Burmese Aid Request Stirs Concerns

By Glenn Kessler
Washington Post Staff Writer
Friday, May 23, 2008

Burma's military junta is seeking up to $11.7 billion in reconstruction aid at a donor conference scheduled this weekend in Rangoon, the former Burmese capital, raising fears among human rights activists and Western governments that Tropical Cyclone Nargis could become a diplomatic and financial windfall for the reclusive regime.

Burma has a gross domestic product of only about $15 billion, and Burmese officials have not indicated how they reached their damage assessment when as many as three-quarters of the 2.5 million victims of the May 2-3 cyclone have not yet received assistance.

But the nation of about 55 million people is rich in natural resources, with major Asian regional players such as China, Japan, India and Thailand long battling for access and influence. Meanwhile, international financial institutions such as the Asian Development Bank and the World Bank -- which have not made loans to Burma for decades -- issued statements this week suggesting reconstruction aid could once again flow to Burma, also known as Myanmar.

The conference, organized by the United Nations and the Association of Southeast Asian Nations, will be held Sunday, the day the house arrest of Nobel Peace Prize laureate Aung San Suu Kyi expires. The military, which refused to recognize the landslide victory of her party in 1990, is expected to renew her detention, as it has annually for the past five years.

"The junta has skillfully used ASEAN and the U.N. to set up a bidding war among the major powers that compete with each other," said Michael Green, President Bush's senior director for Asia affairs on the National Security Council until 2006. The weekend conference could prove "a real turning point," he said.

British Foreign Secretary David Miliband acknowledged the risks in an interview this week. "We are not going to allow this to become a ramp by which the regime resuscitates or reinforces its political position," he said.

Burma's financial situation is remarkably opaque. Though much of the country is desperately poor, the military junta has enriched itself with revenue from natural gas fields that bring in about $2 billion a year, boosting the country's reserves to $3.5 billion, experts said. The Burmese government last week assigned 43 companies -- many with close ties to the military -- to receive lucrative reconstruction contracts, according to a report in Irrawaddy, a Thai magazine that focuses on Burma.

Sean Turnell, a professor at Macquarie University in Australia and a specialist on Burma's economy, said the government exploits the tremendous gap between the official and unofficial exchange rates to hide the $200 million a month in revenue it receives from the gas fields. He estimated that the cyclone actually caused about $3 billion in damage, or about 20 percent of GDP, far below the government's estimate.

"But Burma doesn't need money, it does not need cash. What it needs is the very thing it is refusing: expertise," Turnell said. "If the regime had the will to reconstruct the delta, it has the cash."

The Bush administration, which is sending its senior diplomat based in Burma to the conference, has been pressing allies to come together first to persuade the government to allow humanitarian relief to flow freely to affected areas. The United States has provided $20.4 million in aid, according to the U.S. Agency for International Development. Including the U.S. portion, a U.N. emergency appeal has raised $110 million in contributions and an additional $110 million in uncommitted pledges.

"Our position is very clear: We think this is a natural disaster which still is in the humanitarian-response phase and is not yet in the reconstruction phase," said White House spokesman Gordon Johndroe, adding that administration officials have reached out to Britain, France, Japan and other allies to make that case.

Green said Japan's government is split between officials who want to make a substantial pledge and those who urge caution because of Burma's horrific human rights record. "The Japanese may see an opening to make a big play in Burma" now that China, its traditional rival, is distracted by its own humanitarian crisis in the aftermath of the Sichuan earthquake, he said.

Japan plans to send a senior political appointee, probably a vice minister, to the conference, a Japanese Embassy official said yesterday, adding that "our utmost priority" is the implementation of $10 million in emergency humanitarian and rescue assistance Japan has already pledged.

Among European and U.S. officials, there is growing opposition to any World Bank participation in Burmese reconstruction projects, diplomatic sources said. While the bank has not provided direct financial assistance to Burma since 1987, it has provided grants to countries such as Haiti and Liberia that were in arrears. A senior World Bank official said yesterday the Burmese government must first work closely with international donors to produce an acceptable recovery plan.

"For all the international community -- including the bank -- providing assistance for longer-term recovery would need the government to work alongside international partners, led by ASEAN, to get in place a full assessment of the damage and losses and a recovery plan which focuses on getting aid to people in need and demonstrating that the aid is well used," Sarah Cliffe, the World Bank's director of operations and strategy for East Asia and the Pacific, said in an interview.

The Asian Development Bank, of which Japan is the biggest shareholder, said Wednesday that "additional assistance measures may be considered" after a reconstruction assessment. Some experts believe the aid could be funneled through an existing program to promote development in Southeast Asia's Greater Mekong region.

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