Tuesday, January 01, 2013

China seeks copper firewall in Myanmar

[This piece appeared at Asia Times Online on December 15, 2012.  It can be reposted if ATOl is credited and a link provided.]

The People's Republic of China (PRC) is attempting to establish a modus vivendi with the new political order in Myanmar. With the violent government crackdown on demonstrators at a copper mine-site at Monywa, in northwestern Myanmar, on November 29, things just got considerably more difficult.

Postponement of the China-backed Myitsone dam project was the price tag for the entry of Prime Minister Thein Sein into the good graces of the West. The PRC has, for the time being, not made a fuss but would clearly prefer that Myitsone was the only big-ticket Chinese project that took a bullet for the sake of Myanmar's rebalanced foreign policy.

The PRC is hoping to shield its projects - such as the coppermine and a twin-pipeline project crossing from the Bay of Bengal to China's Yunnan province - through belated hearts and minds outreach to the public in Myanmar (also known as Burma), and serious jawboning and arm-twisting in the halls of government. The current government leadership in Myanmar and, to a certain extent, Aung San Suu Kyi, seem on board, at least for the time being. However, widespread resentment of government oppression and Chinese economic exploitation is driving Myanmar's politics, possibly further and faster than the national elite prefers.

The PRC has to worry that the Myanmarese democracy-and-national-reconciliation express, now chugging determinedly to 2015 elections for a parliament that is supposed to be 65% free-and-fair elected and 35% appointed military officers, will not hop the tracks to administer revolutionary justice to Myanmar's generals for widespread human rights violations and corruptly selling out Myanmar's wealth to the Chinese, putting paid to China's economic interests in the process.

Under these circumstances, the last thing Beijing needed was for Myanmar's present government to be seen brutalizing monks and students in order to protect the interests of the Myanmarese and Chinese military in a polluting copper mine.

China's participation in the mine is relatively recent, dating back only to 2010 However, the mine has been in the crosshairs of domestic and overseas Myanmar democracy activists for years. The original investment in the mine came from a Canadian mine developer, Ivanhoe, which was targeted for its alleged willingness to ignore international sanctions and serve as an economic prop of the military junta.

Even Ivanhoe's efforts to divest itself of the mine came in for criticism as it kicked its interest back to Myanmar's government to sell (instead of selling it to the PRC directly), thereby apparently giving the generals a second chance to secure graft on the deal.

The fact that the mine is a joint venture of the commercial arm of Myanmar's military - the Union of Myanmar Economic Holdings Ltd (UMEHL) - and Wanbao Mining Ltd, a subsidiary of China's main arms manufacturer, NORINCO - added to the shadow over the project.

Copper mines, which generate sulfuric acid in order to reduce the ore to metal, are not the cleanest, most environmentally friendly industrial facilities at the best of times and it is safe to assume that Monywa is not the best, cleanest, or most environmentally friendly of copper mines. Pollution from the mine has been blamed for infertile cropland, tainted groundwater, and birth defects.

Therefore, it is not too surprising that, when the operators started expanding mining operations to a new site, Letpadaung, local and national activists converged in September to set up camps at the gates of the project and demand its closure. Members of the Generation 88 student activist group inserted themselves as mediator/advocates and the demonstrations grew and achieved national prominence.

The international NGO community also piled on, playing up the environmental destruction angle:
The Chindwin River is a major tributary of the Irrawaddy River and runs by misty-blue mountains and charming villages while passing through a region of abundant natural resources and fertile meadows.

"The river runs through intact forests in both the Tamanthi Wildlife Sanctuary and the Hugawng Valley Tiger Reserve, the largest tiger reserve in the world. It sustains vital habitats for a wide array of wildlife, including globally endangered species, tigers, elephants and the endemic Burmese Roof Turtle," says the Burma Rivers Network NGO. [1]
Though willing to pay lip service to addressing local and activist concerns, the government was apparently not of a mind to let the mine serve as another area of Sino-Myanmar friction and decided to clear out the several hundred protesters on the grounds that their encampments were illegal and unapproved.

Instead of efficiently evicting some rabble-rousing monks and strident students and wiping the slate clean for a fresh reconsideration of the project and the fortunes of the Burmese Roof Turtle by the new, more pro-Western, pro-business political grouping, fiasco ensued.

It has not yet been determined what happened on November 29, but something incendiary somehow got involved - perhaps flares, hot tear-gas projectiles, or some unknown weapon - and several dozen people suffered serious burns as the encampments were cleared out. The national news was dominated by pictures of burned monks and Monywa is now associated with fresh crimes by the regime instead of a new, more democratic order.

The Assistance Association for Political Prisoners (Burma) raised the specter of use of incendiary weapons against civilians - a violation of the Geneva Convention. [2]

Myanmar's Eleven Media, an anti-Chinese rabble-rouser that had previously attracted the PRC's ire for false and incendiary claims that pagodas and temples were being demolished during construction at Letpadaung, went with assertions that "chemical weapons" had been deployed during clearance of the camps. [3]

There was also an effort to frame the crackdown as an anti-Buddhist sacrilege - a virtual political death sentence in Myanmar - because the camps were cleared on the night of the eighth full moon, "sacred day of offering woven kahtina robes to the Lord Buddha." [4]

Government efforts to make things right by apologizing to the burned monks were rebuffed, as an article in Irrawaddy, "Monks Suffer in Dignity But Shall Not Forgive", reveals:
On Saturday, the Sagaing Division Police Chief San Yu apologized for the raid and claimed that it was an accident, generating nationwide anger.

"We don't accept their apologies," said Wunna Theddhi faintly yet firmly from his hospital bed. "We demand that Thein Sein apologizes to us personally and completely shuts down the project. If they do so, we are happy to forgive them."

"We don't accept their offerings either," said Thusiddha. "For they are trying to appease us for what they have done," referring to some packs of soft drinks sent by the local authorities that lie untouched in the hospital corridor. [5]
Monks refusing alms is the ultimate weapon against unworthy civilians in Theravada Buddhism.

Follow-on demonstrations against the project, and against the Chinese presence in Myanmar, led to further arrests in Yangon, Mandalay, and other locations. A former ambassador of Myanmar to China warned that events could spiral out of control and lead to a crisis in Sino-Myanmarese relations. [6]

Aung San Suu Kyi's visit to Monywa appears to have been originally scheduled as part of the work of a commission to investigate the environmental costs and economic aspects of the project in response to the demonstrations, presumably in order to tweak the project and get buy-in from activists rather than cancel it.

However, the flame-licked debacle of November 29 turned everything upside down. Instead of fact-finding, Aung San Suu Kyi's first stop was at the hospital to commiserate with injured protesters. The commission's mandate and numbers were announced and then readjusted and reannounced in an awkward, public matter to include investigation of the botched eviction.

Notably, despite the fact that pro-democracy activists of Generation 88 (who had been involved in the protests) declined to join the commission, Aung San Suu Kyi still agreed to head it.

The Chinese government announced its expectations for the process in a statement and interviews by the Chinese ambassador to Myanmar, Li Junhua. While determinedly striking a conciliatory note, providing details on the project meant to clarify that it was not an instance of unscrupulous Chinese rapacity, and stating it would cooperate with the investigatory commission, the PRC made it clear that it wanted acknowledgment that its contract with the Myanmar side was legal and enforceable.
"We made a contract with Myanmar after jointly discussing all issues, such as relocation, compensation, environmental protection and profit sharing, through bilateral negotiations that meet Myanmar's laws and regulations. However, these problems happened because people lack access to this information. So, they misunderstand," he said. …

Mr Li said the Chinese investor in the Monywa copper mine project, Wanbao Mining, began partnering with army-run Union of Myanmar Economic Holdings Limited (UMEHL) in 2010. Wanbao is a subsidiary of state-owned arms manufacturer China North Industries Corporation, better known as Norinco.

Under the terms of the 30-year contract for the Letpadaung expansion at Monywa, Wanbao will invest US$1 billion, he said, with the Myanmar government to receive 16.8% of the profits, followed by UMEHL with 13.8pc and Wanbao with 13.3pc.

He said the company had paid more than $5 million in compensation for the more than 6,000 acres confiscated for the expansion - or about $830 an acre - and built more than 200 replacement homes, as well as a school, monastery and hospital. [7]
China's fair-and-balanced foreign affairs tabloid, Global Times, clearly regards Myanmar as a major test of the authoritarian holy grail of yoking democratic agitation to the cause of economic development. In near-daily reports on conditions in Myanmar, it has asserted that democratic aspirations must be heeded but...
China need not lose confidence in its peripheral diplomacy due to the failure of its investments in Myanmar. What we see in the country is the inevitable impact of its democratization.

... Of course, Chinese companies should focus more on the people of the countries they invest in. It is the objective requirement of the wave of democratization that has swept over poor countries.

The Letpadaung copper mine crisis has drawn Chinese people's attention to Myanmar. Democracy has brought hope there, but it has also blocked a major construction project instead of liberating productive forces.

This kind of democracy can neither bring high growth for the Myanmarese economy nor result in tangible benefits for the people. Western countries' lifting of sanctions cannot bring wealth. [8]
Chinese media has determinedly "worked the refs" by declaring that Aung San Suu Kyi acknowledges the principle that contracts be honored. Global Times correspondent Yu Jincui visited Myanmar and reported relatively frankly on anti-Chinese protests. Re Letpadaung, he wrote:
The Letpadaung protests are the largest and most significant ones. Several months of slow boil brought the issue far beyond just seeking more land compensation for local villagers. Locals want the project suspended and Chinese enterprises to be kicked out of Myanmar.

The challenges of appeasing the protesters while protecting and encouraging foreign investment and job creation make solving the issue tricky.

The contract to develop the Letpadaung mine was signed in 2010, under the approval of the Myanmar government. Opposition leader and parliament member Aung San Suu Kyi, who was chosen to head an investigation group into the project on December 1, admitted the necessity of defending the country's credibility during her visit to the mine to meet both the company side and protesters in late November. [9]
Global Times also tried to draw a line in the sand, declaring that if Letpadaung was canceled, China should demand compensation (and not defer the issue, as it has apparently done on Myitsone):
We must not give up on the project. Even if it is eventually stopped, Chinese companies should receive compensation according to the contract and international practice.
On the Myanmar government side, things were apparently in disarray and message discipline took a beating A key government economic advisor, Aung Min, displayed commendable honesty but not a great deal of political tact in announcing the government's desire not to terminate the mine contract, as Aung Zaw, columnist for The Irrawaddy, wrote:
Aung Min, who exchanged some harsh words with protesters at Letpadaung a few days before the crackdown on Thursday, raised the specter of China when he spoke of the costs of shutting down big projects like the copper mine and the Myitsone hydropower dam in Kachin State, which was ordered suspended last year.

"If China asks for compensation, even the Myitsone Dam shutdown would cost US$3 billion," he said. "But China still hasn't said a word about it. We are afraid of China."

Aung Min added that Burma should be grateful to China for its aid in 1988, when the Southeast Asian nation faced a food crisis due to nationwide unrest. He added that in the 1980s, the former Chinese president Deng Xiaoping decided to cut off support to the Communist Party of Burma, weakening the Marxist insurgency against the central government.

"So we don't dare to have a row with China!" said Aung Min. "If they feel annoyed with the shutdown of their projects and resume their support to the communists, the economy in border areas would backslide. So you'd better think seriously."

Many have criticized Aung Min for his undiplomatic suggestion that Burma's giant neighbor might actually try destabilize the country if it doesn't get its way, but others have said that he was merely letting the public know the reality that Burma faces. [10]
Defending Sino-Myanmarese economic and security engagement is not a popular platform in Myanmar, as the reporting of the Guardian on the scene in Letpadaung makes clear:
Organisers have given fiery speeches directed at China. "Driving out [the Chinese] company is our aim," Thwe Thwe Win, 24, a vegetable seller from the village of Wat Hmei, threatened by the expansion plans, shouted into the hand-held loudspeaker outside the plant last week. "No Chinese on our soil. No Chinese here near our village," the crowd shouted back. [11]
Ambassador Li stated perhaps with more optimism than accuracy that Myitsone and Letpadaung were the only two troubled Chinese projects in Myanmar.

Although the Myanmarese political elite across the spectrum from Thein Sein to Aung San Suu Kyi apparently have no stomach for a political platform of economic expulsion of China from Myanmar, populist politics encourages an anti-Chinese agenda.

Aung Zaw of The Irrawaddy delivered the unwelcome news that anti-regime agitation and attacks on Chinese economic interests will be a political perennial inside Myanmar:
In the future, many activists will no doubt begin to raise the issue of the gas pipeline project and other hydropower projects in Burma. China is one of the main investors in all of these projects.
The Chinese side has taken the position that enforcement of the contracts with PRC companies is a key measure of the openness and rule of law that Myanmar is hoping to sell to Western investors. If, on the other hand, the interests of China and its allies in the Myanmar government and military are threatened, the PRC could presumably quickly make Myanmar, with its welter of aggrieved ethnicities in its unsecured borderlands, a most unwelcoming investment destination.

The Chinese (and Thein Sein) can take some consolation in the idea that the re-emergence of Aung San Suu Kyi into political life means that dissent is no longer dominated by the priorities of vitriolic chauvinists, confrontational students, and intransigent, juice-box refusing Buddhist monks.

As Aung San Suu Kyi plans her path to national political power over the next five years, she is probably considering a middle path between populism and canny compromise. In a press conference on December 6, she struck some "sanctity of contract" notes that the PRC probably found reassuring:
Daw Aung San Suu Kyi said the conflict over the mine was the result of a lack of transparency and accountability between the government and the public. She said she valued public participation in the investigation process but warned against unlawful acts.

"If people want to enjoy the rights of citizenship they also should accept the responsibilities that come from that," she said.

"[Letpadaung] residents said they want to stop the project completely when our team members discussed it with them. We will take into account their opinion. But we understand that this project is being done in accordance with a contract. Therefore, we must negotiate with each other and solve the problems through peaceful means. That's the democratic way, so if we want to build democracy state, there must be a negotiation process. It's not democracy if we just stand for what we want without negotiation." [12]
The commission's conclusions are scheduled for release on January 31, 2013.

1. In Pictures - Monywa Copper Mine, Irrawaddy, Sep 15, 2012.
2. 'AAPP Burma' condemns crackdown on anti-copper mine protesters, Asian Correspondent, November 29, 2012.
3. Chemical weapons used' in copper mine protest, The Nation, Dec 5, 2012.
4. Suu Kyi takes tough stance on Burma copper-mine row, Asian Correspondent, December 3, 2012.
5. Monks Suffer with Dignity but Shall Not Forgive, Irrawaddy, December 3, 2012.
6. Copper Mine Protest Heats Up with Arrests, Cetri, December 7, 2012.
7. China vows to respect findings of mine probe, Myanmar Times, December 10, 2012.
8. Weak democracy hurts Myanmar business, Global Times, November 29, 2012.
9. Myanmar protests painful but inevitable part of democratic transition, Global Times, December 3, 2012.
10. Burma's Copper Mine Saga Opens Old Wound, Irrawaddy, December 3, 2012.
11. Burma: riot police move in to break up copper mine protest, Guardian, November 29, 2012.
12. Commission will find fair solution, says NLD leader, Myanmar Times, December 10, 2012.