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MYANMAR: Further down the rabbit hole

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The military-appointed electoral commission yesterday formally nullified the outcome of the 8 November 2020 election that was won overwhelmingly by Aung San Suu Kyi's party, the National League for Democracy (NLD). Two weeks ago, the commission said it had found evidence of widespread “premeditated” fraud in the voter registration process in all the country's districts involving a total of 11 million votes despite the broad sense both domestically and abroad that the electoral process had been free and fair.

This latest development hardens the junta's path away from possible political compromise, either domestically with the NLD and its supporters, or with Western countries. Invalidating the elections was likely the first formal step in the junta's efforts to legitimize its de facto control. The generals have promised to hold elections within two years of the coup, and what could follow is an announcement of so-called electoral reforms that would precede the setting of an election date. Separately, the NLD also could be dissolved in the next few months, and Aung San Suu Kyi found guilty of the criminal charges against her, resulting in imprisonment away from public access and a ban from politics.

That this process is designed to eliminate the democratic opposition to the junta will be obvious to Western governments, which will likely frustrate the generals' attempts to immediately gain broader legitimacy. But while the junta may struggle to win acceptance of its plans, finding a path in the opposite direction, to a political compromise that allows for some democratic restoration that reduces Myanmar's current political isolation, will also be difficult. After all, the military can maintain effective control of the country, even with the economic contraction and popular anger, and it likely sees its plans as a way of eventually forcing the West to accept the political changes as a fait accompli, even though it may not succeed now. The junta sees time as being in its favor. Meanwhile, it could attempt to exploit regional geopolitical competition between China, Russia, India, some of the Southeast Asian countries, and even Japan and Korea, to blunt its political and economic isolation. For the US and the EU, coordinating with the Association of Southeast Asian Nations and some of its regional allies will be difficult.

Foreign firms, therefore, will find that the uncertainties and risks of the past few months that have hampered their domestic operations and raised the reputational risks of doing business in the country are likely to continue for the foreseeable future. Sanctions are unlikely be rolled back and the possibility of unrest flaring up in the streets will persist. Also, there have been some attacks in secondary cities and of remote army camps that indicate that a more militant opposition may be forming, possibly with the help of, or in coordination with, some ethnic rebel groups. This may also lead to a military reaction against these nascent alliances that further intensifies violence in the country.

A deepening of the economic crisis because of Covid-19 and a lack of investor and consumer confidence is widely expected. Any real change in Myanmar's political trajectory is unlikely while the military remains united under its current leadership, even in this difficult situation. However, at certain points, the junta may appear vulnerable should protests resume or violence on the streets worsens, which would again create dilemmas for foreign investors on how to react.

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MYANMAR: Further down the rabbit hole

The military-appointed electoral commission yesterday formally nullified the outcome of the 8 November 2020 election that was won overwhelmingly by Aung San Suu Kyi’s