SIM Report: Military coup and violent unrest in Myanmar heighten political, security and supply chain risks

SIM Report: Southeast Asia, Issue 11

The UK Foreign Office (FO) on Friday (12 March) told its citizens to evacuate Myanmar due to violent escalations in nationwide unrest unless there was an urgent need to remain in-country. The FO’s warning came after the United Nations (UN) said that the military junta was likely committing ‘crimes against humanity’ to maintain control over Myanmar. Violent nationwide unrest, including in the cities of Yangon and Mandalay, has resulted in a mounting death toll of anti-coup protesters killed by security forces. The weekslong unrest was initially triggered by the military’s coup d’état on 1 February 2021, with protesters demanding the restoration of the National League for Democracy (NLD) party under Aung San Suu Kyi. The NLD had won the November 2020 elections with over 80 per cent of votes; following the poll the military had repeatedly accused the party of election fraud. The allegations have been rejected by both the country’s election commission and independent observers.

The FO’s warning further underscores the severity of the deteriorating situation in Myanmar. Intensifying anti-coup protests and security forces’ concurrent deployment of lethal force, including through reported use of live ammunition, have greatly increased operational, security, and political risks. Strikes against the coup, including by civil servants under the so-called Civil Disobedience Movement, have caused significant supply chain disruption. Several logistics operators have halted cargo bookings and shut down local offices due to the situation. The measures follow earlier reports that strikes by drivers and customs personnel led to delays in Yangon’s primary container terminals.

Foreign stakeholders are under increasing pressure to respond to the violence. Fashion retailers such as Sweden’s H&M and Italy’s Benetton Group have recently suspended new orders in Myanmar. However, more serious damage to the junta’s revenue streams would be dealt by the severance of ties to the crucial oil and gas sector by businesses such as Chevron, Total, Petronas, PTTEP, and Posco. Such actions would likely prove more effective in confronting the junta, which has so far remained resolute in its position and indicated that it is willing to endure sanctions. Calls to end violence by regional grouping the Association of Southeast Asian Nations (ASEAN) have so far proven ineffective in pressuring the military government to change its course of action. The grouping comprises a number of Myanmar’s top trade partners, including Singapore.

However, three factors will be of crucial importance to the longer-term survival of the military regime and Myanmar’s eventual stabilisation. The first factor is the potential defection of military members to the anti-coup movement. A sizeable number of defections by both the police and military have already been recorded, and further defections may significantly erode the junta’s legitimacy and ability to violently suppress protests. The second factor is Myanmar’s insurgent groups, or so-called ethnic armed organisations (EAOs). These groups have so far united against the coup despite attempts by the junta to curry their favour. Direct involvement by the EAOs in the protest movement has so far been limited, though protracted violence could alter the picture.

The third factor is China’s response to the evolving situation. Anti-coup protesters on Sunday (14 March) in Yangon’s garment-producing Hlaing Thaya district carried out arson attacks on Chinese-owned factories. A number of Chinese personnel were injured and trapped in the incident, which was condemned by Beijing. Existing anti-Chinese sentiment has been exacerbated through widespread accusations that China backed the military coup, and protesters have also threatened to carry out attacks on China’s Belt and Road Initiative-linked gas pipeline in Myanmar. Anti-Chinese and attendant security risks to Chinese staff, assets, and operations are likely to intensify in the short-to-medium term. Further possible attacks would lead to serious bilateral tensions that would very likely imperil the junta’s plans to rely on trade with China as it is ostracised and sanctioned by the international community.

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