MYANMAR’S TRANSITION HAS been a top-down affair. This, more than anything, distinguishes it from other recent upheavals such as the “people power” revolutions of the Arab spring, the fall of communism in Europe and the toppling of Indonesia’s President Suharto. At crucial moments the threat of mass protests hurried the process along. Government advisers concede that in 2011 they were afraid of an Arab spring on the streets of Yangon. The army had mercilessly oppressed protests such as the aborted “saffron revolution” in 2007, led by monks, and the pro-democracy uprising in 1988 that had first propelled Miss Suu Kyi to national prominence. Those 1988 protests led to elections in 1990 which were won by the NLD but annulled by the government. For the main part, though, Myanmar now stands as a rare example of an authoritarian regime changing itself from within.

By the start of the 2000s it had become clear that a couple of decades of Ne Win’s “Burmese Way to Socialism”, followed by a couple more of Than Shwe’s crony capitalism, had reduced a once prosperous country to penury. In 2003 the government outlined its “seven-step road map to democracy”. A national convention was held to draft a new constitution, duly approved in a referendum in 2008. The elections it provided for took place in 2010 and by all accounts were rigged. The new president who was installed in March 2011, Thein Sein, had been hand-picked by his predecessor, Than Shwe, probably the most pitiless of Myanmar’s military strongmen. Léon de Riedmatten, a Swiss citizen who worked in Myanmar for several international organisations throughout the 2000s, says there “was nothing very surprising, it all went to plan. There is no doubt that Than Shwe is the architect of the existing democracy.”

However, the sort of democracy that Than Shwe and his satraps had in mind was rather different from what Westerners might understand by the term. The military rulers called their version “disciplined democracy”—a version in which the army would retain a lot of power whatever happened in any elections. The idea was to offer just enough of a say to the people to win support from the army’s opponents at home and abroad for rebuilding the country’s shattered economy.

Thein Sein, to his great credit, realised that strictly rationed freedom would not persuade America and Europe to lift sanctions, nor would it gain Miss Suu Kyi’s support; so once in power he pushed the democratic reforms much further than Than Shwe had envisaged. The need was urgent. Back in 1962 Myanmar, with its abundance of minerals, teak, rice, oil and gas, had been one of the wealthiest countries in the region, with an income per head of about $670, more than three times Indonesia’s and twice Thailand’s. By 2010 the IMF estimated that Myanmar had the lowest GDP per person in South-East Asia (see chart 2).

The country had achieved a great leap backward just as the rest of Asia was enjoying record growth. The contrast between Myanmar and its neighbours had become too great to obfuscate either at home or abroad. Thein Sein eventually acknowledged publicly that “there are still too many people whose life is a battle against poverty, a hand-to-mouth existence.” But in order to rebuild its economy, the country needed an end to Western sanctions. It had become dangerously dependent on resource-hungry China, which had stepped into the breach as the West shunned Myanmar. Chinese companies built dams, roads and pipelines there, often for the sole benefit of consumers back home. Having long enjoyed a free hand, China was shocked when in September 2011 Thein Sein suddenly called a halt to its biggest construction project, the $3.6 billion Myitsone dam in Kachin state. The 68-year-old president, slightly stooping and studiously uncharismatic, may seem an unlikely free-thinker, but his decision on the Myitsone dam marked him out as quite different from his predecessor, Than Shwe (who now keeps a low profile and is rarely seen in public). Thein Sein wanted to end the country’s over-dependence on China, and he had begun to listen to the Kachin, who were vehemently opposed to the dam. Zhu Feng, a professor of international studies at Peking University, says the change of mind over Myitsone “set alarm bells ringing” in China’s government. Myanmar was turning awkward, and it was America that stood to gain most from China’s discomfort as a then fairly new American government appeared more willing to re-engage with the rogue state.

We unclench, you unclench

Previous American administrations had branded Myanmar a danger to world peace. But when Barack Obama became president, he promised to “unclench” America’s fist if the world’s most recalcitrant regimes did the same—a strategy that got nowhere with Iran and North Korea but worked wonders with Myanmar. Soon after the Obama administration was installed in early 2009 it ordered a review of America’s policy towards Myanmar. It attempted some cautious re-engagement, retaining the sanctions but opening up a dialogue. At first this did not seem to do any good. But from the moment that Thein Sein took over, says Derek Mitchell, now America’s ambassador to Myanmar, “we noted that this guy was different,” that he was someone the Americans could speak to.

Since then a succession of American envoys has promised to ease sanctions and reduce the country’s isolation in exchange for political reform, notably the release of political prisoners. Thein Sein did everything that was asked of him. In November last year he received the ultimate endorsement of his country’s reform efforts when Mr Obama visited Yangon.

Some argue that the West’s re-engagement with the former pariah state has been too hasty. Perhaps so, but it has also given enormous leverage to Miss Suu Kyi, the opposition leader, since the Americans never moved a step before obtaining her approval. In August 2011 Thein Sein invited her to the presidential palace in the capital, Naypyidaw, knowing that he would need her approval if the Americans were to support his reforms. That is how it turned out.

At a time when America is generally turning towards Asia, the re-engagement with Myanmar has been the most striking external aspect of the country’s transition. Hawks in Beijing see this as more evidence of America’s aggressive attempts to contain China’s rise. Enlisting Myanmar even partly in the Western camp has certainly been a coup for Mr Obama, but it does not automatically lead to a new “great game” in Myanmar between the two rivals. Mr Mitchell argues that “there is a competition [in Asia] in terms of values and rules, but it’s not necessarily anti-China.”

Can old soldiers just fade away?

The economic, domestic and strategic explanations for Myanmar’s transition all suggest that it can become a normal democratic country, but much will depend on the army. Over the decades this 350,000-strong institution has come to dominate all aspects of life in Myanmar. If there is to be real change, the army must not only stop fighting the Kachin and other ethnic groups, it must release its stranglehold on parliament and on the economy.

This is where the limitations of the top-down process become obvious. The constitution of 2008 was drafted by the army and gave it a wholly undemocratic lock on power to ensure that it retained control of the transition. Most egregiously, the army awarded itself an unelected block of a quarter of all seats in the new national and state parliaments so the constitution could not be changed without its consent. It also assumed sovereign powers over its own affairs as well as a big say in some of the civilian ministries. All the current ministers, including Thein Sein, are former army officers.

In its modern incarnation, the army was formed by Aung San, Miss Suu Kyi’s father and the man who led Myanmar to independence from Britain. It regards itself as the only institution that can hold fissile Myanmar together in a “union”, as the country is officially called. This would suggest that the army will halt any moves towards a more federal organisation and more democracy, both of which would involve devolving power to the ethnic Karen, Kachin and others, and, to the military mind, the dissolution of “the union”. Such changes would also reduce the army’s importance, and thus its budget.

It is also widely thought that the army and its proxy party in parliament, the Union Solidarity and Development Party (USDP), have a vested interest in resisting further economic liberalisation because that would undermine the business monopolies enjoyed by former army officers. In particular, two vast military holding companies, the Union of Myanmar Economic Holdings Limited (UMEHL) and the Myanmar Economic Corporation (MEC), have tentacles everywhere, from hotels to airlines, from chicken farms to jade mines.

At every turn people have braced themselves for a backlash from army hardliners with the biggest institutional and economic stakes in the status quo, but it hasn’t come, at least not yet. Moreover, when reforms are debated in parliament and in the executive, the hardliners have tended to lose arguments, and votes. Richard Horsey, a consultant who is an old Myanmar hand, says that so far the army has accepted the changes like everybody else. It has not resisted the demand for the UMEHL and the MEC to pay taxes, for instance, and the two holding companies have lost their monopolies on lucrative imports of cars, edible oils, cigarettes and beer. “These are massive changes,” says Mr Horsey.

Even bigger changes could come out of a review of the constitution, considered unthinkable even a year ago but now proposed by the USDP itself. That could shake up the very foundations of the army’s political power—and might even allow Aung San Suu Kyi to become president.