from Asia Unbound

Obama Announces Aid Package to Myanmar

November 24, 2012

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Diplomacy and International Institutions


Nathan LaGrave is an intern for the Southeast Asia studies program at the Council on Foreign Relations.

Last week, during his historic trip to Myanmar, President Obama demonstrated the United States’ continued commitment to the country’s transition with the announcement of a $170 million aid package. The announcement coincides with the reestablishment of a U.S. Agency for International Development (USAID) mission in Myanmar, which was suspended for twenty-four years during the brutal reign of the former military regime. Now comes the critical time in which Chris Milligan, the newly-appointed USAID mission director in Myanmar, must develop a strategy for the distribution of these dollars. It is vital that the United States recognize those hazards which can potentially surround the offering of aid and tread cautiously, understanding the issues that could stall a successful transition in Myanmar and negate the positive effects of aid.

Firstly, the United States needs to acknowledge a reality that most official development assistance (ODA) providers would rather not: the historically mixed results of aid in Southeast Asia. One doesn’t need to look far to see an example of undesirable consequences brought on by an oversaturation and misallocation of foreign aid in the region. As Sophal Ear argues convincingly in his recently released book, foreign aid has thus far proved a detriment to development and democracy in Cambodia.

Since Cambodia’s transition from a one party state in the early 1990s, billions of dollars in ODA has flowed into the country from international agencies, foreign governments and NGOs, making it one of the largest recipients of aid in the world. Ear notes that despite GDP per capita doubling since 2005, inequality has increased dramatically in Cambodia while health indicators have declined. Citing the clear failures of certain ODA projects —including the World Bank-sponsored land titling venture in Boeng Kak Lake— Ear demonstrates how aid has failed to result in successful, grassroots development and has instead entrenched what he calls an irresponsible culture of trial-and-error aid experimentation. In the Boeng Kak Lake case, aid funds were utilized by Shukaku Inc.—a firm owned by a senator in the ruling Cambodian People’s Party— to evict Cambodians with little or no compensation, a land-grabbing issue that is just one of many trends of inequality that persists in Cambodia’s development.

Ear cites Cambodia’s budget as further evidence that aid has negatively affected the country’s transition. From 2002-2010, roughly 50 percent of Cambodia’s public spending came from foreign aid. This amount of financial support reduces the need for the Cambodian government to collect taxes and subsequently minimizes a sense of democratic participation and the accountability its citizens demand from their leaders. The fact that Cambodia consistently ranks among the lowest on Transparency International’s Corruption Perception Index and that human rights abuses are committed with impunity would seem to confirm Ear’s arguments.

While there is of course no guarantee that aid will have this same negative effect in Myanmar, Washington should note those circumstances in the country which could push it onto a similar trajectory. Last year, President Thein Sein ordered construction on the Myitsone dam project in Kachin State stopped. More recent reports suggest that those villagers who have attempted to return to their homes have been forcibly evicted by the military while Chinese workers remain at the site, indicators that the project will likely move forward. This situation may involve foreign investment rather than ODA, but the incident suggests that central government may have limited control over local military and police forces. What stands in the way of the still-powerful regional military leadership from utilizing soon-to-arrive ODA funds to carry out similar policies of unequal development that benefit only a select few?

At present, the mantle of democracy and progress seem to rest on reformer Thein Sein and Aung San Suu Kyi, both aging and who, however committed, cannot be expected to carry the burden of democracy and development alone. Should ODA from the United States and elsewhere overwhelm this fragile and complicated process and somehow diminish an expectation of accountability from the people of Myanmar to its leaders as it has in Cambodia, Myanmar’s democratic transition will be at risk and its development will miss those who need aid most.

Along with ensuring the international aid community’s experience in Cambodia is not replicated in Myanmar, the United States needs to construct its aid strategy in conjunction with other Western governments who have commenced aid. It’s obvious that the United States is not alone in hoping to gain favor with Myanmar. Instead of moving unilaterally to counteract aid overtures and risking its dollars and credibility in an increasingly important geopolitical region, the United States should seize this opportunity to demonstrate leadership in aid administration to transitioning states. Through soberly acknowledging past failures and moving forward with aid in concert with other donors, the United States will safeguard against redundancy and make certain that development dollars are disbursed effectively to even the country’s most remote regions—regions like Kachin State and Rakhine State— that need assistance the most.