Normalization Without Stabilization

Myanmar’s junta is increasingly pursuing political and diplomatic normalization despite having failed to resolve the civil war, creating a widening gap between the appearance of political stabilization and conditions on the ground. While elections and renewed engagement with regional governments may improve the junta’s international standing, they are unlikely to resolve the underlying conflict in the near term. For businesses, this means Myanmar may become more accessible diplomatically without becoming materially less risky, particularly given sanctions exposure, human-rights concerns, conflict-related disruptions and weak governance.

Where Myanmar Stands Today  

Five years after the military seized power from Myanmar’s elected civilian government, the National League for Democracy (NLD) party, the country remains embroiled in a violent, multifront conflict between the junta and resistance forces, a fragmented coalition of pro-democracy forces and ethnic armed organizations (EAOs). The military has suffered significant territorial losses, especially after the 2023 “Operation 1027” military offensive launched by the Three Brotherhood Alliance, a coalition of three EAOs. The offensive exposed the junta’s difficulty defending territory across multiple fronts. Resistance forces control substantial portions of the country, particularly in border regions, while the junta retains control over major population centers scattered across central and lower Myanmar, including the capital Naypyidaw, and key infrastructures.

Despite incremental battlefield gains, neither side has achieved a decisive advantage. Resistance groups remain constrained by shortages of weapons, funding and coordination, while the military has relied on airpower, artillery, conscription and foreign support to compensate for manpower and territorial losses. The conflict has produced a severe humanitarian crisis, with nearly 3.8 million people displaced and more than 16 million requiring humanitarian assistance. And the economy has not fared much better. Real GDP contracted over 10% from pre-coup levels by 2025, inflation reached 24.6% year-on-year this April, foreign investment has largely vanished, the financial system remains strained and the tourism industry has collapsed.

The Junta’s Push for Political Normalization

With neither a military victory nor a political settlement in sight, the junta has increasingly sought to consolidate its rule through rebranding and securing international legitimacy. The junta held long-promised elections between December 2025 and January 2026. However, major opposition parties—including the NLD—were banned, other parties were dissolved for refusing to comply with military registration requirements and voting was limited to just areas the military could secure. The military-backed Union Solidarity and Development Party won an overwhelming majority of elected seats. With another 25% of seats constitutionally reserved for the military, the junta ensured continued control of the legislature.

The military quickly translated the election into a new political order. Parliament reconvened in March for the first time since the coup, and a Union Consultative Council was established with broad authority over national security and legislative affairs. To abide with the 2008 military drafted constitution, which mandates the president cannot hold military command, Min Aung Hlaing stepped down as commander in chief and assumed the presidency on April 3. Meanwhile, by handing the military chief role to his close ally, General Ye Win Oo, Min Aung Hlaing can retain substantial influence over the military while formally assuming civilian office.

The junta paired this restructuring with measures intended to project a more conciliatory image. In April, former President U Win Myint was released from prison alongside more than 4,300 prisoners, and NLD’s de facto leader Aung San Suu Kyi’s 27-year sentence was marginally reduced. Min Aung Hlaing invited EAOs to participate in peace talks during his first cabinet meeting, though he coupled the invitation with a warning that the military would act if EAOs made “unrealistic demands.” Most recently, the junta allowed Aung San Suu Kyi to meet privately with a representative of the International Committee of the Red Cross—her first known meeting with a foreign official since being detained during the coup. These measures, however, contrast sharply with reality. The junta stands widely accused by the international community of ongoing war crimes, including “double tap” aerial attacks against civilians.

International Reception: From Isolation to Pragmatic Engagement 

The gap between the junta’s efforts to project normalization and conditions on the ground has produced a fragmented international reaction. While some countries are increasingly engaging the military regime for pragmatic security and economic reasons, others continue to reject its legitimacy. The election illustrates this divide: although most Western governments and ASEAN members rejected the election as neither free nor fair, nine countries—including China, Russia, India, Japan, Vietnam, Cambodia, Kazakhstan, Belarus and Nicaragua—sent observers. And since becoming president, Min Aung Hlaing has visited China, India, Laos and Thailand as part of efforts to break diplomatic isolation and secure greater international acceptance. The result is a gradual shift toward pragmatic engagement, particularly among its neighbors.

For regional governments, the security consequences of Myanmar’s conflict seem to outweigh concerns about the nature of Naypyidaw’s government. The conflict has generated refugee flows, narcotics and human trafficking, transnational crime and other border-security concerns. Thailand has been particularly explicit about this logic, calling for a “calibrated re-engagement” with Myanmar. During Min Aung Hlaing’s visit to Bangkok this month, the two governments signed agreements on issues including migrant labor and water management, and agreed to restore cross-border trade and expand investments in Myanmar. Thailand has also presented itself as a bridge between Myanmar and ASEAN, arguing cross-border problems such as narcotics and transnational crime require cooperation between the two governments.

China’s engagement is driven by even broader strategic and economic interests. Beijing has invested billions of dollars in Myanmar, including major infrastructure connecting China to the Indian Ocean. Instability has threatened projects such as the China-Myanmar Economic Corridor and oil and gas pipelines. Myanmar is also an important source of heavy rare earths for Chinese supply chains, with mining concentrated in Kachin State along the Chinese border. Beijing has an interest in a government capable of providing sufficient stability to protect its national security, investments and cross-border trade.

China’s approach has centered on managing all sides of the conflict rather than aligning exclusively with the junta. It supplies arms to the military and pressures them over border instability and scam centers. Simultaneously, Beijing provides supplies to regions held by EAOs and leverages utilities, like fuel supplies, to push them into ceasefires and territorial concessions—this strategy successfully compelled two members of the Three Brotherhood Alliance to sign peace deals and return land to the junta.

India has similarly pursued pragmatic engagement, driven by border security and access to critical minerals. Its participation in the election and growing engagement over rare-earth supplies suggest New Delhi is increasingly willing to work with Myanmar’s military-led government when doing so advances its strategic interests. Diplomatic engagement has also reignited talks about long-standing border demarcation issues, with the two currently looking to exchange small parcels of land along India’s Manipur frontier.

Russia, meanwhile, has deepened its relationship with the junta primarily through arms sales and diplomatic support, selling over $400 million in weapons and receiving Min Aung Hlaing in Russia multiple times since the coup, making Moscow one of Naypyidaw’s most important external backers. Myanmar for its part officially supports Russia’s invasion of Ukraine.

Yet regional engagement does not translate to regional acceptance. ASEAN continues to withhold high-level political recognition from the junta because of its failure to implement the bloc’s Five-Point Consensus. Over the weekend, Myanmar rejected ASEAN’s renewed call for the unconditional release of Aung San Suu Kyi and questioned the need for the bloc’s special envoy. Western governments have likewise continued to reject the junta’s political legitimacy and maintain sanctions, although even the US has sent mixed signals. In November, the Trump administration terminated Temporary Protected Status for Burmese, citing “notable progress in governance and stability.”

Future Outlook 

The emerging pattern is therefore one of selective normalization rather than broad international acceptance. Several regional governments increasingly see engagement as necessary to manage security and economic interests, while ASEAN and many Western governments remain unwilling to treat the junta’s political transition as legitimate. For the junta, this partial opening may be enough to reduce the costs of international isolation and create new opportunities for diplomatic and economic engagement, even without resolving the underlying conflict. The junta is likely to continue using political gestures, diplomatic outreach and economic incentives to portray Myanmar as a more stable and investable country.

Normalization, however, is unlikely to translate into meaningful stabilization in the near term. The military still does not exercise control over large parts of the country, the civil war continues and Myanmar’s political future remains uncertain. Meanwhile, sanctions, a Financial Action Task Force (FATF) blacklist designation and human-rights concerns will continue to constrain engagement with Western economies and create compliance and reputational risks for companies operating in military-linked sectors, leaving Myanmar a high-risk operating environment, even as the junta increasingly works to present itself as a legitimate government. In two months, the FATF’s review will provide an assessment of whether the junta’s efforts are translating into meaningful improvements in governance. Failure to demonstrate progress could prompt the FATF to consider countermeasures, further complicating the junta’s efforts to reengage internationally and increasing compliance risks for businesses. 

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