The Lifting of US Sanctions on Myanmar: Not As Great As It Seems
November 10, 2016
After meeting in September with Daw Aung San Suu Kyi, the state counselor and de facto leader of Myanmar, President Obama completely lifted economic sanctions on and restored trade benefits to Myanmar, hoping to spark economic development in one of Southeast Asia’s poorest nations.
Normalization of US-Myanmar Relations
US-Myanmar relations have been marred by sanctions and nonexistent dialogue dating back to 1988, when Myanmar’s dictatorship cracked down on student-led, pro-democracy movements by killing and imprisoning thousands. This strained the countries’ relationship and has forced Myanmar to depend on China for economic, political, and military support over the past two decades. However, in recent years, tensions between the United States and Myanmar have improved as the Southeast Asian nation has taken extensive steps towards democracy combined with the Obama administration’s pivot towards Asia and desire to rebalance China’s growing influence in the region.
The United States began easing the sanctions against Myanmar four years ago. After President Thein Sein took measures to decrease media censorship, free some political prisoners, and allow the National League for Democracy (NLD)—the party of Aung San Suu Kyi—to participate (and win) in the by-elections of 2012, the United States rewarded the Thein Sein administration by removing the investment ban, mitigating restrictions on financial services, and reintroducing aid. In May of 2016, three months after Aung San Suu Kyi and the NLD formed the country’s first democratically elected government in over fifty years, the Obama administration further lifted sanctions against ten state-owned banks and companies to strengthen trade and investment. President Obama retracted the final pieces of the sanctions in September 2016 after Aung San Suu Kyi paid a visit to Washington.  Consequently, 111 individuals and businesses are no longer on the blacklist; restrictions on new investment with Myanmar’s military and penalties on the import of jade and rubies have also been eradicated.
Loss of Leverage and its Consequences
Although President Obama hopes that the removal of American sanctions will revive the country’s economy by helping small and medium-sized firms, by doing so, the United States loses their leverage in dealing with the issues that continue to hinder the country’s development. The group that stands to benefit the most is the military, which continues to have a significant sway over politics in the country. Militaristic industries, such as the Union of Myanmar Economic Holdings Ltd (UMEHL) and the Myanmar Economic Corporations (MEC), advocated and lobbied for the removal of all sanctions. These corporations are involved in jade mining, gems, real estate, banking, teak harvest, and the extraction of natural gases—businesses conducted by these industries are diverse and incredibly corrupt. As such, even though Myanmar’s jade sector is worth up to $31 billion dollars, its control by military elites prevents the wealth from being distributed among the Myanmar citizens, classed as one of the poorest in Southeast Asia.
The military’s influence extends beyond wealth and multiple business interests: it also acts as a government within a government, casting doubt on the legitimacy of Myanmar’s democracy. The military controls a quarter of the seats in the parliament, repudiates the amendment of the 2008 constitution drafted by the former military junta, and hinders peace talks between the government and ethnic groups by continuing to launch ground offensive and air strikes in ethnic areas. In addition, the military has autonomous control over the ministries of armed forces, borders, and home affairs and the power to launch a nationwide state of emergency. By removing all sanctions, the United States and Daw Aung San Suu Kyi have given up the leverage to rectify this continued division of power between the military and the democratically elected government.
Washington also gives up the check on power and accountability of the ruling NLD government, which has strayed from some of the democratic principles and goals that they originally espoused. Since the NLD holds 80 percent of the seats in parliament, it has the power to amend or disband an existing law by simple majority. Due to its overwhelming majority control of the legislature, the NLD has tended towards liberal or benevolent authoritarianism. In essence, the NLD only listens to the information offered by the party, rather than listening to what is actually happening within the country. This has led to the exclusion of key stakeholders such as the civil society, political parties, and media—vital components whose differing perspectives and inputs must be heard to build up a democratic society. It is worrisome that protestors and critics of the government are all too often chastised and/or arrested for opinions that do not align with the government’s interests or could harm the government’s image. In the United States, criticism and sometimes insults directed at the president or any high-level official is widespread and goes unpunished. In Myanmar, similar provocations can land a person in jail. Washington needs to push the government to amend its constitution and promote freedom of speech and transparency, integral components of a democratic country.
President Obama with Myanmar State Counselor Daw Aung San Suu Kyi (Source: Wikimedia commons)
Obama’s Eagerness to Balance China
Although some sanctions were rightly erased in order to promote economic development in a country, some sanctions should have been kept in place to promote an effective democratic transition. As President Obama approaches the end of his presidential term, it appears that he wanted to lift the sanctions in order to make Myanmar a success in his pivot to Asia legacy, especially as America’s relations with some ASEAN nations become shaky. President Obama’s eagerness to control China’s expansionary tendencies has caused him to become shortsighted in determining the appropriate foreign policy for Myanmar.
The Job is Not Done
When news broke out that sanctions were lifted, citizens of Myanmar were thrilled because they thought they would gain access to more opportunities and foreign services. In reality, the average citizen in Myanmar, making approximately $3 a day, cannot afford the services or reap the benefits provided by foreign firms. People who stand to profit the most from the lifting of sanctions belong to those at the top or upper-middle class.
This has been a recurring theme of a political system that works only for the elite and limits social mobility. If the people do not have trust in the political system and keep getting stuck in the eternal cycle of poverty, the country will remain divided. Resolving the seventy-year-long civil war will continue to remain an uphill battle no matter how many ceasefires are signed or how many calls to peace are proposed. As such, the government should be responsible for punishing crony capitalism and bringing reform to the ineffective tax system. The United States, by agreeing to lift all sanctions, are pardoning the widespread corruption and inequalities that continue to remain unresolved. The lifting of sanctions, although it promises to boost the economy, is not as great as it seems.
Additional Blog Posts
Student Blog Disclaimer
The views expressed on the Student Blog are the author’s opinions and don’t necessarily represent the Wharton Public Policy Initiative’s strategies, recommendations, or opinions.