Monday, April 13, 2015

Despite appearances, Thailand and Myanmar are not 'trading in' their allies


Slowly and steadily, some 21st century power struggles are shifting to Southeast Asia. Noticeable rifts have emerged between the U.S. and Thailand on the one hand, and China and Myanmar on the other. These diplomatic spats, however, are unlikely to represent a radical shift for any of these nations.

Bangkok will retain its close relationship with Washington, as will Naypyitaw with Beijing.

     Fears of such geopolitical ruptures were spurred by recent tensions on the Myanmar-China border. In early March, a Myanmar military jet accidentally dropped a bomb inside China, killing at least five in a field in Yunnan Province. The incident was a spillover from conflict in Myanmar's Shan State, where Naypyitaw is battling an ethnic insurgency.    

     China reacted furiously, and in March, Chinese Premier Li Keqiang criticized Myanmar's military for the bombing. His stern words were the latest in a series of disputes between the two countries since 2011, when Myanmar began its democratization process. 

Shifting influence

In stark contrast, Li's visit last December to Thailand struck a more conciliatory tone. He reassured Bangkok's military rulers of Beijing's continued support. Thailand's junta seized power in a coup in May 2014, after the courts ousted the elected prime minister, Yingluck Shinawatra.

     China's story in Myanmar and Thailand is illustrated by two railroads. Last year, Naypyitaw suspended plans for a Chinese rail project to connect the Myanmar coast to Kunming, in China's southern Yunnan Province. The railroad was part of Beijing's grand ambitions to improve its global logistics corridors. The suspension was a bitter defeat for Beijing. It followed the postponements or enforced delays to other large Chinese infrastructure projects in Myanmar, including in 2011 the massive Myitsone dam in the east and in 2013 the Letpadaung copper mine.

     China is having more success with a strikingly similar project: a railroad intended to connect Yunnan Province to Bangkok via Vientiane, the capital of Laos. In March, Chinese and Thai officials met to discuss the Thai leg of the project, the third such meeting since plans for a western Myanmar railroad were suspended.

     The Thailand railroad is one of many signs that Beijing-Bangkok relations are deepening. The two countries are considering enhancing joint military exercises, for instance, and Thailand is contemplating having China upgrade its Sattahip naval base.

     China's increasing influence in Thailand is facilitated by cooling Washington-Bangkok relations. Traditionally, Thailand has aligned itself with the U.S., which regards Bangkok as a major non-NATO ally. The U.S. has alienated Thailand, though, with criticism of last year's coup and a downgrading in its annual report on trafficking in persons (the TIP report).

     In January, U.S. Assistant Secretary of State Daniel Russel on a visit to Thailand urged the country's military leaders to restore rights to free speech and assembly and lift martial law. In February, President Barack Obama downgraded annual joint military exercises to indicate his disapproval of the coup. These reactions angered the junta, which claims it seized power to save the country from failing civilian politics.

     Washington's pullback from Bangkok is occurring as it simultaneously deepens ties with Naypyitaw. Promoting reform in the former pariah state has been a major foreign policy goal for Obama, who has met Myanmar President Thein Sein more than a few times. Obama's relationship with Myanmar contrasts starkly with the approach taken by his predecessors -- who were admittedly dealing with a repressive junta. In 2005, Condoleezza Rice described Myanmar as an "outpost of tyranny" just before taking up her appointment as secretary of state under President George W. Bush. Rice's comments echoed an earlier speech by Bush in which Myanmar, also known as Burma, was dismissed as part of an "axis of evil."

     As part of the rapprochement under Obama, Washington suspended sanctions against Myanmar starting from 2012. European countries went further and lifted nearly all restrictions previously imposed on Myanmar. Myanmar passed legislation to liberalize its economy, particularly its foreign investment law in 2012. The result has been a flurry of new foreign direct investment, which more than doubled between 2011 and 2014. China's previously unchallenged role in Myanmar's economy has been shaken.

Continued ties

While the balance of U.S. and Chinese influence in the region is indeed changing, both superpowers will maintain close relations with their traditional allies. In Myanmar's case, while it will continue to open up to foreign investors, it will also remain dependent on trade with China for years to come.

     The Chinese and Myanmar economies are too intertwined to separate easily. Between 1988 and 2013, Chinese companies invested $14 billion in Myanmar, accounting for approximately one third of total foreign direct investment. On an official visit to the country in November 2014, Li signed deals with Naypyitaw totaling $7.8 billion.  China's increasing energy demand and hunger for commodities ensure that it will continue to invest in its southern neighbor.

     Likewise, the U.S. continues to maintain a strong relationship with Thailand. In mainland Southeast Asia, no other country comes close in terms of usefulness as a strategic partner. Thailand is large, centrally located, heavily populated, and economically developed. For these reasons, Washington cemented its relationship with Thailand during the Cold War and deepened it during the Vietnam War. Thailand's numerous coups since then have not harmed the sanctity of this alliance.

     Thailand is Washington's oldest treaty partner in Asia. The two countries have engaged in dozens of joint military exercises in the last half century, and Washington has relied on Thailand since the 9/11 terrorist attacks on America in 2001 to help combat terrorism. Bangkok also committed logistical support to assist American military operations in Iraq and Afghanistan. Following Thailand's coup in 2006, Washington suspended military aid to Thailand, only to restore it 18 months later after the return of civilian government.

     Taken together, all the above events would suggest that the balance of power in Southeast Asia is shifting. Myanmar, whose economy was long overly dependent on China, is now opening up to the West. Thailand, one of the strongest regional partners of the U.S., is deepening ties with China. Alarm bells are ringing in Washington and Beijing.

     However, neither Washington nor Beijing should fear losing their traditional allies. Thailand and Myanmar are diversifying diplomatically, but they are not trading places. 

Nicholas Borroz is an independent analyst of energy geopolitics and investment strategies, specializing in energy-related infrastructure in Southeast Asia and the Middle East. He is based in Washington. Hunter Marston is an independent Asia analyst who has worked in both Thailand and Myanmar.


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