US Trade Sanctions on Burma: American Efforts at Global Democratization

3/6/2022

Memo 1

To: Andrea Gacki, Director of the Office of Foreign Assets Control

From: USFP Group 1 Foreign Policy

Re: Further Myanmar Trade Sanctions

Issue: US Trade Sanctions on Burma (Myanmar)

Executive Summary

Since February 1st, 2021, following a coup, a radical military regime has halted the democratic consolidation of Burma, and wreaked havoc on the Burmese people, detaining around 10,000 and killing around 1,500. The coup occurred following a general election in which Aung San Suu Kyi won by a landslide, but the military opposition demanded a recount, however the election committee found no evidence of fraud to support these claims. Military commander-in-chief Min Aung Hlaing took power following the coup.(1) For the past year, the conditions in Burma under the forced military regimes rule have left citizens feeling trapped and unsafe in their own country. Due to the horrific violence being enacted by the illegitimate government, which has derailed the democratization process for the Burmese people, the United States began implementing economic sanctions on Burma on the 1-year anniversary of the coup.(2) 

The sanctions, named under Executive Order 14014, have been placed on the following individuals/institutions:

• Directorate of Procurement of the Commander-in-Chief of Defense Services
• Tay Za, a prominent business supporter of the regime
• Htoo Htet Tay Za 
• Pye Phyo Tay Za
• Jonathan Myo Kyaw Thaung and his KT Services and Logistics (KTSL) Company Limited
• Supreme Court Chief Justice Tun Tun Oo
• Union Attorney General Thida Oo
• Anti-Corruption Commission Chair Tin Oo 

Any and all property or interests in property owned by the above individuals that are in the United States are blocked, as well as any directly or indirectly owned entities. The United States has placed these sanctions alongside the efforts carried out by the United Kingdom and Canada, to show support of the oppressed Burmese people and attempt to help end the tyrannical reign and allow justice to regain control.(3) These sanctions will be in place temporarily, until democratic order can be restored and the relentless violence is ended.

Analysis

The sanctions on Burma come after a military coup took over the democratically elected government of Burma. According to The Department of the Treasury, this was a fair and credible election that reflected the opinions of the population of Burma. The coup was mostly carried out by 6 individuals on Burma’s Defense and national security councils. The sanctions from the US and their allies are not directed towards Burma as a whole, but rather the 6 figures mentioned previously, plus 4 additional high ranking military officers thought to be major players in the coup. The sanctions block these 10 figures state, as explained by The Department of the Treasury, “As a result of today’s action, all property and interests in property of the individuals and entities named above, and of any entities that are owned, directly or indirectly, 50 percent or more by them, individually, or with other blocked persons, that are in the United States or in the possession or control of U.S. persons, are blocked and must be reported to OFAC. Unless authorized by a general or specific license issued by OFAC or otherwise exempt, OFAC’s regulations generally prohibit all transactions by U.S. persons or within (or transiting) the United States that involve any property or interests in property of designated or otherwise blocked persons” (Treasury 1). The sanctions also targeted 3 business entities within Burma, Myanmar Ruby Enterprise, Myanmar Imperial Jade Co., LTD., and Cancri (Gems and Jewelry) Co., LTD. (Treasury 1). Along with sanctions, the United States and its allies are calling for the release of political prisoners detained by the military coup. Specifically, the United States wants to see the release of President Win Myint and State Counselor Aung San Suu Kyi. These sanctions may be effective if the Military officers have assets in conjunction with American and American allies’ businesses. The military officers likely started this coup to protect and control wealth. Creating financial burden on the officers protects the Burmese people from suffering the consequences of national level sanctions, yet still pressures the coup to release the political prisoners and possible even give up control of the government.(4)

The sanctions that the United States and the EU put on Burma is seen as a slap on the wrist. There were 10 military official that were put under sanctions for being leaders of the coup. Many of these leaders are drug lords that have a large follow and their own militaries. These officials took the sanctions as minor step in road and then went back to doing what they were doing. Then no one really checks to see what the official are doing if it is not made public to the western world they would not be put under scrutiny. America put sanctions on the two companies that funded the coup, Myanmar Timber Enterprise, and the Myanmar Pearl Enterprise. Both these companies were banned from doing business in America or with an American company. The United States also froze $1 billion that Burma was supposed to have. The EU froze assets and imposed a VISA ban. Also putting sanction on Myanmar Economic Corporation and Myanmar Economics Holdings LTD. These sanctions are good, but the problem is Burma’s biggest trade partner is Asia. Making the loss of trade with the United States and the EU not that devastating. While their second largest market is the black market which is not regulated. The government backs the large cartels that are placed on the outskirts of Burma “for protection”. While the drug police in Burma are run by the large cartels and takes out the small drug dealers that they see as competition. For more than 650 people dead and 3,200 people being detained, Burma got away without a scratch. They used the idea of keeping their mouth shut and see what comes. The biggest part is that they can keep their Asian allies like India and China. They might have been push away from the western world, but they do not need the western world. The militias are not going to stop until the sanctions are more devastating. Therefore, the United States may need to intervene more, but over-involvement could do more harm than good. It is a difficult balance to find, but right now it is clear that the regime is still able to act with the current sanctions in place, prolonging the suffering in Burma.

Relation to National Interest

The coup enacted by the military directly ceased the journey to democratization Burma was undergoing. The United States is a country that for decades has overseen and aided int he global spread of Democracy, and has a history of standing up to those who try to slow down this goal. Burma was a nation that was actively working to becoming a Democracy, when a tyrannical government took over and upheaved the progress that was being made; a clear sign of aggression and disrespect towards Democracy. This display of hostility to a forming democracy goes against the very principles the United States stands for, therefore making it a situation that calls for at least some US involvement. As seen in our own formative years, a country in the process of becoming a democracy may need support from international allies to reach their goal, so it is only fair for us to offer support and aid to Burma. By implementing economic sanctions, this shows our strong belief in the spread of democracy, and highlights our stance on the unacceptable coup carried out by the military regime. It is in our best interest to aid Burma in regaining control of the government so other nations can share the benefits of democracy like the United States does.

General Policy Options

Continued Sanctions on Burmese Officials and Trade Sanctions

In the event that China and other trade allies of Burma eliminate any dependence on the US for trade, continued sanctions on Burmese officials limit their ability to increase their presence in the global arena and places increased pressures on US allies to not work with Burma. Under all major sanctions, top regime leaders within Myanmar continue to operate in the international arena with limited challenge from the US and international community.(5) These sanctions would likely be as effective as the current ones, limited but symbolically significant, and would prevent much of the profiting off of power that regime leaders seek while in power. Additionally, greater restrictions could be placed on Burmese exports, with the focus being on restrictions of natural gas and oil which remain the primary non-agricultural product from the country.(6)

Sanctioning Chinese Trade

One of the ongoing challenges to opposing the military regime in Burma is the arms trade originating from the military junta’s allies, China and Russia. As the two primary arms suppliers of the Burmese military, these countries have served to enable the military junta. With sanctions already in place on both counties, in addition to the rising global tensions between them and the US, these sanctions are unlikely to hold much weight unless used in conjunction with other strategies to mitigate arms dealing with Burma. (8) One of the major challenges of this option is that this risks diplomatic ties with China, especially at a time where cooperation is necessary to challenge the military invasion of Ukraine by the Russian Federation. By sanctioning the companies that are primary traders with the Burmese Junta, it sparks the distinct possibility of China countering with stonewalling international action or tightening ties to Burma, both of which could escalate the tensions and completely prevent US intervention both fiscally and militarily. 

Military Intervention

Armed resistance has formed a loose wing called the People’s Defense Force, or PDF, and has been effective at countering Tatmadaw’s actions, but also has instituted the retaliation of being designated as a terrorist group in the country. This has provided the military increased ability to take violent action against both armed and unarmed protestors in the name of counter terrorism. By providing these movements supplies and information, there is a chance that they can apply enough pressure to resist the military.(9) This would need to be met with ensuring that these groups would not fill any apparent power vacuums without proper democratization efforts in place. Additionally to supporting the local resistance groups, direct military action remains a distinct possibility on the grounds it does not result in an invasion or require the placement of US troops within Burma. Various options are available, with no-fly zones in neighboring countries being a key step to hindering air supremacy against the insurgent forces within Burma. A full-scale invasion, while potentially warranted due to the human rights abuses occurring, would embolden the efforts of Russia in Ukraine and give international justification for the potential Chinese invasion of Taiwan.(10) Even without these conflicts and tensions existing, an invasion would be ill advised without backing by regional powers and the international community as a whole. It is therefore recommended that any US intervention is limited to support of insurgent forces.

Recommendation

The continued placement of sanctions upon Burmese officials seems like the best course of action. Limiting their global influence and presence will do well symbolically in showing that the Burmese officials will no longer benefit. The US will show its support for the Burmese people and keep these sanctions in place until peace returns and democracy is restored. We believe that the worst case of action would be to implement boots on ground military interventions, as this would raise hostile tensions and could lead to loss of life, both within American troops and Burmese civilians. By focusing on increasing economic sanctions, this adds economic pressure which could lead to a more peaceful collapse of the regime, and it does not risk casualties. Over-involving the United States would be bad for both sides, so by implementing sanctions it shows the US's belief in helping spread democracy, but doesn't put lives on the line when they do not need to be.

  

Works Cited

1. Blinken, Anthony. (January 1, 2022) “Increasing Pressure on the Burmese Military Regime and Its Supporters,” US Department of State. https://www.state.gov/increasing-pressure-on-the-burmese-military-regime-and-its-supporters/

2. BBC News. (February 1, 2022) “Myanmar: What has been happening since the 2021 coup?”, BBC. https://www.bbc.com/news/world-asia-55902070

3. Dept. of the Treasury.(January 31, 2022) “Treasury Sanctions Regime Officials and Military Affiliated Cronies in Burma on One-Year Anniversary of Military Coup,” US Department of the Treasury. https://home.treasury.gov/news/press-releases/jy0572#:~:text=On%20January%2026%2C%202022%2C%20the,to%20Entities%20Responsible%20for%20Undermining

4. Dept. of the Treasury (February 11, 2021) “United States Targets Leaders of Burma’s Military Coup Under New Executive Order,” US Department of the Treasury. https://home.treasury.gov/news/press-releases/jy0024

5. Kurlantizick, Joshua. (February 1, 2021) “Aftershocks of Myanmar’s Coup: Policy Options,” Council on Foreign Relations. https://www.cfr.org/blog/aftershocks-myanmars-coup-policy-options

6. Office of Public Affairs. (March 4, 2021) “Commerce Implements New Export Controls on Burma and Makes Entity List Additions in Response to the Military Coup and Escalating Violence against Peaceful Protesters,” US Department of Commerce. https://www.commerce.gov/news/press-releases/2021/03/commerce-implements-new-export-controls-burma-and-makes-entity-list

7. AFP. (July 3, 2021) “US sanctions 22, including Myanmar ministers, for military coup,” Al Jazeera. https://www.aljazeera.com/news/2021/7/3/us-sanctions-22-including-myanmar-ministers-over-military-coup

8. Kimball, Spencer. (March 4, 2021) “U.S. imposes trade sanctions on Myanmar, calls on China to help end coup as violence escalates,” CNBC Politics. https://www.cnbc.com/2021/03/04/us-imposes-more-sanctions-on-myanmar-calls-on-china-to-help-end-coup.html

9. Avila, Drake. (August 21, 2021) “The Kachin Insurgency Could Deal a Heavy Blow to Myanmar’s Military Junta,” The Diplomat. https://thediplomat.com/2021/08/the-kachin-insurgency-could-deal-a-heavy-blow-to-myanmars-military-junta/

10.  Martin, Michael. (May 24, 2021) “Myanmar’s Opposition Wants U.S. Intervention. Here Are Some Options,” Foreign Policy. https://foreignpolicy.com/2021/05/24/myanmar-opposition-coup-us-intervention-sanctions-options/