When Myanmar’s generals deposed newly re-elected leader Aung San Suu Kyi in February 2021 and put her through the show trials that ended with a twenty-seven-year jail term, they must have assumed they’d tidied away that threat for good. Recently, though, senior general Min Aung Hlaing and his cohorts have discovered they need their seventy-nine-year-old political prisoner close by.
Suu Kyi has been moved from her jail to a house within the compound in the capital, Naypyidaw, where the top military leaders live. But they aren’t concerned for her well-being, it seems: with armed resistance groups getting into drone warfare, her presence is designed to deter sneak attacks. The generals are hiding behind Aung San Suu Kyi.
In this, the fourth year of military rule under the innocuously named State Administration Council, the military regime has moved from overwhelmingly dominating to struggling for survival. It is faced with a diverse array of opponents. Most effective are the armies of the ethnic minorities around the fringes of Myanmar — armies that have been battling for decades against the centralising powers of the Bamar majority, from which the national military, or Tatmadaw, is largely drawn. But a broader-based resistance, drawn from supporters of the ousted government and calling themselves the People’s Defence Force, is growing in military skill and experience.
Concerted attacks last October by three ethnic armies based in the north and northwest — the “Three Brotherhood Alliance,” or 3BA — ousted the Tatmadaw from border-crossing control points into China and nearby towns. Almost weekly since then have come reports of more towns and army bases falling into rebel hands, with heavy Tatmadaw casualties and many of its troops captured or surrendered. By February, the junta had announced a new conscription drive to field more soldiers. Then, a month ago, ethnic forces took over the city of Lashio, a major stop on the old Burma Road between Mandalay, the ancient capital and Myanmar’s second-largest city, and China’s Yunnan.
David Scott Mathieson, an Australian analyst who has reported on Myanmar from Thailand for two decades, says the resistance groups are inflicting “body blows” on the Tatmadaw, forcing it out of borderlands along the country’s north, southeast and in Rakhine (Arakan) state on the Bay of Bengal. The People’s Defence Force is also starting to deliver pin pricks. In recent weeks, fighting near Mandalay forced a Singapore-owned power plant to shut down for two weeks. It also grabbed three small oil and gas fields not far from Bagan, the tourist centre of ancient temples and stupas further down the Irrawaddy River.
Mathieson cautions that some of the claims are tenuous. “You have to look at the backlash,” he tells me by phone. “When the military lose control of a town or area they then subject it to really intensive aerial and artillery bombardment. The resistance might gain control of the town but over the following weeks half the town is flattened and the townspeople have to flee.”
An accommodation has been worked out in some commercially important centres. No bombing followed the capture of Lashio, for example, which receives significant investment from China and is home to the Wa ethnic group, long known for its working relationship with China, whose United Wa Army is keeping order. Nearer the Thai border, ethnic Karen forces earlier claimed to have taken Myawaddy, a big cross-border trade centre with many Thai investments, but agreed to retreat to its fringes rather than subject it to fighting or bombing.
What has doubled the pain for the junta is that China clearly supported last year’s 3BA action against the northern border points. Its authorities were fed up with the cyber-scam centres tolerated and taxed by the regime in the borderlands, where workers — effectively captive — mount phishing attacks on individuals in China and elsewhere. It allowed the 3BA to acquire attack drones with software that enables then to avoid the anti-drone weapons China supplies the Tatmadaw. In Rakhine state, the Chinese have an understanding with the rebel Arakan Army that their gas and oil pipelines into Yunnan will not be touched.
The ethnic leaders are thinking long term, says Mathieson. “It’s going to be the Chinese who will be their major investors. It’s the curse of geography. We don’t like them but this is the hand we’ve been dealt.” On China’s part, it’s realpolitik: the Tatmadaw were out of the picture in these regions, so China would deal with the ethnic forces. Chinese diplomat Wang Yi could simultaneously go to Naypyidaw, as he did recently, and pledge support for Min Aung Hlaing and his plans to hold elections next year, a fanciful window-dressing exercise if the proven most popular electoral force, Suu Kyi and her National League for Democracy, is disbarred.
“The grand picture is that the Burmese military is losing a lot of territory in the hinterlands but they do have an incredibility strong central core with military factories, airfields, and lots of bases,” says Mathieson. “The question is whether they will be able to defend that central core where the dynamics of conflict will be quite different.”
Sean Turnell views the state of play from a different angle. He is the Australian economist who was resident adviser to Suu Kyi’s government; he too was imprisoned and tried on improbable espionage charges, and he was released in November 2022 after 650 days in miserable prisons. Now at Sydney’s Lowy Institute, he has just published Best Laid Plans, a somewhat rueful account of the economic reforms his team attempted.
For Turnell, the real threat to the military regime is the dire state of the economy, which has contracted sharply since the coup and left around 40 per cent of the fifty-five million population in poverty. Production of natural gas and exports via pipeline to Thailand have fallen sharply. Foreign exchange reserves have dwindled. The State Administration Council has resorted to desperate means to shake out more hard cash and stop capital flight.
Myanmar’s rulers have also tried to get the country’s many expatriate workers to send their remittances through the official banking system, where the exchange rate is Kyat 2100 to the US dollar — as against a market rate of more than Kyat 5000 to the dollar — which effectively means confiscating 60 per cent of their earnings. A somewhat less punitive exchange rate is enforced on commodity exporters. To cut off alternative ways of moving funds, security authorities have arrested leading bankers including the Yoma group’s Serge Pun, along with gold dealers and operators of the hundi system of counter-party payments that has run for centuries across India and the Middle East. (The regime uses hundi too, to evade sanctions.) Even the regime-appointed central bank governor has been hauled in.
“They [the State Administration Council] have given up any rhetoric on development or growth,” Turnell tells me. “All of their policy is about: How do we get resources to survive? And above all that means foreign exchange. Because the blending of the two, the economy and the military, comes at that point. They need the foreign exchange to buy the weaponry, from China or Russia. They’re desperately short of it.”
Foreign exchange reserves have fallen to “probably around a quarter” of pre-coup levels, said Turnell. “This is why they keep bringing in those measures — to capture the remittance business, go after the hundi dealers, the goldsmiths, the banks, the attack on Serge Pun and the bankers, all brought up to Naypyidaw and given lectures. It’s all about the same thing: commandeering foreign exchange… There’s no doubt they are on the back foot.”
This drift has Turnell and exiled figures in the self-styled National Unity Government starting to think about how they would resume the reforms so abruptly ended by the army. “We would do it all again, only faster and deeper,” Turnell writes in his book.
But economic reformers could no longer leave two previous constitutional givens in place. One is the military’s lock-hold on the defence and home ministries and its own budget. The other is the centralised state structure, with endless negotiations on devolution stretched into a future where it was hoped greater prosperity and cleaner governance would weaken ethnic demands for autonomy or independence.
Aside from military retreat, could a new central government really concede a dispersal of powers? The support Suu Kyi gave the Tatmadaw against charges of genocide against Rohingya in Rakhine comes to mind, along with the strident support for Bamar dominance among populist Buddhist monks and their wealthy abbots.
“That’s the $64 question,” said Turnell. “From the National Unity Government’s side, they’ve been incredibly careful to craft everything in some sort of federal framework, and to convince ethnic groups that there will be a sort of federal system. Certainly some of the armed organisations have at the very least paid lip-service to that. Where groups like the 3BA, the United Wa Army, fit into all that is where it becomes more difficult. Some of their activities would not bear close observation in terms of national building and all the rest of it.”
How would Suu Kyi herself now see these questions? Communications are now nearly non-existent, Turnell said. When he was appearing with her in their trials, they had some exchanges. “We would hear things, that she was highly favourable to what the National Unity Government was all about, things like federalism,” he said. “I don’t think she was in any sense dictating the pace of that, but certainly not objecting to it.”
If she had, she would have told him, Turnell thinks. “My leaving of her was a specific moment where a message could be got across, and the only message she was absolutely full on about getting across was how proud she was with the resistance, that people were standing up, that this was a new generation, things were different. There was no sense of her objecting to any particular piece of policy, even though that policy was in some ways quite different to what she was doing, in particular over the Rakhine, over federalism.”
In jail, Turnell and other key reformers talked about what they would do differently. “The assumption of these people, and it might be her assumption, was that the military had no place. Which meant that a lot of things that were unacceptable to them could go ahead, like a federal structure, like a very different approach to Rakhine.”
The military will resist all the way, of course. “Taking my economist hat off but putting my economic historian hat on, one of the things that always happens is when regimes get really desperate, in the crunch you don’t need money any more, you just take,” Turnell says.
“Money is always an ephemeral, inter-subjective reality, a philosophical thing, a belief we both trust,” he said. “Once that breaks down and money ceases to have a value, then you are in the world of nature, jungle and might, and real resources. A regime like Myanmar’s — they print money, the taxation system is not up to anything, the bond market is collapsed. They can go after the banks, the foreign exchange, because that retains value because it’s determined by somebody else.”
As monetary value collapses, regimes employ naked power, seizure and command. “To me, the regime is not yet into that last desperate stage, but it does seem they are getting into it, where the monetary system is beginning to not meet their needs.”
The decline could be slowed, perhaps, by an internal military coup. Turnell is surprised that none of the regime’s crony capitalist friends — figures like the notorious Tay Za and Aung Ko Win — seem to have remonstrated with the leadership. “But you might get rid of one despotic but incompetent general, and you get one that’s no less despotic but more competent.”
Where Mathieson and Turnell converge, however, is that after all the borderland reverses and the collapse of the formal economy, the regime might stretch out its survival in the central core, feeding off its exchange rate extortion, bartering resources, and paying for Russian and Chinese arms in gold.
“When you add up all these different data points: the currency, fuel prices, commodity prices, battlefield losses, it looks pretty grim for the State Administration Council,” Mathieson said. “The big question here is: They’ve stuck it out for nearly four years and how much longer can they hold on? I suspect that as long as they have access to their domestic arms manufacturers, enough bodies to put uniforms on and to fight, and air power, they can probably hold on. Ten years they could easily hold on. They can go down fighting, or they can hold on to be lords of the wasteland, like in Mad Max: Fury Road.” •
