Financial Times: Pipeline marks scramble for Myanmar

Pipeline marks scramble for Myanmar (click to view article)

In May, something curious will happen to the geography of China. The continental-sized country, whose supercharged development has been concentrated in cities on its eastern coast, will gain something it has never had: a western seaboard. An 800km gas pipeline will connect Kunming, capital of Yunnan province, to the Bay of Bengal, passing through central Myanmar. Next year an oil pipeline will open along the same route. Road and rail will follow.

Of course, China won’t literally gain a second coastline to match that of the US, which looks out on the Atlantic and the Pacific. But it will get the next best thing. “What China is lacking is its California, another coast that would provide its remote interior provinces with an outlet to the sea,” says Thant Myint-U, author and adviser to the Myanmar government. In Where China Meets India, his book about Myanmar’s geopolitical significance, he says the pipeline is a milestone in Beijing’s “Two Oceans” policy. Similarly, Robert Kaplan, an influential US author, argues China’s ability to establish a presence in the Indian Ocean, the world’s third-largest body of water, will determine whether it becomes a global military power, or stays as a regional power confined to the Pacific.

For years, the west viewed Myanmar – or Burma as many still prefer to call it – through the prism of human rights and democracy. That narrative has been one in which Aung San Suu Kyi struggles to rid the country of military authoritarianism. It’s a vital story, particularly for Myanmar’s 60m downtrodden people. But it has obscured something arguably just as important: a tussle over one of Asia’s most strategic states.

It is worth recalling how the pipeline that will link the Indian Ocean with China came about. In the 1990s, Myanmar started sending some of its offshore gas to Thailand through a pipeline built by Total of France. India, South Korea and China squared up for rights to another, bigger, field. In 2006, Beijing vetoed a UN Security Council resolution condemning Myanmar’s human rights record. Shortly after, it clinched the deal for the Yunnan pipeline. That route to the Indian Ocean begins to solve what Hu Jintao, the outgoing president, has called China’s “Malacca Dilemma”. About 80 per cent of China’s oil goes through the narrow strait between Malaysia and Sumatra, a chokepoint still in effect controlled by the US navy. The new oil pipeline, which will transport oil shipped from the Middle East, will reduce China’s dependency on Malacca by a third. The gas pipeline has an annual capacity of 12bn cubic metres, 28 per cent of China’s current gas imports.

China’s influence in Myanmar goes further. Millions of ethnic Chinese have migrated there, so much so that Mandalay, the second city, feels like a Chinese outpost. The territory belonging to the Wa ethnic minority has no effective border with China, but is reachable from Myanmar only through military checkpoints. Over the years, Chinese companies have invested billions in mines and dams. So large had Beijing’s influence become that in 2010, then US senator Jim Webb warned that, Myanmar – once part of British India – risked becoming a “province of China”.

Fears of Chinese domination galvanised both Myanmar’s generals and Washington to reach a compromise. The country’s dramatic opening in 2011 coincided with the US pivot to Asia. It may turn out that geopolitical considerations were a more decisive factor than democratic ones in the sudden breakthrough. The generals’ first big signal that they were open to a deal was not the release of political prisoners: it was suspension of the $3.6bn Chinese-funded Myitsone dam.

Since then, the scramble for Myanmar has begun. The US and Europe have ramped up their presence, so far mainly through aid agencies and supply of technical assistance via multilateral bodies. Japan, which never left during the sanction years, has been quick to step up its engagement, unilaterally writing off $6.3bn of debt as a prelude to what many expect to be a wave of investments. This week, the Paris Club of western creditors also struck a debt deal, paving the way for new flows. Neither western nor Japanese companies have yet committed to fresh large-scale investments. But Japan may be interested in the vast Dawei seawater port and industrial zone in the south. In the diplomatic sphere, the US will allow Myanmar to observe joint US-Thai military exercises early this year.

China is on the back foot. Myanmar has launched an inquiry into allegations of land seizure and environmental destruction at the Chinese-owned Monywa copper mine, the largest in the country. Naypyidaw has also risked annoying Beijing by firing artillery into Chinese territory during recent bombardments of Kachin rebels.

Still, Naypyidaw will not abandon Beijing. It has far too much to gain from playing east off against west. Even Ms Suu Kyi knows only too well what is at stake strategically. “You mustn’t forget the fact that China is next door to Myanmar and the US is some way away,” she once said in her understated way. If she ever becomes president, it will be fascinating to watch whether she plays the geopolitical game as well as the democratic one.