Difficulties in Easing Sanctions on Myanmar - Global Trade Magazine
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  April 22nd, 2016 | Written by

Difficulties in Easing Sanctions on Myanmar

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  • The U.S. risks undercutting its sanctions leverage on Myanmar with less market access for U.S. companies.
  • The U.S. government has actively encouraged greater U.S. participation in the Myanmar economy.
  • If the U.S. means to support the entry of U.S. businesses into Myanmar, it must do more.

The global sanctions regime against Myanmar is one of the few adopted that can be described as an unambiguous victory for the use of the tool and international efforts to press the country to undertake political reform. However, creating permanence for the gains reached through these efforts requires the same level of dedication, foresight, and seriousness in the removal of sanctions as the imposition of the regime in the first place.

Complicating this effort is the vast and intricate nature of the U.S. regime on Myanmar. This situation is made exponentially worse by virtue of the U.S. attempt to retain its sanctions infrastructure and maintain leverage to encourage further reform and prevent backsliding, while also encouraging Myanmar economic development and U.S.-derived investment. While there is obvious tension in these goals, they are not necessarily irreconcilable.

Following the National League for Democracy (NLD) victory in the November 8, 2015, elections and the formation of the next government, there will be expectations both within Myanmar and internationally that the United States can and will work to prevent unintended consequences from the remaining sanctions and restrictions and follow through with its commitment to the now long-anticipated entry of additional U.S. businesses into the Myanmar market. Without proper attention and care, the United States risks undercutting both policy imperatives and being left with diminished sanctions leverage and less market access for U.S. investors and companies.

Although there are initiatives that could be undertaken by banks and other businesses to address certain obstacles, the impetus principally lies with the U.S. government, as it has actively encouraged greater U.S. participation in the Myanmar economy. If the United States really means to encourage and support the entry of U.S. businesses into the Myanmar economy, it must do more to demonstrate that. Toward this end, I make the following recommendations:

The United States must be ready to deal with emerging sanctions issues quickly and allocate the resources necessary to handle them.

To help address such concerns efficiently, the U.S. government must streamline its decision-making process for Myanmar. Unreconciled views across, and within, various agencies are setting inertia and delaying decisions, even in areas such as licensing where policy direction has precedent. The White House is best positioned to conduct outreach, consolidate views, and advance policy decisions, and it needs to lead the Myanmar policy process.

The U.S. government also needs to work to ensure that other critical stakeholders appreciate its goals, especially the NLD majority Parliament now in power in Myanmar.

To fully rebuild confidence in the Myanmar market, modifications to sanctions need to be done in a way that signals a permanent shift in the climate and U.S. government approach. Licenses alone do not suffice, especially if they can expire or are likely to change. The United States should prioritize durable actions, such as delistings, as Myanmar works toward the ultimate goal of sanctions removal.

Although it takes time to investigate and assess each delisting case and review the facts and circumstances specific to each Specially Designated National and Blocked Person (SDN) seeking removal, there must be a reasonable timetable for entities seeking relief, and these entities must understand how the process will work and by when.

With respect to potential future imposition of sanctions under the standing sanctions regime, the U.S. government must be clearer about the bases for those designations. Programs with clear criteria for both designations and removals, such as U.S. counternarcotics trafficking sanctions, have the most movement on and off the SDN list and could serve in part as a model.

The U.S. government should regularly consult and collaborate with U.S. banks and businesses on sanctions matters, both to seek information and to address proactively the difficulties that they are encountering.

Finally, the U.S. government, banks, and businesses should be open minded and look for other creative ways in which sanctions policies can be adjusted to better support the economic development and people of Myanmar.

Peter Kucik is the regulatory and sanctions expert at Inle Advisory Group, with nearly seven years of prior experience at the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC), which administers and enforces economic and trade sanctions. This article is based on a paper published by the Columbia University School of International and Public Affairs.