Trade with Myanmar Key Part of US Pivot to Asia

By William Boot 25 July 2013

Is there a pivotal link between the United States’ concerns over China’s assertiveness in the South China Sea and inroads into the Indian Ocean and bids from the US to expand Yangon’s airport and improve the roads between Myanmar’s main commercial city and Mandalay?

The rapid rapport developing between Washington and Naypyitaw coincides with US efforts to reassert influence in the Asia-Pacific region as China’s belligerent territorial claims on most of the South China Sea create angst for old US allies such as the Philippines.

US concern about China’s growing influence and assertiveness in East Asia has led to President Barack Obama’s so-called pivot to Asia, and the key element of Washington’s bid to counteract China is not military but commercial. The days of cold war politics are past.

“Simply put, the pivot is meant to be a strategic ‘rebalancing’ of US interests from Europe and the Middle East toward East Asia,” said The Atlantic, a Washington based business-political magazine, in April.

This pivot lies behind Obama’s promotion of yet another Asia-Pacific trade grouping, the Trans-Pacific Partnership, or TPP.

Obama’s TPP is both new and still small, with just 11 countries, plus firm interest from Japan. Following its most recent meetings this year, the TPP loosely comprises tiny Brunei, Chile, Singapore, New Zealand, Australia, Peru, Vietnam, Malaysia, Mexico, Canada and the US. It is also still drawing up its trade pact plans.

The Atlantic described the TPP as “one of Washington’s most ambitious trade proposals in years” and a key element of the pivot to Asia.

“For Washington, improving relations with established markets like Tokyo and Seoul and emerging ones like Jakarta and Manila presents tremendous opportunity, while for these countries the American presence acts as a check against growing Chinese power,” the influential US magazine said.

But it isn’t just the Pacific Rim that concerns Washington. China’s expansions into the Indian Ocean are of equal concern, say analysts. And this is where greatly improved US-Myanmar relations seem highly relevant.

“The opening up of Myanmar after decades of isolation will make it an increasingly important geopolitical country, not just for the United States but also for India, China and the Asean bloc,” a military attaché at a Western embassy in Bangkok told The Irrawaddy.

“Until now China has held the box seat in Myanmar and it has clearly used its influence to secure large supplies of gas and to use the country for access to the India Ocean. We can clearly see the benefit of this in the port and oil pipeline the Chinese have built to open up a new supply route into its landlocked southwest region,” said the embassy official, speaking on condition of anonymity due to the sensitivity of the subject.

China has plans to further strengthen its infrastructure to the Indian Ocean with a new railway route from its southwestern Yunnan Province through Myanmar to the coast at Kyaukphyu, where its oil transhipment port is based. Kyaukphyu will also be the focus of a special economic zone, as yet still only on the drawing board in Naypyitaw.

As well as a diplomatic smiles offensive in Myanmar, the US is clearly eager to match China’s infrastructure build-up in the re-awakening economy.

US business is already bidding to win contracts to expand Yangon’s international airport and to build much-needed roads, notably in the main commercial corridor between Yangon and Mandalay.

It is significant that the US State Department’s former Assistant Secretary for East Asian and Pacific Affairs, Kurt Campbell, is playing a “pivotal” role in the airport development bid.

Mr. Campbell and his former colleague at the State Department, Nirav Patel, have formed a consulting company which has now teamed up with a US business consortium, the ACO Investment Group, bidding for infrastructure projects in Myanmar.

Mr. Campbell was an influential component of Mr. Obama’s decision to re-engage with Myanmar and through visits to Naypyitaw laid the path for Washington’s suspension of sanctions.

“The ACO consortium is clearly interested in capitalizing on that work,” said the Washington magazine Foreign Policy recently. “Kurt Campbell is widely regarded as one of the key architects of the United States’ efforts to engage and normalize relations with Myanmar,” the political magazine noted.

The ACO includes several prestigious US companies, including Boeing and Burns & McDonnell Engineering.

Another still influential Washington political figure, former Secretary of State Madeleine Albright, has also suddenly taken a renewed interest in Myanmar, as chairwoman of the National Democratic Institute, an organization created by the US government to promote democracy in developing countries.

The US is not alone in being concerned about China’s rising influence in the Indian Ocean rim. India is now flanked by two ports managed exclusively by Chinese state-owned interests—Kyaukphyu on the Bay of Bengal and Gwadar on Pakistan’s coast abutting the Arabian Sea.

“It is possible that if the political situation in Myanmar had not changed the Chinese might have gone on to develop some sort of naval port on Myanmar’s coast. This would have been worrying for both Washington and Delhi, but I do not see this happening now,” the Bangkok embassy official told The Irrawaddy.

“What we are seeing instead in Myanmar is a free for all. China’s continued presence is certain but it will be less influential and must compete now more on commercial grounds with the rest of the world, notably I would think Japan and increasingly the United States.”

This story first appeared in the July 2013 print issue of The Irrawaddy magazine.