BURMA-BANGLADESH MARITIME DISPUTE FLARES

S E C R E T SECTION 01 OF 02 DHAKA 001147

NOFORN
SIPDIS

DEPT FOR SCA/PB, SCA/FO, AND EAP/MTS

E.O. 12958: DECL: 11/03/2018
TAGS: BG BM ECON KDEM PBTS PGOV PHUM PREL SOCI TRGY
SUBJECT: BURMA-BANGLADESH MARITIME DISPUTE FLARES

Classified By: Ambassador James F. Moriarty Reasons 1.4 (B) and (D)

SUMMARY
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1. (S/NF) Dhaka, on November 2, strongly protested Burma's
November 1 decision to explore for oil and gas and dispatch
naval vessels in disputed waters between the two nations.
The Government of Bangladesh demanded the withdrawal of four
exploration ships, accompanied by two naval warships, from
Bangladeshi waters until the maritime borders were clearly
delineated. This incursion came only weeks after a Burmese
delegation visited Dhaka in what was hailed at the time as a
"landmark" event between the two countries. Other
information suggests the Burmese were not happy with the
visit, particularly the lack of progress on several issues.
Led by Burma's second highest ranking leader, Vice-Senior
General Maung Aye, the delegation discussed a range of
issues, including increasing trade opportunities,
establishing a road link between the two countries,
repatriating Rohingya refugees, and demarcating the maritime
border. While open conflict between the two countries is
unlikely, this incident shows the fragile prospects for a
normalized relationship between Bangladesh and Burma.

MARITIME DISPUTE HEATS UP
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2. (U) On November 2, Bangladesh's press reported an
incursion by exploration and naval vessels from Burma into
disputed waters in the Bay of Bengal. Bangladesh responded
by deploying three naval ships to the area, approximately 50
nautical miles southwest of St. Martin's Island. By these
actions, Burma breached a commitment that neither country
would begin resource exploration until the border dispute was
settled. Since India,s discovery of gas and oil in
2005-2006, the Bay of Bengal has become a coveted area for
natural resource exploration. Bangladesh,s talks with Burma
over maritime boundaries are slated to take place November 16
and 17. Dhaka will also have discussions with India on this
issue in late November. The current dispute may affect the
timing of the talks.

DELEGATION FOCUSED ON TRADE AND TRANSPORTATION
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3. (U) During an early October visit, a 55-member Burmese
delegation, including seven key ministers and business
leaders, discussed economic and trade issues with Bangladeshi
counterparts. The only agreement signed during the visit
deals with double taxation, a significant trade barrier
between the neighboring countries. More important, however,
was Bangladesh's pledge to increase bilateral trade with
Burma from $140 million to $500 million.


4. (U) In other trade discussions, the Burmese delegation
agreed to export 100,000-200,000 tons of rice to Bangladesh
annually. In contrast, the delegation put on hold
Bangladesh,s request to import natural gas from Burma to
make fertilizer. (Note: Burma already exports gas to India
and China at far higher profit margins than the Bangladeshis
were willing to pay. End Note)


5. (U) The Chittagong Chamber of Commerce and Industry also
signed an agreement with Burma's Federation of Commerce and
Industry to expand communications, trade and commerce between
the two countries' private sectors. A delegation of
Bangladeshi officials and business leaders plan to visit
Burma soon to discuss other economic issues, including
contract farming.


6. (U) The two nations also revisited a road link between
Bangladesh and Burma. In July 2007, Bangladesh and Burma
signed an agreement to build a road between the two
countries, with Bangladesh agreeing to pay the $20.3 million
cost of the 23 kilometer road. Bangladesh is eager to
complete this road, which will link Bangladesh to China.

LONG-STANDING ISSUES IGNORED
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7. (C) The two sides did not address long-standing issues of
maritime border demarcations and Rohingya refugee

DHAKA 00001147 002 OF 002


repatriation during the early October visit, two key
concerns. When Bangladesh raised the Rohingya refugee issue,
the Burmese delegation responded by promising to "look into
the matter." Similarly, the two sides barely touched on
maritime boundary issues. The Ministry of Foreign Affairs
Southeast Asia desk confided to us that diplomats from the
two countries had recently conducted a meeting on the issue
and scheduled separate future talks. Resolution of the
maritime boundary issue has become more pressing as
Bangladesh finalizes allocation of exploration blocks in its
third hydrocarbons bidding round. U.S. company
Conoco-Phillips is a leading participant in the bidding
round.

COMMENT
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8. (S/NF) Reports in other channels indicate that the
Burmese leadership was disappointed with the lack of concrete
results from the high-level visit. The current dispute
highlights the need for Bangladesh and Burma to quickly
finalize maritime negotiations. If the two sides do not
resolve the conflict soon, the relationship between the two
countries may sour. Bangladesh remains eager to develop a
stronger relationship with its neighbor as part of its "look
east" policy. This may encourage a resolution. With only
two months remaining before it hands power to an elected
successor, however, the Caretaker Government may lack the
political will to act decisively. Ultimately, Bangladesh may
need to seek international arbitration to resolve this
dispute.
Moriarty