PROBABLE DEVELOPMENTS IN BURMA

Created: 4/10/1956

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NATIONAL INTELLIGENCE ESTIMATE NUMBER

PROBABLE DEVELOPMENTS IN BU3MA

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PROBABLE DEVELOPMENTS IN BURMA

tht? problem

To analyze recent trends in Burma and to estimate probable developments over the next few years, with particular emphasis on Burma's international orientation.

political life of Burma is and will probably continue for the next few years to be dominatedandful of leaders whoommon outlook based on Marxist economics. Western political principles, and Burmese nationalism.in terms of basic values Burma identifies itself with the free world,anticolonial sentiment and fear of provoking Communist China have led it toeutralist position. (Paras.)

Both the current stability and thegrowth of Burma's economy are heavily dependent on the export of rice. The world price of this commodity has fallen substantially in the last couple of years and Burma has had difficulty in marketing its rice. Burma's economic development will remain limited not only by the price of rice, but also by the lack of competent administrators and trained technicians and by thedisturbances which hamperand disrupt agriculturalHowever, it is unlikely that economic conditions will seriously affect political stability during the next year or so. )

Although Burma's need for markets for its rice has provided the basisignificant expansion in Bloc-Burmese relations, particularly in the trade and technical assistance fields, Burma will almost certainly try to continue toits economic and political relations between the West and the Bloc. While trade with the Bloc will accountarge share of total Burmese trade and carries potential dangers, Burma'sinvolvement alone will not, at least for the next year, be so great as to destroy Burma's freedom of maneuver.

However, Burma isajor Bloc target, and over the longer run there is dangerubstantial increase in Bloc influenceesult of economicalready concluded or underand Burma's likely receptivity to further Bloc offers of trade and technical

assistance. Other factors which may in-crease Burma's vulnerability are: (a) the probable susceptibility of Burmeseand other potential leadership gioups to the current pattern ofpropaganda; (b) Communist China's ability to exert diplomatic or If necessary military pressures on Burma; and (c) TJ Nu's apparent belief that he can deal with the Bloc without losing his freedom of action.

he extent to which the Communists realize their potential in Burma willin part on the actual economic gains realized by the Burmese and in part on the skill and restraint with which the Ckrmmunists comport themselves;efforts to apply pressure could result in alarming Burmese leaders. The Burmese have been disturbed byChina's sale of rice to Ceylon, and this concern would be intensified should the Bloc re-export increasing amounts of Burmese rice to traditional BurineseButajor extent, Burmese receptivity to Communist offers andwill depend on the ability of Burma to dispose of its exportespecially rice, in non-Communist markets.)

DISCUSSION

For several years after- its peacefulto independencehe Union of Burmarecarious and uncertain existence. Following the assassination7 of Burma's strongest leader and popularhero, Aung San, here was danger that the small leadership group would fall apart in personal struggles for power. Due to thecomplete wartime destruction ofsmall modern industrial sector and to the widespread disorders that hinderedand transport, production fell to less than half of prewar levels. The ethnic minorities which constituted one-third of the totalofillion posed serious problems of control, insurgency was rife, andime Communist and other rebel forces frequently opera*.ed within sight of Rangoon.

espite these handicaps and the reluctance of the strongly nationalist government to seek major assistance from the West, thehas retained its cohesion and has made steady progress In rehabilitation and internal security. Although Insurgency and chronic banditry are still serious, the government's major concern is lo develop economic stability. The failure to disposeeavy rice surplus in traditional non-Communist markets ledonsiderable budget deficit, balance ofdifficulties, and curtailment of lhe large economic development program lo which the leadership had committed itself.

circumstances have providedfor the economic, political, andtactics oi the Bloc. Over lhe pastBloc has agreed lo take large amountsrice in exchange for Bloc goodsadvisors, and Burma is beingto various Bloc political andmoves designed to reduce westernto increase the acceptability ofond to prepare the ground for anin direct Bloc Influence. In thisthe key question is the exlcnt lowill be responsive to Bloc offersto Bioc pressures and propaganda.

I. PRESENT SITUATION The Political Situation

political life of Burma is dominatedhandful of top leaders in theFreedom Leaguehecoalition of nationalists that inoff Communist attemptsegotiated the country'sdrafted Burma's constitution, and8

formed the provisional government.first electionarliamentary majority of-

he stability of the government since In-dependence lias been made possible not only by the commanding majority of the AFPFL, but also by the strength and discipline of its principal component, the Burma Socialist Partyhich controls nearly half of the seals in parliament. Most of theBurmese political leaders, except Primeu, arc BSP members. Ba Swe, Minister of Defense and Minister of Mines,ember of the party presidium and leader of the Influential Trade Union Congresshich has successfully kept most union locals from affiliation withcontrolled Burma Trade UnionXyave Nyeln, Minister of industries and oft limes acting Foreign Minister, is the parly's secretary-General and the leading party theoretician andu,-the most Important member of the coalition, remains the best known and most popular lender In Burma. His prestige amongcircles and minority peoples has served to offset some of the distrust which these groups feel towards the dominant BSP.

ost of the AFFFL leaders share aoutlook based on Marxist economics. Western political principles, and Burmese nationalism. They worked together in the nationalist movement at the University of Rangoon during's and through study groups came to accept Marxist-Socialist ideas on imperialism and economic development. However, in large measure because of British mfluencc and in part by reason of their own Buddhist heritage. Burmese leaders tended to reject Leninist-Communist concepts of parly organization and political struggle. Although tlie constitution is based on doctrinal socialist provisions tor stale ownership or regulation of mosl of the economy, Burmese socialism has in practice resembled the more pragmatic approach of the British Labor Party. Finally, the peaceful granting of independencethe extremist influence in nationalist circles. However, antlcoloiUal sentimentstoignificant influence onpolicy, and have contributed to the development of neutralist attitudes.

1 Throughout this estimate the term Burman Is used to describe the majority ethnic group; tho term Burmese Is used lo describe all nationals of the Union of Burma.

The AFPFL has no significantopposition, and the attitude of tlieof the Burmese toward the government is one of passive acceptance. The weak and In-experienced civil administration is gradually being improved through technical training, strengthened central control, and theof insurgency.

Adrnlnistration of the ethnic minorities, who were given special protection by theand who fear loss of their cultural Identityurman1 state, has posed the most serious political problem. To mitigate the fears of these groups and to win their loyalty to the Union the constitution provided specialregions for the largest of thegroups: Shan, Kayah (Karenni),and Kachln States, and the Chin Hills Special Division (seeoreover, the constitution gives to the first three of these states the right to secede from the Union afterhough the procedure pre-t'.vibed would be complicated and timeThe powers of the stales are limited to those specifically granted In theand the Union Prime Minister appoints the state executives. In practice, the AFPFL has been able to insure the protection ofinterests in the minority states bytho election of acceptable candidates to important slate offices and to the central parliament.

Although there have been personaland differences on tactics, the leaders generally share the same concepts and beliefs. Kyaw Nyefn has been more inclined toard line with domestic Communists than Ba Swe, and is reported to question someu's arrangements with Moscow. There have also been differences within the coalition on the pace of economic development, onpolicies, andu's lavish use of

government funds touddhist revival. Although these Issues are not likely to split the AFPFL before the national electionsfor April-May luaG, or even to attain the level of major introparty disputes, they could become significant Issues in the future if economic progress were stalled. They also provide an opening for possible Communist efforts to split the coalition.

Communismolitical force. The Communist movement in Burma has been dividedG into two main factions. The smaller and less importantParty, Burma (CPB)by Thakin See, split off at that time over personal and tactical Issues and has sinceinor guerrilla movement The Burma Communist Partyed by Than Tun, Isuerrilla organization. It also has linksegal political front, the Burma Workers and Peasants Parlyhe BWPP membership and the Communist insurgent groups combined probably number no morehe BCP and the BWPP have been responsive to the international Communist line on all important Issues.

During the prewar period Burma'sworked within the nationalistand, until Burma entered negotiations tor independence, nationalist leaders were generally unaware that theleaders had separate politicalSome of the key present-dayplayed leading roles in forming the wartime resistance movement which4 evolved Into the AFPFL. Than Tun was the first secretary-general of the AFPFL, and was at one time acclaimed by TJ Ku to be the most able man in Burma. Nationalist suspicions were aroused by Communist activities within the AFPFL. however, and7 allCommunist leaders had been expelled. Following the call to armed insurrectionby the Communist Asianhan Tun and his BCP went underground. Communist attempts toby violence the anticolonial. newlygovernmentrofoundlyeffect on non-Communist leaders. Poorly planned and harshly executed attempts by the Communists to conduct "land reform" and their continued raiding for suppliesmuch of the peasantry. These tactical blunders, together with goverrrment measures to safeguard peasant ownership of land and to improve peasant welfare, and possibly theof Buddhism, have combined tothe Communist movement of mass appeal.

Although the government hasontinuing campaign against theinsurgents, it has permitted theBWPP to operateegalparty since its formationhe BWPP has an estimated membershipnd controls several minor peace, cultural, and labor fronts. Itine-mandelegation. The BWPP is strongest in Rangoon, where it receives guidance and support from the Chinese Communist andembassies.

The Communists also control theUniversity Students Union and other student groups throughout Burma. Although we have no evidence that Communist electoral successes within the Student Union indicate more than student protests against specific situations on the campus, the government is concerned about Communist influence on the campus. The BSP students on the campus have been unable to displace Communistof the students' organization. Because of the shortage of trained Burmese, students assume positions of relatively greatalmost immediately upon graduation. The Communist line as It develops In the current phase of Slno-Soviet Bloc tactics mayrofound Influence on theKhrushchev's speech at Rangoon University and his offer to build andechnical institute in Burma are Indicative of Communist efforts to exploit their already favorable situation amr'g the students.

The BCP and the BWPP have beena "coalition" government for several years. In the past few months the BCP has intensified its efforts to obtain recognitionegal parly in return for cessation ofactivity. These recent maneuvers, which may have included direct contact with some

AFPFL leaders, are consistent both with the current Bloc emphasis on united front tactics andealistic appraisal of thofortunes of the guerrilla movcrnent Therobably hope tonited front movement and to split the AFPFL, thus opening the way for eventual Communist participationew coalition govenunent.

The Communist effort* to obtain more liberal terms for surrender hare achieved some success, but the government still Insists that the Insurgents must give up their arms and renounce the use of force, terms which the guerrilla leaders have been unwilling to meet Although the government's surrender otterMarchnd the government Isheavier pressure than heretofore on the Communist guerrillas, it may bo willing to moderate its terms,u nppcars to believe that Communismegal political movement would be less troublesome than the costly insurrection.

OxcTicai Chinese. The Integration Into the Burmese community ofwho reside in the country to farther advanced than elsewhere In Southeast Asia, and the majority of the Chinese appear at present not to be concerned with politics. However, the Chinese press in Burmareflects pro-Communist sympathies, and Communists hold influential positions among the Chinese organizations In Rangoon and other cities. Chinese Communistsarge number of the Chinese schools. In additionoung Chinese have gone to Communist China to attend school,the rate of departures has declined2 following Burmese government action to deny re-entry.

Problems of Internal Security

rebels, minorityChinese Nationalisterious burden on governmentto frustrate rehabilitation andin important areas, and toforeign relations. However,strength has declined by twn-thlrds9 and in total probably docs not now

Communist insurgents. Over-allrebel strength isC. of wlilchan BCP is the most Important group. Efforts to weld Cornmuriist Insurgent unity during the past several years have achieved only limited success because of personaland doctrinal difference* Although skilled in guerrilla tactics, the Communist rebels are handicappedaucity of aims and supplies, and have been dispersed into small groups by the government forces. They apparently have not received significantfrom the Chinese Communis la. The BCP leadership probably has little expectation of receiving such support during tho current phase of Sino-Soviet tactics.

Minority insurgents. Dissatisfaction with the dominant Burman characlci and policies of Ihe National government has produced armed rebellion among certain t'.hnlcand has prompted rumors that Shan State and Kayah State, both located in east-central Burma, may attempt to secede from the Unionhe Karen Nationalithrmed men, Is the most Important minority Insurgent group. With the passive or active support of many of theairns, the KNDO has carrieduerrilla strugple lo attain greater autonomy for the Karen people. The KNDO has been weakened by the loss of its major centers, by theof its armed forces, by personal rivalries, and by discord over the issue of collabornllon with the Communists. However, it continues to hamper government administration and economic development In southern and

The government alsoifficult task with the frontier tribesmen who cross the poorly demarcated boundaries to mingle with their ethnic kin in Yunnan. Lace, andThe movement ofrlh Burma tribes complicates the government's problem of extending its control over the border areas which Peiping considers are part of China.

hinese Nationalist irregulars. Alter the Communist victory in China,ationalist troops entered Burma under Nationalist Generali. Following aappeal to the UN tor relief,f these troops were evacuated to Taiwannder the auspicesoint US Thal-CIvncsc Nationalist commit tee and with Burmese cooperation.re in agricultural settlements in Thailand under surveillance by the Thai government, andhundred arc believed to have crossed into northern Laos.

Burmese military operations against therregulars who arc scattered in small pockets along the Thai border and in the southern Shan State have not been very successful, and the government nowwilling to negotiate with them. The Burmese apparently have no objection to the Chinese staying in their present areas If they give up their arms, but so far they have refused to do so

The partial evacuation of Chinesetroops has largely eliminated the once heated question of US assistance to these troopsomplicating factor in Iturmese-US relations. Burmese-Thai relations have also been Improved by cooperation along the border during Burmese array operations against the Chinese forces. Nevertheless, their presence in Burma provokes continued fears of possible Chinese Communist pressures and of internal meddling by Taiwan and the US.

Security forces.8 the Burmese armed forces have been committed almost entirely to the restoration of internal security. During the past three years Burmese armed strength has increased from0 to0 men (Including an0 In the0 in tho National Union Military Police,n the navy,OO in the airut the army still lacks sufficient strength to mountoflcniivcs against all the Insurgent forces in Burma. Funds allocated to defense have averagedercent of governmentin the past several years, and in fiscal

efense funds account forercent of the total budget

The morale and prestige of lhe army have improved over the past five years largelyof operational successes whichreater degree of combat effectiveness. However, poor training and lack ofcontinue to handicap tlie army. It has the capability gradually to reduce themenace, but could offer no serious resistancehinese Communist invasion.

The Burmese navy, withiscellaneous small ships, is capable only of supportin coastal and inlnnd waters. The air force oflrcrall (includingld piston fighters,ransports,et traincis) provides fairly effective support to the ground forces to operations against insurgents.

Burma depends almost completely on foreign sources for Its military equipment.4 Burma obtained such equipment entirely from the UK. In that year theuneasy at tho degree of Britishimplicit In this situation and dissatisfied with the rate of British deliveries, terminated the exclusive arrangements. Burma has since purchased amis from Italy, Switzerland. Israel, and Yugoslavia, as well as from the UK. These purchases have further diven-ificd the arms supply and have complicatedmaintenance, and operations.

The Burmese would like lo modernize their armed forces. However. Burma hasfunds to supportajor modernization program of Its armed forcesodest rate of economicAs the government Is probablytoubstantial cut-back in its economic program, Burmese military leaders are likely to seek armsredit or abasis from the US. If thisfails the Burmese may turn to the Bloc, if necessaryortion of the creditsnder existing rice barter agreements for military rather than consumer

Theotion

Burmese economy fits theof an underdcvclopid country: agn-

culture Is the primary occupation, the exportingleprovides the main source of foreign exchange andrevenues, and per capita income is well0 per year.

Burma suffered heavy damage during World War IL The rail system was wrecked, most of the oil installations (including all five refineries) were destroyed, and the principal mines which produced lead, zinc, silver, tin,wolfram were heavily damaged. Much .'ice land reverted to jungle. In the postwar period, widespread civil strife and banditry has handicapped efforts to restoreand communications facilities and has continued to disrupt agricultural production. Rehabilitation has been further retarded by the lack of incentive for foreign private

esult, Burma has not been able to restore its economy to prewargrves national product of aboutillionjfv was roughlyercent below pre-WorldI. Burma's foreign trade, which pro-vices betweenndercent of Burma's central government revenues, was intill only about two-thirds of the prewar lavd. Rice production5 was aboutercent below the prewar averagetons, and the exportillion tons of riej was only half what it had been in prewar yeers. Moreover, because exports of raw materials such as limber and minerals haveeen restored, rice now accounts forSO percent of total exportittle aboveercent before the war.

.

urmaonsiderable potential for increasing the living standards of Its people. Population density is low (less than one-fo :rth that of India and only one-third greater than that of thend population Is Increasing at an annual rate of only one purcent. In lower Burma, the principalarea, the land under cultivation could probably be doubled. Although known reserves of minerals and petroleum weredepleted in prewar years, geological formations suggest the existence ofsubsoil deposits. Timber reserves are large. Hydroelectric potential IsThe country has excellent naturalextensive inland waterways,asic rail and highway network.

However, Bui-ma's ability to exploit its potential is hampered by the primitive nature of itsack of capital anda stringency in foreign exchangea lack of competent administrators and trained technicians, and continued civil disorder. Moreover, the bulk of tlie Burmese people has by tradition and by temperament been relatively uninterested in material

Economic development program.2 the government initiated an eight-yearbillion development program. Tlie over-all goal of the program was to raise Burma'sproduct from0 million to0 million0 in constant prices. However, the program goals would raise per capita output only four percent above prewar levels. Formulated with the aid of American consultants, the programthe developmentore balanced agricultural economy reinforcedodest industrial sector.

increased output wa; to be soughtUuvjugh Investment In agriculture, mining, and forestry, with supplementaryin transport, communkatlon, and power facilities. Crude petroleum output was to be only one-third of prewar production, railways were lo equal prewar levels, andin forestry, electric power, and crops like cotton and peanuts were to exceed prewar levels. The plan also called for fairly heavy investment in health, housing, and education. Including technical training. However, the various parts of the plan have never been fully coordinated.

The government hoped thathird of tlie total planned investment would be undertaken entirely by private enterprise.

The government was lo be responsible for the remainder either alone or in partnership with private enterprise. The government was counting on its sizeable foreign exchangeand the earnings of governmentparticularly the rice monopoly, toIts share of Investment capital and to finance necessary imports. Foreign exchange requirements of the plan were estimated to be5 million over the eight-year period. The estimates of domestic capital and iorcign exchange resources available to support the program were based primarily on the assumption Hurt international rice prices would remain at about1 level.

Burma's economic crisis.3 the price of rice declined sharply.esult, the value of Burma's rice exports fell4 million39 millioneven though the volume of rice exports Increased slightly In the latterurplus of rice began to accumulate as Burmeserose. The volume of exports was probably less than it might have been because of the government's reluctance to adjust its prices to the market.

esult of the sharp decline In export earningsising level of Imports, Burma4alance of payments deficit ofillion, the firstoreover, the steady growth of GNP drastically chocked.

2

ies3

5

current pricesillions) TT5

970

estimated)

he Burmese government, apparently hoping that the price trend would be reversed or that substantial foreign capital could be obtained, took no action until5 to reduce nonessential imports or the rate of domestic investment Indeed, domesticcontinued to increase:

Investmentpercent

percent

percent

percent

To maintain this rale, tlie governmentto deficit financing, whicherious budgetary situation. Government financial transactions for the firstonths of5 (exclusive of borrowing from the banking system)eficit ofillion comparedurplus ofillion for the firstonths oforeover, the government depleted itsexchange reserves, which fell2 minion in3 to the critically low levelillion in

5 and0 the Burmese governmentcries of actions lo meet the foreign cxclwnpe crisis. For immediate relict it: (a) negotiated withiUiomequ'.vHlcnt rupee credit, convertible into sterling; (b) obtained from (lieMonetaryillion foreign exchange credit; (c) concluded negotiations with the USillion In surplusproducts under; andonsumer goods imports. Burma is negotiating with the IBRD for loans4 millioneries of projects, and some of this assistance Is likely tothis year. Burmese officials have also approached the US for loans.

In addition, under the terms of4 reparation agreement with Japan, Burma will receiveillion worth of goods in each of the next ten years. The Japanese have also agreed to Invest upillion in Joint undertakings In which the bu.mese axe toO percent interest. To improve its internal finances the Burmese government nas. In0 budget, reduced theItem lo about one-lhlrd below5 level, and has raised cxclno tuxes.

The Burmese government has given some encouragement lo domestic and foreigninvestment Except In the sectorsfor public ownership, the government willen-year guaranteeion-

alization. equitable compensation in the event of naUonallzaUon after the agreed period, permission to remit current earnings and repatriate investment, and other privileges. With respect to foreign private investment, the government appears to be interestedin Joint ventures on an operating contract basis. Most significant instances of private participation thus far are In Joint ventures for the exploitation of lead, silver, zinc, and pot role urn.

Burma has also taken action to Increase the quantity and quality of its agricultural production and to develop new markets. It has made plans to obtain Israeli and Soviet agrlcultuial advisors, and is seekingassistance from the International Dank. Most importantly, the government took steps to ease its rice surplus situation and Its foreign exchange shortage by the conclusion of government-to-government barterIn addition to agreements withIsrael, Indonesia, Japan, and India, major deals were concluded with the Sino-Sovict Bloc. However. Burma in8 stillurplus o'ons of rice.

Economic relations Kith the CommunM Bloc. Beginning Inurma enteredcries of barter agreements with Communist China, the USSR. Bast Germany. Czechoslovakia. Poland, and Hungary.esult. Burmese exports to the Bloc, which had previously averaged about one percent of Burma's total trade, and most of which went to Communist China, rose during5 loillion, or almostercent of totttl Burmese exports. If all agreements with the Bloc which have been concluded or arc pending are fullyBurmn's annual rate of exports to the Bloc couldevel0 million, or equivalentuarter to one-third of Burma's estimated6 exports.1

projectionupplementarywith the USSR, signed in Aprilwhich raise* lluimcae rice exports to tho USSR from lOO-lOn.uttt tonsons tor each of the next tour years,ear agreement with Rumania, sinned In, for around KfJlOO tons of rice annually.

These deals with the Bloc haveboosted the Immediate prospects for the export of rice, but the total gain to Burma Is not yet clear. Some skepticism lias been vcrtced in Burma over the quality, price, and delivery schedules cf Bloc goods. Moreover, since the Bloc countries offered capitaland the services of technicians infor the rice, the Burmese are having to modify various piognuns to fit the typo and kinds of Bloc equipment available to them. Concern Is also felt regarding the reexport of rice to Burma's traditional markets.

Burma's economic prospects. Tlie volume of production in all fields on which statistical information Is available has been climbing steadilynd thereumber of factors which favor continued economic Progress. Theseteady growth of fixed capital formation, some recognition that private enterprise or investmentole to play, employment of skilled foreignadvisors, tho gradual training oftechnicians, increasing experience In management, the Japanese reparationsand the financial assistance which is available or probably will be forthcoming from India, tho United States, and the IBRD.

However, thereumber of obstacles to continued economic progress: continued Insurgency in many parts of the country, and the lack of experienced government officials, capable managers for industrial enterprise, and skilled workers. Finally, Burma'sprogress will remain dependent on the export of riceime when the world market price for rice remains depressed.

Foreign Relations

terms of basic values. Burmatoward the free world and thea fear of provoking Communistresidual antlcolonial sentiment, havethe adoptionoreign policy positionof the major power blocs-AFPFL leadership is united on theof Burma' foreign policy, itsand moralistic tone are oftenPrimeu. He hasan active role in world affairs, in the

ID

that Burma can actediatorthe great powers. His apparentto accept Sino-Soriet pledges at lace value while questioning the motives of the Western powers frequently hasu to take positions favorable to the Bloc. Within the past year, moreover, Burma's economic difficulties have provided the basis for aexpansion in Bloc-Burmese relations.

Relations with the West. Becausewas achieved without violence, Burma's anllcolunialism has lacked theexhibited In some former colonies. The majority of Burmese prefer the democratic system as developed In the West, and several Burmese have publicly described the Soviet systemew form of imperialism.relations. In particular, have been cordial and the Burmese governmentespectful hearing to official British opinions,

All Burmese slate scholars and virtually all private students (except overseas Chinese) going abroad for study still go to the OS or to other free nations. The great majority of printed and visual information media are non-Communist in nature. The governmentthe anU-Communist publishing program of the Burma Translation Society, and several of the lay Buddliist societies haveovertones. Some responsible officials frequentlyreference for Western rather than Bloc economic and technicalwere it possible to pay for it with surplus rice and to avoid political

Anticolonialtst attitudes persist,andonsiderable degree the United Stales lias Inherited Britain's former position as the principal "imperialist" threat. While no responsible Burmese suspects the US of coveting Burmese territory, there has in the past been considerable apprehension lest Burma and other weak nations fall victim to some new and perhaps unintended form of economic Imperialism. Moreover, US-Bur-mcsc relations have been strained by theof the Chinese Nationalist irregulars, and more recently by US sales of rice In Asian The Burmese are critical of the US position on such matters as trade controls, Taiwan, and disarmament, and they feel that US policy in general is too inflexible and too narrowly centered on the military aspects of the Communist threat. The Burmese also fear that too close alignment with the US or the West might provoke Communist China or lead to involvement in war. These fears and Irritants account In large measure for Burma's reluctance to undertake not only the pledges required In US legislation but evenpolitical commitments in return for the receipt of economic and military assistance.

Despite these complications, the Burmese recognise the need for good relations with the US. Although Burma felt obliged to cancel the US technical assistance program3 when it brought the Chinese Nationalist troops issue to the UN, the governmentprivate US firms to fulfill some of the projects. Under appropriate conditions, the Burmese would probably like to obtain US arms and economic and technical assistance.

Relations with non-Communist Asian states. Since independence, Burmese-Indian relations have been close, and Burma'spolicy has been similar to that of India. Burma's ties with other Asianwere slow to develop, but the Increased importance of these relations has beenin membership in the Arab-Asian group in the UN, planning of the Bandung Conference, and participation in the Colombo Plan. In addition, Burma was the prime mover in staging the Sixth World Buddhist Council in Rangoon, and in organizing the Asian Socialist Conference. Past relations with Thailand and the Philippines have been rninimal, due to the feeling that thesewere tied too closely with the US, and, in the case of Thailand, because of the long history of conflict. Relations with Thailand have improved greatly during the past year, but Burma has no interest In followinginto such direct relationships with the US as SEATO provides.

Despite the bitterness caused by wartime occupation and destruction,relations have developed on anfriendly basis since the conclusion of a

reparations agreement Inhe Bui mesc appear to welcome Japanesein Burma's economic development

Relations with the Btoe. Burma was the first non-Communist nation to extendto the Pclping regime, actingombination oi: (a) fear ofowerful neighbor whichhad shown expansionist tendencies whenever unified and strong; (b) vicarious pride In the emergencetrong Asianand (c) distaste for the Chinesogovernment.elations with Communist China have grown steadily closer. Burmese interest and admiration hasaroused by the Chinese Communist eeimosoic development program, and Burmese dUUste for the rulhlessness of Ctiii.'se methods is tempered by an uneasy awe oferies of cultural, religious, and athletic missions have beenajor bilateral trade agreement was signed inu made an official visit to Pelping inurma favors the admission of Communist Chliui lo the UN and during tho past year has publicly supported Peiping's claims to Taiwan,

esultu's visit to Pclping. the large Chinese Communist embassy staff in Rangoon has been supplemented by aat Lashio. which could further facilitate Chinese contacts wllh Burmese Communists as well as with Overseas Chinese. Theof the Burma road and agreements on postal faculties and air transport willdirect contact and permit. Chinese flights into Burma.5 renewal of the trade agreement again permits Chinesepurchases of commodities which. If shipped, couldarrier to USthrough conflicts with provisions of the Battle Act.

hinese golong claimedat least through offlcial mapsconsiderable territory the Burmese consider theirs, and the agreement concludedu's visit to Pclping4 called for negotiations tothese boundary questions. If theseeventuate. Burma's stand on Uic border issue mayest of Burmese readiness to resist Cltlnese Communistmen L

the past year. Burmese-Soviethad not been close. Although theBurma soon afterofficial line followed byas thaturviving "tool of theHowever, in5 awas concluded in which theto exchange industrial equipmentBurmese rice. Soon afterwardsbegan to praise Burma for itsstatus and Its postuie ofgrowing rapprochement wasan exchange ofNualccrow in October and Khrushchevtouring Burma for nine days inIn the Joint communiques issuedwith these visits. Burmaof the major themes In Sovietand agreements were made forobtain Soviet technical assistance, into capital equipment. In exchange tor

II. PROBABLE DEVELOPMENTS Internal Developments

The AFPFL will almost certainly win the elections in the spring6arge majority because of its control of the election machinery, the lack of an effective opposition, and the general acceptance of AFPFL policies. The new government will probably againroad coalition, and Uirn will probablyas Prime Minister because of his national prestige and because he servesnifying force in the AFPIX. It is possible that the Socialists will feel themselves well enough organized toovernment which did notu.evelopment, however, would probably not result in major changes In Burma's domestic and foreign policies,

The BWPP may increase Its representation slightly in the parliament, but Its over-all position will probably not be greatlyin the short run by the Increase in Burmese-Bloc relations. The organizational strength of the BWPP would be improved it

the BCP guerrilla cadres should obtain an amnesty. The Communist insurgents arelo accept present terms for surrender, but will continue to maneuverease-fire on terms that provide them some credit for making peace and some provision forovert political activity.

Ethnic minority dissatisfaction withpolicies will continue, but thewill probably be successful in preventing secession. The strength of thewill piobably be further weakened, but dissident and bandit activity win continue toeavy burden on government finances and to hamper economic

During the next year or so Burma will confront the same economic problems that have impeded its progress for the last two years. At the same time, it will probably have larger resources at Its disposal, chiefly from deliveries under Slno-Soviet commitments and assistance from non-Communist sources.of payments and fiscal problems will continue as long as tlie price of rice remains depressed and the availability of other export commodities does not materially increase. Productionw projects will not begin to save significant amounts of foreignfor at least the next two or three years. To carry out even its recently curtailedprogram, Burma will have to hein disposing of its increasing rice production. Unless free world marketssubstantially, Burma will remainlo Bloc barter agreements. Burma will probably receive sizeable amounts of aid from the US and UN agencies, and may drawarge credit from India and fromreparations. The government is unlikely further to relax current resections onprivate capital.

It is unlikely that economic conditions in themselves will affect internal stability during the next year or so. Tlie incresse in national output is expected to continueufficiently high rale toteady growth in per capita consumption. Judging by the general apathy of the population thus far towards government economic policies, it is unlikely that the state of the economy willopular political issue.

Probable Trends in Burma's Orientation

Burma isajor target of Bloc efforts to extend its influence by political, economic, and psychological means. During the short run. the Bloc will probably attempt only to reinforce Burma's tendency to adopt positions similar to the Communists oninternational issues and to establishfavorable to the increase ofInfluence within bur ma. In the long term. Bloc leaders may hope to reduce Burmairtual captive of the Blocombination of economic pressures and united front maneuvers, which could be reinforced at any time by the application of military threats along Burma's long frontier with China.

During the next year or two Burma,Bloc tactics, will almost certainly try to continue to balance Its economic andrelations between the West and the Bloc. There will probably be no important internal pressures for closer politicalwith the Bloc, and Burma will continue toariety of economic ties with the West and non-Communist Asian countries. Including the Japanese reparationsthe USrogram, the Colombo Plan, and the sale of rice in traditionalOn the other hand, Burma's economic relations with the Bloc will probably Increase, and Bloc trade may account forercent of total Burmese trade. While trade of this magnitude with the Bloc carries potential dangers, the Burmese government willto have room to maneuver to avoid Bloc political pressures for at least the next year.

However, In the longer run the situation in Burma, combined with Bloc capabilities, offers the Bloc important advantages inof its long-range objectives. Because of its political organization, Uic Bloc caneconomic agreements quickly, it offers long term credits at low interest rates, and can accept agricultural and other rawin payment for capital goods or as

service ti credlLv It Is able to exploitntlnvmS and desire to remain lice of foreign entanglements by offering economic arrangements on the basis of "mutual self-help* with "nourmese receptivity to Bloc offers has been increased by the continuing decline in the world market price for rice, theof economic negotiations with the US, and the disposition of some Burmese leaders to take Bloc assurances at face value while remaining distrustful of Western

If the Bloc exercises skill and restraint, and If non-Communist markets for Burmese rice do not expand, the situation favors agrowth of Communistunna. Economic commitments already made will lend lo Increase Burmese-Blocintercourse. Accordingly, Burma is likely to become dependent on the Bloc in many Instances for maintenance and repair, supplies, and servicing. There win probablyelatively heavy influx of technicians and experts accompanying this equipment,in agricultural development, and staffing Lhe new technical institute. To some extent these people will encroach on the area in which non-Bloc assistance Is being or may be oflcred.

In the resulting atmosplierc of Increased goodwill towards lhe Bloc, the BWPP might be strengthened by adding BCP cadres and by luring additional Independents and some socialistsew opposition group. The appeal of Communism, and particularly the attraction of Communist methods of building an industrial economy, would probablyamong students. Direct Communist influence in the government would probably be increased.

If the Bloc were able to convince the Burmese that It shouldarge credit in order to accrlcrale its economicthe Bloc's opportunity for exercising influence in Burma would expandSuch credits in addition to the existent level of trade with tlie Bloc would orient the

Burmese economy toward the Blocong term basis, and Western Influence would be sharply curtailed.

However, there arc also obstacles to the success of Bloc tactics In Burma. There is no significant politicalire on theto drop Its present pay-as-you-go policy on development, and, unless it docs so, Burma is unlikely to Increase greatly its presentof economic dependence on the Bloc. Burmese economic tics with the West are substantial; Burma's leaders have no desire to become economic dependents of any bloc; and Burma will prefer to export lo theextent possible to markets where it can cam convertible currencies. Despitein economic and cultural relations with the Bloc, Burmese nationalism,and memories of past Communistwill tend to discouragetrong domestic Communist

The actual course of events In Burma will also be influencedumber ofparticularly Communist conduct and Western courses of action. Communistwould be adversely affected if Bloc representatives appeared vo meddle inBurmese affairs or If the Bloc moved too soon to extract concessions. KvajGJfyein and Importan'.jjipiyjcoders are believed to.be_thatrnia Is already_too dependent on^thc. Bloc! "Sharp Increases in Blocmight lead themjopres&urgU Nuhange pV^cTcnto removeBurmese vigilance woum^hiso be increased by Chinese Communist aid to dissident or Overseaselements In Burma, or by excessiveclaims during boundary negotiations. Moreover, Burmese distrust of thewould also be stimulated by clear-cut Communist aggression In Laos, and possibly Vietnam or even Taiwan.

Communist prospects would also beadversely if Bloc economic performance falls seriously short of rxpectations. or ifeconomic relations with thecountries expanded signlflcanUy. The delivery schedules and quality ol Bloc capital

goods may suffer in comparison with Western performance. Communist China has already evidenced difficulty in providing more .than nonessential consumer goods In return for Burmese rice and rubber. The Burmese have been disturbed by Communist China's sale of rice to Ceylon, and this concern would be intensified should tho Bloc re-exportamounts of Burmese rice to traditional Burmese markets.

Original document.

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