Myanmar Political Shift Revives Debate on Sanctions

International New York Times | 9 December 2015

The broader question, though, whether the sanctions are effective, remains open to debate. President Obama has trumpeted his administration’s diplomatic efforts, which include sanctions, as an important factor in the country’s transformation.

One of the main port terminals in Yangon is owned by Asia World, a company on the sanctions list. The company, founded by one of the country’s premier heroin kingpins, built not only the port but roads, dams and a major Yangon hotel. Credit Adam Dean for The New York Times

YANGON, Myanmar — The Burmese tycoon Zaw Zaw, who has been subject to American economic sanctions for nearly seven years, thinks it is time for them to end. At least in his case.

 

His conglomerate, Max Myanmar Group, which has interests in construction, gems, timber and tourism, had been placed on the United States sanctions list for his ties to the army generals who have governed Myanmar, formerly Burma, for five decades.

But he has tried to distance himself from the military and has cultivated a relationship with Daw Aung San Suu Kyi, the nation’s pro-democracy leader, whose party, the National League for Democracy, won landslide elections last month.

“I expected the N.L.D. would win in a landslide, and I am very happy for it,” he said. “And I hope the U.S. will consider lifting the targeted sanctions on Myanmar, particularly for those who aren’t involved in drug trafficking or arms trading.”

The success of the Nov. 8 elections, a crucial step in the country’s transition to democracy, has rekindled the debate about the effectiveness of American sanctions and whether to lift those that remain. Unfortunately for Mr. Zaw Zaw, they may not go away any time soon.The United States says it wants to maintain leverage to encourage a transition that is still far from certain.

“Our priority is to support the N.L.D.’s political and economic transition into an actual government,” a senior administration official said, speaking on the condition of anonymity. “Eventually there will be a broader Burma policy discussion, depending on how events unfold. At this point there are no significant changes to our sanctions policy.”

Still, the sanctions have already been adjusted as the country’s polity has evolved.

After Myanmar shifted from a military government to a quasi-civilian one and allowed parliamentary by-elections to go forward in 2012, the United States and other Western countries dropped broader sanctions that prohibited most trade with Myanmar.

But the United States continued to enforce prohibitions against Americans doing business with more than 70 officials and businesspeople with ties to Myanmar’s former military government.

On Monday, the United States said it was relaxing some of those restrictions to fix what it called an “unintended consequence.”

Two international banking associations had discovered that one of the main port terminals in Yangon was owned by Asia World, a company on the sanctions list. The New York Times reported in June that the company, founded by one of the country’s premier heroin kingpins, had built not only the port, but roads, dams and a major hotel in Yangon, making its projects difficult to avoid.

The banks feared that they could be liable for financing trade that passed through the port.

The change made on Monday would allow trade to pass through a facility owned by a person on the sanctions list, as long as the transaction is not on their behalf. But officials insisted that the move was an adjustment to allow the flow of approved commerce and not a loosening of the remaining sanctions.

“This general license is not in any way a reaction to the election and not in any way a change to overall Burma sanctions policy,” the senior official said. “Rather it is a technical fix to address something that was clear to us is an unintended consequence of our sanctions.”

But Representative Ed Royce, the California Republican who is chairman of the House Foreign Affairs Committee, criticized the move, saying the United States needed to do more to combat oppression and drug trafficking in Myanmar. “Rather than responding to human rights abuses or narcotics trafficking, the administration is further lifting sanctions,” he said in a statement.

The broader question, though, whether the sanctions are effective, remains open to debate. President Obama has trumpeted his administration’s diplomatic efforts, which include sanctions, as an important factor in the country’s transformation.

Priscilla A. Clapp, former head of the United States Mission in Myanmar, said that American policy had some influence, but that it should not be overstated.

“The economic effect was minimal,” she said. “We weren’t doing business with Burma anyway.”

The real credit for the country’s shift, she said, “goes to the people in the country,” including the military leaders who have managed the transition and the democracy activists who have pressed relentlessly for it.

Sean Turnell, an economist at Macquarie University in Australia, said the sanctions did have an effect, but not in the way most people think. The sanctions pushed Myanmar “into the arms of China,” he said, an awkward arrangement for the military leaders, many of whom had fought China or Chinese proxies. And many Burmese fear China’s influence and interference.

“This circumstance then, of being pushed into an uneasy Chinese embrace, was the direct result of sanctions, and it was the anxiety to precisely break free from it that was the trigger for the changes that have taken place since 2010,” he said.

Ms. Aung San Suu Kyi, once a staunch advocate of sanctions, has said they played an important role. But recently she has suggested that they may no longer be needed.

“With a genuinely democratic government in power, I do not see why they would need to keep sanctions on,” she told The Washington Post in November.

She did not elaborate, but at some point, if Myanmar continues its path toward democracy, American policy makers will have to decide if the sanctions’ goals have been met. Those goals, initially, were that Myanmar honor the results of the 1990 election, which the N.L.D. won and the military rejected.

Next month, the N.L.D. will be seated as the majority party in Parliament.

The sanctions were premised on the demand that “the N.L.D. be given its rightful place in government, and that’s happening now,” said Ms. Clapp, now a senior adviser to the U.S. Institute of Peace and the Asia Society. “The U.S. government needs to rethink its policy.”