A severe humanitarian crisis encountered by the Rohingya (mostly Muslim) minority has fast erupted in Myanmar. It began at the end of August when the rebel Arakan Rohingya Salvation Army (ARSA) attacked police posts and military headquarters and killed a dozen soldiers in the restive Rakhine State (west of the country). In retaliation, the army would have killed ARSA militants and violently cracked down on the Rohingya population and villages. About 480,000 people fled the country to Bangladesh. The army has rejected the ceasefire proposal from ARSA which it considers a terrorist group. This humanitarian crisis triggered protests in several Muslim countries (e.g. Indonesia, Malaysia) which, together with the international community, are urging Myanmar’s authorities to take refugees back. Under mounting external pressure, Mrs San Suu Kyi made a belated speech in which she called for appeasement and reconciliation, committed to taking back refugees on citizenship ground and raising economic development spending in Rakhine State, while she denied the UN’s ethnic cleansing accusations.

Impact on country risk

The current crisis confirms what was already known: the wide historic rejection and non-recognition of the Rohingya minority – having no citizenship – among the largely Buddhist population, and the weak position of the civilian government, especially in defence and internal security affairs which remain conducted by the military. De facto country leader Mrs San Suu Kyi had little room for preventing her international image from being tarnished. In Myanmar’s transition period, she accepts paying this price for preserving the political and economic reform process by not interfering with the army, and for hoping to move forward the challenging ‘unification of the country’ (i.e. ending the many ethnic conflicts). The country’s political risk might deteriorate as a result. First, Mrs San Suu Kyi’s NPD might suffer from less international support (international sanctions are unlikely to be re-introduced, though) and some foreign investment projects in Rakhine State might be threatened or postponed without solution to the crisis. Secondly, there is a risk of Rohingya refugees joining the IS ranks and increasing terrorist risks targeting the government and security forces across the whole country, i.e. outside border areas faced with longstanding ethnic conflicts. Hence, the business environment and domestic stability might be hit. In the short term, the sake of the Rohingya minority is not expected to greatly improve with Mrs San Suu Kyi probably offering midway solutions that leave them in Bangladesh’s refugee camps for an undetermined period of time.

Analyst: Raphaël Cecchi, r.cecchi@credendo.com