Why has the Burmese military junta suddenly removed fuel subsidies, causing the price to rise by 500% and cause untold economic misery? Is it economics or politics?
Protests against the removal of fuel subsidies continued over the weekend and were met with further crackdowns on protesters and dissidents. The Burmese Ambassador to the Philippines, Thang Tun, has argued that the policy was economic and not political in nature – the increasing number of vehicles on the roads of Burma hasmade it prohibitively expensive for the military junta to maintain the subsidies. This is possible but most people seem to think that there are at least political elements to the decision. These include the desire to identify further areas of dissidence in the country and root them out prior to any elections, which, as has been written elsewhere, may be planned for the future.
The increase in fuel prices amounted to 500%, which is rather more than most people in that poor and suffering country can manage. It may be no coincidence that the policy arrives at the same time that a delegation from the IMF and the World Bank were due to visit the country. The Washington Institutions oppose subsidies and have long called for the fuel subsidies to be abolished. That they were done so without prior notice has dire implications for the economy at large. All those businesses which pay for energy in one way or another face closure – that includes not just taxis, delivery services, shops and offices, but everybody that requires electricity or fuel oil. Most firms are unable to cope with that loss of profitability and it is likely that poverty and unemployment will increase in the short term. Some estimates place the new transportation costs amount to 50-75% of the total income of the bulk of Burmese workers, who earn less than US2 per day. Basic commodities such as eggs, meat and cooking oil have increased by up to 50% in the past week and a basic plate of noodles in the capital city has increased by 300%. Few people can deal with these increases: the cost of retrieving a pension is now more than its actual value, for example. Notwithstanding the IMF’s long history of incompetence and the discrediting of its policies, this would appear to be economic recklessness on an immense scale. The junta raised official salaries last year and seem hardly likely to be in a position to do so again in the foreseeable future.
It appears that ‘hundreds’ of demonstrators were active over the weekend and unknown numbers have been taken into detention. Their treatment while imprisoned is likely to be harsh. Burmese demonstrators have to be brave to face their government.
