Tests Ahead for Suu Kyi’s Neutral Foreign Policy

How will Myanmar’s National League for Democracy-led elected government aim to calibrate its great power relations between China and the United States? While China’s previous dominance over the once isolated country has been eroded in the transition from military to democratic rule, it’s not apparent that foreign minister and de facto national leader Aung San Suu Kyi intends to swing her government’s diplomacy decidedly in favor of the United States. Her ability to strike a neutral balance between the two will be pivotal for future growth and stability.

U.S. President Barack Obama has highlighted Myanmar as one of his administration’s most prominent foreign policy successes, where steady U.S. pressure for democratic change helped to end over six decades of direct and proxy military rule. The United States was an unwavering supporter of Suu Kyi and her NLD party during over two decades of harsh military persecution. China, on the other hand, leveraged the then-ruling generals’ international isolation and weak negotiating position to make deep economic and strategic inroads some have come to view as a sovereign threat.

Despite that history, Suu Kyi appears to recognize she must play her cards carefully with China. Beijing has pivoted adroitly with the changing times. Months before the NLD’s thumping election win last November, Chinese President Xi Jinping hosted Suu Kyi and other NLD members to a symbolic meeting in Beijing. On April 5, Chinese Foreign Minister Wang Yi was the first high level foreign official to meet Suu Kyi’s newly installed government. At a post-meeting press conference, Wang promised to resume Chinese financial support for large-scale infrastructure projects as part of its “Belt and Road” initiative.

That support had waned to a trickle after outgoing President Thein Sein’s quasi-civilian government moved to stall certain controversial Chinese-invested projects, including the US$3.6 billion Myitsone hydroelectric dam in conflict-ridden Kachin state. The dam was designed to export 90 percent of the power produced to China and threatened to disrupt the country’s main river, the Irrawaddy, and riparian livelihoods. Thein Sein’s decision to suspend the project was made on the grounds that it lacked popular support, a decision the United States appeared to reward months later through eased sanctions on investments and exports.

China is now pressing to restart negotiations on the stalled project, overtures the NLD has tepidly agreed to consider if the project is redesigned and situated in a different location. Some analysts suggest that China may link restarting Myitsone to providing support for other growth-promoting and badly needed infrastructure, including roads, ports and power generation. At the same time, the NLD has indicated it will review certain concessions given to China by the outgoing government, including deals to develop a special economic zone and sea port in western Rakhine state, which were awarded after the NLD’s election win.

While relations with China have so far focused on economics, Suu Kyi is no doubt aware that Beijing could stir instability in Myanmar’s conflict-ridden northern hinterlands if it perceives the NLD has sided (to its strategic detriment) with the United States. China is known to provide different levels of support to the ethnic Kokang Myanmar National Democratic Alliance Army (MNDAA) situated on China’s border, the Kachin Independence Organization (KIO), as well as the rebel United Wa State Army (UWSA), Myanmar’s largest non-ceasefire rebel group with as many as 20,000 fighters under arms. The UWSA in particular is known to have recently received shipments of Chinese arms and equipment.

Although the NLD nominally runs the government, the military--known as the Tatmadaw--maintains strict control over the security-related defense, border affairs, and home ministries. While the previous ruling junta cultivated close China ties, resentment of perceived Chinese exploitation mounted over the years inside the military, a sentiment that drove Thein Sein’s re-engagement with the United States. U.S. sanctions, including targeted measures against military appointed first vice president Myint Swe, bar significant military-military engagement, though the two sides engaged in limited bilateral naval exchanges under the outgoing government.

The Tatmadaw hopes that Suu Kyi holds the key to lifting sanctions and opening the way for renewed U.S. strategic ties. While there is still a strong constituency on Capitol Hill that advocates for maintaining sanctions that specifically target the military to guarantee deepened democratic reforms, people familiar with the situation say the Pentagon is keen to reengage, including through training and arms sales, as soon as possible. Some analysts believe Myanmar could quickly emerge as a second proxy front in any U.S. versus China armed conflict scenario in the South China Sea, with China-backed rebels potentially clashing with a U.S.-backed Tatmadaw.

It’s a worst case scenario Suu Kyi’s neutralist foreign policy stance clearly aims to avert. After decades of military mismanagement and misrule, Myanmar requires substantial foreign assistance to spur growth and development. But as her government makes crucial economic and strategic decisions between China, the U.S. and other regional players, it will take all of Suu Kyi’s diplomatic charm and skill to channel foreign overtures to Myanmar’s best advantage and prevent the country from becoming a theater of debilitating superpower competition.