Russian Economic Interest Spur Policy in Myanmar

The current civil and political situation in Myanmar carries much more political and economic potential than one would initially assume. The unrest presents an opportunity for several major powers, namely the Russia, China, India, and the United States. Of these, the power most likely to profit from the situation is the Russian Federation. Before delving into the perceived interests of the Russian Federation, an overview of the current situation in Myanmar is necessary.

Less than two weeks ago, the price of natural gas and oil in Myanmar rose between one hundred and five hundred percent, depending upon the source. Spurred on by the extreme rises in price, Buddhist monks and regular civilians began protesting against the government, in response, the military junta currently in power brought on a full scale crackdown against the rioting, which has now incurred the attention of the international community.

Especially interesting is the involvement of the Russian Federation, which is working in concert with the People’s Republic of China, in order to attain its interests. For Russia, Myanmar holds a special business interest. Over the past few years, the Russian Federation has entered into business dealings with Myanmar. For example, in May, nuclear equipment export monopoly Atomstroyexport signed an agreement to build a nuclear research center in Myanmar. Zarubezhneft, Russia’s leading foreign trade company in oil and gas sector, natural gas producer Itera, and Silver Wave Sputnik Petroleum, are currently producing Myanmar’s offshore oil deposits alongside the Chinese company PetroChina, after having had connected with the south Russian republic of Kalmykia. Also, Myanmar bought 15 Russian MiG-29 Fulcrum fighters for about $150 million in 2001, and is now negotiating with Russia’s state-controlled arms exporter Rosoboronexport the establishment of an air defense system comprising Tor-M1 and Buk-M1-2 missile systems. These business dealings, with a special influence on the energy related deals are especially important to the Russian Federation.

Russia, who is currently one of the leading exporters of natural gas, is on the path to achieving a monopoly on energy throughout Europe (see “Economic Brief: The Implications of a Russian-led Gas Cartel.”), is most likely utilizing Myanmar and the Burmese oil and natural gas deposits (which it has gained access to after having negotiating the placement of the aforementioned air defense systems) to further its goals of monopolizing Europe and possibly expanding its economic and political interest into the East. It is also important to note the establishment of state-controlled air defense systems in Myanmar, in order to gain access Burmese oil. It is possible that these air defense systems will serve other purposes, such as; establishing bases to counter growing Chinese power or American influence, much like the United States has done in Belarus after establishing military bases, and continues to do in Taiwan.