India lays out a red carpet for Myanmar

Posted in India | 07-Apr-08 | Author: Siddharth Srivastava| Source: Asia Times

Indian Prime Minister Manmohan Singh (R) talks with Vice Senior General of the Government of Myanmar, Maung Aye during a meeting at Singh's residence in New Delhi.

NEW DELHI - India has come to realize that the main beneficiary of strained India-Myanmar relations will be China, whether for access to all-important hydrocarbon energy sources, transport corridors or strategic control of the maritime waters of the Indian Ocean.

India has thus accorded prime importance this week to the visit of the second-most important person of Myanmar's ruling military junta, General Maung Aye. Apart from China and a few East Asian nations, it is unlikely that any other country would extend the kind of red carpet welcome laid out for Aye by New Delhi.

Aye has had audiences with Prime Minister Manmohan Singh, Vice President Hamid Ansari, Foreign Minister Pranab Mukherjee and the top brass of the defense forces. Bringing to fruition a series of meetings between Indian and Myanmar officials, Aye and Ansari inked a major transport agreement that will link a crucially located Myanmar port with a remote and underdeveloped part of northeastern India.

The US$130 million project permits India to develop Myanmar's Sittwe port on the Kaladan River - a project that could turn into an important international trade hub - and possible military logistical base - for the land-locked northeast.

Prior to this, trade has only been possible via a longer and circuitous route through West Bengal by way of an already overcrowded Siliguri corridor, also known as "the chicken's neck".
The new road and river link will bypass Bangladesh, which has denied access to Indian trade via Chittagong port due to domestic political opposition.

"India, which is one of the largest importers of pulses will be able to get them directly from Myanmar instead of via Singapore," said Minister of Commerce Jairam Ramesh.

The route will also provide India an access point to Sittwe, a city located just off the Kaladan River that is being developed as an onshore hub for Myanmar's gas once the vast reserves in the Shwe fields in the Bay of Bengal are depleted.

India and China are competing over the massive Shwe natural gas development project. Ironically, India's state explorer, Oil and Natural Gas Corp and utility Gas Authority of India Limited, are partners under the majority stakeholder, South Korea's Daewoo.

According to a press statement, India has also signed a tax treaty with Myanmar to check evasion and to boost trade and investments. The double taxation avoidance agreement will cover taxes on individual incomes, company profits, dividends, interest and capital gains.

It is apparent that India will not desist from dealing with Myanmar in all matters despite Western pressure.

The Foreign Ministry, though, issued a politically correct statement that Manmohan "underlined the need for Myanmar to expedite the process and make it broad-based to include all sections of society, including [opposition icon] Aung San Suu Kyi and the various ethnic groups in Myanmar".

But Ansari emphasized India's position that international sanctions will be "counterproductive" to the economic progress of Myanmar and detrimental to the interests of the people.

This is a reiteration of Mukherjee's statements last year that the United Nations should not impose sanctions on Myanmar and that New Delhi does not have any problems dealing with military regimes in its regional neighborhood.

The Kaladan agreement is being viewed as the first serious step in implementing New Delhi's "Look East" policy, of which Mukherjee is a big proponent.

Aye's visit follows an aggressive diplomatic initiative launched by India in Myanmar. This year, India's foreign secretary visited Myanmar to coincide with the declaration by the military junta of a constitution referendum in May and democratic elections in 2010.

For over a decade India has been trying to engage Myanmar, with which it shares a 1,600 kilometer border, despite international pressure to isolate Yangon over its human rights record and the recent crackdown on pro-democracy protesters.

Officials and experts have proffered various reasons for India's approach. India's geographical proximity to Myanmar makes it important to engage with it, and trade and economics are essential for both parties. Additionally, Delhi has cited the need for joint operations to confront separatist elements in India's northeast which find refuge in Myanmar.

India has also been very uncomfortable with the prospect of China's involvement in building ports in Pakistan (Gwadar), Sri Lanka and Myanmar. Recent reports suggest China's aid to Sri Lanka for infrastructure projects has crossed $1 billion, more than double the amount being invested by the traditional partners, India and Japan.

Such efforts by Beijing open the possibility of India being enveloped by a Chinese naval presence from all fronts. However, it is still quite unlikely that India would have resisted international pressure to the extent it has, had it not been for Myanmar's rich natural gas resources. Myanmar's proven gas reserves stood at 19 trillion cubic feet (tcf) at the end of 2006, with vast areas yet unexplored.

Over the past five years, China has made massive investments in Myanmar to build its case for the energy sources. Beijing has followed a similar strategy in Asia, Africa and Latin America to win energy blocks and has recently struck deals in Kazakhstan, Russia, Indonesia, Nigeria and Angola - in most cases beating out India as one of the main contenders.

Much to India's chagrin, China has even offered to buy gas from Iran should India opt out of the Iran-Pakistan-India (IPI) gas pipeline. India has been dilly-dallying about the IPI due to US pressure to forestall the project.

In response to Beijing's efforts, Myanmar has already inked a memorandum of understanding with PetroChina to supply 6.5 tcf of gas from Block A of the Shwe gas fields in the Bay of Bengal for over 30 years. This was seen as a big blow to New Delhi's efforts to bring gas from Myanmar.

It is increasingly apparent that it will be either China or India that will be given the rights to oil and gas from Myanmar. Yangon recently rejected a request to sell gas to Bangladesh to help the country meet its growing energy crisis.

Bangladesh's Deputy Energy Minister M Tamim has been quoted as saying, "They said they would sell their gas to India and China, but cannot export gas to Bangladesh at the moment. Myanmar would consider selling gas to Bangladesh only after new discoveries are made."

Outbid by Beijing for energy blocks across the world, an alarmed New Delhi has thus softened its stand against Myanmar in the past year.

Last September, India's Petroleum Minister Murli Deora visited Myanmar to sign exploration agreements, even as massive pro-democracy protests broke out. Deora had rushed to Myanmar after being publicly reprimanded by the Prime Minister's Office for failing to beat out China in Myanmar's energy stakes.

Recent reports suggest China is mulling the prospects of building oil and gas pipelines from Myanmar to its southwestern province of Yunnan.

Clearly, India has a formidable task ahead.

Siddharth Srivastava is a New Delhi-based journalist.

Siddharth Srivastava is WSN Editor India.