Identifier
Created
Classification
Origin
04RANGOON967
2004-07-30 08:22:00
CONFIDENTIAL
Embassy Rangoon
Cable title:  

ECONOMIC TENSIONS IN THE BURMESE MILITARY

Tags:  PGOV ECON MCAP PINS PINR BM KBIO 
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C O N F I D E N T I A L SECTION 01 OF 03 RANGOON 000967 

SIPDIS

STATE FOR EAP/BCLTV, INR/B
COMMERCE FOR ITA JEAN KELLY
TREASURY FOR OASIA JEFF NEIL
USPACOM FOR FPA

E.O. 12958: DECL: 07/29/2014
TAGS: PGOV ECON MCAP PINS PINR BM KBIO
SUBJECT: ECONOMIC TENSIONS IN THE BURMESE MILITARY

REF: A. RANGOON 247

B. 03 RANGOON 1552

C. 03 RANGOON 1417

Classified By: COM Carmen Martinez for Reasons 1.4 (B,D)

C O N F I D E N T I A L SECTION 01 OF 03 RANGOON 000967

SIPDIS

STATE FOR EAP/BCLTV, INR/B
COMMERCE FOR ITA JEAN KELLY
TREASURY FOR OASIA JEFF NEIL
USPACOM FOR FPA

E.O. 12958: DECL: 07/29/2014
TAGS: PGOV ECON MCAP PINS PINR BM KBIO
SUBJECT: ECONOMIC TENSIONS IN THE BURMESE MILITARY

REF: A. RANGOON 247

B. 03 RANGOON 1552

C. 03 RANGOON 1417

Classified By: COM Carmen Martinez for Reasons 1.4 (B,D)


1. (C) Summary: There has been much talk recently of
perceived "rifts" in the senior military leadership of Burma
and between the regional commanders and the central command
structure. Some claim that these rifts are based on starkly
differing views on the best political path for Burma to take.
However, they are likely more deeply rooted in a
long-standing and complex web of friction over economic
interests and fundamental intra-military rivalries. In any
event, we see no way that these economic and other
differences will lead to any systemic change. End summary.

Political Differences are Skin Deep


2. (C) It has become popular lately to blame perceived
frictions among the senior leaders, between combat troops and
military intelligence (MI),and between field commanders and
the central command on fundamental political differences. We
are skeptical that any such differences would go very deep.
Military leaders across the board are in the same boat
politically. It's hard to envision any democratic political
system in which any military leader would be better off than
he is now. Thus we believe it is more appropriate to look at
traditional academic and economic rivalries when seeking to
explain any internecine conflict.

My Old School


3. (C) The long-standing rivalry between graduates of various
military officer programs cannot be ignored but shouldn't be
overstated. Traditionally there were four ways to become an
officer: do four years (now three years) of university study
at the highly selective Defense Services Academy (DSA); do a
post-graduate year-long course at the Officers Training
School (OTS); do a two-year post-high school apprenticeship
program followed by a year in the field; or, make your way up
the ranks based on merit, connections, or luck. The latter

two systems have the fewest representatives in the top
echelon, and the apprenticeship program was reportedly
scrapped a few years ago. Thus, the most politically
important actors in Burma are generally DSA graduates (who
view themselves as the elite "West Pointers" of the Tatmadaw)
and those of the OTS (who have some jealousy of the DSA grads
but think of themselves as more worldly as they've attended
university outside the military sphere). There is also a
particular bond between graduates of DSA, who call each other
"brother," and in particular those of like classes (or
"batches") who have regular reunions.


4. (C) The current leadership is well divided between the
different schools. SPDC Chairman Senior General Than Shwe
(1954) and Prime Minister General Khin Nyunt (1960) are OTS,
while SPDC number two Vice Senior General Maung Aye (1959)
and rising star Lieutenant General Shwe Mann (1969) are DSA.
This could explain some of the purported tension between Khin
Nyunt and Maung Aye. However, it cannot be assumed that
differing military educational background is the most
important element in intra-service relationships. Graduates
of different schools also often make good bedfellows: Shwe
Mann (DSA) is known to be a right-hand man of Than Shwe
(OTS). Also, graduates of the same schools can be rivals or
enemies. For example Maung Aye and Shwe Mann (both DSA) are
thought to be competing to succeed Than Shwe and there are
rumors that Khin Nyunt and Than Shwe (both OTS) don't see eye
to eye on some issues. Outside of the SPDC, we note that a
similar trend is visible. For instance, Senior General Than
Shwe's most trusted toady in military intelligence is a DSA
grad -- MI Deputy Chief Major General Kyaw Win. Similarly,
Khin Nyunt's closest deputy, Brigadier General Kyaw Thein, is
DSA.

MI and the Army: Economic Divisions of Labor


5. (C) The business interests of the regional commanders and
other combat troops (the "Tatmadaw"),championed on the
national level by Vice Senior General Maung Aye, are based
largely on graft and muscle. These officers, often tasked by
their superiors to be self supporting, skim from local
businesses, sell off military supplies (particularly food and
fuel),force private entities to partner with them
(especially in extractive industries),collect road tolls,
offer protection services, etc. General Maung Aye, as
chairman of the Trade Policy Committee also has significant
authority over extremely lucrative import licenses, which he
doles out to favored civilian and military cronies. Two
enormous exceptions to the Tatmadaw's normal, more mercenary,
approach to business come with the military-controlled
corporations: the Myanmar Economic Corporation (MEC) and
Myanmar Economic Holdings, Ltd. (MEHL). The latter
conglomerate in particular, whose shares are majority owned
by the various regional commands, runs business ventures
across the spectrum either independently or in a joint
venture partnership (ref C).


6. (C) In contrast to the regional commands, the vast MI
apparatus (controlled by Prime Minister Khin Nyunt) is a far
more sophisticated "mafia-like" operation. Aside from taking
graft and running protection rackets, MI divides up its
territory and is very active running its own small business
fronts, especially hotels and restaurants, and controlling
essential junctures of the economy -- such as the informal
financial remittance system and border trade smuggling. It
also has a hand deep into the entertainment industry --
gambling, karaoke, nightclubs, and some prostitution.
Regional MI commanders can also use their leverage over
regional commanders to horn in on the economic rents being
earned by these Tatmadaw officers -- who are usually much
higher rank than their MI colleagues. This is much resented,
but there is little the regional commander can do if he
wishes to avoid a bad report going into his MI file.

Turf Wars


7. (C) Aside from MI "poaching," another factor generating
tensions in the ranks is the expanding economic role of
ethnic cease-fire groups (CFGs) -- given economic concessions
a decade or more ago by Prime Minister, then Secretary One,
Khin Nyunt in exchange for peace. These groups -- such as
the Wa, Kokang, Kachin, and Pa-O -- are seen as affiliated
with the MI because of the primary role played by General
Khin Nyunt in the negotiation of the cease-fire accords and
the long animosity between these groups and the combat troops
against whom they fought for many years.


8. (C) As the CFGs grow wealthier from their local
concessions, they have expanded outside of their designated
"special regions" and are bringing their capital and
connections into ethnic Burman areas, stealing market share
in areas that were traditionally the feeding trough of the
regional commanders. One active Rangoon businessman told us
that when he wanted to set up shop in Bago, about 50 miles
northeast of Rangoon, he engaged a transplanted ethnic Wa
fixer rather than dealing directly with the regional
commander. Another Rangoon businessman agreed with this
decision, saying the CFG leader is likely to be a much
longer-term business partner than a regional commander who
could be transferred anytime.


9. (C) This is a new phenomenon and has the potential of
expanding MI-Tatmadaw acrimony in the future. Despite any
anger the regional commander might feel, these CFG reps are
seen as "untouchable" because of their close ties with the
Prime Minister and MI. This area of conflict is only
lessened now, we have been told, by CFG desires to minimize
antagonism with the regional commanders to reduce
interference in any ongoing illegal activities.

Business and Family are Key for Big Three


10. (C) This business-based conflict between various elements
of the military trickles up, with complaints at the local
levels eventually reaching the ears of respective "champions"
in Rangoon. Friction ensues as the Prime Minister and Maung
Aye try to maximize their respective civilian patronage
networks and keep their respective troops fat and happy. The
veto power of Senior General Than Shwe, who is very weak in
business and economic matters, adds to the discord and
confusion.


11. (C) Some retired military officers now in business argue
that Than Shwe abhors business and does not like his
subordinates involved in it. Supporting this theory, Than
Shwe's children, with one notable exception, are not involved
in large economic concerns as are most other privileged kids
of senior military officials. Most of Than Shwe's known
offspring are in the foreign ministry, others just lazily
reap the low-lying fruit granted them as progeny of "Number
One." On the contrary, General Khin Nyunt has been described
by Rangoon businessmen as a "Thaksin-like" Prime Minister,
seeking to dominate both the economic and political worlds.
He and his MI apparatus are like economic octopi trying to
take a leading role in all the perceived "cutting edge"
sectors like tourism, IT, etc. The PM has set up two of his
three sons (the third is a senior MI officer) in powerful
economic positions: one is the head of the country's dominant
IT firm and another is the publisher of a respected business
magazine (among other business interests).


12. (C) Vice Senior General Maung Aye is deeply interested in
business, but has thus far his family has been incapable of
competing with Khin Nyunt's for economic dominance. Maung
Aye's daughter runs Queenstar computer business, which has
not flourished in competition with Khin Nyunt's
well-organized control of the industry (either directly or
through an MI-managed Computer Association of private firms
who were allocated market share).

Comment: Will They Play Nice?


13. (C) The bottom line is that there is no evidence to
support the conclusion that high-level frictions are caused
by differing views of the country's destiny or the path to
it. There are other areas of rivalry that have been a source
of friction for many years and will likely continue to be so.
Rivalries over dividing the economic pie are manifold and
complex and will continue to grow if the economy becomes more
open to regional foreign trade and investment and as the CFGs
continue to edge up to the table. While these areas of
disagreement may be bad for morale, and cause anxiety among
the top echelon, they are not serious enough to upset the
apple cart. As long as the regime continues to run its
country according to plan, with little successful
international or domestic pressure, the desire to maintain a
common political front will surmount any other areas of
discord. End comment.
Martinez