New CSO briefing: Myanmar’s military junta cripples economy

28.06.2021

Since seizing power on 1 February, Myanmar’s illegal military junta’s destructive efforts to gain territorial and political control have dragged the economy, already impacted by the COVID-19 pandemic, into a crippling, downward spiral.

A new briefing by ALTSEAN-Burma, in collaboration with IFI Watch Myanmar and Recourse, reveals that since the coup the junta has: 

  • Destabilised the country by escalating conflict. There were 2,458 attacks that targeted or failed to protect civilians during Feb–May, more than double the 1,024 incidents for all of 2020. 
  • Paralyzed the banking sector (around 80% of bank branches closed, affecting all 44 banks), imports/ exports, and other key sectors. 
  • Turned key industrial zones into ghost towns by killing workers and persecuting labor activists. At least 600,000 workers have lost their jobs. 
  • Severely undermined the rule of law by gutting prosecutors’ offices and the judiciary, instituting amendments and orders that violate human rights, and court-martialing civilians. 
  • Severely eroded freedom of information by detaining at least 88 journalists and banning key independent media. 

According to the briefing, if the coup is not reversed, the junta’s domination of the economy with result in: 

  • The rise of military-controlled monopolies at the expense of SMEs; while the population becomes increasingly vulnerable to forced labor, child labor and human trafficking as a result of land grabs and other threats to human security. 
  • Dismantling of institutions and processes necessary for human rights due diligence and compliance with relevant protection frameworks. 
  • Reduced political will and competence to fulfil existing state commitments to human rights, development goals, and transparency, including an action plan against money-laundering. 

Multilateral Development Bank (MDB) financing decisions are inherently political, even if banks assert that they cannot interfere in political affairs and are apolitical by virtue of their Articles of Association. Any development intervention has a potential political impact, by empowering or disempowering the incumbent political authority or its challengers and human rights concerns can undermine development objectives.

While the World Bank and Asian Development Bank have both declared a freeze on disbursement for their operations in Myanmar, it is unclear whether their private project loans, loans through financial intermediaries, and other financial instruments and guarantees will continue. Without a thorough examination of their portfolios, they risk assisting the junta. To date, the Asian Infrastructure Investment Bank has not published any formal statement regarding Myanmar and the IMF has said that its engagement with Myanmar is determined on an ongoing basis by its membership. 

MDB shareholders may in turn be bound by the sanctions imposed by their countries. Multiple foreign governments—which are shareholders in MDBs—have sanctioned entities and individuals in Burma. For example, the US—the largest shareholder in the World Bank Group and sharing the top position with Japan in the ADB—has sanctioned the junta. European shareholders, as a bloc, represent 23% of shareholder power in AIIB—second only to China—and many have adopted sanctions against the junta. 

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