On​ 2 May 2008 Cyclone Nargis slammed into the Irrawaddy delta in Burma, killing 140,000 people overnight. Three million more were made homeless. Worse may be around the corner. Rising sea levels and shifting rainfall patterns threaten the livelihoods of the country’s poorest. Much of the coastline is at risk, including Rangoon, home to five million people. And the country’s arid interior, with a population of ten million, where daytime temperatures can exceed 45ºC for weeks at a time, may soon become uninhabitable. Severe storms like Nargis will become more frequent. Burma faces other challenges too: exploding wealth inequality, violent race-based conflict, a multibillion dollar methamphetamine industry, the proliferation of hate speech on social media, and the withering impact of China’s industrial revolution next door. Burma’s story has long been presented as a morality tale of democrats versus dictators, but the country is better seen as an arena in which many of the world’s most vexing problems are contended with – and where, perhaps, their solutions could be sought.

The modern Burmese state was born out of military occupation. Over the course of the 19th century, Britain’s Indian empire conquered the coastline from Bengal to Malaya, together with the valley of the Irrawaddy river and the surrounding highlands. From these territories they created British Burma, a province governed from Calcutta. There had been Burmese-speaking kingdoms for at least a thousand years, but Burma’s current borders are modern. The last independent kingdom was snuffed out in 1885; tens of thousands died in the ‘pacification’ campaigns that followed.

British Burma was a racial hierarchy, with ‘Europeans’ (the majority of them Scottish) at the apex. In the late 19th and early 20th centuries millions of people from across the Indian subcontinent and from China moved to Burma in search of a better life. In the 1920s Rangoon rivalled New York as the greatest immigrant port in the world. The British saw the Burmans – the Burmese-speaking, overwhelmingly Buddhist people of the Irrawaddy valley – as a separate race. As they became more familiar with the dozens of other peoples in their new province, such as the Shan and the Karen, they formulated theories about racial origins, fine-tuned their ideas about racial difference, and categorised each racial grouping as ‘indigenous’ or ‘alien’.

Modern political parties emerged in Burma a hundred years ago, demanding separation from British India. Some also campaigned against economic exploitation. ‘If we are honest,’ George Orwell wrote, ‘it is true that the British are robbing and pilfering Burma quite shamelessly.’ Firms in London and Glasgow grew fat on profits from the export of Burmese rice, oil and timber while ordinary villagers sank into poverty. In 1937 Burma was separated off from British India on the basis of a perceived difference in race.

When it gained independence in 1948 Burma had been devastated by the Second World War. The Raj had left a weak state, a legacy of race-based thinking, and a politics dominated by the left. Colonial rule had never really extended to the remote uplands and administration was now everywhere in tatters. Socialist ideas were in the ascendancy, and there were ambitious plans for rapid industrialisation. The socialists’ main rivals were the communists, who, having failed to seize power, fought a bitter insurgency. In truth, the war never ended. Since the Japanese bombing of Rangoon began in December 1941 Burma hasn’t had a single year of peace. In the uplands, minority communities established their own militias, to protect themselves and enforce their demands for self-rule. The communist insurgency is long over, but more than two dozen ‘ethnic armed organisations’ still exist (the largest fielding more than twenty thousand troops with armour and heavy artillery), plus hundreds of smaller groups. No one knows how many people have died in this, the longest running of all the wars in the world: perhaps half a million, with millions more displaced.

In the 1960s the army took control and, following what it called the ‘Burmese Way to Socialism’, nationalised big firms and severed ties with global markets. Indians left the country in their hundreds of thousands. In the 1980s, as the economy stuttered, socialism began to give way to nativist sentiment. The idea of the taing-yin-tha – ‘indigenous’ or ‘national’ races – took root. The ‘national races’, such as the Shan and Karen, were to be included in a framework dominated by the Burman majority: citizenship was increasingly tied to membership of one of these races. People of Indian or Chinese descent could stay on but only as ‘guest’ citizens. The Rohingya Muslims weren’t recognised as indigenous and were subjected to recurrent, violent operations explicitly aimed against illegal immigrants.

The last quarter-century in Burma is usually narrated as a fight for democracy, with a thuggish junta on one side and, on the other, Aung San Suu Kyi and her National League for Democracy (NLD). Less well known is the story of the predatory political economy that developed over this period. In 1989, the year after an abortive pro-democracy uprising, Burmese socialism was replaced by free-market policies and the Communist Party’s insurgency collapsed, its forces splintering into new militias. Ceasefires were agreed between the new army junta and the leaders of these new militias, which now focused instead on making money. That same year, the border with China was thrown open.

The new Burmese capitalism mutated over the years as Western sanctions became harsher. Heroin production and the felling of virgin forest became a road to riches. Millions of acres were confiscated from locals and leased or sold to former black marketeers, warlords or cronies of the generals, all of whom were now hailed as ‘national entrepreneurs’. By the 2000s, the mining of jade for sale to China was producing billions of dollars in profits. Much of the money went overseas, but enough stayed behind to create a new wealthy class. Global oil companies, conveniently excluded from American sanctions, developed an offshore gas industry, with revenue shared between the army and its business partners. Property prices soared. Wealth inequality reached levels not known since the colonial era. Gated communities with golf courses, spas and multimillion-dollar villas adjoined slums with no running water or electricity. Western sanctions meant international aid was reduced to a bare minimum. Rackets and rent-seeking became stronger than state institutions. Virtually no one paid tax.

Things began to change around 2010. Than Shwe, who had been Burma’s dictator since 1992, was in his mid-seventies, and didn’t want to give way to another strongman. He decided to break up the existing power structure and devise a new constitution. All the top generals were retired, a few recycled into new roles. A younger generation of army officers, beholden to Than Shwe, was promoted. The new constitution was semi-democratic, with a quarter of the seats in parliament reserved for military officers, and the ministries of defence and home affairs (which controls the police) reserved for serving generals. It was condemned by the NLD and most Western governments as a fig leaf for continued army rule. Than Shwe didn’t care. When the NLD boycotted the first elections under the new regime (in December 2010) his Union Solidarity and Development Party (USDP) swept the board. A few months later he stood down as commander-in-chief and dissolved the junta. He now lives in comfortable retirement.

A group of reform-minded former generals came to power. In his first year in office, the new president, Thein Sein, freed nearly all the country’s political prisoners, ended media censorship, lifted all internet restrictions, legalised unions, and shifted the economy out of army control. A fresh peace process resulted in ceasefires with local insurgents, including the Karen National Union, which had been fighting non-stop since 1949. (This hadn’t been part of Than Shwe’s plan.) Thein Sein was guided by a small circle of fellow retired generals and their advisers. A box-set of The West Wing was made available to help reformist ministers understand the workings of democratic government.

In late 2011 Aung San Suu Kyi accepted the new constitution in the hope that it would be a step towards proper democracy. At the same moment the Americans, conscious of China’s growing influence, were hoping for a rapprochement with Burma’s generals. The generals did just enough to justify a normalisation of ties. Sanctions were quickly rolled back and billions of dollars invested in telecoms, resulting in internet speeds that are now among the fastest in Asia. Between 2012 and 2015 mobile phone penetration increased from 7 per cent to 90 per cent.

The reformist push soon lost momentum as venal interests reasserted themselves and disputes within the elite came into the open. But the initial impetus, combined with Western encouragement and the feeling in the USDP that they might do reasonably well, ensured free and fair elections in 2015. The result was a landslide for Aung San Suu Kyi’s NLD. The old administration peacefully relinquished power. It seemed too good to be true. And it was.

In 2011 a 17-year ceasefire between the army and the Kachin Independence Organisation, one of the most powerful of the so-called ethnic armed organisations, broke down, leading to pitched battles in the rugged highlands adjacent to China. More than a hundred thousand civilians were forced to flee their villages. In 2012 conflict between Muslim and Buddhist communities in the western coastal region of Arakan spread to other parts of the country. Hundreds died and 120,000 others, mainly Muslims, were displaced.

In the new world of Burmese social media, the idea of an Islamic threat took root, connecting the century-old prejudice against people of Indian descent with the idea of Burma as an island of Buddhism surrounded by large and expanding Islamic neighbours. Images online of al-Qaida and Islamic State atrocities added fuel to the fire. The nationalism of the Burman majority draws strength from an imagined imperial past as well as the humiliation of colonial subjugation, and is fixated on the need to protect ‘indigenous’ races and traditional values, which are perceived as being under siege. For minority peoples like the Shan and Karen, however, Burman chauvinism is the problem, with the army as its standard-bearer. There is little appreciation of how recent and fluid local identities are. Instead, there is identity-based mobilisation on an unprecedented scale.

This masks the gross inequalities of wealth in the country, which cut across the boundaries of race and religion. A third of the population lives in extreme poverty, with no access to public health or education. Millions are landless and move around in search of work. Some have seen their incomes rise over the last few years, but even among the better-off there is growing anxiety, as the security of village life is replaced by a more precarious existence in the cities. Private schools and hospitals have mushroomed, nearly all of them inaccessible to the vast majority, while social spending remains woefully low.

The tentacular presence of China is another problem. In the early part of this decade, as Burma was embraced by the West, China seemed at a disadvantage. But its economic influence continued to grow and its $120 billion stimulus plan – a response to the financial crisis of 2008, which targeted poorer regions including Yunnan, on Burma’s border – created a boom that hoovered up every conceivable Burmese commodity, from rare minerals to young women auctioned as brides. Inexpensive Chinese consumer goods, from solar panels to smartphones, flooded the Burmese market. At the same time, China maintained close relations with the ethnic armed organisations active along the common frontier, making itself indispensable to any future peace process. Beijing has proposed a multibillion dollar China-Myanmar Economic Corridor, with high speed trains, new ports, special economic zones and even a ‘New Yangon City’, a multibillion dollar development across the river from Rangoon – all of this intended to bind the country more tightly to Chinese markets.

Drugs are also part of the mix. The UN estimates that the methamphetamine industry in and around Burma is worth more than $50 billion. Ethnic Chinese syndicates control exports to foreign markets. Casinos in militia-run territories launder vast sums. In one heist, a militia attacking the casino of a rival group made off with $70 million in cash from a single vault.

In 2016, Aung San Suu Kyi seemed to have a strong hand. The generals remained dominant in security matters, but everything else was under her control, from foreign policy to the central bank and the $15 billion budget. She enjoyed enormous popular (and international) support. But she and her small team of trusted lieutenants were dependent on bureaucracies deeply embedded in rackets far more powerful than any government agency that might seek to regulate and reform them. The new government was also weakened by conspiracy theories: the NLD believed the army was plotting to oust them; the army believed the West and the NLD were scheming to remove what powers they still had.

In October 2016, the Arakan Rohingya Salvation Army (ARSA) made its first appearance, launching a string of attacks on army patrols. Seventy thousand people fled to Bangladesh in the chaos that followed. ARSA was led by Ataullah abu Ammar Jununi, a Rohingya recently returned from Saudi Arabia who mobilised fighters from an increasingly hopeless and angry population. In August 2017, after ARSA attacked dozens of police outposts and a military base, the army launched a counter-attack that left hundreds if not thousands dead. Scores of villages were razed, and hundreds of thousands fled across the Naaf river into Bangladesh.

The past year has seen the rise of the Arakan Army, a new insurgency that seeks self-determination for the region’s Buddhist inhabitants. A further hundred thousand civilians were displaced. Fighting also broke out in the east, near the Chinese border, where tens of thousands of poor villagers were driven out by clashes between the army and insurgents, as well as between warring militias.

Tired​ prescriptions about the importance of elections and free-market reform are insufficient as a response to Burma’s problems. Democracy is usually interpreted narrowly: attention is focused on the voting process itself, not so much on ways of encouraging informed debate or guaranteeing the freedom of the media. There is little discussion of how to move towards true democracy in a country riven by violent conflict, where the reach of state agencies is limited and generations have suffered from inequalities of wealth, gender and race, unaided by an education system that stresses rote learning and makes no attempt to foster a capacity for critical thinking.

Another popular cure-all is federalism. Clearly the current situation, in which a Burman-dominated state attempts to govern territories which are historically the home of non-Burman groups, is both unjust and unstable. But Burma is no longer a collection of regions inhabited exclusively by a particular ‘national race’, or by two or three such groups. Massive internal migration over the past few decades means that its cities and towns are a hotchpotch of peoples, and an increasing number have parents and grandparents from different communities. Aggressive measures to end all forms of discrimination and guarantee more inclusive state institutions would be a better starting point than reorganising the political system along federal lines.

Behind the mantras of democracy and federalism lies the assumption that both must go hand in hand with a laissez-faire capitalism turbo-charged by reintegration into world markets. The left remains weak after the failed experiments of the last century. In 2017, on the advice of the IMF, new and far stricter regulations were imposed on the Burmese banking sector; if properly enforced they may crash local banks and businesses. A move to open up the market to foreign banks is under consideration. Burma’s political economy is at an inflection point, yet politics and economics are still treated as if they were separate spheres, with economic issues portrayed as purely technical, the preserve of officials and international advisers. The Burmese are drifting towards a false choice between the crony capitalism of the past and a neoliberal future of low taxes, austerity budgets, tight money and global capital. A fairer society is nowhere in sight.

But in a world of automation and protectionism, it isn’t clear that Asia’s model of cheap labour and manufacturing growth will remain viable. Even if it does, are the polluted, congested cities characteristic of South-East Asia really all that can be hoped for? There is an urgent need for a strategy to deal with climate change, yet this isn’t discussed at all. There is growing support for protecting the environment at home but next to no awareness of the catastrophic impact a global temperature increase of as little as two degrees may have. The location of everything from agriculture to transport infrastructure to areas for urban growth will have to be reconsidered; land will have to be set aside for uprooted communities. Burma’s immediate priorities should be protecting the most vulnerable (including refugees and the internally displaced), stopping violence and fighting poverty. But just as important will be plans to tackle discrimination, dramatically lessen wealth inequality and adapt to the changing climate. Any such platform that was able to attract broad-based support, while steering the country away from race-thinking and identity-based conflicts, could be the foundation of a new Burmese democracy.

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