India Cosies Up to Burma

Some analysts say India's high profile welcome earlier this week of Burma's junta leader, Snr-Gen Than Shwe, may be an unspoken endorsement of his military regime's plans to hold national elections, but New Delhi is also fishing for benefits from the regime.

The Indian government, feting Than Shwe with top-level political and commerce meetings this week, faces a number of concerns that put Burma firmly on its agenda: the search for nearby energy sources, concerns about Chinese hegemony, transport links eastward and, perhaps most of importantly according to observers, rising rebel activity in India's northeast states.

Despite attempts by Western governments to promote isolation of the Burmese junta, New Delhi has been increasing its contacts. This follows a period of Indian petulance after New Delhi's disappointment at being usurped by China for the chance to purchase the 200 billion cubic meters of gas in Burma's still-to-be-developed Shwe offshore field in the Bay of Bengal.

Two Indian government-owned companies are part of the Shwe development consortium, led by South Korea's Daewoo International, and they had hoped to acquire much of the gas for export to India.

"Bilateral trade with Burma in general is small fry stuff for a burgeoning economy the size of India's, but it's more significant for the junta and it might benefit India's efforts to stop China from running away with more Burmese gas," said Collin Reynolds, an independent energy industries consultant in Bangkok.

"Only two blocks of the Shwe field are being developed so far, and it's highly likely that much more gas will be found in that field," Reynolds said.

In addition, Reynolds said that recent reports that India is rapidly becoming one of the biggest investors in Burma overlook the fact that most of India's investment was committed a long time ago to the two-block Shwe development project, whether or not it acquired the gas China is now buying.

Through its state-owned energy firm Oil and Natural Gas Corporation and sister firm GAIL, the Indian government has committed about US$1.3 billion to the Shwe development project, and also to the pipeline which will carry gas from the coast to China's Yunnan province. Thus far, there are no guarantees that India will be able to buy gas from any future discoveries, and despite Chinese inroads Thailand remains the biggest buyer of Burma's gas.

India's other big project in Burma, a trade route to the coast via a river flowing from the northeast Indian state of Mizoram, has been stalled for two years. Efforts by India to develop hydroelectric dam systems in western Burma to feed electricity to the northeast Indian states have also largely stalled.

In addition, India's Ministry of External Affairs acknowledged in May that cash shortages and bureaucracy on both sides of the border had delayed an agreement for Indian companies to dredge the River Kaladan to make it navigable for bigger commercial vessels, and also to renovate the port of Sittwe. The delay has pushed up costs by 40 percent to US$134 million.

India is Burma's biggest export market after Thailand, accounting for 17 percent of Burmese exports in the 2008-2009 financial year, but most of those exports are agricultural produce such as beans and pulses, said Australian economist Sean Turnell, who produces the Burma Economic Watch at Macquarie University in Sydney, in a study of Burma's economy.

Conversely, Burma's imports from India are insignificant, whereas China is the biggest single source of Burma's imports at more than 30 percent of the annual total.

"While commercial interests are doubtless playing an important part in India's closer ties with the junta, I would say that growing border security concerns are at least as important at present," said an official with a European Union embassy in Bangkok, speaking on condition of anonymity.

"India and Burma are close to signing an agreement to cooperate in trying to cut off the sources of money that funds separatist rebels operating in India's northeast states," the official told The Irrawaddy this week. "Those sources include drugs and weapons and extortion."

India's porous border with Burma is over 1,500 kilometers long and allows rebels to cross in and out of the Indian states of Manipur, Nagaland and Mizoram.

Another South Asia analyst, Marie Lall of Chatham House, a London-based think tank, concurs that the strengthening insurgency movement in India's northeast region, which has become more violent in the last 18 months, is at the heart of New Delhi's growing engagement with the Burmese junta.

The price of winning the junta's active support in combating rebels may not be very expensive economically—Than Shwe is reportedly keen on Indian know-how in developing Burma's nascent information technology town of Yadanabon, near the new capital Naypyidaw. But it could prove costly in political terms.

Reprinted with permission from Irawaddy Daily, awith which Asia Sentinel has a content-sharing agreement