Myanmar is in the midst of a slow and complicated transition from military to democratic rule. The new constitution, essentially imposed by previous rulers, allows the military to veto significant changes in addition to controlling key ministries and their own budget. This leaves the newly elected government with tough choices. They have to settle decades-long ethnic conflicts without upsetting the military. The new NLD government, effectively led by Daw Aung San Suu Kyi, needs to reduce religious frictions which were stirred up by elites opposed to her, and which could draw Myanmar into conflict with Islamic groups around the world. With relatively few seasoned civil servants, the NLD has to rely on an “old guard” that is not sympathetic to many of their reforms. Meanwhile, China is actively seeking to influence decisions in its favor, regarding the exploitation of resources, the use of ports, and Myanmar’s foreign policy.

When an independent and modern Burma was being formed after World War II, founding father General Aung San persuaded most of the ethnic groups to join the country where “full autonomy in internal administration for the Frontier Areas is accepted in principle” (Article V of the Panglong Agreement). If they did not like it after ten years, they were promised to be free – but this was a promise to be incorporated into the new constitution and not a part of the written agreement. However, most natural resources of Myanmar are in the ethnic states along with about 30% of its population. After General Aung San was assassinated in 1947, the Burmese Army took the position that Burma was a unitary state and there was no right to quit. Indeed, a long running, if sporadic, series of ethnic conflicts have made it clear that attempted secession will be met by violence. As a result, the ethnic groups have agreed to remain in Myanmar, but want a federal republic in which they have some rights.

The 21st Century Panglong conference, set up by the National League for Democracy, is an attempt to end the long running ethnic wars. However, the military has to approve any concessions to ethnic groups and it is not at all clear that effective decentralization of governing or revenues is on offer. Without serious political and economic talks, it is unlikely that there can be a peaceful settlement. Progress has been stalled or partial and it appears that there is not even a willingness to set an acceptable agenda.  Currently the officer class and most soldiers in the Myanmar Army are ethnic Burmans and Burmese laws with respect to land and other matters apply, even in ethnic states that have historically had their own laws, practices and languages.

All this would be hard enough to sort out, but China is also an active participant. Many minorities in Myanmar have ethnic and clan ties to Chinese living in Yunnan. This alone gives China an interest in what goes on in Myanmar. But, in addition, they have armed and aided groups such as the Wa and the Kokang who are fighting the Burmese military. The Wa have shoulder-fired anti-aircraft missiles from China and the Kokang have raised funds and attracted volunteers from China. It is clear that settling the war with the Northern Alliance (a group of ethnic militias bordering China who have not signed the cease-fire agreement) will not be settled without China’s help. In return, China wants concessions in other areas, such as access to a very good port on the Indian Ocean (Kyauk Phyu), possibly for naval and intelligence activities and certainly for controlling shipments to Yunnan and to further their expansive “Belt and Road” initiative. They also are taking a hard line on a poorly negotiated hydroelectric contract, demanding hundreds of millions of dollars in compensation unless other concessions are made.

Most large hydroelectric sites are in ethnic states. Former Senior General Than Shwe signed contracts in which the Chinese would build dams and effectively get 90% of the revenue from the electricity generated. Ethnic groups who would be displaced and flooded were not asked about this nor were they even sure that they would get any electricity or revenue from the projects. Since India gives Nepal 20% or more of the revenue from joint hydro investments, it is pretty clear that these contracts were poorly negotiated and ignored those most affected. The disputed contract at Myitsone Is not just opposed by the Kachin whose state it is in, but by many Burmese who dislike flooding the headwaters of the Irrawaddy River for cultural and historical reasons. While China did some investment at the site, it is not at all clear that the $800 million being demanded in compensation is closely related to the expenses incurred. In any case, ethnic groups want a voice in major hydroelectric developments in their ancestral homelands as well as a share of the benefits.

While Japan and India are aware of rebounding Chinese influence, the US has had other priorities. President Trump has contacted President Duterte of the Philippines and Prayuth Chan-Ocha, the military general who took over Thailand in 2014, but not Aung San Suu Kyi or other ASEAN leaders. Meanwhile, Aung San Suu Kyi has been courted by China and visited China again this year. She knows that peace will be elusive if China continues to support ethnic militias. She also knows how China can use a variety of economic and political pressures to get favorable terms for resource exploitation. Yet China is intensely unpopular and any politician has to be careful in the terms of deals agreed to. Perhaps the major decisions will be made jointly by the Commander-in-Chief Min Aung Hlaing and Suu Kyi. Unfortunately, they do not seem to communicate well with each other.

So, 2017 is a difficult year. There is renewed fighting between the Northern Alliance and the Burmese military and a lack of significant progress in ethnic negotiations. There are continuing tensions in Rakhine stoked by UN reported mistreatment of over a million Muslims, many of whom are not recognized as legal residents much less citizens and cannot move from their townships. Indonesia hosted a series of meetings for Rakhine and national-level people that led to an understanding (sometimes called the Maluku Compromise) but it is being poorly implemented. Radical Islamic influence there is growing as moderate Muslims are being killed by radical Muslims. There are pressures from China, neglect from America and internal tensions or at least a lack of easy cooperation among the civilian and military leadership. The economy has problems, including a growing trade deficit, weak currency and poor hard and soft infrastructure. Assassinations of U Ko Ni, a brilliant Muslim lawyer who advised the NLD (apparently financed by a retired officer in military intelligence) and of a critical publisher have undercut the promise of a rule of law or a free press. These killings are a problem both for Aung San Suu Kyi and the Commander-in-Chief as they point to the existence of a “deep state” that neither controls and that can create serious strategic problems for Myanmar.

It is hard to say where these events will take Myanmar if current trends continue, but the Cambodian government may be a reasonable model. Dominated by China and ruled by an illiberal authoritarian who is formally, if unfairly, elected, Cambodia has effectively lost its policy independence. Aung San Suu Kyi will stand down at some point and the next leader may look more like Hun Sen than Suu Kyi or Jokowi – real democratically elected leaders trying to improve the lives of their people and the strength of their nations.