The Burmese Way To Capitalism

Junta frees economy; political freedom and dancing must wait

AS a young man, U Kyaw Tin used to spend Saturday nights squiring ladies on dance floors at the numerous ballrooms that dotted this once-sophisticated capital. During the late 1950s and into the early 1960s, this was the most colorful city in Southeast Asia, outshining even Singapore, and revelers boogied to the latest tunes into the wee hours.

But that was before Gen. Ne Win nipped the country's brief bloom of democratic rule with his 1962 military coup, just 14 years after independence from the British in 1948.

Soon afterward, in a fit of rage at seeing his favorite daughter swooning with a diplomat on a hotel dance floor - or so the story goes - the general banned dancing.

Twenty-six years of austerity followed, the result of Ne Win's "Burmese Way to Socialism," a socialist experiment that required the explusion of just about all foreigners - Europeans, Chinese, and Indian businessmen - and things foreign. It mostly masked an increasingly brutal military rule.

After taking over from Ne Win, who stepped down in 1988 following a democratic uprising, a new military government said it would renounce socialism and eventually restore democratic rule.

Five years into this "new order" under the State Law and Order Restoration Council (SLORC), U Kyaw Tin, a former banker who now makes ends meet by banging boards into bookcases, says there is little in Burma (also called Myanmar) to rejoice over.

"Sure, they have loosened up in the last couple of years, but you have to know these are basically still the same hoods, and they will keep most things for themselves," he says, a cravat wrapped rakishly around a neck that still tracks ladies passing by his front stoop.

His is a common refrain, but not the only one heard here nowadays.

Businessmen are generally more upbeat about SLORC's liberalization - not just well-connected businessmen, but also small-scale entrepreneurs who are taking advantage of the new space the government created for them when it legalized the country's huge black market.

Farmers, too, are more prosperous. They now have to sell only about 10 percent of their output to the state for less-than-market prices.

Undoing the mechanisms of socialism is less daunting in Burma than in the former Soviet Union or China, because collectivization was never imposed on a large scale. Three-quarters of the country's output is still in private hands - most of that in the agricultural sector but also in trade, transportation, and small-scale industry.

Responding to new economic incentive, the farm sector has begun producing substantial surpluses and, in the view of some agricultural experts, the country is on its way to becoming a major food exporter as it was in the 1950s and early 1960s.

The government has ended its monopoly in a number of businesses (including gems, wood, and banking), and encouraged the formation of private firms, including joint ventures with the state, to take up the new space. Trade within the country has been freed and commerce with neighboring countries legalized.

The result is that the country - or at least the major cities where foreigners (and now foreign reporters) are allowed to visit - has markets filled with cheap consumer goods from China, Thailand, and India, quenching a demand never adequately satisfied by the decrepit state sector. There is also an abundance of electronic gadgetry, and automobile ownership is increasing 30 percent a year. Unlike in neighboring Thailand, however, traffic jams are still a malady of the future.

But all this just lends a patina of prosperity to a place that remains seriously rundown.

"They have been living from money under the mattress for the last 20 to 30 years," observes a longtime Western resident. Several years after the door was thrown open again for foreign investors, "productive investment is awfully absent," he adds.

Instead, most foreigners have come to exploit the country's legendary resources - oil and gas, gems and minerals, fish, and its vast stands of teak and other timber.

Investors complain that the Burmese are largely to blame because of their enervating bureaucracy, ridiculously unrealistic exchange rate, and penchant for driving excessively tough deals.

Many international exploration companies have packed their bags after drilling some of the world's most expensive wells, most of them dry. More recent discoveries off shore promise huge reservoirs of gas that could provide a critical boost to SLORC.

If commercially developed, the oil concessions, one held by Texaco and the other shared by Los Angeles-based Unocal and the French state oil firm Total, could net the government several hundred million dollars a year.

This would effectively replace international assistance, which was cut after a bloody Army crackdown on pro-democracy demonstrators in 1988.

Most major donors have made the release of Nobel Peace Prize laureate Aung San Suu Kyi the litmus test for resuming aid, but SLORC shows little inclination to meet this demand.

Nor, it is clear, is SLORC going to recognize the results of 1990 elections, which were overwhelmingly won by an opposition the government subsequently wiped out. The opposition government now reigns in exile from the city of Manerplaw, the headquarters of the ethnic Karen rebel movement.

Still, diplomats and other residents note some improvements. Universities are still open, and martial law, the source of so many abuses, has not been reinstated; it was lifted last year.

They also say the government has released more political prisoners than it has arrested in recent months, and there are no new reports of torture among the several hundred still detained.

THE heavily scripted political convention SLORC is holding to write a new constitution has won it little credit, but some diplomats say proceedings have been more free than is generally acknowledged.

"The situation used to be black and white, and now it is more gray," one analyst says. "You want them to move a mile, they have moved a few yards. But for a country that has not moved for 30 years, that couple of yards is fairly significant."

Analysts differ over whether the changes represent a change of heart or merely tactical cunning. "It is probably somewhere in between," one resident says. "But collectively these measures take on a life of their own."

Of course there are limits. The military has made plain it intends to call the shots for a long time to come - even from behind the scenes of the civilian administration it is trying to build.

The new economic freedom is thus seen as an attempt to buy time so the military can finesse a more internationally acceptable government that it can still control.

Trading any real progress on political freedom for an improved standard of living is the same strategy the Chinese and Vietnamese governments are foisting on their people. Both countries have won international praise for their economic reforms.

But SLORC, which has no recognized economic talent among its 21 members, is given lower marks. Analysts say this is because it feels more insecure.

"They are getting all sorts of good [economic] advice, but they don't take much of it, mainly, I think, because they are afraid of losing political control, which might come about with, say, freeing up the exchange rate," observes one analyst.

According to this line of thinking the present "Burmese Way to Capitalism" might prove to be the military's nemesis.

More likely, though, it appears the military will manage to muddle along.

One of its more sure-fire plans is to develop the country's tourist potential. The pristine countryside and relatively unspoiled culture are positive legacies of Ne Win's rule. The government is plowing ahead with plans to increase annual tourist visits from roughly 20,000 last year to 500,000 in just a couple of years.

This is a startling reversal of Ne Win's xenophobic isolationism, which allowed only a trickle of tourists out of a concern for national purity.

But a group of former military officers now running the tourism ministry still wants to make one thing clear: "There will be no dancing."

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