Center for Strategic Communication


By Dan Grant

Now that the presidential election has been put to rest, Barack Obama has turned his attention to his administration’s most ambitious foreign policy project: rebalancing America’s global focus to East and South Asia.

It’s predicted that close to half of all global growth over the next five years will come from this area, so it’s unsurprising that America would deepen its involvement there. There is a more unspoken element of this policy, however: this shift allows the United States to keep a watchful eye and potential checking power on China.

Elements of this policy have been ongoing since Obama’s first term: Australia agreed to host a U.S. Marine base in Darwin late last year; Prime Minister Yoshihiko Noda is subtly altering Japan’s defense posture with quiet American support; and the president dispatched Secretaries Clinton and Panetta to the region this week to attend the annual meeting of ASEAN in Cambodia.

The president himself visited Myanmar in a show of solidarity with its newly reform-minded government. It was a first-ever presidential visit to that country, which underscores the seriousness with which the administration views rebalancing.

Myanmar previously had been a student of the North Korean practice of statecraft, consisting of isolation, autarky, and paranoia, most recently evidenced by a refusal of international aid after a catastrophic cyclone in 2008. With Thein Sein’s 2011 rise to the Prime Minister’s office in Myanmar, however, the changes have been dizzying: the release of political prisoners, openness to economic reform, and a push toward a functioning democracy. The reason for this openness has sprung from several sources: a legitimate desire to join community of nations; the harsh economic realities of isolation; internal power struggles in Yangon – but behind all these is China.

Myanmar has a gold mine of natural gas and oil in its territorial waters. Energy-hungry China wants it, and has pledged billions to assist in their development. It’s an understatement to say that China has a complex history with its neighbors, and it’s not surprising that Myanmar has judged it prudent not to link its economy too closely to China, and has shifted to include other international partners.

Part of this shift has been a set of subtle, but fundamental, economic changes, including Myanmar’s reform of its currency system. The kyat was moved to a managed floating exchange from a fixed rate earlier this year, which has helped spur an influx of investment from abroad.

To solidify its relationship with Myanmar, the United States should do all it can to support these economic reforms. To this end, the Obama administration should commit to the following:

  • Assist Myanmar with expertise and logistical support in the next step of its currency reform: the planned phase-out of Foreign Exchange Certificates – Myanmar’s dual currency for foreigners – which is scheduled for next year.  This will solidify the kyat into a credible, floating, and unified currency, which is one of the fundamentals for attracting investment.
  • Push for Myanmar’s inclusion in APEC, the Asia-Pacific Economic Cooperation, which promotes Pacific economic development and trade. It operates in parallel with ASEAN, which Myanmar will chair in 2014. Myanmar’s entry into APEC would be a natural next step, and would further encourage investors and reassure neighbors.
  • Shepherd Myanmar into in the Trans-Pacific Partnership, an Asian trade group spearheaded by the United States, which will ease movement of capital, simplify customs regulations, and provide basic investor protection.

The United States should do all it can to support these changes and make them permanent. They would solidify Myanmar’s entry into the international community as an active partner, and quietly dilute China’s influence in Yangon.

The fact that the Chinese government’s Propaganda Department has mandated that local media downplay Obama’s visit to Myanmar indicates how much Beijing has taken notice. Rebalancing needn’t necessarily be a repetition of twentieth century American-Soviet Cold War containment, however.

Asia is more than large enough for a great deal of international activity, and Myanmar even presents a chance for Sino-American cooperation in humanitarian development. That said, Obama’s visit to Yangon signals that America’s interest in the Pacific is serious, redoubled, and will be at the forefront of U.S. policy for decades.

Dan Grant is a fellow at the American Security Project, and is a specialist in post-conflict and developing countries. He was the international operations officer for the currency conversion and stabilization program at Afghanistan’s Central Bank.