Burma Sanctions: Will Backsliding on Reform Lead to Backsliding on Sanctions Relief?

Burma Sanctions May Return if Reform Stalled

Originally Published May 20, 2014.

Last Thursday President Obama notified Congress of his decision to continue the National Emergency with respect to Burma by stating that “[d]espite great strides that Burma has made in its reform effort, the situation in the country continues to pose an unusual and extraordinary threat to the national security and foreign policy of the United States.”

In justification of the continuation, Obama stated that “[t]he political opening remains nascent, and concerns persist regarding ongoing conflict and human rights abuses in ethnic minority areas . . . and the continued role of the military in the country’s political and economic activities.”  The belief is that the continuation of the National Emergency will help “ensure that the democratic transition is sustained and irreversible.”

The position taken by the White House is very similar to that of Burma’s pro-democracy leader Aung San Suu Kyi.  Two days prior to the President’s continuation of the National Emergency Suu Kyi cautioned that “her country could slide back after dramatic reforms.”  Despite the air of optimism about Burma’s progress Suu Kyi advocated for “caution” when asked about sanctions relief.  Suu Kyi further opined that the reforms in Burma can only be considered irreversible if the military firmly committed to changing its ways.  Meaning sanctions relief will most likely require this commitment from the military.

How to measure the firmness of such commitments by the military remains unclear.  Whether anyone from Suu Kyi’s pro-democracy political party or the U.S. Government will give any credence to such commitments is also uncertain.  However what’s more apparent, given both the timing and substance of Suu Kyi’s statement and the continuation of the emergency, is that the White House gives considerable weight to Suu Kyi’s judgment on the matter.

By renewing the emergency President Obama keeps in place the targeted sanctions against the former military junta and its cronies, just as is cautioned by Suu Kyi.  So although the broader country-based sanctions have for the most part been lifted, targeted sanctions continue to exclude from the U.S. economy members of the military junta, their cronies, and the companies they own and/or control.  This makes the OFAC compliance situation very precarious for U.S. businesses exploring the frontier economy that is Burma, as key sectors of the Burmese economy are owned and/or controlled by such targeted persons.

Had President Obama let the national emergency lapse most of those targeted sanctions would have lapsed with it, which would have made the situation less precarious for U.S. businesses.  As it currently stands, continued sanctions relief in Burma seems to rely on whether the former military junta can convince the U.S. Government and Suu Kyi that they are fully and irreversibly committed to democratic reform.  Otherwise, Burma may experience backsliding on U.S. sanctions relief.

Disclaimer: Blog posts should not be relied upon as legal advice and are only provided for informational purposes.  Information contained in blog posts may also become outdated with the passage of time as laws change and U.S. foreign policy and national security objectives evolve.