In his Sept. 3 letter, "Sanctions don't impoverish Burma," Donald Seekins takes issue with Brahma Chellaney's Aug. 29 article, "U.S. should engage Burma," over the particular point of whether sanctions impoverish the Burmese people or not. (Seekins said it would be premature to drop all economic sanctions.) If you take "sanctions" to include the serious interruption of bilateral aid programs from 1988 onward and the simultaneous blocking by the West of all funding from international financial institutions (IFIs) like the IMF, World Bank and Asian Development Bank, then I am more inclined to agree with Chellaney than with Seekins.
Because of these particular sanctions, Myanmar found itself at the bottom of the Organization for Economic Cooperation and Development's list of 38 "fragile states" in 2007, with only $4.08 per capita of foreign aid, lower than any other country. This denial of aid from IFIs has bound to have had a direct effect on the living standards of the population, which Seekins might well recognize through his plea for a dramatic increase in humanitarian aid.
I agree that the regime must accept some responsibility for the impoverished state of the country because of the size of its standing army, its purchases of weapons, the costly new capital at Naypyitaw and general managerial incompetence. Yet, taken in GDP per capita terms, defense expenditures in Myanmar would seem to be on a par with that of Thailand. Indeed, Myanmar always seems to be catching up with the Thais in terms of sophisticated equipment.
Myanmar has a problem because of its obscure accounting structures. As the United Nations found during its Cyclone Nargis relief program, there is no great demand for U.S. dollars in Myanmar at present, and the regime may have problems knowing how best to convert its ever-increasing foreign exchange reserves into kyat. Indeed, the extent to which it was able to use its reserves to assist with capital construction costs at Naypyitaw is far from clear, and it was a shortage of kyat, not U.S. dollars, that may have foolishly induced the regime to raise fuel prices in August 2007, thus precipitating the widespread popular protests led by monks.