US Revisits Sanctions to Push for Action in Myanmar
By Erin Murphy and Peter Kucik
After more than two months of high level official statements condemning the ongoing violence in Myanmar’s Rakhine State against the minority Rohingya population, the U.S. has begun taking steps toward reimposing certain restrictions, including financial sanctions. If, though more likely when, the recently proposed measures are passed by the U.S. Congress, their impact will be significantly felt by investors, aid agencies, and non-government organizations. The U.S. Senate and House of Representatives introduced companion bills on November 2 and 3, respectively, to target perpetrators of what both chambers deem “ethnic cleansing” while seeking to balance concern for the country’s continued transition to democracy and economic reform. Action against Myanmar’s security forces was widely expected; the latest round of violence in Rakhine State started in earnest in August, though the initial waves of intercommunal violence began in 2012. On August 24, the same day Kofi Annan issued his Advisory Commission’s report on Rakhine State, the newly organized Arakan Rohingya Salvation Army (ARSA) attacked three police outposts. The military cracked down, resulting in an estimated 600,000 Rohingya fleeing Myanmar.
On November 2 a bipartisan group of Senators introduced the “Burma Human Rights and Freedom Act of 2017.” A bipartisan group of House of Representatives members followed suit on November 3, introducing the nearly identical “Burma Unified through Rigorous Military Accountability Act (BURMA) of 2017.” As here, Myanmar policy has historically been bipartisan in nature, a trend that will likely continue as the situation in the country develops both with the Rakhine State violence and further political reform. The draft bills included findings citing the 2015 election, reform efforts, continued detention of political prisoners, military presence in government, violence in Rakhine State, and military skirmishes in Shan and Kachin States. The acts also reference London-based NGO Global Witness’ 2015 report on jade that highlights former military leaders such as Than Shwe, military holding companies, drug kingpins such as Wei Hsueh Kang, and the United Wa State Army (an armed ethnic group that remains sanctioned under the Drug Kingpin Act) as financial beneficiaries of jade mining profits. More specifically the draft bills:
- Authorize humanitarian assistance for the Rohingya;
- Support the implementation of the Kofi Annan Commission recommendations;
- Restrict support for international financial assistance projects to those that do not partner with military-owned enterprises;
- Restrict military-to-military engagement;
- Reimpose the ban on the importation of jadeite and rubies into the U.S.;
- Require a report evaluating GSP privileges for Myanmar;
- Require a report determining which individuals should be sanctioned through visa bans and inclusion on the list of Specially Designated Nationals and Blocked Persons (SDN List), as well as a report justifying any removals from the SDN List;
- Authorize additional banking sanctions;
- Require a report on inclusive and responsible economic growth and development;
- Require a report on accountability for ethnic cleansing, crimes against humanity and genocide.
Both acts require President Trump, within 90 days of enactment, to submit a list of senior military and security officials that played a direct and substantial role in the Rakhine violence and determining which individuals should be added to the U.S. Treasury Department’s list of sanctioned Specially Designated Nationals and Blocked Persons (SDN List). The acts also outline criteria for the termination of sanctions against such individuals. The president already has the authority to sanction human rights violators anywhere in the world and add them to the SDN List, including under the Global Magnitsky Human Rights Accountability Act. Under the Global Magnitsky Human Rights Accountability Act, sanctions may be imposed for significant acts of corruption, as well as for extrajudicial killings, torture, or other gross violations of human rights, committed in any foreign country. This could make it easier to add names to the SDN List for corruption or human rights violations in Myanmar, and a broad range of military officials and interests could potentially be targeted, including those involved in Rakhine State and persons involved with the military’s holding companies, Myanma Economic Corporation (MEC) and the Union of Myanmar Economic Holdings Limited (UMEHL), two holding companies that have been frequent targets of criticism by Congress and human rights groups. Both acts before Congress have specifically named Commander in Chief of the armed forces Senior General Min Aung Hlaing, and other senior officials including Major General Maung Maung Soe and Major General Khin Maung Soe, as being subject to sanctions.
The timing of passage of these bills is dependent on the Congressional calendar and when they are put to vote, and Congress is currently consumed with domestic priorities, namely tax reform and immigration. However, Congress is also looking to accomplish something, and passing a bipartisan bill on the Rakhine State issue in defense of human rights will likely be an easy sell. Congress has 21 days in session before the end of the year to put the bill to vote and pass it. Senator McConnell, a long-time friend and supporter of Myanmar’s de facto leader, Aung San Suu Kyi, would likely oppose any legislation he views as endangering her ability to govern and her safety. McConnell did not allow a vote on a McCain and Durbin-authored nonbinding Senate resolution last month that also called out the Myanmar military and ongoing hostilities. McConnell said he didn’t bring the resolution to the floor because it was not appropriate for the Senate to “lecture” other countries and called Suu Kyi “the greatest hope” for the country as it transitions from a military dictatorship. Those that support such legislation believes it provides Aung San Suu Kyi leverage in that it targets the military without forcing her to be involved. Senator Cardin said of the current bill, “We hope that whatever we do here supports her efforts to bring about the type of governmental reform necessary in Burma [Myanmar]. I think she would welcome the opportunity to better control the security in all parts of the country.” However, Zaw Htay, a de facto spokesman for Aung San Suu Kyi’s State Counsellor Office, told Reuters that “[ i]mposing international sanctions directly affects the people in travel and in business investments, and there are many bad consequences…The country’s reconstruction cannot be done only by the government. The Tatmadaw needs to be involved, it is very clear…Sanctions and pressures affect the government’s work. It won’t be a positive result if they impose sanctions, as with the previous experience (of sanctions).Of course, it will damage all the business investments, not only military-owned (businesses). It will definitely have a bad affect [sic]. There can only be bad results.”
If passed, this legislation will have a significant impact for U.S. investors or companies involved or currently negotiating investment in gemstones, jade, mining, and potentially telecom sectors. The acts specifically target jadeite and rubies through the reimposition of an import ban and stymie any nascent efforts of companies seeking to purchase and sell Myanmar gemstones and jade, undertake joint partnerships with ruby and jadeite miners and dealers, or cooperate with miners and traders on sectoral reform efforts–a major priority of U.S. government, international rights groups, and the Myanmar government, particularly in the wake of the Global Witness report and ensuring global media coverage. For the telecom sector, the fourth telecom license was awarded in January to the joint venture Myanmar National Tele & Communications Co. Ltd , comprised of Vietnamese military-run Viettel (49%) and local partners Myanmar National Telecom Holding Public (23%) and Star High Public Company (28%). Star High Public Company is overseen by a Myanmar military holding company. The act will also impact aid and assistance, with such programs already on the budget chopping block and funds limited. NGOs and donor agencies will also have to potentially limit their partnerships and cooperative efforts in the country, and both investors and aid groups will have to overcome growing perception of reputational risks from working in Myanmar.
Myanmar has been a challenging market since the 2010 opening, but the current uncertainty about the thinking in Washington, D.C. may make already cautious investors, both within and outside of the U.S., think twice. Myanmar policy has typically been driven by strong reaction to particularly troubling and serious human rights violations, and these recent steps with the Rohingya are not unexpected. There are, however, many people in Myanmar that have neither influence nor insight into the current situation in Rakhine State, and whose livelihoods remain on a razor’s edge. Undermining economic development and preventing much needed assistance from reaching these vulnerable populations would be devastating; some humanitarian projects have already been suspended, and impacted villagers, when given the reason for the suspension, have channeled their anger, previously not held, at the Rohingya and not the military or government. Failure to understand and acknowledge such sentiments and their impact will undermine efforts to address this very real and complex racial issue permeating the country, and will likely increase this type of backlash throughout Myanmar and stall progress toward giving the Rohingya a chance to live without fear, be included socially and economically, and ultimately be accepted as citizens.
Inle is closely monitoring developments both in Myanmar and in Washington and is ready to assist you in navigating these complex transnational challenges and address serious legal and regulatory changes.
 Senators McCain (R-AZ), Cardin (D-MD), Durbin (D-IL), Young (R-IN), Markey (D-MA), Rubio (R-FL), Merkley (D-OR), Feinstein (D-CA), Schatz (D-HI), Kaine (D-VA), Van Hollen (D-MD), Baldwin (D-WI), Booker (D-NJ), and Shaheen (D-NH
 Representatives Engel (D-NY), Chabot (R-OH), Crowley (D-NY), Yoho (R-FL), Sherman (D-CA), Wagner (R-MO), Castro (D-TX), and Franks (R-AZ)