By Francis Wade
YANGON - British Prime Minister David Cameron came bearing gifts to Myanmar on Friday with the announcement his government would push for the suspension of European Union sanctions. It was viewed by many observers as something of a volte-face from a country that has long been among the staunchest supporters of the block on Western trade and investment with the historically military-run country.
He made the brief Myanmar stopover, the first official visit for a Western head of government in decades, at the tail end of a tour of Japan and Southeast Asia. Prior to landing in Yangon, Cameron had told reporters in Indonesia that Britain now must reinvigorate relations with regional states, where "so much of the power in the world is going to be".
Myanmar's position among the league of nations now considered key to Britain's strategic and economic objectives shows just how dramatically perceptions of the country, until recently considered an international pariah, have evolved in recent months. The United States and EU member states have with varying degrees of caution hailed President Thein Sein's reform program, which allowed opposition leader Aung San Suu Kyi to win a seat in parliament at by-elections earlier this month.
At a press conference at Suu Kyi's house on Friday, Cameron said that the two had agreed it was "right to suspend" all sanctions on Myanmar bar the arms embargo - a decision Suu Kyi said she was "very happy" about. Suu Kyi had been a strong proponent of the sanctions as punishment for the past military regime's abysmal rights record and her support for their suspension will give new impetus to their legal removal.
While the Nobel Peace Prize laureate claimed it was "absolutely the right time" for the prime minister to visit the country, the timing is also pertinent for Cameron, who visits the region amid economic trouble at home. What now matters for Britain is a foothold in emerging markets largely insulated against what appears an increasingly likely recession in the euro zone.
Before word had spread about the Myanmar stopover, Cameron had said of his tour: "This trip is really about British business, British exports and investment from Britain into these countries, and investment from these countries into Britain."
Officially, he leaves that sentiment at Myanmar's door; behind the scenes, however, a strategy is likely being formulated for Britain and other EU states to push ahead in the race for Myanmar's untapped riches and markets. The financial crisis back home makes Myanmar - replete with cheap labor, abundant energy and five-year tax breaks for overseas companies - all the more alluring.
That said, opinion is still split on whether to overhaul EU policy towards Myanmar in the wake of this month's by-elections that saw Suu Kyi's party win 43 seats in Myanmar's 664-seat parliament. Britain had earlier steadfastly refused to join the likes of Germany in pushing for an end to sanctions. But with recent developments inside Myanmar, coupled with Cameron's surprise visit, it seems more a question of when, and not if, the EU will drop its blockade and restore trade and investment ties.
The EU is scheduled to take up the issue of sanctions on April 23, the same day that Suu Kyi is scheduled to take up her seat in parliament. While the EU's foreign ministers are widely expected to ease sanctions, there are differences between member states over how these should be eased, with the initial focus expected to be lifting measures targeted at individuals.
Speaking to Asia Times Online, a British foreign ministry official said that it "remains UK policy to discourage trade with Burma [Myanmar]. This has not changed." Quite how that marries with a push to end the ban on investment is unclear. Cameron, an outwardly pro-market conservative, will want to plant an early stake in Myanmar's future in the wake of a series of economic reforms that have sought to attract greater foreign investment, particularly as signs point toward rising competition for an early foothold in the country.
Like the US, Britain is acutely aware that its influence in Myanmar currently pales in comparison to China, which pumped an estimated US$20 billion into the country's underdeveloped economy last year. Although strong on the surface, however, Myanmar's relations with its northern neighbor are strained. One senior United Nations official in Yangon said that behind the cordial exchanges of solidarity between the two countries lies a vitriolic disdain.
Cameron, like US Secretary of State Hillary Clinton before him, may seek to capitalize on Naypyidaw's increasing nervousness about its economic and financial dependence on China.
Myanmar still has a woeful regulatory system governing investment, despite busily luring companies with its recently revised investment laws and efforts at streamlining the dual exchange rate - two factors apart from sanctions that have long repelled Western entry to the market.
Until accountability mechanisms are introduced to ensure that business can drive human development and not further empower the military, there will be a vocal contingent in the pro-sanctions lobby that considers these cordial overtures to the government as primarily self-seeking.
Rights advocates have already questioned the motives behind Britain's decision to re-engage with Myanmar. At the same time that Foreign Secretary William Hague was talking up democratic reform and an end to military abuses during his January visit, Cameron was in Saudi Arabia pushing for stronger ties with a regime that only two months before had handed nine people sentences of up to 30 years for trying to set up a non-governmental organization - exactly the sort of rights abusing behavior that has over the years brought Myanmar notoriety.
Whether British investment can contribute more economic democracy in Myanmar remains to be seen, but it appears eager to test the marketplace. Consumer lobby groups in the EU have more sway over business ventures abroad than they do in China, for example, whose investments in Myanmar have generally carried few development multipliers.
Cameron would thus do well to exercise the caution his government has repeatedly spoken of as it begins to court the leaders in Naypyidaw. The first visit by a Western leader to Myanmar has attracted the pomp expected of such an occasion, but like all hasty dalliances with Myanmar's military-backed leaders the risks are still varied and many.
Francis Wade is a freelance journalist & analyst covering Myanmar and Southeast Asia.