World on Fire: How Exporting Free Market Democracy Breeds Ethnic Hatred and Global Instability

Drawing on examples from around the world, the author describes the potential dangers of globalization and the exportation of free-market democracy, arguing that they do not spreak wealth evenly through a society but instead produce a class of wealthy plutocrats, as well as increased ethnic conflict, violence, ethnonationalism, and other potentially disastrous results.

CHAPTER 1

Rubies and Rice Paddies

Chinese Minority Dominance in Southeast Asia

In Burma,* tattoos are traditionally used to protect against snakebite. In 1930 and again in 1938, enraged Burmans applied these tattoos to achieve invulnerability against bullets and then proceeded to slaughter Indians in an orgy of violence. Even monks were said to have participated. At the time, Indians, along with British colonialists, were a starkly economically dominant ethnic minority in Burma and the object of mass antipathy. Killing Indians was an act simultaneously of revenge and nationalist pride among a long-downtrodden people. As a contemporary observer put it, "The average Burman on the street felt that at least once he had proved his superiority over the Indian."

Today there is only a small community of Indians left in Burma. Hundreds of thousands fled in the sixties, in response to another wave of ethnic violence. But a new market-dominant minority has taken their place, far wealthier than the Indians ever were.


Markets, Junta Style, and the Chinese Takeover

Burma has one of the most repugnant military governments in the world--the State Law and Order Restoration Council, or SLORC,** which seized power in September 1988 after gunning down thousands of unarmed demonstrators. SLORC held multiparty elections in 1990, but then refused to honor the landslide victory of 1991 Nobel Peace laureate Aung San Suu Kyi, placing her instead under house arrest and earning the widespread hatred of the Burmese people.

From its inception, SLORC has been aggressively pro-market. Reversing three decades of disastrous, socialist central planning, SLORC in 1989 launched "the Burmese way to capitalism." Apart from enriching corrupt SLORC generals, who are all ethnic Burmans, the ensuing decade of marketization brought virtually no benefits to the indigenous population, the vast majority of whom still engage in traditional agriculture. One group, however, has benefited tremendously.

Since Burma's shift to a market-oriented, open-door economy, both Rangoon, the modern capital, and Mandalay, the ancient City of Gems and royal seat of the last two Burmese kings, have been taken over by ethnic Chinese. Some of these Chinese are from families that have lived in Burma for generations. Like the Indians but to a lesser extent, the Chinese were disproportionately wealthy during the colonial period (1886-1948), which was characterized by essentially laissez-faire policies superimposed on Burma's traditional rural economy. Although much of their wealth was confiscated during the socialist era (1962-88), the Chinese remained active in Burma's black markets and, in a few cases, opium trafficking.

In Burma's new market economy, the Sino-Burmese minority have been transformed almost overnight into a garishly prosperous business community. In addition, tens of thousands of poor but entrepreneurial immigrants from China, sweeping down from nearby Yunnan, have bought up the identity papers of dead Burmans for as little as three hundred dollars, becoming Burmese nationals overnight. Today, ethnic Chinese Burmese--looking uncomfortable in longyis, the traditional Burmese unisex sarongs--own nearly all of Mandalay's shops, hotels, restaurants, and prime commercial and residential real estate. The same is more or less true in Rangoon. Only a tiny, dying handful of Burman-owned establishments (mainly printing houses and cheroot factories) are left, dwarfed by the Chinese-built and Chinese-owned high-rise buildings around them.

Typical of Southeast Asia, the Chinese dominate Burmese commerce at every level of society. Massive joint ventures--such as the Shangri-La Hotel deal between Lo Hsing-han, the Sino-Burmese chairman of the Asia World conglomerate, and Sino-Malaysian tycoon Robert Kuok--have turned Mandalay and Rangoon into booming hubs for mainland Chinese and Southeast Asian Chinese business networks. (Non-Burmese Chinese investors are easy to spot. They're the ones not in longyis but in cowboy boots and sunglasses, walking around with bottles of Johnny Walker Red.) At the humbler end of the spectrum, Chinese hawkers make an excellent living selling cheap bicycle tires from China--often more than thirty thousand tires a month--for rickshaws in Burma. Nor is Chinese dominance only an urban phenomenon. After two years of severe flooding in southern China, large numbers of Chinese farmers--over a million, some estimate--poured into northern Burma. These new Burmese "citizens" now grow rice on the cleared hill country they have taken over. Entire Chinese villages have sprung up in this way.

With the United States boycotting Burma on human rights grounds, globalization for Burma has had a disproportionately Chinese face, although the presence of French and German foreign investors can be felt as well. "Name a large infrastructure project anywhere in Myanmar these days and there is a strong possibility it will be in the hands of Chinese contractors," observed The Economist a few years ago. "Chinese engineers are working on improvements to the highway from Mandalay to Yangon. Chinese companies are developing the railway line from Mandalay to Myitkyina, near the Chinese border, and the line from Mandalay to the capital. With the help of chain gangs from Myanmar's prisons, they are also building a line from Ye to Tavoy in Myanmar's far south-east. . . . Against international competition, Chinese contractors have won the contract to build a big bridge across the Chindwin river. Other Chinese ventures range from a new international airport for Mandalay to housing for the armed forces and 30 irrigation dams. It was the Chinese, in association with Siemens, who last year installed a ground satellite station serving the capital."

The Chinese in Burma dominate not only legitimate trade and business but also more sordid black market activities. Indeed, the line between licit and illicit commercial activity in Burma, as in many developing countries, is often vague. Some of the country's most influential businessmen are former--possibly current--drug kingpins. "Drug traffickers who once spent their days leading mule trains down jungle paths are now leading lights in Burma's new market economy," lamented former U.S. secretary of state Madeline Albright a few years ago.

Burma-born, ethnic Chinese tycoon Lo Hsing-han, for example, was an infamous opium warlord in the 1960s, thought to be responsible for much of the heroin that wound up in American veins. According to Burma scholar Bertil Lintner, Lo started off in his native Kokang Province as a lieutenant to the pistol-toting lesbian opium queen, Olive Yang. In 1989, Lo cut a deal with SLORC, persuading fellow ethnic warlords to accept a cease-fire with the junta in exchange for valuable timber and mineral concessions. Today, Lo's "Asia World" commercial empire includes a container shipping business, Rangoon port buildings, and tollbooths on the resurfaced Burma Road. Lo insists that he is now a legitimate businessman. "Since the market economy appeared in Myanmar," he explains, "it is easier to earn money trading vehicles on the Chinese border."6 Whether or not Lo is clean--and most Western officials believe otherwise--Burma's "Chinese underworld" remains as dominant in drug traffic and money laundering as Chinese merchants are in Mandalay's booming, lawful markets.

Chinese Plutocrats, Burman Misery

Ever since SLORC embraced markets, Burma has been hemorrhaging natural resources, especially teak, jade, and rubies. Apart from SLORC generals, the beneficiaries have been almost exclusively ethnic Chinese and a handful of hill tribe smugglers.

Burma's forests hold more than 70 percent of the world's teak. The Burmese...