The Disaster Profiteers: How Natural Disasters Make the Rich Richer and the Poor Even Poorer

by John C. Mutter

  Myanmar (then called Burma) had one of East Asia’s strongest economies during the colonial period and was the largest producer/exporter of rice, cultivated mainly in the Irrawaddy Delta. Well before 2008’s Cyclone Nargis devastated the rice-producing areas of the delta, home to a mixture of the Burman majority and the Karen minority, rice production had dropped to the very lowest in the region. Almost nothing was being exported.

  Although the Karen people are just one of the ethnic minority groups that have been in conflict with the central military government, they are perhaps the most persistent and dedicated to ethnic independence. They have sought a Karen state through armed conflict since 1949. In fact, Myanmar holds the dubious distinction of being host to the world’s longest-running civil war. The Karen people sided with the British in World War II in hope of obtaining an independent state, while the Burmese government originally collaborated with the Japanese in hope of gaining independence from Britain. Both groups saw the war as an opportunity to move their cause for independence forward, and both lost. The history of internal and external conflicts in Myanmar is decades old. The southwest region of the Irrawaddy Delta is today and has long been a region where Karen insurgents operate and foment resistance to the government.

  In 2008, the military government in Myanmar was by no means an exact mirror of the government of Haiti. It was more like Haiti under the Duvaliers, who were strong, dictatorial leaders who repressed all opposition with cruelty and violence. “Papa Doc” Duvalier was originally elected to the presidency, unlike the junta in Myanmar, which seized power by force. Papa Doc then progressively centered power around himself; jailed, murdered, or exiled all opponents; faked elections (including one in which he claimed to have received 100 percent of the vote); and eventually declared himself president for life, which, he supposedly believed, was the people’s will. All power was centralized around Papa Doc and Port-au-Prince, the capital city.

  The junta in Myanmar was almost as intent on centralizing power and suppressing dissent. Power was not as physically centralized in Myanmar until the capital was moved from Yangon to Naypyidaw in the center of the country in 2005. The generals did allow one election in May 1990, and it was not faked. The National League for Democracy clearly won, and Aung San Suu Kyi should have taken power as president. Although the generals initially said they would honor the election results, they changed their minds, nullified the election, and then ruled by decree, much like Papa Doc Duvalier in Haiti. Apparently they were so isolated from and indifferent to the mood of average citizens that they were actually surprised not to have won the election. Papa Doc may also have believed he was genuinely popular. It is astonishing to think that the generals may have thought themselves genuinely popular, given the way they had viciously put down popular protest by students and monks in 1988.6

  The government in Myanmar is also known for its bizarre and incomprehensible actions as well as its brutality. A prime example was the move of the capital from Yangon in the south to Naypyidaw, a wholly new, vast city built specifically to be the capital in the central region of the country, about halfway between Yangon and Mandalay. It is a city of opulent buildings and astonishingly wide boulevards, twice the width of the Champs-Élysées. The official reason for the move was that Yangon had become too congested, but many have speculated that it was fear of an amphibious invasion by Western powers, a repeat of British tactics in the Anglo-Burmese wars. Others believe the new location may be strategically better for dealing with the many insurgent groups trying to overpower the government, some of which occupy territory well to the north.

  When I first heard of the move of the Myanmar capital, I couldn’t help but recall that the capital of Australia, Canberra, where I worked for five years as a government geophysicist, was also a wholly constructed government capital (in its own territory, like Washington, DC, and called the Australian Capital Territory, or ACT). Canberra was located well inland and partway between Australia’s two major cities, Sydney and Melbourne, strategically placed in a high mountain valley so that it could be more easily defended than the former capital, Melbourne, located on the southern coast. The capital of Brazil was moved inland from São Paulo to Brazília for much the same reasons.

  Both the Haitian government and the generals in Myanmar led their countries to economic ruin. Haiti and Myanmar both lie within the world’s economic deserts. Perhaps it is more correct to say that both countries’ leaders led average citizens of their countries into economic ruin while concentrating wealth and power to themselves.

  In Myanmar, the defining philosophy was known as the Burmese Way to Socialism,7 a peculiar mix of isolationism, socialism, Buddhism, and superstitions, especially about numbers. The Burmese Way actually was little more than a collection of Marxist-like slogans mixed with nationalistic ideology that doomed the country to economic failure. But there is money in Myanmar, and, unlike Haiti, there is very strong centralized control over that money.

  When I visited Myanmar in March 2012, I stayed at a delightful small hotel called the Alamarda Inn on Golden Valley Road, a sometimes roughly paved, winding road north of the main part of Yangon; a very pleasant and leafy place. From the inn and walking around the area I could see, behind high walls and steel gates, quite large homes with sophisticated architecture and luxurious appointments. Someone in Myanmar has money. New high-end cars sat in the driveways. There were advertisements for luxury cars and swimming pools in the center of Yangon. I couldn’t help but think of the area’s similarity to Pétionville in Haiti. And just think of the cost of the new capital at Naypyidaw, which was built entirely with government money.

  Myanmar’s wealth comes from abundant natural resources: oil and gas, teak, gems (rubies mainly), and minerals. Agricultural products are no longer a significant source of export revenues. Gas exports are the main source of foreign revenue, not rice and timber, as in colonial times. Most of the resources are extracted in the ethnic states—Kachin, Shan, Kayah, Karen, and Mon—but very little benefit accrues to those states themselves. The nongovernmental organization (NGO) Arakan Oil Watch published a report on Myanmar’s extractive industries under the title “Burma’s Resource Curse: The Case for Revenue Transparency in the Oil and Gas Sector.”8 The second section of the report is titled “Burma’s Black Hole, Where Did the Gas Money Go?” Since gas is sold on international markets, it is possible to make rough estimates of how much wealth is derived from gas. But by manipulating the exchange rate—effectively by claiming a very low official government exchange rate more than a hundred times less than the market rate—the government can hide billions in revenue.

  Myanmar is a classic rentier state and suffers the resource curse—the “paradoxical situation in which countries with an abundance of nonrenewable resources experience stagnant growth or even economic contraction.”9 In many ways it is similar to Nigeria, which is the poster-state for the curse. Grievances with the government are many, but one of the most prominent grievances mirrors that of Nigerians in the oil-producing Niger Delta: the people see vast revenues generated locally, but with little to no return to their region.

  That government of Myanmar has made utterly bizarre and catastrophic currency blunders. One morning in 1987, government radio informed the citizens of Myanmar that as of that moment, all bank notes denominated in 25, 35, and 75 kyats would cease to have any value. They instantly became nothing more than pieces of paper with numbers and images of generals printed on them. New 45- and 90-kyat notes were issued, but people could not exchange old notes for them. The new notes had the very important attribute that their value was divisible by 9, which the ruling general at the time, General Ne Win, considered lucky. Only members of the elite who were close to the junta were prenotified of the change. They cashed in their old money for gold and jewels and were thereby protected. Everyone else took a hair-raising plunge deep into poverty.

  The generals running the government earn their revenues from
foreign sales, so the currency change meant almost nothing to them. While superstitious, they are not reckless, unless it comes to the lives of ordinary people. The riots that followed soon after the currency catastrophe, led by students and joined by monks, protested the junta’s oppressive regime. The students’ grievances were deeply rooted in the currency fiasco, which made it impossible for them to pay school fees.

  Cyclone Nargis battered the people of southern Myanmar in May 2008 with winds and water, but the entire country was already badly battered by corrupt, xenophobic, and fanatically irrational leaders.

  Cyclone Nargis came ashore in Myanmar’s Irrawaddy Delta almost exactly where the British first established a trading post in the early 1800s. The path of the cyclone was most unusual. Even a day or so before landfall, forecasters were predicting the storm would cross the coast much farther north, as most have before. Four days earlier, the Japanese Typhoon Warning Center was expecting landfall almost 100 miles to the north and described it as an intense storm, not a cyclone. Had the storm followed its predicted path, the outcome would have been far less devastating.

  No known storm had plowed a similar track across the Bay of Bengal since the British began their conquest in 1842. The cyclone’s unusual track meant that people of the delta were as unaware of the risks they faced as the people of Port-au-Prince would be in 2010 or the people on the coast of Sri Lanka had been in 2008. These events are genuinely rare for those locations. No living person would have had any memory of such a storm in the Irrawaddy Delta. Local legends didn’t speak of them. The surprise factor accounted for a significant part of the high death toll.

  Cyclone Nargis was probably more deadly than the three Anglo-Burmese wars summed together. The cape region, where Nargis made landfall, is extremely low-lying—typical of most major river deltas—and is one of the lowest-lying areas of the country. The inevitable storm surge that accompanies almost every cyclone is driven ahead of the storm by high winds and (to a much lesser extent) by low atmospheric pressures, and it can travel very far inland if it comes ashore in a delta region. Deltas, in fact, are one of the worst places a cyclone can make landfall. Nargis’s storm surge reached as far as 30 miles inland into the Irrawaddy Delta, which contributed significantly to the very high death toll.

  Often cyclone storm surges do more damage and take more lives than cyclone winds. Coastal relief and seafloor topography govern the inland penetration of storm surges, just as they do with tsunami waves. After making landfall, Cyclone Nargis acted as if it intended to follow the most destructive path possible, running along the length of the delta about ten miles inland from the coast. In following this track, it also traveled across one of the most densely populated regions of Myanmar. Most cyclones significantly lose strength when they cross onto land, where they are deprived of the warm ocean water that provides their energy. But because deltas are swampy—containing more water than dry land in many places—Nargis sustained more strength than usual. By the time it had moved almost directly over Yangon, it was still a category 1 cyclone.

  The British were responsible for starting rice farming in the delta and had drained many swampy areas, built levees for flood control, and removed extensive mangrove stands. But more than that, they made people migrate from the northern areas into the delta to help grow rice for export. Rice is a very labor-intensive crop. So the population of the delta grew and grew until it became one of the most densely populated regions in Myanmar. The British colonials have to take some responsibility for Nargis’s high level of casualties.

  Nargis was never a superstorm; it had nothing close to the strength of Typhoon Haiyan, which hit the Philippines in 2013. At its top strength, it reached category 3 on the Saffir-Simpson scale, the same strength Hurricane Katrina was when it made landfall east of New Orleans. The National Oceanographic and Atmospheric Administration’s National Weather Service classifies category 3 as a “major” storm, and its website states: “Devastating damage will occur: Well-built framed homes may incur major damage or removal of roof decking and gable ends. Many trees will be snapped or uprooted, blocking numerous roads. Electricity and water will be unavailable for several days to weeks after the storm passes.”10

  Hundreds of trees fell in Yangon, but there were few recorded deaths in the city. Businesses there were up and running pretty quickly. Not far away, across the Yangon River in the delta, the story was very different. Nargis came nowhere near the new seat of government, which is well inland.

  The true death toll, according to the Red Cross, was 84,500 with 53,800 people unaccounted for.11 If it is accurate, those figures are unusually large. Assuming most of the missing are actually dead, that would place the death toll as high as 138,300.12

  What is so disturbing about Cyclone Nargis is not this very large mortality figure—we have grown inured to reports of high death tolls from poor countries—but rather how the junta reacted to the storm or, more precisely, didn’t react. First, the government largely ignored warnings from the Indian Meteorological Agency, a government institution that has the responsibility for issuing warnings to several countries in the region with lesser forecasting capacity. These warnings included detailed reports and forecasts as well as personal e-mails that were apparently never acknowledged or answered. Of course, the government of Myanmar says it did broadcast timely warnings, but there was certainly no attempt to systematically evacuate the area in the path of the storm. In contrast, the Philippine government, well used to the danger of typhoons, evacuated tens of thousands as Haiyan approached in November 2013 and undoubtedly saved countless lives. Evacuation was difficult because that part of the Philippines is made up of numerous small islands, and travel is not easy at any time. The death toll there from the much stronger storm in an equally densely populated area was around 6,000,13 20 times fewer than the toll of Cyclone Nargis. Even so, the prime minster of the Philippines grumbled that the figure would have been zero if local government had evacuated more effectively. This recalls the mood of the government officials in Taiwan who viewed deaths from typhoons in their country as embarrassing and avoidable.

  Though I wasn’t able to go to the delta region in March 2012 due to unanticipated permission issues, I talked to many people who had lived through the cyclone and was able to piece together some sense of how recovery was progressing. The most common answer I received was: not much at all. And what recovery there was came with almost no help from the government.

  One thing I found somewhat surprising was that although everyone was very critical of the government for its miserable relief and recovery actions, no one was critical of it for failure to provide a warning. Why would that be? Most likely it was a combination of two things. One was the complete uniqueness of the storm. It was described as a once-in-500-year event by Jeff Masters, cofounder of the US Weather Underground.14 No one was surprised to be surprised. Such things didn’t happen. If you live in London and are told to anticipate a volcanic eruption on the Strand, you would treat the information rather skeptically. The people who lived in the Irrawaddy Delta would have felt the same way about an evacuation order, had they received one, just as people in Port-au-Prince would have been skeptical about a vague earthquake forecast.

  The second and probably more important reason is that common people in Myanmar, as in Haiti, have come to expect very little of their government. They are, I heard numerous times, extremely distrustful of anything the government says. If your government does nothing for you, either by intent or by incapacity, and even acts to suppress the ethnic group to which you belong, it is highly unlikely that you would heed a warning for your safety issued by that same government. Lack of trust in the government could, in fact, be part of the reason some people did not try to evacuate New Orleans as Hurricane Katrina approached.

  Poverty traps, like the one that the people in the delta of Myanmar live in, are like time traps, where people are locked in ancient settings in a modern world. The
ir homes or businesses are typically much more fragile and more easily damaged than buildings in richer countries. Few buildings in the delta could withstand a storm like Nargis. Government institutions and emergency management services are equally inadequate. There are few safe places to seek shelter and few workers to help people find shelter. People of the Irrawaddy Delta in 2008 had little useful information about the approaching storm and few means of escape. Even if they had been warned, many would have died, but the extremely high total—even admitting the uncertainties and distortions—could have been mitigated.

  For people in the delta, the government was remote in distance and in caring. As noted, Naypyidaw was almost completely unaffected by Nargis. It is entirely possible that accurate reports of the scale of devastation in the delta did not get to the highest level of government for quite some time. There were no Weather Channel camera crews taking real-time video. Just as the generals don’t generally acknowledge that earthquakes happen in Myanmar and very probably understate fatalities from earlier tsunamis, their impulse, like that of Mayor Daley in Chicago in the heat wave discussed in chapter 1, was to understate the extent of the crisis and act as if they could handle the situation by themselves. Chile’s president had a similar reaction to the situation in Concepción discussed in chapter 3.

  Everything Is Broken: A Tale of Catastrophe in Burma, by Emma Larkin, centers on Cyclone Nargis.15 In the book, Larkin describes what I heard repeatedly in Myanmar: that the top generals never were told about anything bad occurring in the country, from the economy to domestic unrest to election results to food security to literacy rates. As information is passed up from the lower ranks, from people who typically do know the situation on the ground, it is constantly adjusted to put everything in the best light. By the time information about Nargis reached the top general’s desk, it was uniformly good news. It’s possible that all the generals actually thought the storm was nothing much to worry about.