Maritime dispute between Bangladesh and Myanmar
JARED BISSINGER
While the eyes of Myanmar watchers have been focused on the country's upcoming elections and nuclear ambitions, the junta has been quietly working to settle its maritime boundary dispute with Bangladesh.
The significance of a boundary settlement might not be readily apparent, but that does not mean that the consequences are insignificant. The leaders of Myanmar and Bangladesh are both feeling political pressure to settle the long-drawn-out dispute over maritime boundaries in the Bay of Bengal.
If the junta concludes an agreement motivated by its own short-term interests, the resulting boundary will have a negative impact on the people of Myanmar for generations to come.
The maritime boundary was, at least until 2007, not a significant issue for either Myanmar or Bangladesh . So why, after largely ignoring the dispute for two decades, are both countries suddenly so keen to settle it?
The answer is two-fold. First, the disputed area could contain billions of dollars of undiscovered natural gas that these countries can finally access. Second, the economic and political motivations pushing Myanmar and Bangladesh to settle have never been stronger.
Both Dhaka and Naypyidaw have high hopes for natural gas in the disputed area. This optimism largely results from the bonanza of other finds in the Bay of Bengal over the last decade. The biggest, India's massive Dhirubhai fields, already and produces more natural gas than all of Myanmar's offshore wells combined. According to Dhirubhai's developer, Reliance Industries, the field currently produces 1,236 million cubic feet per day, compared to the Myanmar Oil and Gas Enterprise (MOGE) stated production of 1,090 for Myanmar's entire offshore production.
The discovery of Myanmar's Shwe fields, though not nearly the size of Dhirubhai, furthered hopes because it lies so close (about 50km) to the disputed area. Shwe, Dhirubhai, and many other gas-rich parts of the world also share similar geologic characteristics with the disputed area. The high hopes for gas from the disputed area are shared by energy companies, including Conoco Phillips. In a 2009 report, it characterized Bangladesh's offshore area, including parts of the disputed area, as having high potential for deep water natural gas. All of these signs together have convinced Dhaka and Naypyidaw that there is gas in the disputed area.
Offshore resources, of course, are not very valuable without the technology to exploit them. However, over the past 15 years there have been major advances in offshore drilling technology. They include rigs that can drill in waters 3,000 meters deep, seismic surveys that can render three-dimensional results and computer processing that makes deepwater operations feasible. The advances have opened up huge parts of the disputed area to resource exploitation.
With the high probability of offshore gas and the technology to get to it, the disputed area looks poised to provide a steady supply of natural gas. Complementing this is the skyrocketing gas demand in Bangladesh and in regional powers such as China and India , which have created the incentives to exploit the potential gas resources.
Bangladesh desperately needs more natural gas for its domestic electricity sector, which is struggling to keep up with rapid economic growth. Bangladesh's gas shortfall is about 20 percent of demand, and its current gas wells cannot make up this difference because they are already running at full capacity.
The country also cannot import gas to make up for this deficit because it lacks the necessary infrastructure of pipelines and liquid natural gas facilities. Bangladesh's need is amplified by its dependence on gas, which produces about 85 percent of the country's electricity. Pressure is on the government to find a solution to the power crisis, and the Bay of Bengal could play a central role in this.
Animesh Roul, the executive director of Research at the Society for the Study of Peace and Conflict in New Delhi, noted that for energy-starved Bangladesh, the Bay of Bengal has been the major source for oil and natural gas and it cannot afford to let neighboring Myanmar and India harness the resources without taking it into account.
The power crisis will likely also be a key issue for the Awami League, Bangladesh's center-left government, in the country's next election. The Awami League plays to the more conservative elements within Bangladesh that are nationalistic when it comes to the country's natural resources. The current government therefore has a fine line to walk. It must settle the dispute quickly to address the country's power crisis, but without giving away too many concessions, for fear of boosting public support for the opposing right-wing parties.
Myanmar's government also seems keen to access natural gas from the disputed area. If the country's previous offshore projects are any indication, however, the gas will most likely not be used to address Myanmar's ongoing electricity problems. Instead, the junta will probably sell any new resources and keep most of the billions of dollars that it would reap.
"For Bangladesh, it's all about getting a source of cheap and reliable energy so as to power its developing industrialization. For Myanmar's regime, on the other hand, the motivation is utterly different. Even though Myanmar is also desperately short of energy, Myanmar's leaders just want the gas to sell it," said Sean Turnell, a Myanmar expert and economist at Macquarie University in Australia .
Gas exports are already Myanmar's biggest foreign currency earner. In 2009, it brought in an estimated US $2.5 billion, about two-thirds of the regime's total reserves for the year. Yet little of this money made its way into Myanmar's official accounts, thanks to the multi-tiered exchange rate that the country uses to convert dollars to kyat. By recording sales at the official rate of about 6.5 kyat/dollar but exchanging them at a market rate of around 1,000 kyat/dollar, the junta omits more than 99 percent of the country's actual gas revenues from the official budget.
Myanmar's opaque politics make it impossible to determine exactly where this money goes. However, there is widespread speculation that the junta spends this money at its discretion, normally for political projects and personal enrichment. Examples of extravagant spending thought to be connected to gas exports include construction of the new capital Naypyidaw, various weapons purchases and the pursuit of nuclear technologies from North Korea . Gas revenues have likely enriched the junta and helped secure their continued rule over Myanmar , and the junta probably has similar plans for revenues from the disputed area.
Yet future access to these revenues is not guaranteed for the junta's current members. There is strong internal competition among the junta, current and retired military officers, bureaucrats and the business class.
Upcoming elections and the possible retirement of some senior junta members also add to the uncertainty. This could give the junta's current members a sense of urgency in their undertakings to secure revenue. And few projects have as much revenue potential as developing the natural gas resources in the disputed area.
So how might they go about concluding a settlement? If recent developments are any indication, a settlement will likely come through either the International Tribunal on the Law of the Sea (ITLOS) or bilateral negotiations. At the ITLOS, the Bangladesh-Myanmar case is currently only one of two on the docket, and its first on maritime boundaries. This means a verdict will likely be quick but less predictable than negotiations, as there is no certainty on how the court will interpret maritime laws.
The other avenue, bilateral negotiations, had a breakthrough in January when Bangladesh and Myanmar announced that they would compromise on the legal principles for delimiting the boundary. The matter was then referred to a technical team, though they have yet to announce any progress. The seeming inability to take concrete steps forward suggests that the January announcement may have been largely a political gesture.
Major regional powers, especially China , have been largely reluctant to get involved in this dispute. Bangladesh has on at least one occasion approached Beijing for help in mediating the dispute, though they were rebuffed. China , which has good relations with both Bangladesh and Myanmar , is understandably unwilling to get involved for fear of souring one of their relationships.
China is probably also reluctant to get involved because it could present challenges in the country's own maritime disputes in the South and East China Seas . Both the legal principle of equidistance, proposed by Myanmar , and the principle of equity, proposed by Bangladesh , could hinder China's maritime claims. Therefore, China likely does not want to be seen as indirectly supporting a legal principle which does not advance its own claims.
India has remained similarly removed from the maritime boundary dispute between Bangladesh and Myanmar . Because of the concave shape of the Bay of Bengal, India's involvement will be necessary to construct a full set of maritime boundaries for the bay. Presently, however, there are no trilateral discussions or direct talks between Myanmar and India on maritime boundaries.
So what might a potential settlement look like? There's no way to know for sure, as it will depend heavily on how the agreement is concluded. However, both bilateral negotiations and the ITLOS seem poised to produce a solution in which neither country is a total loser. For Myanmar's citizens, the worst-case scenario may well be a negotiated settlement in which the junta sacrifices maritime territory for a quick deal. An unfavorable decision from the ITLOS could also be bad for Myanmar's people, though this depends largely on the court, not the junta.
What does all this mean, especially for the people of Myanmar? In the near term, an unsettled boundary will continue to prevent natural gas development in the overlapping claims. Once the boundary is agreed, however, both countries will likely begin exploiting potential resources. This could help alleviate Bangladesh's gas crisis and funnel more foreign reserves to Myanmar's junta.
If Myanmar finds gas, it could inspire a repeat of the competition between China and India for gas exports from the Shwe fields. However, it could also offer the junta an opportunity to create stronger economic, strategic and political links with India , balancing the country's perceived over-dependence on China .
The biggest losers of a boundary settlement and any subsequent energy developments will probably be the people of Myanmar, especially the Rohingya and others living in the country's northwest. Little of the money from gas exports is likely to go to Myanmar's people. If the history of onshore energy infrastructure development is any indicator, gas exports will instead lead to forced labour, land confiscations and other human rights violations. Offshore energy infrastructure could result in fishing restrictions which will challenge the livelihoods of the fishermen in the area.
If the junta settles the maritime boundary motivated mainly by its own short-term interests, Myanmar could be stuck with the injurious boundaries long after the generals are gone. With such grave potential implications, it is important that the maritime boundary dispute not be forgotten, even in the run-up to the election. The consequences of a maritime boundary agreement could long outlive the results from Election Day.
(The author was until recently a research fellow at the National Bureau of Asian Research in Seattle, Washington.)
If the junta concludes an agreement motivated by its own short-term interests, the resulting boundary will have a negative impact on the people of Myanmar for generations to come.
The maritime boundary was, at least until 2007, not a significant issue for either Myanmar or Bangladesh . So why, after largely ignoring the dispute for two decades, are both countries suddenly so keen to settle it?
The answer is two-fold. First, the disputed area could contain billions of dollars of undiscovered natural gas that these countries can finally access. Second, the economic and political motivations pushing Myanmar and Bangladesh to settle have never been stronger.
Both Dhaka and Naypyidaw have high hopes for natural gas in the disputed area. This optimism largely results from the bonanza of other finds in the Bay of Bengal over the last decade. The biggest, India's massive Dhirubhai fields, already and produces more natural gas than all of Myanmar's offshore wells combined. According to Dhirubhai's developer, Reliance Industries, the field currently produces 1,236 million cubic feet per day, compared to the Myanmar Oil and Gas Enterprise (MOGE) stated production of 1,090 for Myanmar's entire offshore production.
The discovery of Myanmar's Shwe fields, though not nearly the size of Dhirubhai, furthered hopes because it lies so close (about 50km) to the disputed area. Shwe, Dhirubhai, and many other gas-rich parts of the world also share similar geologic characteristics with the disputed area. The high hopes for gas from the disputed area are shared by energy companies, including Conoco Phillips. In a 2009 report, it characterized Bangladesh's offshore area, including parts of the disputed area, as having high potential for deep water natural gas. All of these signs together have convinced Dhaka and Naypyidaw that there is gas in the disputed area.
Offshore resources, of course, are not very valuable without the technology to exploit them. However, over the past 15 years there have been major advances in offshore drilling technology. They include rigs that can drill in waters 3,000 meters deep, seismic surveys that can render three-dimensional results and computer processing that makes deepwater operations feasible. The advances have opened up huge parts of the disputed area to resource exploitation.
With the high probability of offshore gas and the technology to get to it, the disputed area looks poised to provide a steady supply of natural gas. Complementing this is the skyrocketing gas demand in Bangladesh and in regional powers such as China and India , which have created the incentives to exploit the potential gas resources.
Bangladesh desperately needs more natural gas for its domestic electricity sector, which is struggling to keep up with rapid economic growth. Bangladesh's gas shortfall is about 20 percent of demand, and its current gas wells cannot make up this difference because they are already running at full capacity.
The country also cannot import gas to make up for this deficit because it lacks the necessary infrastructure of pipelines and liquid natural gas facilities. Bangladesh's need is amplified by its dependence on gas, which produces about 85 percent of the country's electricity. Pressure is on the government to find a solution to the power crisis, and the Bay of Bengal could play a central role in this.
Animesh Roul, the executive director of Research at the Society for the Study of Peace and Conflict in New Delhi, noted that for energy-starved Bangladesh, the Bay of Bengal has been the major source for oil and natural gas and it cannot afford to let neighboring Myanmar and India harness the resources without taking it into account.
The power crisis will likely also be a key issue for the Awami League, Bangladesh's center-left government, in the country's next election. The Awami League plays to the more conservative elements within Bangladesh that are nationalistic when it comes to the country's natural resources. The current government therefore has a fine line to walk. It must settle the dispute quickly to address the country's power crisis, but without giving away too many concessions, for fear of boosting public support for the opposing right-wing parties.
Myanmar's government also seems keen to access natural gas from the disputed area. If the country's previous offshore projects are any indication, however, the gas will most likely not be used to address Myanmar's ongoing electricity problems. Instead, the junta will probably sell any new resources and keep most of the billions of dollars that it would reap.
"For Bangladesh, it's all about getting a source of cheap and reliable energy so as to power its developing industrialization. For Myanmar's regime, on the other hand, the motivation is utterly different. Even though Myanmar is also desperately short of energy, Myanmar's leaders just want the gas to sell it," said Sean Turnell, a Myanmar expert and economist at Macquarie University in Australia .
Gas exports are already Myanmar's biggest foreign currency earner. In 2009, it brought in an estimated US $2.5 billion, about two-thirds of the regime's total reserves for the year. Yet little of this money made its way into Myanmar's official accounts, thanks to the multi-tiered exchange rate that the country uses to convert dollars to kyat. By recording sales at the official rate of about 6.5 kyat/dollar but exchanging them at a market rate of around 1,000 kyat/dollar, the junta omits more than 99 percent of the country's actual gas revenues from the official budget.
Myanmar's opaque politics make it impossible to determine exactly where this money goes. However, there is widespread speculation that the junta spends this money at its discretion, normally for political projects and personal enrichment. Examples of extravagant spending thought to be connected to gas exports include construction of the new capital Naypyidaw, various weapons purchases and the pursuit of nuclear technologies from North Korea . Gas revenues have likely enriched the junta and helped secure their continued rule over Myanmar , and the junta probably has similar plans for revenues from the disputed area.
Yet future access to these revenues is not guaranteed for the junta's current members. There is strong internal competition among the junta, current and retired military officers, bureaucrats and the business class.
Upcoming elections and the possible retirement of some senior junta members also add to the uncertainty. This could give the junta's current members a sense of urgency in their undertakings to secure revenue. And few projects have as much revenue potential as developing the natural gas resources in the disputed area.
So how might they go about concluding a settlement? If recent developments are any indication, a settlement will likely come through either the International Tribunal on the Law of the Sea (ITLOS) or bilateral negotiations. At the ITLOS, the Bangladesh-Myanmar case is currently only one of two on the docket, and its first on maritime boundaries. This means a verdict will likely be quick but less predictable than negotiations, as there is no certainty on how the court will interpret maritime laws.
The other avenue, bilateral negotiations, had a breakthrough in January when Bangladesh and Myanmar announced that they would compromise on the legal principles for delimiting the boundary. The matter was then referred to a technical team, though they have yet to announce any progress. The seeming inability to take concrete steps forward suggests that the January announcement may have been largely a political gesture.
Major regional powers, especially China , have been largely reluctant to get involved in this dispute. Bangladesh has on at least one occasion approached Beijing for help in mediating the dispute, though they were rebuffed. China , which has good relations with both Bangladesh and Myanmar , is understandably unwilling to get involved for fear of souring one of their relationships.
China is probably also reluctant to get involved because it could present challenges in the country's own maritime disputes in the South and East China Seas . Both the legal principle of equidistance, proposed by Myanmar , and the principle of equity, proposed by Bangladesh , could hinder China's maritime claims. Therefore, China likely does not want to be seen as indirectly supporting a legal principle which does not advance its own claims.
India has remained similarly removed from the maritime boundary dispute between Bangladesh and Myanmar . Because of the concave shape of the Bay of Bengal, India's involvement will be necessary to construct a full set of maritime boundaries for the bay. Presently, however, there are no trilateral discussions or direct talks between Myanmar and India on maritime boundaries.
So what might a potential settlement look like? There's no way to know for sure, as it will depend heavily on how the agreement is concluded. However, both bilateral negotiations and the ITLOS seem poised to produce a solution in which neither country is a total loser. For Myanmar's citizens, the worst-case scenario may well be a negotiated settlement in which the junta sacrifices maritime territory for a quick deal. An unfavorable decision from the ITLOS could also be bad for Myanmar's people, though this depends largely on the court, not the junta.
What does all this mean, especially for the people of Myanmar? In the near term, an unsettled boundary will continue to prevent natural gas development in the overlapping claims. Once the boundary is agreed, however, both countries will likely begin exploiting potential resources. This could help alleviate Bangladesh's gas crisis and funnel more foreign reserves to Myanmar's junta.
If Myanmar finds gas, it could inspire a repeat of the competition between China and India for gas exports from the Shwe fields. However, it could also offer the junta an opportunity to create stronger economic, strategic and political links with India , balancing the country's perceived over-dependence on China .
The biggest losers of a boundary settlement and any subsequent energy developments will probably be the people of Myanmar, especially the Rohingya and others living in the country's northwest. Little of the money from gas exports is likely to go to Myanmar's people. If the history of onshore energy infrastructure development is any indicator, gas exports will instead lead to forced labour, land confiscations and other human rights violations. Offshore energy infrastructure could result in fishing restrictions which will challenge the livelihoods of the fishermen in the area.
If the junta settles the maritime boundary motivated mainly by its own short-term interests, Myanmar could be stuck with the injurious boundaries long after the generals are gone. With such grave potential implications, it is important that the maritime boundary dispute not be forgotten, even in the run-up to the election. The consequences of a maritime boundary agreement could long outlive the results from Election Day.
(The author was until recently a research fellow at the National Bureau of Asian Research in Seattle, Washington.)
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