US Moves to Ease Sanctions Against Myanmar

Meeting action with action, United States Secretary of State Hillary Clinton yesterday (4 April) announced that the Barack Obama administration will begin easing of travel and financial restrictions on Myanmar and name an ambassador in response to the formerly military-run country's landmark 1 April by-elections. The by-elections saw the opposition leader Aung San Suu Kyi and her National League for Democracy (NLD) securing a landslide victory by winning 43 of the 45 vacant seats contested and assuming representation in parliament for the first time since the 1990 election, when they were not allowed to govern by the military junta (see Myanmar: 3 April 2012: Myanmar Election Commission Announces Overwhelming Opposition Victory).

In her televised speech, Clinton praised the "dramatic demonstration of public will" and said that the country's current semi-civilian "leadership has shown real understanding" citing the by-election and other progress made in recent months. "We fully recognise and embrace the progress that has taken place and we will continue our policy of engagement," Clinton said before unveiling five steps towards opening Myanmar for investment and diplomatic interaction after decades of isolation:

1. Restoration of full diplomatic ties with Myanmar after a two-decade gap by appointing an ambassador in coming days.
2. Establishing an in-country US Agency for International Development (USAID) mission and supporting the establishment of a UN development programme to boost annual aid to the country.
3. Allowing private US organisations to pursue greater aid work inside Myanmar in areas such as health, education, and democracy building.
4. Facilitating travel to the US for selected government members and parliamentarians.
5. Targeted easing of investment sanctions to help to accelerate economic modernisations and political reform with the priority given to allowing the use of credit cards in Myanmar.

US-Myanmar Relations in Context

The restoration of full diplomatic ties and targeted easing of sanctions marks a cautious first step towards the opening up of Myanmar after decades of isolation. It does not, however, mean "an instant and complete opening up of trade with Burma", and the US administration will continue to impose a number of tough sanctions against the country, as noted by Clinton yesterday.

For decades, the US has been Myanmar's ruling government's strongest critic and it is represented in the country only at charge'd'affaires level. The US sanctions were first imposed in 1998. They have since been significantly expanded to include five laws and four presidential directives prohibiting new investment and exportation of financial services to Myanmar as well as importation of the country's products to the US, and blocking all property and interests in property of the Myanmar leaders and imposing travel restriction of them. The US has also been imposing economic sanctions on Myanmar to advance its policy goals, namely to press the leaders to carry out reforms that will lead to democratic governance in Myanmar and respect of human rights. The sanctions have been mainly aimed at isolating the regime politically and economically to send a strong message.

Outlook and Implications

Given that Myanmar's future "is neither clear nor certain" and there is "much to be done" in the country's road to democracy, in the words of Hillary Clinton, the US decision to start easing of sanctions is a risky strategy and could result in a slowing of the reform process. Although the election of Aung San Suu Kyi and her NLD colleagues to the parliament is a historic development, the opposition will still have less than 10% of the parliamentary seats and the ruling Union Solidarity and Development Party (USDP) will continue to hold power. The question on everyone's lips is whether the US is giving away too much too quickly to Myanmar in exchange of its either still tentative or low-risk reform steps. Additional risk comes from Myanmar's long history of broken reform promises and the reversal of progress that has already been made. The former ruling State Peace and Development Council (SPDC) was notorious for granting well-calculated concessions in its effort to gain international legitimacy and quell US criticism, but always gave priority to domestic imperative, namely regime survival, national unity and stability. Whether this has truly changed, remains to be seen. As demonstrated by the 2006 coup in Thailand and subsequent political developments, the democratic process is not necessarily irreversible in South East Asia. The first key indicator of the ruling government's commitment to reform will most likely come when the NLD assumes its opposition role in the parliament.

Although not without its risks, the US move is a well-calculated decision, part of the Obama administration's broader effort to help to accelerate economic modernisation and political reform in the South East Asian country. Since coming to power, the Obama administration has pursued a "greater engagement" policy with Myanmar's rulers. The policy was announced by Hillary Clinton in September 2009 and is based on recognition that the hard-line stance pursued under the previous government had not led to the desired outcome. It is also in line with the approach advocated by US special envoy Derek Mitchell since his appointment last September. Although the easing of sanctions has been on the agenda for a while, the US has made it always clear it will only follow after Myanmar has taken concrete steps towards democratic reform.

Easing of travel and financial restrictions on Myanmar and naming an ambassador to the country in coming days are only the first steps aimed at supporting the reformers in the country. Removing all the sanctions, particularly those applied to the exporting of jade and timber that need congressional approval, will probably take years not months and be subject to specific conditions, such as freeing of all remaining political prisoners and a free and fair general election, which is scheduled for 2015. Tellingly, Clinton did not give details on the exact investment sanctions measures set to be lifted or a timeframe, which are still under government consideration, leaving room for US manoeuvring.