3 years on from coup, financial sanctions look unlikely to push Myanmar again to democracy

When Myanmar’s military seized back control of the nation in February 2021 after a decade-long democratic interlude, the worldwide neighborhood reached for a well-known software: financial sanctions.

The coup led a number of international locations, including the United States and European Union member states, to impose or reinstate commerce embargoes and different monetary proscriptions towards Myanmar’s navy.

On Feb. 1, 2024 – coinciding with the third anniversary of the navy coup – the U.S. announced a fresh round of sanctions. It comes because the Myanmar authorities continues to be embroiled in a grinding civil war with ethnic minority insurgent groups. However up to now, sanctions haven’t inspired the ruling generals again towards a democratic path or tipped the struggle in favor of pro-democratic resistance teams.

Furthermore, as specialists on East and Southeast Asia and economic sanctions, we all know that the historical past of Myanmar – and our personal analysis – means that economics sanctions are unlikely to have that affect any time quickly.

Present sanctions towards Myanmar

The present sanctions towards Myanmar share a lot in frequent with these imposed previous to 2010, when the nation started a process to restore democratic government. The actions taken since 2021 by the U.S., EU and others – which embody focused and sector-specific sanctions – are aimed toward undermining the navy junta’s skill to violently repress the country’s pro-democracy movement.

On the identical time, these imposing sanctions seem like extra cognizant than in earlier intervals of the potential negative impacts on the Burmese people.

The sanctions imposed after the 2021 coup are extra focused and designed to have an effect on the navy authorities and its enterprises. In earlier intervals, the financial measures were broader and affected the complete Myanmar financial system.

That is by design. The authorized foundation for post-2021 U.S. financial sanctions on Myanmar, Executive Order 14014, serves as the inspiration for a mess of focused measures, which embody restrictions on people and companies linked to supplying Myanmar’s air drive with jet gas.

Signed on Feb. 11, 2023, the brand new U.S. sanctions regime displays modifications in how the Biden Administration intends to make use of monetary penalties to focus on Myanmar’s generals, not its folks.

The U.S. has additionally made it a precedence to work collaboratively with worldwide companions on imposing complementary quite than competing sanctions.

Proof of this coordination emerged on Dec. 10, 2021, coinciding with Human Rights Day, with the U.S. rolling out a package deal of measures together with the UK, Canada and the European Union. For instance, the EU’s “restrictive measures” – the bloc’s parlance for financial sanctions – embody lots of the identical sanctions imposed by the U.S., similar to restrictions on the export of navy and dual-use gear, asset freezes, visa and journey restrictions, and restrictions on the export of telecommunications gear.

The U.S. has additionally imposed focused sanctions through the Specially Designated Nationals list, a blacklist of individuals with whom U.S. residents and corporations are banned from doing enterprise. Listed entities in Myanmar embody navy leaders, enterprise folks and their households. The concept is to focus the financial ache on people and entities concerned within the coup and subsequent repression of democracy campaigners, quite than on the nation as an entire.

Previous sanctions towards Myanmar

Actually, historical past means that the U.S. wanted to replace its sanctions coverage. Myanmar observers have lengthy debated the effectiveness of the previous Myanmar sanctions regime, with many concluding that it had little affect on the junta’s choice to return to democracy. Moderately, Myanmar’s democratic elections were part of the military’s road map and never the results of sanctions stress.

One motive for this skepticism over earlier sanctions was that they focused imports from key sectors of Myanmar’s financial system, such as garments and textiles, that weren’t linked to the junta. These financial sanctions harmed personal enterprises in Myanmar.

The newest sanctions target military-owned or -linked enterprises, similar to Myanma Financial Holdings Public Firm, Myanmar Financial Company Restricted, Myanma Gems Enterprise, Myanma Timber Enterprise and the Myanmar Pearl Enterprise.

The post-2021 sanctions, although, are nonetheless affected by among the identical issues of their predecessors.

They lack the burden of the United Nations, which has not referred to as for sanctions towards Myanmar. This stands in distinction to sanctions towards different international locations flouting worldwide norms, like North Korea and Iran.

The U.N. Safety Council is unlikely to sanction Myanmar as everlasting members China and Russia refuse to condemn, not to mention sanction, Myanmar’s navy rulers.

Because of this, the worldwide neighborhood has been break up in its response to Myanmar’s democratic backsliding and human rights violations. Whereas Western international locations have determined to isolate Myanmar via focused commerce and monetary sanctions, international locations in East and Southeast Asia have maintained diplomatic and trade ties with the navy authorities.

And there may be an incentive for international locations in Southeast Asia to not participate in any sanction regime. As we present in our forthcoming e book, “Trading with Pariahs,” Myanmar’s commerce ties are typically strongest inside its area.

In the course of the first sanctions regime from 1988 to 2015, Southeast Asian financial ties with Myanmar grew to become stronger because the nation’s commerce with sanctions-imposing Western states declined.

For international locations in East and Southeast Asia, sustaining ties with Myanmar supplied not solely financial alternatives but additionally a method for monitoring and maybe ameliorating Myanmar’s inner scenario. For instance, the Affiliation of Southeast Asian Nations, or ASEAN, admitted Myanmar in 1997 regardless of the refusal of the junta to permit democratic elections and deal with human rights abuses. The strategy favored by Myanmar’s neighbors was to try to deliver Myanmar’s generals in from the chilly quite than ostracizing them internationally.

And regardless of Singapore’s current declaration that it will stop arms transfers to Myanmar, ASEAN member international locations and people in East Asia proceed to chorus from sanctioning Myanmar, preferring engagement to isolation.

Can sanctions work?

Whereas U.S. sanctions have the potential to harm the navy, there are causes to imagine that they gained’t be capable to deliver the federal government to its knees. It’s doubtless that the uneven termination of the United States’ earlier sanctions supplied inadequate time for American corporations to totally interact and spend money on Myanmar’s market, limiting the potential for future leverage now.

These international locations that do have vital leverage are unlikely to sanction Myanmar. And this undermines efforts by the U.S. or the West to isolate the nation.

The problem for the West may be seen in its sanctions on jet gas commerce. Amnesty Worldwide’s “Deadly Cargo” report in 2023 highlighted how Myanmar’s navy can nonetheless safe dependable shipments of jet gas regardless of the U.S. sanctions on the product.

The reason being greater than 95% of Myanmar’s refined petroleum oils – wanted for jet gas – come from regional buying and selling companions. Since 2021, China, Thailand, Singapore and Russia have provided much of the Myanmar’s military’s jet fuel, enabling it to proceed bombing campaigns all through the nation.

Though the U.S. Treasury has expanded its sanctions on jet fuel to incorporate each navy and business, the affect of those sector-wide sanctions stays unclear.

Whereas the character of the present U.S. sanctions is starkly completely different from prior efforts to stress Myanmar’s generals, the effectiveness and potential for achievement seem fairly comparable. Given the dearth of financial ties between Myanmar and international locations outdoors its area, the potential for change in Myanmar appears unlikely with out vital efforts by these international locations with a capability to weaponize their in depth financial interdependence: China, Japan and ASEAN member states.

ASEAN just isn’t blind to the erosion of human rights, and it has signaled its consciousness of the regime’s atrocities and assist for civilians by denying Myanmar its turn as ASEAN’s chair in 2026.

Nevertheless, the regional bloc is unlikely to impose financial sanctions on Myanmar within the foreseeable future, casting additional doubt on the flexibility of Western sanctions to enhance human rights and democracy meaningfully.