A Shattered Rice Bowl

Burma specialist Sean Turnell of Macquarie University in Australia recently spoke to The Irrawaddy about the politics of rice, the junta’s bank balance and the possibility of humanitarian intervention.

Question: The Burmese military announced it would contribute 5 billion kyat (US $4.4 million)  for the Cyclone Nargis relief effort. What do you think of the amount of their donation?

Sean Turnell

Answer: No not at all. I think it’s the most extraordinarily mean-spirited thing imaginable. I think it’s important to remember, of course, that the regime currently has around $4 billion in foreign exchange reserves that they got from the gas sales. In kyat terms that’s over 4 trillion kyat. So the idea that they’re giving 5 billion kyat in relief funds is the most extraordinarily ungenerous thing imaginable. Also of course, this is the people’s money; it’s not the generals’ money at all. They’ve accumulated all of Burma’s vast export revenue from the gas, which should belong to the people, so the idea that they’re handing back is an extraordinarily poor thing and it unfortunately summarizes so much of what the regime’s response has been to this cyclone.

Q: The junta earns so much money every year from selling and exporting gas. Where are they hiding this money?

A: The Burmese regime is currently earning just over $100 million every single month. If we have a look at the public accounts, what we see is an incredible accounting trick—the regime has logged into the public accounts the gas revenue according to the official exchange rate, which undervalues it by 200 times. Effectively, that means that $3 billion is sitting somewhere. Now where it’s sitting is the interesting question, but what we do know is that it’s sitting somewhere where Burmese people can’t get access to it.

So either it’s sitting offshore or it’s sitting in the accounts of the Myanmar Foreign Trade Bank or the Central Bank. But it looks like it’s only accessible by Than Shwe and perhaps one or two others; it’s not being used for the benefit of the Burmese people, which of course is critical at the moment. This sort of money can do an enormous amount with regard to the cyclone disaster, but it seems to be deliberately withheld.

Q: Not all the money is really being spent on victims and survivors. Where are the authorities going to use this money?

A: Well I think we can expect the money to be used in the way they’ve always used foreign exchange—for things like the new capital at Naypyidaw, for the nuclear reactor, if that goes ahead. I’m sure people will remember the 1,000 percent pay increases for senior military personnel and various other wasteful capital projects like that. They are, in a sense, glorifying the regime rather than relieving the suffering, which is certainly the most important way the money could be used at the moment.

Q: The Irrawaddy basin is one of the important “rice bowls” in Southeast Asia and very important for Burma’s economy. Since this rice bowl has been destroyed in the cyclone, what will the impact be on Burma’s people, the economy and food security in the future?

A: The effect on the future, I’m afraid, is very poor—in the short term, the medium term and, indeed, the long term. In the short term, of course, we’ve seen the destruction of much of the current harvest, but we’ll also see at least the next two harvests are going to be greatly affected and there’ll be virtually no output from those areas during that time. So we’re likely to see considerable food and rice shortages for the next couple of years.

The damage to the economy is going to be profound because the timing of this could not be worse with the world’s rice prices at record levels and many other countries restricting exports and so on. It’s going to be very difficult to replace the rice that was grown in the delta. It’s going to be very expensive.