Economic pressure is unlikely to force Myanmar’s junta to retreat
KILLING UNARMED protesters does not seem to daunt Myanmar’s army. Since its commander launched a coup on February 1st, it has killed more than 200 of its fellow citizens. Many of the victims were shot in the head by snipers as they demonstrated against the putsch. Others were shot at random as soldiers rampaged through neighbourhoods thought to be supportive of the protesters. Residents are fleeing Hlaingthaya, an industrial district of the country’s main city, Yangon, after the army responded to arson attacks on factories in an especially brutal manner.Listen to this storyYour browser does not support the element.Enjoy more audio and podcasts on iOS or Android.The protesters have not given up. This week, despite a complete shutdown of all mobile-internet services and the declaration of martial law in parts of Yangon and the country’s second city, Mandalay, they continued to demonstrate. But given the intransigence of the Tatmadaw, as the armed forces are known, many are pinning their hopes on a subtler form of resistance, on display in supermarkets and corner stores around the country. Refrigerator shelves once packed with cans of Myanmar Beer are now emptied of them, because the brew is made by a company that is partly owned by the army. Other products linked to the Tatmadaw, including a popular brand of cigarettes and a big mobile-phone network, are also being shunned. These boycotts, along with efforts by striking civil servants to disrupt the business of government, aim to force the junta to retreat by cutting off its money supply.There are some signs that the junta is short of cash. Days after the coup, the central bank attempted to bring home $1bn it holds at the Federal Reserve Bank in New York. American authorities blocked the transaction. On February 15th the government sought to sell 200bn kyats ($142m) of five-year bonds. It received just one bid, for 1.7bn kyats’ worth, at a higher interest rate than normal.The IMF puts the government’s reserves of foreign currency at $6.7bn, including the $1bn marooned in New York. That buys less than five months of imports. Myanmar purchases almost all its fuel and cooking oil abroad, among other crucial staples. Prices for these goods are rising, and the kyat is depreciating. Foreign investment, which helped bring in hard currency, has evaporated amid the turmoil. The recent arson attacks, which were aimed at Chinese firms, are likely to put off the few investors who are not deterred by the Tatmadaw’s conduct.Foreign exchange is not the only potential weak spot. Even before the coup and the associated economic upheaval, the World Bank was projecting a budget deficit of 8.1% of GDP this year. Since then, the civil-disobedience movement has brought the economy to a near-standstill. Myanma Economic Holdings Limited (MEHL), the main army-controlled conglomerate and one of the targets of the boycott movement, is the country’s second-biggest taxpayer. A subsidiary, Myawaddy Bank, is the fifth-biggest. The growing budget deficit will become harder to finance, in turn, if the failed bond auction is any guide.For any normal government, these alarming statistics would dictate a change of course. But the junta, alas, is not a normal government. It knows it will continue to receive a minimum income in foreign exchange from exports of natural resources, especially oil and gas, which account for a bigger share of government revenue than tax does. The Tatmadaw has long been involved in the illicit extraction and smuggling of gems and timber in remote regions. It is also thought to provide protection to drug gangs that make methamphetamine, in particular, in Myanmar’s lawless borderlands. It is not even above extorting money from its own members. Soldiers interviewed in 2018 by Gerard McCarthy of the National University of Singapore reported being ordered to spend anywhere between a tenth and a quarter of their salary on shares in MEHL. The junta will presumably redouble such fundraising efforts if need be.The Tatmadaw is also unlikely to worry too much about mismanaging the economy. Given that it does not mind shooting its own citizens, it will hardly shrink from cutting already threadbare public services. Or it may order the central bank to print money, whatever the consequences for inflation. It is already gleefully profiteering from the dislocation caused by the protests. An employee at a customs-clearance company told Frontier, a local magazine, that, owing to the civil-disobedience movement, almost the only container trucks operating were those owned by MEHL. Those trucks are now charging 80,000 kyat a trip, eight times the typical rate in normal times.Ruthlessness is not a perfect substitute for competence, however. There is a chance that the chaos enveloping the economy becomes so all-encompassing that the army cannot keep even the parts that matter to it moving. There are some signs that this possibility worries the junta. It has convened a committee to work out ways to lessen dependence on imported fuel. It is becoming increasingly shrill about the continuing closure of the many banks where workers have walked off the job, issuing repeated orders for them to reopen, to little avail. Some 200 employees of the central bank, meanwhile, have been suspended for absenteeism.Whether all this will prompt a change of course from the Tatmadaw is uncertain, but it will certainly do huge damage to the economy. That, in turn, will do far more harm to ordinary Burmese than to the junta and its cronies. And it will remind them of another reason, in addition to the army’s brutality, why they so dislike military rule: in its previous stints in power, the Tatmadaw has repeatedly run the economy into the ground. ■This article appeared in the Asia section of the print edition under the headline “Blood money”