US embassy cable - 05RANGOON187

S E C R E T SECTION 01 OF 02 RANGOON 000187 
 
SIPDIS 
 
NOFORN 
 
STATE FOR EAP/BCLTV, EB 
COMMERCE FOR ITA JEAN KELLY 
TREASURY FOR OASIA 
USPACOM FOR FPA 
 
E.O. 12958: DECL: 02/10/2015 
TAGS: ECON, PGOV, BM, Economy 
SUBJECT: THE SPDC'S ECONOMIC PRIORITIES 
 
REF: 04 RANGOON 31 
 
Classified By: COM CARMEN MARTINEZ FOR REASONS 1.4 (B,D) 
 
1. (S/NF) Summary: A sensitive GOB document has given us a 
rare glimpse at the economic policymaking process of the 
SPDC's top leadership.  From its list of 30 "guidelines," 
it's clear that the SPDC is not totally ignorant of the 
economy's key problems (energy shortages, budget deficits, 
and poor agricultural and industrial production).  However, 
it's also clear that the SPDC has little idea what to do 
about them.  End summary. 
 
The View from the Top 
 
2. (S/NF) We have seen a GOB 'Top Secret' document outlining 
the 30 economic priorities set by the top four SPDC leaders 
(Senior General Than Shwe, Vice Senior General Maung Aye, 
Prime Minister Lt. Gen. Soe Win, and Secretary One Lt. Gen. 
Thein Sein) during the January 20-21 quarterly SPDC 
coordination meeting.  A short note covering the list of 
"guidelines" instructed ministries, other SPDC members, and 
regional Peace and Development Councils to "note and 
implement" these instructions as quickly as possible. 
 
3. (S/NF) The guidelines are often vague, and always 
dogmatic.  Some instructions are extremely general ("keep the 
economic growth rate high"), while others are excessively 
micromanagerial ("plant rubber in Tamu, Sagaing Division" and 
"grow more corn because people in Chin State like to mix it 
with rice").  The guidelines also occasionally repeat 
themselves, and often are contradictory.  For example, while 
urging attention to import-substitution industries first and 
export-oriented industries second, they also stress the 
importance of increasing the "production of export items." 
 
Energy, Agriculture, Industry, and the Budget are Key 
 
4. (S/NF) Several themes emerge, however, notably the 
leaders' concern over agricultural production and diversity, 
electricity and crude oil shortages, building the industrial 
sector, and cutting the budget deficit.  Seventeen of the 30 
guidelines address these topics.  Other areas address the 
need for better statistics and reform of border trade. 
 
-- Agricultural goals are to increase cultivation of new 
crops and more efficiently cultivate traditional ones. 
Specifically mentioned are cash and import-substitution crops 
like oil palm, rubber, coffee, tea, and pepper.  Agricultural 
production must move away from small and medium-sized farms 
to "commercial size" enterprises.  To this end, farmers 
should start cooperative production and "entrepreneurs who 
are financially strong" (read: cronies) should develop 
"thousands of acres of virgin land." 
 
-- Energy problems must be solved by conservation across the 
board, with a priority given to manufacturers for supplies of 
electricity and domestic and imported fuel oil.  Despite 
admonishments elsewhere to maximize import substitution, 
there is no suggestion of using offshore, exportable natural 
gas to help improve the domestic power situation. 
Hydropower, long the SPDC's public answer to Burma's energy 
problems, is not mentioned. 
 
-- Industrial success is dependent on better long-term 
planning and increased use and specialization of industrial 
zones.  The generals recognize the lack of "know-how" in the 
private and state-owned sectors, but offer no advice on 
getting it -- other than to establish a goal of achieving 
"high-level industries" by 2009. 
 
-- Budget deficits remain chronic despite the publicized 
target of a surplus by FY 2003-04.  Like in the energy 
sector, budget deficits must be fixed through conservation of 
resources and controlled spending.  Supplementary 
expenditures will not be authorized (except presumably for 
SPDC priority areas), government construction projects must 
cease (except for manufacturing infrastructure), and 
ministries must "increase departmental income." 
 
-- Correct data and statistics must be compiled by 
responsible authorities while ministries must devise 
"feasible" production plans for FY 2005-06.  The guidelines 
do embrace, however, the absurdly overstated official GDP 
growth figure of 13.8 percent, and stress the need to keep it 
up. 
 
-- Perhaps dwelling on the previous domination of border 
trade activities by ousted Prime Minister, and military 
intelligence chief, General Khin Nyunt, the new guidelines 
insist that trade at the two largest border trade points, 
Muse (on the China border) and Myawaddy (on the Thai border), 
be converted from more informal and decentralized border 
trade rules to more centrally controlled "normal" trade.  A 
separate instruction orders "training" of border traders so 
they can conduct future commerce as normal, vice border, 
trade. 
 
A Kinder Gentler SPDC? 
 
5. (S/NF) Somewhat incongruously, three of the guidelines 
address the importance of government servants treating the 
people well while striving to achieve these economic 
objectives.  Local officials "should live together with the 
people and should not behave haughtily or arrogantly." 
Likewise, GOB-affiliated NGOs are cautioned to improve their 
organizations to be more "firmly rooted among the people." 
 
Comment: Moments of Lucidity 
 
6. (S/NF) There are few surprises from the list, which 
reflects the top-heavy dirigiste policymaking process that 
has caused the economy so many problems.  However, the 
majority of the guidelines make it clear that the senior SPDC 
leadership does have a concept of some of the challenges 
facing the Burmese economy -- if not why these problems have 
arisen.  It has long been debated whether the GOB's inept 
economic policymaking was based on ignorance of the situation 
or inability to address it properly.  From this document, it 
appears to be as much the latter as the former, as the 
guidelines identify several real problems, but propose few 
realistic or creative solutions.  End comment. 
Martinez