Hundreds of residents protested Thursday against a China-backed petroleum pipeline project in western Burma’s Rakhine state over inadequate compensation and demands that the project developer provide better transportation infrastructure and higher salaries for local workers.

Around 400 people gathered to protest the Shwe Gas Project in Maday Island off the coast of Kyaukpyu town in the Bay of Bengal, also complaining that the project had polluted rivers which fishermen in the area had depended on for their catch.

“We protested today because we want the world see that the project is not making the lives of local residents better—it has only made things worse,” protester Tun Kyi told RFA’s Burmese Service.

The Shwe Gas Project is a joint venture between Beijing’s state-owned China National Petroleum Corporation (CNPC) and Burma’s national petroleum company Myanmar Oil and Gas Enterprise.

A conglomerate of two other companies from Burma, another company from China, two firms from India and one from South Korea also have a stake in the joint venture South East Asia Gas Pipeline Co, Ltd (SEAGP).

Tun Kyi said that residents had received compensation payment for only half of the area expropriated for the project, including a mountain owned by local residents from Maday Island.

But CNPC representatives claimed the company had made the full payment, he said, suggesting that part of the compensation has been unaccounted for.

“The Chinese businessmen are treating the local people unfairly. They occupied more than 400 acres (162 hectares) and we received compensation for only about 200 acres (81 hectares),” he said.

“No one knows where the rest of the compensation went. A lot of residents have lost their property.”

Protesters also wanted the company to build better transportation infrastructure from the crude oil jetty at Maday Island to the nearby villages of Kyauttan, Ywarma, and Panhteinse, and supply the area with electricity before continuing with the project.

They also called on CNPC to create more job opportunities for local workers and to pay them at international rates.

Demands unmet

Tun Kyi said that residents went ahead with the protest on Thursday even though the authorities refused to give them a permit to hold the gathering. They had applied for the permit in December last year, he said.

“First, we applied to the township authorities to protest about our rights being trampled on, but they wouldn’t let us. Then we applied to the state-level authorities to protest, but our application was rejected again,” he said.

When the group gathered at a nearby monastery at around 10:00 a.m. to launch the protest on Thursday, he said, the Kyaukpyu township administrator told them that CNPC had agreed to meet with them to discuss their demands.

But following a meeting with CNPC representatives, the protesters remained unsatisfied and decided to press on with their demonstration at around 2:00 p.m., marching two miles (3.2 kilometers) to the company’s headquarters in Kyaukpyu town while the authorities looked on.

“They didn’t [stop us]. We had heard that we would be shot if we entered the CNPC compound, so we didn’t ask to go inside. We just stood in front of the office shouting, ‘We don’t want CNPC’ and ‘We residents won’t shut our mouths for CNPC’,” Tun Kyi said.

He said that the township administrator and chief of police approached them and asked them to return to their homes, but the protesters said they would not leave until their demands were met.

“We asked them how they could help us to solve this problem. They told us that they would meet with someone from the CNPC on Friday at the [company’s] Social Eco office to discuss our demands.”

Protests to continue

Tun Kyi said that CNPC had created the office to negotiate with the community and to meet with township administrators, but he had little faith in the company’s willingness to accept his group’s demands.

Around 70 percent of local residents are fishermen, but we can’t even support ourselves that way because CNPC has thrown debris from the construction into our rivers.”

As a result, many of the area fishermen have gone to work as laborers on the pipelines, but only make around 90,000 kyat (about U.S. $100) a month—30,000 kyat (U.S. $34) of which is kept by the construction companies for meal costs, according to a report by the Irrawaddy online journal.

While contracts show that the workers are paid 9,000 kyat (U.S. $10) per day, they actually receive only 3,000 kyat, with most of the rest going to the local agents who found them employment with the pipeline companies, Irrawaddy said.

Tun Kyi said the protesters had vowed to continue protesting if CNPC didn’t agree to their demands at Friday’s meeting and would post leaflets outlining their grievances.

He said they wouldn’t bother applying for permission to continue protests because they know that the authorities would not grant it.

“They might arrest us, but they won’t dare do it publicly.”

Local blowback

Construction on the Shwe Gas Project began in 2009 and is slated for completion in May this year.

CNPC is constructing two pipelines to transport oil purchased in the Middle East and gas purchased in Burma’s Shwe Bay to China, beginning in September.

Each pipeline will cost U.S. $2 billion to build. Burma will earn U.S. $7 million per year in annual right-of-way fees to transport the fuel through its territory.

The oil pipeline is aimed at diversifying China’s crude oil imports routes from the Middle East and Africa, and avoid traffic through the Strait of Malacca. Oil storage tanks will be built on an island near Kyaukpyu.

The Shwe Gas Project has created a controversy in much the same way as the China-backed Myitsone Dam project did in Burma’s Kachin state two years ago—angering critics who saw the scheme benefitting the country’s northern neighbor while negatively affecting the lives of local inhabitants.

The megadam, which was designed to generate electricity mostly for export to China, was suspended by Burmese President Thein Sein’s reformist government after taking power from the former military junta in March 2011 due to public opposition.

Reported by Min Thein Aung and Zin Mar Win for RFA’s Burmese Service. Translated by Khet Mar. Written in English by Joshua Lipes.

 RFA

Photo (SGM)

A group of farmers from Shan state issued a public call on Friday demanding that Burma’s government remove sections of the Shwe gas pipeline built on their land.Representatives of the Northern Shan Farmers Committee sent an open letter to the Shan state parliament in Taunggyi citing environmental and human rights concerns regarding the twin oil and gas pipelines which are currently under construction.

When completed later this year the pipelines will transport gas and oil from Burma’s Arakan (Rakhine) coast to China’s Yunnan region, along some 800 KM of land largely expropriated from local farmers, including those from six townships in Shan state.

A report released on Friday by a coalition of Shan civil society organisations led by the Shan Human Rights Foundation (SHRF), that was timed to coincide with the petition highlights the pipeline’s numerous controversies. This includes the seizures of more than 2000 acres of land and what critics call an inadequate and completely non-transparent compensation scheme.

According to Sai Khur Hseng, a spokesman for SHRF many of the farmers who received compensation for their land were forced to sell against their wishes and then compelled to hand 10 percent of the funds they received to local officials who demanded kickbacks. The amounts of compensation distributed to the farmers varied widely depending on where their farms were.

Farmers in Namkham closest to the Chinese border received 14 million Kyat per acre. While those further south in Namtu and Hsipaw received 3 to 5 million Kyat per acre. But Sai Khur Hseng and his collegues say even the largest amount of compensation paid out to the farmers was below market rates and completely insufficient.

Another major concern for the farmers is the environmental impact that the pipeline will have on the land their land which the pipelines will pass through. Pipelines throughout the world are infamous for leaking and contaminating nearby farm land. The Shwe gas pipelines appear to be at serious risk for leaks in Shan state as they cross heavy salt deposits north of Hsipaw.

The farmers worry that the salt will corrode the pipes, a concern that has so far been ignored by both the Burmese government and and China National Petroleum Company (CNPC), the state-owned Chinese firm leading the consortium building the pipeline project.

The farmers say they were never invited to public consultations about the pipeline project nor were they given any opportunity to voice their concerns.

“We feel like a time-bomb has been placed under our homes,” said Nang Mwe Hseng a farmer from Namkham who was quoted in the press release accompanying the report. “Not only have our lands been taken without our consent, but our lives are now under threat,” he said.

The ongoing fighting in northern Shan state between government forces and armed ethnic groups is also a major concern for those monitoring the pipeline’s development. As recently as late last month clashes between Burma’s military and forces from the Kachin Independence Organization (KIO), took place in an area next to the pipeline corridor.

Throughout the past few years the military has also fought frequently with the troops from the Shan State Army North and the Ta’ang National Liberation Army (TNLA) in territory close to the pipeline. The continued fighting in Shan state poses a major risk for the pipeline, warned an oil industry security specialist during a recent interview with the Interfax news service.

“Running an over-ground gas pipeline in a location where an armed conflict taking place is absolutely unadvisable; an explosion could easily be caused by a stray bullet. If the pipeline is penetrated it will explode, causing it – and the surrounding area – significant damage” said Michael Oxlade, a consultant with Westminster International, a UK based firm that specializes in providing security services for global oil operations.

DVB

Construction of the Shwe gas pipeline near Hsipaw, Shan State. (Photo: Francis Wade)

Much-delayed plans to kick-start an international scramble for oil and gas on Burma’s Bay of Bengal coast are due to be unveiled this month, but the Ministry of Energy has yet to provide any details of the license auction, or the level of transparency which will be in place to oversee it.

Up to 20 offshore blocks will be offered for exploration licenses, according to the ministry. However, potential foreign bidders still do not know whether they will be permitted to hold a full license—with a 100 percent shareholding—or take on domestic partners.

Foreign firms seeking onshore licenses must have a local partner, but offshore exploration requires heavier investment and a level of technology unavailable to Burmese companies, say industry analysts.

The auction was meant to take place last September but was postponed amid foreign concern about the transparency in the bidding process and the involvement of an unreformed Myanma Oil & Gas Enterprise, widely seen as a tool of the former military regime.

Four weeks ago Minister of Energy Than Htay said the government had taken the “necessary actions” to ensure Burma’s oil and gas sector fulfilled the standards of the Extractive Industries Transparency Initiative (EITI).

Based in Oslo, Norway, EITI is an international body which overseas financial openness and fairness in the industry.

According to EITI, however, Burma is still only at the stage of preparing to become a member and has yet to apply for inspection to qualify for candidate membership.

“Revenue from oil and gas is the largest source of foreign income for the government of [Burma],” said an EITI statement. “According to the IMF, revenue from gas will likely increase by 85 percent over the next three years as the Shwe gas project becomes operational.

“By preparing to implement the EITI, the government is taking practical steps to ensure that a robust framework is in place for dialogue about the governance of these natural resources.”

Analysts say the recent outbreak of sectarian violence between Buddhists and Muslims in Burma, renewed fighting in Kachin State and a major clean out of corrupt and incompetent senior officials by President Thein Sein may have distracted the government from the exploration licensing auction.

The president has in recent days forced the dismissal of key leading officials in the Ministry of Finance and Revenue, the Trade Department, the Department of National Economic Planning and Development and the Commerce Department as part of a dragnet to clean up the government.

“There is still an air of uncertainty around the proposed offshore oil blocks auction due this month,” industry analyst Collin Reynolds in Bangkok told The Irrawaddy on April 3. “We still do not know any details of the auction, such as how many blocks, locations and terms.

“It all could go ahead, however, Burma is under intense scrutiny from the international community in view of its recent past and the close financial involvement of the former regime.”

Chinese national oil companies are expected to be among bidders for Burma’s offshore blocks, where large volumes of natural gas are reckoned to be under the sea.

China’s interest is linked to its plans to use Burma as a conduit for oil and gas via the two pipelines it is building through the country from the central coast terminal it has developed at Kyaukphyu, where it also has proposed to bring a freight railway line from its landlocked Yunnan Province bordering Burma.

“Not only will these pipelines become a reliable means of delivering energy imports from the Middle East and Africa directly to China, without having to navigate the narrow Strait of Malacca and increasingly volatile South China Sea, they will also provide China a potential direct line to over 20 new offshore oil and gas exploration blocks that will go up for international auction in April,” said Eric Draitser, an American geopolitical analyst writing in the Asia Times.

One of the pipelines is due to begin pumping gas from the Shwe field in the Bay of Bengal in the middle of this year, but fighting between a Kachin militia and the Burmese army near the northern end of the pipeline just before it enters Yunnan has raised doubts about security.

A report by Natural Gas Daily, produced by the Russian news agency Interfax, quotes a security consultant saying it could be highly dangerous.

“Running an over-ground gas pipeline in a location where an armed conflict is taking place is absolutely unadvisable. An explosion could easily be caused by a stray bullet. If the pipeline is penetrated it will explode, causing it and the surrounding area significant damage,” Michael Oxlade, senior security consultant at Westminster International, was quoted by Interfax as warning.

Westminster International is a UK company run by ex-British Army officers which provides advice on security for all kinds of installations, including energy infrastructure.

Natural gas exports are becoming an increasingly important source of income for the Thein Sein government to finance its economic reforms and also reportedly to directly take part in new oil and gas explorations.

Income from gas exports in the 2012-13 financial year ended March 31 were expected to reach almost US $4 billion, according to the Ministry of Commerce, although official figures have yet to be published.

Next year, this source of income will be further boosted by the Shwe gas sales to China—if there are no pipeline mishaps—and also from gas bought by Thailand from a new field in the Gulf of Martaban to the east.

 Irrawaddy

A leading oil security expert has weighed in on the potential dangers of operating twin gas and oil pipelines in northern Shan state while fighting between the Burma army and the Kachin Independence Army (KIA) is ongoing near the pipeline route.

A long stretch of KIA- controlled territory lies along the route of the Shwe gas project’s twin oil and natural gas pipelines that are currently under construction. When completed, the pipelines will send gas and oil from Burma’s Arakan (Rakhine) coast to China’s Yunnan region, a total distance of nearly 800 KM.

Although the Shwe Gas Project may not be the primary reason behind the army’s offensive against the KIA, observers speculate it has added fuel to the fire.

A security consultant with Westminster International; a firm that provides security for oil and gas projects, told Russia’s Interfax news agency last week they had serious concerns about the risks involved with operating the Shwe pipelines while the conflict is ongoing in the region. “We would strongly advise our clients against doing this,” said Michael Oxlade.

“Running an over-ground gas pipeline in a location where an armed conflict taking place is absolutely unadvisable; an explosion could easily be caused by a stray bullet. If the pipeline is penetrated it will explode, causing it, and the surrounding area, significant damage.”

Since the Kachin conflict restarted on June 9, 2011 fighting has repeatedly broken out near where the pipeline will be built – an area controlled by KIA Brigade 4.

A month before the conflict began; a senior commander for the Kachin Independence Organization (the political wing of the KIA) foretold that the pipeline would be used by the military for its own strategic purposes – to crush ethnic armed groups like the KIO. “The pipeline will be a tool and an opportunity for the SPDC to eliminate the armed groups,” Lt-Gen Gam Shawng told the New York Times back in May of 2009.

Originally the initial pipeline route would have avoided most of the KIO’s territory; however in early 2011 the pipeline route in Shan state was significantly altered. Under the old route the pipeline was slated to continue east at Hsipaw and reach Lashio before heading north to Kunming, but under the new route the pipeline makes a near 90 degree turn at Hsipaw heading directly north into KIO territory.

An environmental coalition opposed to the pipeline project has uncovered that two firms hired to produce Environmental, Social and Health Impact Assessments (ESHIA) for both the oil and gas pipelines are Western owned. Activists with The Shwe Gas Movement have repeatedly written letters to the firms asking for copies of the assessments but neither firm has complied.

China National Petroleum Company (CNPC) – the state-owned firm spearheading the consortium that will build and operate pipelines – hired the Hong Kong branch of the UK-based Environmental Resources Management (ERM) to conduct the ESHIA for the oil pipeline, according to Shwe Gas Movement staff. International Environmental Management Co., Ltd. (IEM), a Canadian-owned firm based in Thailand, was also hired.

When the ESHIA was being produced it is unknown whether either of the firms predicted that the pipeline route would be engulfed in fierce fighting between the Burmese government and KIO.

BNI

Marines of the People’s Liberation Army (Navy) pictured at Zhanjiang in 2006. (U.S. Marine Corps photo)

State news service Xinhua reported that Chinese army units were undergoing rigorous training in the jungle, mountains and rivers; moreover they were preparing “for real combat” and “to be victorious in battle”. Nonetheless, no red flags of warning were raised nor did the nationalistic Myanmar press become over-excited.

Beijing expressed its concern earlier this year when at least four artillery shells landed on Chinese soil during a Myanmar government campaign against the Kachin Independence Army (KIA) at its main base in Laiza, which straddles the Chinese border.

Chinese authorities are naturally worried that a continuation of the conflict results in another surge of refugees spilling over its border.

Myanmar government forces retain strategic hilltops outside Laiza. They have already proved their ability to launch air assaults with helicopter gunships and fighter jets, but would require Chinese airspace in order to overfly the town and bomb the Kachin stronghold.

The pressure of the siege has brought the Kachins reluctantly to the negotiating table. The last talks were on February 4 and a new round looks set for early March, peace broker Hla Maung Shwe told Mizzima on Monday. In the meantime, an awkward lull in fighting at Laiza perseveres though skirmishes continue in other parts of Kachin State.

But while both governments take all precautions to ensure that China does not become embroiled in Myanmar’s civil war, a second scenario looms which severely tests Chinese resolve to refrain from direct intervention.

The 700-mile-long Shwe Gas pipeline is due to be completed in May. Optimistic Chinese sources believe the oil and gas may start flowing from the deep-sea port at Kyaukphyu in the Bay of Bengal to China’s southwestern Yunnan in early June.

China’s controversial trans-Myanmar pipeline is now more than 70 percent complete. The remaining portion on the Myanmar side runs through northern Shan State where it will cross the border at Muse, a town currently under government control but in a pocket surrounded by Kachin outposts.

The KIA has stepped up campaigns of sabotage against Myanmar infrastructure over the last year. There is little to indicate that—if peace talks do not go their way—they would feel less inclined to disrupt the transfer of oil across their territory.

Tin Thit, the coordinator of the Myanmar-China Pipeline Watch Committee in Mandalay, is cited in NPR on Friday saying that although the Myanmar army will station soldiers in Shan State to protect the pipeline, this act could fuel the insurgency and threaten national security.

“If insurgents attack or blow up part of the pipeline, the Chinese could send troops into Myanmar to protect it,” Tin Thit is quoted as saying. “This would have a huge impact on our sovereignty.”

Washington-based NPR said that officials in both countries deny such a thing could ever happen. “Nonetheless, it’s a common perception among Burmese,” it reported.

Wong Aung of the Shwe Gas Movement told Mizzima on Monday that local resistance to the pipeline will prevent it opening as scheduled. “I am confident that China will not be able to complete the pipelines project as planned in May because some infrastructure development still needs to be completed, especially in the conflict area in northern Shan State,” he said. “The resentment and anger of the local people over the project are growing due to involuntary relocations and uninformed consent during the project activities.”

These are testing times for the Chinese government and its associated investors. The suspension of the Myitsone Dam and the Latpadaung copper mine project must have tried their patience. Losing the Shwe pipeline might push them to the brink.

Is it unrealistic to believe that Beijing would not order its troops across the border to protect China’s national interests? Has it already made a contingency plan for such a scenario? Some analysts have suggested that the Chinese have suddenly taken a renewed interest in arming their old allies, the United Wa State Army.

Several news agencies closely aligned with the Beijing government reported only last week that the Chinese military had last year contemplated using drones to assassinate drug kingpin Naw Kham. If Laotian authorities had not apprehended the Shan warlord in April and handed him over to their Chinese counterparts, would plans for a strategic strike in northeastern Shan State have gone ahead?

Perhaps, but perhaps not. However the fact that China is making its southwestern neighbor aware of its military capabilities sends a message hard to ignore.

It is highly likely that Chinese patience and its committed policy of respecting sovereignty will be put to the test in the coming months—not only in containing the Kachin conflict, but also in protecting a vital pipeline from sabotage.

Naypyitaw must realize that time is running out to agree a concrete ceasefire with the KIA if its wants to avoid putting its Chinese counterparts in that very position.

A soon-to-be completed gas pipeline connecting the Indian Ocean coast of Myanmar with southwest China may help China avoid military obstacles set up by the United States, reports the Voice of Russia, an international broadcaster based in Moscow.

The state-owned China National Petroleum Corporation, which built the pipeline, announced on Monday that the 793-kilometer pipeline would become fully operational by May 30, less than three years after construction began.

The schedule of the pipeline was decided at an emergency Sino-Myanmar military meeting due to worsening violence between the Myanmar government and ethnic Kachins in the country’s north, not far from the country’s border with China.

The pipeline will help free China from its dependence on the Strait of Malacca for its energy imports, giving it a shorter and alternate supply route that also helps evade military obstacles from the United States, according to the Financial Times, adding that the pipeline is not only an issue of energy but also of strategic safety.

Countries in Southeast Asia including Myanmar have become the center of a silent conflict of interests between China and the US, with the latter attempting to develop its relations with those countries to restrict China’s growing power. Washington has already strengthened its cooperation with India and has established a new military base in the Asia-Pacific region through Australia.

The new gas pipeline will reportedly be able to carry 12 billion cubic meters of gas and 22 million tons of imported crude oil to China every year.

The pipeline offers China “an alternative supply route if the Strait of Malacca were ever blocked because of terrorism, piracy or conflict,” Stephanie Kleine-Ahlbrandt, director of North East Asia Project at the International Crisis Group, told the Financial Times.

“Beijing also fears that the straits could be threatened or cut off by the US if there was ever a conflict between the countries in the Taiwan Strait or elsewhere,” the director added.

According to the Global Times, a tabloid under the auspices of the Communist Party mouthpiece People’s Daily, the pipeline appears to have given China an advantage in its strategic conflict with the US, though whether the advantage will last remains to be seen.

Want China Times

The spokesperson also said the pipeline was being constructed according to “international standards” after a report by Eleven Media last week quoted critics of the project saying its construction was shoddy and that the country was being shortchanged in the deal.

Residents of Kyaukphyu Township in Rakhine State also called for a suspension of the project until concerns over its environmental and social impacts were addressed.

“We gave compensation to locals,” the CNPC spokesperson said, adding that “the Chinese government will take action if we don’t follow their rules and regulations in big projects”.

“We negotiated with local governments, the farmers and the company [contracted to build the pipeline] to pay compensation for land. We gave the set price,” he said.

The dual pipelines, one for gas and one for oil, are being buried at a depth of 0.76 meters, which is in accord with international standards, the CNPC spokesperson said.

Chen Jian, China’s Deputy Minister of Commerce, last week called on CNPC to investigate the dispute with residents in Rakhine State and said the project would benefit both countries.

“Myanmar people will know the mutual benefits if they go to the project area and study it,” Chen Jian said, adding: “I heard that the protesters are not locals in some project areas.”

The pipelines will operate for 30 years with the government receiving US$13.81 million per year in royalties. It will also receive royalties based on the amount of oil and gas transported, with some sources saying that total could exceed $600 million over 30 years. Critics of the project say it lacks transparency, has damaged the environment, cost farmers land and crops, and will provide China with cheap oil and gas while Myanmar’s commercial hub, Yangon, continues to experience power outages.

Eleven Media Group

But the political reforms under way in Myanmar, also known as Burma, are redefining its place in the world. President Obama’s visit in November was a sign of the dramatic turnaround in relations with the United States.

Meanwhile, China, which has been Myanmar’s main backer for years, is stepping up its investments. Chinese media report that 700-mile oil and gas pipelines will be completed in May. The pipelines will begin in the Bay of Bengal, stretch all the way across Myanmar and into southwestern China’s Yunnan Province.

It’s the most strategically vital of China’s investments in Myanmar. China will be able to ship oil from the Indian Ocean straight to the pipeline.

This will avoid a potential choke point in the Strait of Malacca, as tankers go the long way around the Malay Peninsula. The pipelines can reportedly transport 22 million tons of oil and 423 billion cubic feet of gas a year.

Villagers Caught In The Middle

Residents of Nong Pha village in southern Shan State say the Burmese army confiscated their farmland to build the pipeline, and kept money intended to compensate them

Anthony Kuhn/NPR

Myanmar stands to gain billions of dollars in revenue from the pipelines, but some villagers along the route are already complaining that they are worse off.

Chinese and Burmese work crews could recently be seen burying the pipelines outside Myanmar’s second city, Mandalay. When they’re done, all that’s visible is a ribbon of red earth, stretching through the green hills and valleys.

Further east, the pipeline cuts through Nong Pha, an ethnic Shan village. Residents there complain that the pipeline has left them utterly destitute.

Nong Pha’s 42-year-old village chief, U Hla Shwe, says that the army took away their farmland to build the pipeline last year. Since 1995, he says, farmers have been forced to give the army a portion of their crops.

He says the Chinese pipeline company gave the army money to compensate the villagers — but the army kept that money for itself.

“I don’t think this is a good project,” he says. “I don’t know what profits my country will get from it. I just know that my family and my neighbors are suffering and starving, and we haven’t seen any money.”

Many of the villagers appear hurt and bewildered by their misfortune. They say they fear the army. And they don’t dare complain about their troubles.

“We have no jobs, and no money,” Hla Shwe says. “Our children can’t afford to attend school. Our new president said early in his administration that poverty would be reduced. The present government is really no different from the last one.”

Another farmer, 55-year-old U Pin Nya, says the project is affecting his work.

“Even our cows and our water buffaloes are starving,” he says. “We may have no choice but to move to another village soon.”

Environmental Concerns

U Tin Thit, coordinator of the Myanmar-China Pipeline Watch Committee in Mandalay, cites a Ministry of Energy estimate, putting the cost of the pipeline at $2.5 billion. But only $32 million, or 1.3 percent of that, he says, will go to compensate Burmese citizens for their land.

Tin Thit says he is also concerned about the project’s effect on the environment and on human rights.

The last leg of the pipeline still to be built is in Shan State. Ethnic insurgents have been fighting the government there for decades. Tin Thit says the government will station soldiers in Shan State to protect the pipeline. And he says that could fuel the insurgency and threaten Burmese national security.

“If insurgents attack or blow up part of the pipeline, the Chinese could send troops into Myanmar to protect it,” Tin Thit says. “This would have a huge impact on our sovereignty.”

Officials in both countries deny such a thing could ever happen. Nonetheless, it’s a common perception among Burmese.

Backlash Against Chinese Investments

Such perceptions have led to a rising tide of opposition to Chinese investment projects. Last November, a police crackdown on demonstrators protesting the Letpadaung copper mine injured dozens and sparked a national outcry. The project is operated by a Chinese arms manufacturer, Norinco, and a Burmese military enterprise.

In 2011, strong public opposition prompted President Thein Sein to shelve the Chinese-funded Myitsone Dam on the Irrawaddy River. That incident was the clearest signal yet that Myanmar has begun to reduce its reliance on China.

Irked Chinese leaders have warned Myanmar to honor its agreements.

Ko Ko Hlaing, chief political adviser to President Thein Sein, says Myanmar’s government will address problems caused by the Chinese investments. And he also expects Chinese companies to clean up their acts.

“Yes, they have to admit that there is some sort of weakness in the CSR, corporate social responsibility, in the previous time,” says the former army colonel and military researcher. “Now they are quite aware of that. They need to amend their bad image in this country.”

He promises that the government will share revenues from the pipelines with communities living nearby.

China’s Roots In The Country

Realistically, he says, his small country has little choice but to stay on good terms with its giant neighbor to the north. But he suggests that like many Southeast Asian nations, Myanmar will be hedging its bets.

“We need some sort of help from the United States,” he says, “as a check and balance power to the Chinese influence on the region.”

Ko Ko Hlaing says Myanmar is returning to a policy of neutrality that it maintained during the Cold War.

But the big powers were never satisfied with Burma’s neutrality. Winston Churchill famously called Burma a hole in the West’s Cold War encirclement of China. China’s leaders, meanwhile, accused Burma of fence-sitting in the fight against U.S. imperialism in Asia.

China’s dissatisfaction grew to a climax in 1967. Maoists tried to export their Cultural Revolution to Burma. They mobilized ethnic Chinese in Burma to wear Chairman Mao badges and wave his Little Red Book of quotations, in defiance of the Burmese government. Anti-China riots followed in Burma, and dozens were killed.

Historians note that Burma’s then-ruler Gen.Ne Win benefited from the riots, as it distracted from economic woes at home, particularly soaring rice prices.

Beijing insists that it is careful not to meddle in Myanmar’s internal affairs. But the Burmese will not easily forget that for more than two decades beginning in 1967, it armed, trained and funded communist insurgents fighting the Burmese government.

Tug Of War

Yun Sun, with the Washington, D.C.-based Brookings Institution, says that China’s government now publicly welcomes Myanmar’s engagement with the West.

But in private, many Chinese are heatedly debating how China misread Myanmar and allowed the U.S. to increase its influence there at China’s expense.

Sun says that China and the U.S. both assumed that Myanmar’s 2010 elections were an attempt by the ruling military junta to appease public opinion, while hanging onto power.

“But it turned out the new civilian government was much more eager to engage in political democratization than China originally presumed,” she says. “And that’s where China’s grand strategic thinking on Myanmar fell apart.”

Sun adds that, based on its own experiences, China’s government believed Burma would be more grateful for the jobs and economic growth that Chinese investments bring.

“As for the downside of these investments,” she says, “such as the damage to the environment or the deprivation of the livelihood of some people, China sees these as necessary costs associated with economic development for a less-developed country.”

In other words, China may have overestimated the appeal of its development model to the Burmese.

At a Buddhist monastery outside Mandalay, a bell calls crimson-robed monks to prayer. Abbot U Sein Ni Ta, who has organized local farmers affected by the oil and gas pipelines, says he does not want to see his land exploited and his people subjugated, like Burma’s deeply Buddhist neighbor just to the north.

“I don’t want my country’s fate to be like that of Tibet,” he says sternly. “The international community should examine the impact of China’s investments in Burma. The former military regime signed these deals with China, and now we’re paying the price for it.”

NPR

The two sides have agreed to resume negotiations by the end of the month. A statement foreshadowed the invitation of third party “observers” and “witnesses” to the next round of talks as well as the establishment of “a surveillance system in the conflict-affected areas” to facilitate a ceasefire.

High level Chinese and Burmese officials were present along with representatives of Kachin Independence Army (KIA), the military wing of the Kachin Independence Organisation (KIO). Two other major ethnic groups in northern Burma, the Karen National Union and the Shan State Restoration Council, also attended.

The Chinese government has become increasingly concerned over the escalating fighting near its border between the Burmese army and the KIA.

Since December the Burmese military has used air strikes and heavy weapons to attack KIA positions, a major intensification in the fighting that followed the breakdown of a 17-year peace agreement in mid-2011. On December 17, the Chinese foreign ministry noted that artillery fire from within the Kachin area had fallen on Chinese territory for a fourth time.

Burmese President Thein Sein announced a unilateral ceasefire on January 19. However, Burmese army units continued operations near the KIA’s headquarters at Laiza late last month, capturing high ground only seven kilometres from the town. Laiza is just over the border from China.

China has intervened to shore up its relations with the Burmese government and also to prevent the conflict from spilling over the border into southern China. China has long been preoccupied with stability in its border areas with Burma that include the Kachin and Shan states. These ethnic groups are mirrored across the border in China’s south western province of Yunnan.

China cultivated ties with the ethnic groups in northern Burma, both to prevent unrest on its border and as leverage with the Burmese military junta. Some of the separatist militias were breakaways from the Burmese Communist Party, which Beijing supported until the end of the 1980s. Beijing never supported independence or a high degree of autonomy for the Burmese separatists lest it encourage similar movements inside China.

Western sanctions against Burma from the late 1980s resulted in the junta becoming more economically and politically dependent on China, changing Beijing’s relationship both with the government and the northern separatist groups.

Chinese investment in Burmese resource and hydroelectric projects expanded. Much of it was in the border areas on terms worked with the military rulers that took little heed of the demands of ethnic groups for economic and political autonomy.

Under an agreement signed in 2009, China is constructing oil and natural gas pipelines through Burma that are due to begin operation in June. The parallel pipelines will run from the Indian Ocean port of Kyaukphyu through Burma to Kunming in Yunnan. The oil pipeline will have an annual capacity of 12 million tonnes.

The energy corridor will cut the time and expense for Chinese oil and gas imports from Africa and the Middle East and also shipment via the Strait of Malacca. The pipelines are part of Beijing’s plans to lessen its dependence on shipping routes that could potentially be blocked by the US and its allies.

Chinese relations with Burma have been complicated by the developing rapprochement between the US and the Burmese regime, which created a quasi-civilian government under President Thein Sein in 2011.

Thein Sein signalled a diplomatic opening for the US and its allies in September 2011 by suspending the massive Chinese-funded Myitsone Dam hydro-electric project in Kachin. High-level visits followed and most economic sanctions were lifted after the opposition National League for Democracy (NLD) was allowed to stand in Burma’s parliamentary elections in April 2012.

China was particularly concerned that the latest Burmese military offensive proceeded without taking vital Chinese interests into account. Beijing is anxious to settle the Kachin ethnic conflict, but the Burmese government is expected to take a hard line in talks, ruling out anything but token autonomy.

As US ties with Burma have improved, the opposition NLD headed by Aung San Suu Kyi, while formally supporting autonomy, is increasingly lining up with the government and military.

Suu Kyi has failed defend either the Kachin or the Muslim Rohingya in the western Burmese state of Rakhine who have suffered sectarian attacks. During a visit to the East-West Centre in Hawaii on January 25, as the army was moving in on Laiza, she expressed her admiration for the Burmese military, saying: “I can’t help it, it’s the truth.”

Following the brutal military crackdown on strikes and protests in 1988, Suu Kyi has been systematically built up as an icon of democracy. In reality, she and the NLD represent Western-aligned sections of the Burmese bourgeoisie whose interests were previously blocked by the military junta. Suu Kyi has been crucial to the Obama administration in providing democratic window dressing for renewed US relations with Burma.

The strengthening of US ties with Burma is part of Obama’s aggressive “pivot to Asia” which is aimed at undermining Chinese influence throughout the region. Washington has called for the settlement of the ethnic conflicts in Burma’s north has made limited criticisms of the military’s recent offensive against the KIA. Indeed, at the height of fighting, Western creditors relieved Burma of $US6 billion or 60 percent of its total debt.

The US has already expressed interest in becoming a third party to the peace talks sponsored by China. Any American involvement will be aimed at boosting US influence, not only in Burma, but in the sensitive northern border areas adjacent to China. The US is already developing closer ties not only with the Burmese government, but also with the military, posing a potential threat to vital Chinese economic and strategic interests.

By John Roberts

A government peace negotiating committee invited the Kachin Independence Organization, the armed group’s political wing, for negotiations in a letter to chairman Zaung Haya dated Jan. 19, the state-run New Light of Myanmar reported. Fighting erupted in June 2011 after a 17-year hiatus, making it Myanmar’s last ethnic conflict without a cease-fire agreement.

President Thein Sein announced a unilateral cease-fire two days ago following a three-week offensive against Kachin fighters that involved the use of air power. The army attacked a Kachin base Jan. 19, signaling a possible resumption in fighting, the BBC reported. La Nan, a spokesman for the Kachin, didn’t answer calls to his mobile phone.

The conflict is testing Thein Sein’s control over army commanders two years after he took power following an election that ended about five decades of direct military rule. The president vowed to push for peace at a meeting at the weekend with donor nations aimed at coordinating plans to modernize the country’s financial system and infrastructure.

“I want to stress that we continue to try to achieve genuine peace in the country,” Thein Sein said in his speech. “I want to invite my colleagues from KIO to come to the peace meeting from here on again. I believe KIO will soon join us in the peace process.”

Political Dialogue

The fighting in Kachin state threatens to undermine Thein Sein’s authority among ethnic armies after he allowed greater political freedom and held talks with dissident Aung San Suu Kyi. He said that political dialogue would start with 10 ethnic armies that reached cease-fires with the government.

The New Light of Myanmar said the Kachin army attacked a police station on Jan. 18, killing two officers, and injuring 22 civilians in mine attacks targeted at three vehicles. Human Rights Watch last week called on the government to halt indiscriminate attacks against the Kachin, such as one on Jan. 14 that killed three civilians, and to allow humanitarian groups access to about 15,000 displaced people.

The U.S. has urged both sides to enter talks to end the fighting, while China welcomed the cease-fire announced by the government after a bomb landed in its territory.

China Role

“The border areas are close and people have frequent exchanges, so war will surely affect the other,” Foreign Ministry spokesman Hong Lei said at a briefing in Beijing today. “China hopes both sides will start peace negotiations to restore stability to the border area. China would like to play a positive role in this process.”

The last attempt at peace talks in October broke down when the Kachin sent low-ranking officials to a meeting with senior Myanmar generals, which was perceived as a snub, according to the International Crisis Group, a Brussels-based policy research group.

Still, the conflict is “much simpler” to resolve than fighting between ethnic Rakhine Buddhists and Muslim Rohingya that erupted last year, Jim Della-Giacoma, Crisis Group’s Southeast Asia project director, wrote on Jan. 10.

“The years of fighting and the cease-fire in Kachin State have produced two sides that may be wary but are very familiar with each other and in regular contact,” he wrote. “There is now informal discussion about what the contours of a cease-fire might be as well as what might follow in terms of sharing of revenues from resources, economic development, political structures, transitions arrangements, and the possible devolution of some power.”

Kachin Christians

Kachin, bordering China and India, is the northernmost of Myanmar’s 14 provinces and home to natural resources including precious gems, jade, copper and gold. Ethnic Kachins are predominately Christian Baptists and Roman Catholic in the majority Buddhist country.

The Kachin took up arms against the military government in 1961, and the group’s Kachin Independence Army has grown to become Myanmar’s second-largest non-state ethnic armed group, according to Human Rights Watch. The KIO maintains a civilian administration that acts as a parallel state, the group said.

Recent clashes between government troops and Kachin rebels have occurred close to oil and gas pipelines being built by China National Petroleum Corp. and China Power Investment Corp.’s $3.6 billion hydropower project that Thein Sein suspended in 2011 because of environmental concerns. In a 2011 statement, the government said Kachin rebels attacked Chinese staff working at hydropower projects in the northern state.

Myanmar has more than 30 armed ethnic minority groups that have resisted central government control since it gained independence from Britain in 1948. Since June 2011, the Kachin have killed 35 soldiers and left 190 injured, according to a government statement on Jan. 18.

Bloomberg