Originally published on Stratfor.com
Summary
To take advantage of Myanmar’s opening to the world and its deliberate rebalancing away from a near-exclusive relationship with China, New Delhi will probably need help. As Myanmar’s neighbor and one of Naypyidaw’s options for diversifying its foreign relations, India has three interests related to the country: quelling ethnic militancy along the Indo-Myanmar border, integrating its remote northeast region and increasing its energy production to meet domestic demand. However, India’s excessive bureaucracy and various other complications have hindered its ability to make substantial moves in Myanmar. Therefore, any robust Indian involvement in Myanmar will likely require cooperation with and even financial assistance from other countries with strategic interests in the region.
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Over the past few decades, with Myanmar focused on domestic issues and secluded from the West and with India distracted by internal matters, China gained a strong foothold in its Southeast Asian neighbor. Recently, however, Myanmar has sought to break out of its international isolation and reduce its dependence on China.
Historical Interests
Like Beijing, New Delhi has geopolitical interests in Myanmar, revolving around India’s isolated and underdeveloped northeast region. From 1885 to 1942, India and Myanmar (together with what are now Bangladesh and Pakistan) were consolidated under British colonial rule. When Bangladesh, as part of Pakistan, broke off from India in 1947, the seven northeastern Indian states remaining became separated from the mainland, connected by only the narrow Siliguri Corridor, which runs between Nepal and Bangladesh. When Myanmar gained independence from Britain in 1948, it formally separated from India as well. Since then, New Delhi has struggled to govern its northeast region.
For India, the northeast is a vital buffer against invasion from the east. However, New Delhi’s only access to the region is through the Siliguri, the lone highway that is prone to flooding and closures. Since India has a tenuous relationship with Bangladesh (the most logical point of access to the northeast), it is advantageous for New Delhi to cultivate relations with Naypyidaw to retain control over the remote territory and keep the buffer intact. Such relations are particularly important if India is going to exert authority over the region’s various tribal communities, whose secessionist movements often erupt into violence. Indeed, Myanmar is also wary of the prospect of an insurgency raging in its periphery. Insurgency-related violence along the border has decreased in recent years, likely stemming in part from the countries’ coordination and intelligence-sharing efforts, but it is unclear if these gains will endure or if further security measures will be attempted.
India’s interests in Myanmar go beyond finding help to control rebellious ethnic groups. India’s population of 1.2 billion people is growing, and parts of the northeast region are outpacing the rest of the country by up to 10 percent. Energy needs are becoming more critical, yet India’s energy supplies consistently fall short of demand across the country. New Delhi’s Look East policy posits that the northeast, with an estimated hydropower capacity of 60,000 megawatts, could become an important source of power generation for the rest of the country. However, the region currently produces only about 1,200 megawatts of renewable energy and faced a power deficit of almost 1,000 megawatts at peak demand in 2012. Furthermore, a number of hydropower projects in the region have encountered crippling delays, and the area lacks the infrastructure to transmit its renewable energy elsewhere in the country.
Myanmar, meanwhile, has 200 billion cubic meters of proven natural gas reserves (with 12.4 billion cubic meters currently in production annually) and 500 million barrels of oil reserves — not a great amount by global standards, but adequate to help supply regional markets. Currently, all 8.6 billion cubic meters of Myanmar’s annual natural gas exports go to Thailand, and the Sino-Myanmar pipeline will soon take additional reserves to China’s Yunnan province. Although India did, in fact, attempt to build a pipeline from the port at the Myanmar city of Sittwe through northeast India and Bangladesh to Kolkata in the early 2000s, disagreements with Bangladesh caused negotiations to collapse. As a result, cross-border infrastructure would still need to be built for New Delhi to tap into Myanmar’s resources substantially — whether to supply the northeast or to transport to Kolkata.
India’s Projects in Myanmar
Despite small-scale successes — such as Jubilant Energy’s production-sharing agreement to develop Myanmar’s PSC-1 onshore oil and natural gas block and Tata Motors’ deal to supply commercial vehicles to Myanmar — most of India’s large-scale projects in the country are not faring well. Its most elaborate project, the Kaladan Multi-Modal Transport network, is taking years to come together and continues to encounter problems. Agreed on in April 2008, this river and road system is supposed to connect the Sittwe port with India’s northeast to make the transportation of goods more cost-effective and open up a new market for Indian products in Myanmar. But all three phases of construction — developing the Sittwe port, dredging the Kaladan River and building a highway to connect the river with India’s Mizoram state — are running as much as a year behind schedule, and the entire project is at least $14 million over budget (some estimates put its cost as high as $214 million instead of its original $120 million appraisal). Completion is expected by 2014 or 2015.
Additionally, while India has two state-owned companies (the Gas Authority of India Ltd. and the Oil and Natural Gas Corp.) involved in the operation of Myanmar’s largest offshore oil and natural gas field, it lost the contract to purchase the natural gas when the India-Bangladesh-Myanmar pipeline fell through. China ended up with the purchasing rights and expects its Sino-Myanmar pipeline to go online by June 2013. Meanwhile, India’s National Hydroelectric Power Corp. was involved in building two hydroelectric dams on Myanmar’s Chindwin River: Tamanthi, with an expected capacity of 1,200 megawatts, and Shwezaye, with an expected capacity of 880 megawatts. But the company recently submitted a report saying Tamanthi is financially unfeasible and Shwezaye is technically unviable.
Obstacles and Opportunities
Although India could use Myanmar’s opening to become a bigger player in Southeast Asia — something the United States and others are interested in seeing happen — India’s internal constraints will allow it to do only so much in the neighboring country.
India’s excessive bureaucracy has hindered efforts to build even domestic energy facilities, and the country’s infrastructure cannot support its booming population. In the northeast, construction on a number of hydropower projects has been delayed or stopped completely due to rising costs, local unrest and difficulties dealing with the weather and the terrain. Given the geographical connections between India and Myanmar — a series of mountain ranges that reach higher than 1,800 meters (roughly 6,000 feet) — any infrastructure project that aims to connect the two countries will likely face similar difficulties and have limited capacities.
However, India could get involved in Myanmar’s opening by taking advantage of the interests of other countries. Thailand is already vested in infrastructure projects in Myanmar, including a deep-water port and a special economic zone in the southern city of Dawei, as well as a highway linking border towns with Yangon. Japan also recently increased aid to Myanmar and is considering investing in the Dawei projects. Meanwhile, Vietnam has pledged to expand cooperation with the country, and U.S. companies are reportedly mulling involvement in the Myanmar oil and natural gas industry.
The involvement of such countries suggests that Myanmar’s opening will be at least somewhat successful, and India could pursue joint partnerships that would allow it to gain a more substantial foothold in the country. Until then, India’s ability to develop stronger economic and political ties with Myanmar will remain limited.