Burma May Survive Sanctions by Turning Timber into Cash

By Amy Kazmin/ Financial Times

October 06, 2003— Burma is likely to survive international economic sanctions imposed since 1997, largely thanks to its vast forest resources, according to a new environmental report.

The country has been subject to a range of sanctions aimed at loosening the military regime's grip on power. However, a report to be released next week by the Global Witness watchdog suggests the junta will survive these acts of disapproval, partly through its control of one of Burma's most precious resources: vast stands of old-growth hardwood forest, which have already been obliterated elsewhere in the region.

"The ruling military has been the ultimate arbiter of forest resources both within Burma and internationally," says the report. "This control, together with the revenue derived from the timber trade, continues to play a significant part in the maintenance of its grip on power.

"In Rangoon's environmentally damaging "resource diplomacy", powerful Chinese logging companies - which have strong political ties - have been granted concessions to log swathes of Burmese virgin forest in exchange for political loyalty and material support. Thai companies, which enjoyed similar concessions until the early 1990s, still covet those opportunities.

"Isolation has only served to [push] the Burmese regime into the arms of two countries, Thailand and China, that are more intent on helping themselves to Burma's natural resource wealth than helping Burma in any meaningful way," Global Witness says. "Resources have been traded by the regime in exchange for political, financial and military support from its neighbours."

At home, the Burmese regime has shored up political support by using the lucrative logs as the foundation for "patron-client" relations, in which key commanders or their relatives, intelligence figures and former ethnic minority insurgent groups win control of vast tracts of forest. Logging concessions have also been granted to business allies.

In 2001, the legal trade in Burmese timber - mostly teak trees destined for high-end users around the globe - brought in about $280m (€240m, £170m) or 11 per cent of the country's legal foreign exchange earnings. But data from wood-importing countries suggests actual Burmese log exports may be nearly twice the level recorded by the government.

Global Witness says part of the generals' intransigent refusal to engage in political talks with Ms Suu Kyi about a political transition stems from their concern about "the potential loss of these economic perquisites in a more democratic society".

As economic conditions worsen because of mismanagement and sanctions, the junta is growing more reliant on timber for foreign exchange, leading to increasingly unsustainable logging, including by the state's Myanmar Timber Enterprises, the report says.

In the late 1980s and early 1990s, the Thai-Burma border was a focal point for taking Burmese timber out of the country. Today, the greatest wholesale logging activity centres on Kachin state on the border with China, the Rangoon regime's most important backer. China has relied increasingly on Burmese logs since a logging ban was imposed in Yunnan province in 1996 and nationwide two years later.

Pornpimol Trichit, of the Institute of Asian Studies at Thailand's Chulalongkorn University, says logging is only one component of the complex relations between the Rangoon regime and China. "There are so many things China wants from Burma - not only logs," she says. "China uses a lot of jade, and the best jade is from Burma. They are also interested in transportation to cut across Burma. Logging might be important but it is not the whole picture.

"Meanwhile, some in the regime, which often calls Burma a lush forest idyll, may be having qualms about the pace of forest destruction. In July the forestry minister, suspected of turning a blind eye to wholesale illegal logging, was sacked.

Since then, some participants in the timber trade have complained of difficulties, though sceptics say this may simply be part of a redistribution of privileges.

"Because of international criticism, they seem to care more about environmental control now then before," said one Burmese academic. "They are more sensitive not because they understand environmental degradation but because of their image."