Sino-Burmese energy cooperation fuels conflict

As Burma and China improve their resources development partnership, concerns have arisen over the impact such the joint ventures will have on conflict and stability in the region. Burmese President Thein Sein’s recent state visit to China in May established further strategic cooperation and mutual collaboration regarding natural resource development between the two nations. However, this rapidly expanding economic partnership has had negative repercussions on Burma’s internal stability, resulting in fighting between the Burmese military and rebels forces as well as on region competition with regards to China and India.

Energy cooperation

The newly formed ‘civilian’ government in Burma faces large challenges regarding its economic development, which has opened the door to China, who has been more than willing to coordinate economic development in exchange for having access to Burmese energy resources. Burma is oil rich, with reserves of around 600 million barrels as well as total gas reserves of 88 trillion ft3, said to be the largest natural gas reserves in Southeast Asia.

China has been keen to tap into and help develop Burma’s resource market, allowing Beijing to further diversify its energy dependence. In April 2007, the Chinese National Development and Reform Commission approved an oil pipeline from Burma’s deep-water port at Sittwe, through Arakan State in western Burma and northern Shan State to Kunming in Yunnan province of China. Since then, four additional pipelines have been agreed upon. Furthermore, nine hydroelectric dams are currently being financed by Chinese companies and are under construction in Burma's northernmost Kachin state. Foreign investment in Burma for 2010 reached nearly $US 20 billion dollars, which is more than the past two decades combined. $US 13 billion of the foreign investment came from China.

Chinese Energy Security

The pipeline agreements are set to allow an alternative route for China’s crude imports from the Middle East, reducing shipping time and its dependence on traffic through the Straits of Malacca. Currently, nearly 80% of energy resources imported by China pass through the strait. In return for the continued promise of economic development, China has also provided a valued added in terms of security for Burma, providing incentive to Naypyidaw to continue cooperation over resource development. China could easily back Burma on the international stage if Western demands for reform and halting human rights abuses increase, similar to the support it provides for North Korea.

Rebel Conflict

Increased development in the north of Burma without inclusion of local ethnic groups has sparked tensions in the region resulting in clashes with Burmese troops. The main point of conflict is between the Kachin Independence Army (KIA) which was ignored when Burma and China agreed energy deals, and is said to be demanding financial incentives. The KIA argues the dams in northern Burma have severe negative social, economic and environmental impacts. Most of the dams are located in ethnic states and allow the expansion of Burma Army control into these areas.

Last year, a series of bombs exploded at a hydropower project site being built in cooperation with a Chinese company in the Kachin state. Current fighting has slowed construction on the Taping River Dam site, as over 100 Chinese engineers and workers returned to China after the fighting erupted, undoubtedly frustrating Beijing.

India’s concerns

While China advances its geostrategic interests in Burma, Indian has actively reassessed its engagement with the Burmese region. With Burma giving China access to the Indian Ocean, not only for imports of oil and gas, but also potentially for military bases or listening posts, India has pushed to establish energy cooperation with Burma, hoping to gain leverage in terms of trade and security.

India was once a vocal pro-democracy supporter but changed its policy over a decade ago in order to have better cooperation with the military government. It now puts emphasis on security and trade rather than democracy and human rights. Doing so will allow India to pursue policies limiting China’s advancement in the region as well as ensuring that the Indian Ocean stays within its sphere of influence.

Finding a balance

As energy cooperation with China grows and India attempts to counter China’s advancement, the Burmese government needs to proceed carefully. Continued resource development in the northern provinces will only increase tensions with the KIA and other ethnic groups. While Burma has traditional pushed aside such concerns, the growing conflict is becoming an annoyance for Beijing, who will increase the pressure on Naypyidaw to ensure its interests are not harmed. Addressing the concerns of the KIA will not only favour Beijing; it will give greater legitimacy to its newly formed government, which would help pave the way for future foreign investment and resources development by those other than China or India.

Author: Evan Jendruck, Assistant Analyst with the AKE intelligence department in London.

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