effects of Burma’s geopolitical placement, the plight of the poor, the destruction of civil society, and rising ethnic tensions. While taking into account the importance of foreign observers as counterpoints to official views, suppliers of economic aid, and advocates of reform, Steinberg contends that ultimately, the solutions to Myanmar’s varied problems lie with the Burmese themselves and the policies of their government.

The paperback edition includes a postcript that reveals the most current and critical issues facing Burma since the publication of the original hardcover in March 2001. Steinberg brings readers up to date on the recent release of political prisoners, economic and military conditions, United Nations actions, and the complex, ever-changing relationship between Thailand and Myanmar.

CHAPTER 1
Setting the Stage: The Crisis of 1988 and Its Origins

We in Myanmar were not prepared for the force and fury of the storm [1988 revolution]. As the years rolled by, we had started to equate lethargy and lack of change with stability; speeches and notions with progress; excuses with reason; and manipulated statistics with the real facts.

—Maung Maung¹

The Coup of September 18, 1988

Coups may be commonplace in the third world, but a military coup designed to shore up another military regime is unusual, although it has also occurred in Thailand.² Although the Burmese coup of 1988 replaced the previous leadership with a new group of officers, it was not intended to shift power even among the military or between military factions. Rather, it was designed to continue military rule by other means. It took place with the acquiescence of the authorities.

On September 18, 1988, General Saw Maung, commander of the Burma Army, carried out a coup in support of a tottering military government that probably could have continued for only a few more days. Battered by widespread popular riots that had evolved over the previous months into a people’s revolution, the government was under popular siege. Perhaps at its height a million people had demonstrated in Rangoon, the capital, with a population of about 2 million at that time, and Mandalay, the seat of Burman culture, about half that size. Demonstrations had been accompanied by widespread looting, for the causes of the popular malaise were a mixture of both political and economic frustration and hatred.

Brutal suppression of popular discontent followed the coup. Dissenters were sought out, jailed, or killed, and although the authorities admitted to the deaths of a few looters and malcontents, observers estimated that over a thousand died in those few days; in 1988 and the events leading up to the coup perhaps four or five times that number had been killed. Based on photographs taken at the demonstrations, the military conducted house-to-house searches to seek out those who had participated. Some 10,000 students and young people fled to the periphery, some to the Indian border, others to the China frontier, but most to Thailand, where many sought refuge. Some later returned to Burma under government auspices, but many others joined the ethnic insurgents, who controlled a substantial part of the Thai littoral at that time, and received military training to continue the struggle against the military.³

Whether the coup was the result of an earlier planned scenario is unclear, but the apparent demoralization of several dozen soldiers holed up on September 17 in the Ministry of Trade building, where they were surrounded by demonstrators and a mob demanding their heads, probably prompted the army to act when it did, even if it had earlier expected that it would have to move at some point to support the regime. On September 15, the crowd had been on the verge of storming the Ministry of Defense and was dissuaded only by the respected dissident, retired brigadier Aung Gyi. It was widely believed that General Ne Win, former national leader, recently retired, had ordered the coup. Saw Maung was said to have visited him at Ne Win’s palatial home on Inya Lake in Rangoon on the evening of September 17 and again on the morning of the following day. President Maung Maung, a civilian installed only a month earlier to placate the populace following earlier demonstrations and massacres, only met with Ne Win at about 3:00 P.M. that day, and the coup was instituted shortly thereafter—between 3:30 and 4:00 P.M.⁴ He may have been only belatedly informed.

The military instituted a new government, called the State Law and Order Restoration Council (SLORC). The cabinet was completely composed of active-duty military officers, with the exception of the minister of health, who had close ties with the tatmadaw (armed forces). It reinstituted the old name of the state, the “Union of Burma,” dropping its previous socialist appellation, “the Socialist Republic of the Union of Burma.” It dissolved the previous single legal party—the Burma Socialist Programme Party (BSPP)—and reconstituted a smaller National Unity Party (NUP), withdrawing overt (but not covert) government support from any political group. It made many changes in the government’s institutional framework and presented an image of a taut, authoritarian administration bent on change.

The people’s revolution that prompted this action burst forth after a generation of simmering discontent, which merits explication.

The Origins of the People’s Revolution

The people of the country have lost confidence in the monetary system; they cannot accept reports on the economic situations [sic] as correct appraisals, correct economic situations in the country are withheld so that the people may not know the truth, data and statistics are falsified and presented, and the suggestions and advice given by economic experts are ignored.⁵

The people’s revolution and the taut response to it by the tatmadaw were the cumulative product of a series of policies and events that had their origins early in the military administration following the coup of 1962 and its political and economic rigidities, but the immediate precipitating factors are to be found in 1987.

In August 1987, in a statement remarkable in the Burmese context, Ne Win, then chairman of the BSPP, publicly noted that there was a need for change in the political, economic, and even the constitutional arenas to respond to deteriorating conditions in Burma. He said that the government could not continue to lie with statistics.⁶ He called for suggestions on improvements. This confession was unusual in that it was the first official recognition since 1971—and obviously authoritative—that conditions in Burma were not as rosy as officially portrayed. Ne Win reiterated the call in October of that year, with little public effect.

Two events in September 1987, however, occurred that were to have contradictory influences on the economy and the society and contributed to the trauma of 1988. On September 1, the government announced the liberalization of trade in the nine grains, most importantly in rice. In what was the most widespread single gesture of reform since the military coup of 1962, and one that affected about 80 percent of the population, peasants were freely allowed to buy and sell rice to traders at whatever price was appropriate and wherever they wished to sell it. Since producer prices had been artificially kept low (and indeed the revenue of the central government was in large part dependent on ensuring that the gap between the prices paid to farmers and the export price remained as wide as possible), this immediately raised farm income. Farmers could cross township and provincial boundaries to sell their produce, as prices varied by locality and scarcity; this had been previously prohibited as well.

This edict was badly timed, however, if it had been economically motivated, because it came at the close of the growing season and thus could not affect immediate production. This change was followed by another in February 1988 allowing private traders to export rice (but not allowing them to hold foreign currency); this previously had been a government monopoly. This regulation was totally ineffective because of an unrealistic exchange that forced traders into losses if they had to redeem foreign exchange for kyat (K.), the local currency, at official rates. Few registered as exporters, and no private trading took place. Foreign observers, noting the widespread changes that had characterized the Chinese centrally planned economy in the 1980s, were quick to point out the potential for these reforms if they were carefully planned. They hoped that these were harbingers of a new and needed economic pragmatism in Burma. In fact, these changes were poorly planned, but the first was a rather shrewd political move designed to alleviate pressure on the government from the rural sector, which contained the bulk of the population. But many foreigners expected further reforms to take place to support economic liberalization. Such efforts did not follow because this was more a political than an economic statement.

Yet only five days later, the regime announced a devastating change—perhaps the most sweeping demonetization in the contemporary world and the third since the military took over in 1962. Under it, all bank notes over K.15 ($2.50 at the official rate) were declared illegal, and no compensation was to be paid for them. The motivations behind this scheme were probably complex; it was ostensibly to eliminate the black market, a quixotic gesture since in fact the government depended on it for its existence, but it may also have been promulgated to cut inflation and the expansion of the money supply, and—some say—for abstruse astrological calculations that would enable Ne Win to live to be ninety. (Nines were said to be lucky for him. He had some years earlier had all the currency bills changed to add up to nines for the same reason; thus K.45 and K.15 bank bills were introduced and K.50 and K.100 bills, among others, withdrawn.) In any case, the BSPP Central Executive Committee was not informed in advance and was simply ordered to vote for the demonetization; it had no choice. Some modest financial modifications were later announced to select groups; after student demonstrations, some small financial conversions (K.100) were allowed so that the students could return to their homes, and rumors abounded that some members of the military bought at discounts or commandeered discredited kyat and were able to have them surreptitiously converted into legal currency.

The result was a pervasive atmosphere of economic fear as further demonetizations were expected. Since all such currency “reforms” had occurred over weekends, businesses bribed banks to accept sealed bags of uncounted currency on Friday afternoons, to be redeemed on Monday mornings if there had been no further demonetizations. (Such funds “deposited” thus would not count as banknotes under this arcane economic equation.) Urban dwellers and farmers at those uncertain times acted with pristine economic logic. The former bought any commodity rather than hold cash, and the latter held their only asset—paddy (unhusked rice). The former fueled inflation and created an intensified demand for increased smuggling since Burmese industry was operating far below capacity levels. At that time, smuggling greatly benefited China, while the price of now uncontrolled rice rapidly rose. These factors most adversely affected the urban dweller on a fixed income. As one Burmese observer noted, “The spear landed at the lowest point”—the common people were mostly affected because the military and civil servants had access to commodities and rice through government procurement mechanisms.⁷ The poor were most adversely affected by inflation.

At the same time, internal debt had risen to dangerous levels. Many of the State Economic Enterprises (SEEs), the public sector that had been the economic symbol of modernity, had effectively failed, borrowing from the government without the possibility of repayment as their production faltered and smuggled goods increased, replacing the modest production that did exist. The SEEs had been designed to be the fruition of the economic manifesto, The Burmese Way to Socialism, which the military had propounded to provide the nonreligious, nonethnic articulated basis for nationhood and a national ideology, as well as to enhance its own legitimacy.

Even more important, external debt had exploded. At that time, Burma owed about three-quarters of its GNP (at official rates of exchange), foreign exchange reserves were about $28 million, and its debt service ratio was calculated by various groups as between 55 and 91 percent of exports.⁸

As important as were these economic indicators of malaise that contributed to the subsequent unrest, the events that triggered the overtly political crisis were ironically apolitical.⁹ Students had been in the forefront of the nationalistic and independence movements (along with monks), and most of the leaders of modern Burma have come from those movements. In mid-March 1988, students at the Rangoon Institute of Technology got into a fight with the owner and patrons of a local tea shop. The resulting riots quickly spread, and the lon htein (security or riot police) were called in to put them down, which they did with unprecedented brutality and an unknown number of deaths. The riots spread from the outskirts to downtown Rangoon. Female students were beaten up, some say raped, and forty-one young people suffocated in a police van into which they had been stuffed to be taken to jail. It was only after four months that the government was forced to admit after a formal inquiry into the affair that this had happened. Ne Win was out of the country at the time. When he returned, he is said to have called in the BSPP Central Executive Committee and the People’s Inspectors (auditors). All were standing, and he appeared to be visibly upset. He asked whether the reports on the suffocations were true, expecting to hear that they were exaggerated. He was informed that indeed they were accurate. He could not respond at first, he was so agitated. He then indicated that the committee had let the country down, and the meeting ended. When Ne Win resigned his position as party chairman in July, he took partial responsibility for the action. Others were fired and had their pensions cut. As one Burmese privately said, “Not since King Thibaw murdered his princes to secure his succession to the throne in the nineteenth century was such brutality evident in Burma.”¹⁰ Overall, the deaths were in the hundreds. Schools were closed and the atmosphere was tense. On May 30, schools were reopened, and since the government continued to impose a rigid, frustrating control of all media, the students gathered to ascertain who was killed, who was arrested or missing, and who simply had not returned from their homes.

Rice prices had exploded to about three times their value a few months before the students began to organize, and urban discontent became wide-spread.¹¹ Burma had begun to fall in arrears in its debt repayments, an event unique since Burmese independence and an important indicator of the extent of the economic debacle. On June 16, demonstrations began again and spread throughout Rangoon.

The overwhelming popular outburst in the capital indicated that the motives behind the demonstrations were far more intense and the population affected far more broadly than the government was prepared to admit. The dissatisfaction was so widespread and so evident that Ne Win on July 7 called for a special congress of the BSPP, one year in advance of its normal gathering. This did not satisfy Burma’s urban population: demonstrations spread to Prome, where martial law was declared over an ostensibly communal dispute,¹² and to Taunggyi, as well as to other urban centers.

On July 23, the special party congress was convened. Ne Win and four of his close associates offered their resignations from official positions.¹³ Ne Win wanted to resign from the party as well. He also suggested that political and constitutional changes might be needed, and he called for a plebiscite on amending the single-party, mass-mobilization constitution of 1974 to allow for a multiparty political system. Observers said that it was an emotional presentation that someone else finished reading, after which, contrary to his normal practice, Ne Win left the assembly. The secretary of the BSPP presented a catalogue of the economic ills, quite similar to those enunciated in 1971 at the first BSPP congress, and called for economic reforms, including encouragement of the private sector and foreign investment by both public and private firms with state, cooperative, or private enterprises in Burma. Certain sectors, however, were to be reserved to the Burmese: onshore oil, gems, teak, and banking. The economic reforms were supported by the party, and authority was given to the Central Executive Committee to work out the details. The socialist basis of the economy, however, was never brought into question. It seems evident that the BSPP regarded these as tactical shifts rather than strategic restructuring.

The resignations of Ne Win and his colleagues from official party positions were accept...

Table of contents

• Cover Page
• Title Page
• Copyright Page
• Contents
• Preface and Acknowledgments
• NOTES
• MAPS
• STATISTICAL PROFILE
• STATE PEACE AND DEVELOPMENT COUNCIL (SPDC)
• GLOSSARY
• INTRODUCTION
• CHAPTER 1 Setting the Stage: The Crisis of 1988 and Its Origins
• CHAPTER 2 The Social and Political Backdrop to the Crisis: Myanmar’s Modern Heritage
• CHAPTER 3 The Military and the Aftermath of the Coup
• CHAPTER 4 Mass Mobilization, Civil Society, and Orthodoxy
• CHAPTER 5 Economic Changes: Progress and Regression
• CHAPTER 6 Multiethnicity and the Burmese State
• CHAPTER 7 The Politics of Social Issues
• CHAPTER 8 Foreign Affairs: Myanmar as Regional Nexus
• CHAPTER 9 Foreign Assistance: Tensions and Needs
• CHAPTER 10 Conclusion: Burma/Myanmar—Its Future and the Dilemmas of Foreign Policy
• APPENDIX I Economic Reform in Burma: Problems and Priority Needs. 1988
• FURTHER READING
• ABOUT THE AUTHOR
• INDEX