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'Burmese Way to Socialism' Drives Country into Poverty

Burma is rich in natural resources, yet one of the poorest countries in the world. Very little of the revenue goes to the people. Instead, the funds are keeping the country's military leaders in a life of luxury. Kate Woodsome at VOA's Asia News News Center in Hong Kong explains how Burma's money is being spent.

Burmese citizens were shocked when a video of the wedding of Senior General Than Shwe's daughter found its way into public markets and onto the Internet last year. The video shows a portly bride adorned in diamonds and emeralds. Military police are shown escorting wedding guests out of luxury vehicles into a banquet hall decorated with grand bouquets, tray after tray of delicacies, and a five-tiered wedding cake.

Min Zaw Oo, a Burmese activist now living in Washington, says it was the first time the general population saw the stark difference between the people and their leaders.

"In Burmese culture, Burmese expect their leaders to sacrifice. So when they see a leader of the regime as having this wedding ceremony with all these jewelries, the Burmese people are really angry, not just only because that broke the norms and values of a leader, but also they compare themselves with those people getting rich under this system," said Min Zaw Oo.

In contrast to the opulence shown in the video, most of Burma's 50 million people struggle to feed their families on less than $1 a day. Malnutrition is widespread, and the HIV infection rate is high. Only about three percent of the country's budget is spent on health care.

The country is one of Asia's poorest, and its government one of the most repressive in the world. But when the government sharply raised the price of fuel in August, tens of thousands of citizens were desperate enough to take to the streets to protest. Last month those demonstrations were stopped with deadly military force.

Burma was not always so poor. Fifty years ago, it was known as the "rice bowl of Asia" - one of the region's richest countries. But the prosperity started to fade in 1962, when leaders of a military coup implemented a plan called the "Burmese Way to Socialism."

Sean Turnell of the Burma Economic Watch at Macquarie University in Australia says the military generals nationalized everything - from major enterprises down to the local corner store.

"After that, Burma begins to sink into deepest poverty as this agenda, this Burmese Way to Socialism, gradually dismantled all of the institutions you need to run a functioning market economy," he said.

Turnell says over the past four decades, military leaders have mismanaged Burma's economy by combining a rigid, Soviet-type of central planning with superstitious beliefs.

"In 1987, a round of demonetization took place where they just declared whole units of the legal currency no longer legal tender and they replaced them by currencies based on the number nine," continued Turnell. "The reason for that was astrologists had told the leading general at the time that the number nine was especially auspicious for him.

He says the military leaders have little formal education and are often advised by astrologists. This has led to spending sprees, like the construction of a new multi-billion-dollar capital in the jungle town of Naypidaw. The move from the old capital, Rangoon, began two years ago at 6:37 a.m. - a time recommended by an astrologer.

The spending is funded by Burma's resources - minerals, gems, natural gas and lumber. It is also the world's second largest producer of opium poppies, and has a growing amphetamine trade.

Burma's gas flows to neighboring Thailand. Its other neighbors - China and India - are competing with South Korea for access to offshore gas fields. France's Total and U.S. oil giant Chevron also are in on the trade.

Regional analysts say most of that revenue and money earned on the black market goes straight to the military leaders and the elite that surrounds them.

In the 1990s, the government embarked on a self-promotional campaign and renovated key architectural and religious sites. But Burmese activists say that was its last notable public contribution.

In recent years, the country's earnings have helped enlarge and modernize the military with weapons and equipment from China and India. Last year, members of the military and civil servants were treated to a substantial pay raise.

Earlier this year, Burma purchased a nuclear reactor from Russia. The government says it will be used to produce medical isotopes for use in cancer treatments.

Ian Holliday, a Burma expert at the University of Hong Kong, says the generals also spend their money in Singapore.

"I know they've got some property investments. Than Shwe and his family have a luxury villa that they go [to]. I don't know how much money they put in Singaporean bank accounts. I assume it's quite a lot," he said. "There's certainly substantial Singaporean investment in Burma, so I think Singapore would have no problem with Burmese putting their money there."

In response to last month's bloody crackdown on the anti-government protests, the U.S. reinforced its economic sanctions on Burma's leaders. And the European Union strengthened sanctions of its own. Holliday says the measures will not be very effective.

"Things like freezing the assets of named senior members of the government that are held in the U.S. - there are almost no assets that the generals have in the U.S. And nobody from the European Union is thinking of investing in Burma right now," he said. "The consumer reaction would be so extensive, and the country's just so toxic."

Analysts say the only thing that could turn Burma's economy around is a split in the military leadership. Until then, they say, there will be no end to the spending sprees.