Myanmar’s military detained Aung San Suu Kyi, declared a state of emergency and seized power for a year after disputing her party’s landslide November election victory in a setback for the country’s nascent transition to democracy.

Vice President U Myint Swe, a former general aligned with the military, was announced as acting president, Agence France-Presse reported. Myo Nyunt, a spokesman for the ruling National League for Democracy, confirmed Suu Kyi and President Win Myint had been detained in what he called a “coup.” TV channels, phone and internet communications were all spotty, making it difficult to get information from the country.

Tensions had been brewing for the past few months, with the military and its political factions demanding authorities investigate allegations of mass voting fraud in just the second general election with widespread participation after decades of army rule. Myanmar’s election commission last week had labeled the vote transparent and fair, and the U.S., United Nations and the European Union urged the military to respect the results.

On Sunday, the military -- known as the Tatmadaw -- denied objecting to the outcome of the election and said it “finds the process of the 2020 election unacceptable.” The 2008 constitution allows the military to take power during a state of emergency that could cause disintegration of the union or “national solidarity,” effectively allowing soldiers to take power for vague reasons.

“It’s a really cynical take on their justification to power,” said Hunter Marston, a Canberra-based political analyst who has written about Myanmar for several publications. “We could see pretty widespread protests in major cities and even around the country in smaller towns, especially in Yangon.”

On Monday in Asia, the U.S. and Australia urged Myanmar’s military to release all those detained and to respect the results of the election. “The United States opposes any attempt to alter the outcome of recent elections or impede Myanmar’s democratic transition, and will take action against those responsible if these steps are not reversed,” White House spokeswoman Jen Psaki said in a statement.

Myanmar’s transition to democracy had prompted the U.S. and European Union to lift sanctions, with President Barack Obama hailing the reforms during a landmark visit to the Southeast Asian country in 2012. Foreign investors flocked to the country looking for opportunities, and the country sought to open up its capital markets.

Rare Earths

But initial optimism quickly dissipated due to a violent crackdown against Muslim Rohingyas that prompted accusations of “genocide” against Suu Kyi’s government. That has tainted the international image of the 75-year-old leader, who had won the Nobel Peace Prize while under house arrest during a military regime that effectively cut Myanmar off from the world.

The Yangon Stock Exchange now only has six listed companies, with foreigners owning 261 million kyat ($200,000) of stocks as of Oct. 8 -- mostly in First Myanmar Investment Co. and Myanmar Thilawa SEZ Holdings. The exchange on Monday said it halted trading due to a connection error.

Several other assets moved on the military action. China rare earth miners such as China Northern Rare Earth Group High-Tech Co. and China Rare Earth Holdings Ltd., which get large supplies from Myanmar, fell in trading Monday. Singapore-listed conglomerate Yoma Strategic Holdings Ltd., which gets all of its revenue from Myanmar, requested a trading halt.

Biden Test

The military’s action will present an early foreign-policy test for U.S. President Joe Biden. The U.S. has become increasingly critical of Myanmar in the past few years under Donald Trump’s administration, imposing targeting visa restrictions and financial sanctions in 2017.

“It’s very clear the Biden administration represents a stark break from the previous government on human rights,” said Graeme Smith, a fellow at the Australian National University’s Department of Pacific Affairs. “Whatever government is in power -- Aung San Suu Kyi or the military -- they will face more pressure on human rights than Trump, who probably wouldn’t have cared either way.”

China is Myanmar’s largest trading partner, accounting for about a third of total commerce in 2019 -- about 10 times more than the U.S. Myanmar has also received support from the International Monetary Fund, which last month approved about $350 million in assistance to address the Covid-19 pandemic.

In November’s election, Suu Kyi’s NLD won 396 seats in the national assembly, more than the 322 needed to form a government. Turnout was an estimated 70% of the nation’s 37.3 million people eligible to vote. The ruling party has also won 524 seats in elections held to state and regional parliaments, official data showed.

— With assistance by Max Zimmerman