Deepening crisis poses major security threat

Bangkok Post, Friday 30 August 2002

The value of the kyat is in freefall and the prices of goods available in the markets just keep rising. This can only cause further discontent among a people long under the heel of military dictators.

LARRY JAGAN - Larry Jagan is the BBC's Southeast Asia analyst, based in Bangkok.

Burma's economic crisis continues to deepen almost daily. The value of the local currency, the kyat, has plummeted to an all-time low on the black-market in the past few days. It's now more than 1,100 kyat to the dollar. That's a fall of more than 10% since the beginning of the week.

``The kyat has gone into freefall,'' one Rangoon financial analyst said, ``and it's likely to continue falling for some time yet.''

The prospect of the border with Thailand remaining closed, as it has done for nearly three months _ the source of most of Burma's dollar bills, and the recent introduction of a money-laundering bill has reduced public confidence in the local currency. The kyat has been falling rapidly now for more than two weeks. It has lost more than a quarter of its value in that time.

Gold prices are also rising steeply. The trade in both gold and dollars though is limited at present as the government has handed down stiff sentences to dozens of people caught dealing in gold and hard currency.

The military leaders of the country like to call this ``market-friendly intervention''. But it has done nothing to stop the plunging value of the kyat. Shopkeepers in the meantime are raising the prices of basic foodstuffs like rice and cooking oil.

``People are growing more and more dissatisfied every day,'' said a Burmese businessman in Rangoon who did not want to be identified. ``If it continues like it is, it could easily reach boiling point in the coming months.''

Even the price of rice is rising uncontrollably.

Local residents complain that rice on the market has risen in price by more than 20% in the past month. In Rangoon, the price has more than doubled since the beginning of the year. In some rural areas, residents report a three-fold increase in the rice price over the past three months. Analysts believe this is largely because of the government's obsessive export drive.

The ruling junta, nervous about the prospect of civil disturbances as a result of rice shortages, has been selling rationed low grade rice at subsidised prices, especially in urban areas like Rangoon. Residents there say long queues of people are lining up every day for hours to buy small amounts of commodities like rice, cooking oil and sugar at these government stalls.

The prices of meat, vegetables, eggs and palm oil are all rising alarmingly. Analysts in Rangoon estimate that the price of palm oil imported from Malaysia _ essential for cooking _ has almost tripled in the last two months. Onions, they say, have more than doubled in price in the past year and fermented fish paste has also doubled in that time. Petrol and diesel are nearly 50% more expensive than they were three months ago.

The cost of medicines has more than doubled over the last three months since the border with Thailand was closed. ``The cost of medicines is already so expensive that many people are not seeking medical attention. They know they can't afford the prescriptions,'' said one doctor in Rangoon.

Most analysts estimate that inflation is running at more than 50% a year. Even bribes, like that necessary to keep a phone line, have risen. But the real problem is that wages and salaries are not rising as prices increase. Local Burmese economists estimate that an average family of five needs more than 80,000 kyat (3,400 baht) a month to live, including food, medicine and transport but excluding luxury goods.

The average monthly income of a professional worker _ teacher, university professor or government official _ is less than 10,000 kyat (420 baht).

``People are really feeling the pinch,'' one Western diplomat based in Rangoon said. ``Comparisons are being drawn with the situation more than a decade ago that led to the events of 1988. The difference though, is then everyone suffered.''

Many families, especially those living on the outskirts of Rangoon or in the poorer rural districts, can only afford to eat one meal a day. The living standards of many Burmese are declining rapidly. UN officials fear a massive humanitarian crisis is looming. They estimate that one child in three under the age of five is already suffering from malnutrition. If the situation remains unchecked, they fear this could double within the next 12 months.

And now there are fears of a major rice shortage within the next year. An independent agricultural expert who has been doing some preliminary research in Burma has privately warned the United Nations that there is a very real risk of famine in the next year because of the likelihood of rice crop failures due to massive soil degradation, as a result of over-cropping and an acute lack of fertilisers.

Already there is a shortage of rice in many areas which rely on rice supplies from other parts of the country, according to UN officials. ``This is only going to get worse,'' one Burmese rice specialist said. ``The supply of rice on the local market is going to shrink even further as the government is committed to procuring more and more rice for its own ends.''

The government is committed to exporting even more rice than it did last year; and increasingly the government is trying to finance its importers through bartering _ particularly rice _ even for petroleum and oil.

Rice shortages in the past have brought people out on to the streets in protest against the government. There's no doubt that the government fears the possibility of food riots and has already begun to form and train special military units to control civil disturbances, according to senior military intelligence sources. But that won't be enough if the rice shortages predicted by a US researcher do begin to happen.

``People are getting increasingly dissatisfied with the situation,'' said one Burmese economic analyst close to the military. ``They are tolerating it at present, but if the situation continues to deteriorate over the next 12 months then there is a very real risk of massive social unrest.''

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