ALERT: Myanmar – Military power seizure raises unrest risk and rocks investment climate

EVENT

On 1 February, the Tatmadaw (Myanmar’s military) detained State Counsellor and the country’s de facto leader Aung San Suu Kyi along with several other senior members of the ruling National League of Democracy (NLD). A year-long state of emergency has been declared, with the military, headed by Senior General Min Aung Hlaing, having seized power from the civilian government.

 

SIGNIFICANCE

The coup d’état took place amid rising tensions between the Tatmadaw and the NLD over the disputes in the outcome of the November 2020 general election, which the NLD won in a landslide, at the expense of the military-backed Union Solidarity and Development Party (USDP). The military has rejected the election results and made unsubstantiated claims of widespread voting fraud.

Despite recent negotiations between the two sides, the NLD reportedly refused to concede to the military’s calls for postponing the opening of the new parliament, scheduled for 1 February.

Citing “electoral fraud”, the Tatmadaw issued a statement on Myawaddy Television (MWD) – a military-owned TV broadcaster – that the state of emergency had been declared in accordance with Article 417 of the 2008 constitution. The military have since claimed that “free, fair general elections” will be held to determine the future leadership of the country.

Although the situation remains fluid following the military seizure of power, widespread disruptions to communication services have already been reported, with phone and mobile internet services being suspended in various urban areas, including the capital Naypyidaw and the commercial hub Yangon.

A heightened security presence has also been reported in Naypyidaw and Yangon, with military forces erecting barricades and checkpoints on key roads. The army has taken over the country’s international airports, leading to cancellations of international and domestic flights.

The NLD has issued a statement on behalf of its leader Aung San Suu Kyi, urging the public not to accept the coup, and to protest against the army’s actions.

There has been widespread condemnation from the international community, with the US, the UK, the EU and the UN, all issuing statements criticising the actions of the Burmese military and urging all parties to respect the rule of law and the results of the 2020 general election.

 

FORECAST

As military activities remain ongoing, the situation will be volatile in the immediate term, with serious and widespread disruption to transport, telecommunication and business operations expected. Any disruption or suspension of services could occur with no prior notice, adding to the challenge for corporations and non-profit organisations trying to assess the developing situation on the ground. Despite the promise made by the military, if any general election is held, it will almost certainly not be fairly contested. The coup leaders are likely to prioritise strengthening their control over executive and the legislature as well as dealing the repercussions of their actions over the coming weeks.

Escalation of unrest is a strong possibility, especially if NLD supporters in urban areas heed Aung San Suu Kyi’s call to protest against the coup. The military may impose strict curfews and use force to disperse any gathering of NLD supporters. In addition, there is also a risk of counter demonstrations organised by pro-military/ultra-nationalist groups clashing with NLD supporters, raising the threat of violence.

The coup represents a significant reversal of Myanmar’s decade-long democratic transition. A return to the military junta-rule will not only disrupt and deter foreign investment to the resource-rich country – with a strong possibility of international sanctions against Myanmar, it will also create a highly uncertain and risky environment for businesses and NGOs operating in the country.

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Alerts form part of Sibylline’s World Risk Register, a ground-breaking analytical service designed to help organisations of all sizes navigate an uncertain world.

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