Burma Sanctions Regime

Burma Independence Advocates London, 8 August 2011 2 Political Developments 1988 - 2011 In the immediate aftermath of the juntas repression of the peaceful demonstrations in August and September 1988, the USA introduced punitive measures, suspending its arms sales and assistance on 23 September 1988. Canada also imposed arms export and non-humanitarian exports to Burma soon after the regime came to power in 1988. Its Official Development Assistance (ODA) to Burma has been suspended since that time. In April 1989, President George Bush withdrew all GSP (Generalized System of Preferences) benefits as a reaction to its disapproval with the new SLORC regime, while in August the following year, Congress passed the Customs and Trade Act which provided the President with the necessary powers to impose economic sanctions as he deemed appropriate. In the same year, the EU imposed an arms embargo against Burma and, in 1991, suspended its defence cooperation with the regime, adopting a policy of providing only strictly humanitarian assistance. The measures described above are the first known actions to be taken by international governments in the hope that they would create a catalyst for change in Burma. The measures failed to prevent or reduce the regimes oppression against dissidents. Opposition leader DASSK, U Tin U and other senior NLD party members were arrested in July 1989. Although the junta held relatively free and fair multi-party election on 27th May 1990, the regime broke its promise to transfer power to the NLD victors on the grounds that a new constitution required drafting. The SLORC continued its repression of NLD members andli activists, abolished the 1974 constitution and tightened its control across the country. Marshall Law remained and resulted in a complete extinction of political freedom in Burma. The regimes crackdowns on the first anniversary of the 1988 uprising were significant as Buddhist monks in the second largest city, Mandalay, were severely suppressed. From late 1989 to early 1990, the junta forced the relocation of 500,000 people to the outskirts of Rangoon. At the same time, military operations were increased across the Thai-Burma border in order to clear the ethnic rebels and pro-democracy freedom fighters campaigning there. The European Union also strengthened its sanctions through its Common Position in 1996, adopting such measures as an arms embargo, restrictions to travel and trade. The EUs adoption of the Common Position on 28 October 1996 was an important measure in both reaffirming existing sanctions and extending them by measures such as the imposition of visa bans on the junta. According to research conducted by the Peterson Institute of International Economics, sanctions against the regime failed to make a difference in 1996. Repression against dissidents, particularly NLD members, increased during this period. When the USA imposed visa bans on the juntas officials, the junta responded by banning US officials from entering the country. In spite of measures taken in 1996 by the international community, the military junta continued harsh oppression against dissidents. In late May, more than 200 NLD members were arrested for protesting to mark the 6 year anniversary of

their stolen election victory; in September of the same year, yet more arrests brought the total number of detainees to almost 600. As a last measure in November 1996, DASSK and a number of the NLDs senior members were attacked on the campaign trail by thugs allegedly in the pay of the junta. It was brutal action such as this that caused Daw Aung San Suu Kyi to press for international sanctions against the regime. Despite pleas to the international community by DASSK and others, there has been a clear failure to impose a uniform method of dealing with the regime. Asian governments, institutions and businesses have continually undermined the action undertaken by the USA, the EU and other Western countries. In October 1996 for example, an oil consortium in negotiation with the Burmese junta signed a memorandum resulting in a deal to supply oil to Thailand. Diplomatically, Burma was initially granted observer status by ASEAN in December 1996. It is clear from events within Burma in that year that, despite the imposition of Western-sanctions, the military regime continued to both oppress and to deny the basic rights of its people. An important reason for the futility of these measures was that other, particularly Asian, governments and institutions continued to undercut the impact of such measures by offering trade and business incentives, thus helping to stabilise the regime and ensure its long-term survival. Let us look also into the Japans handling of the regime. In July 1995, opposition leader Daw Aung San Suu Kyi was released from house arrest signaling an important development in Burmese politics. There were claims that the Japanese government played a crucial role in the release of DASSK. A number of Japanese companies visited Burma to discuss various projects. It has been suggested that the Japanese government used the provision of these business opportunities to press for Daw Aung San Suu Kyis release and it could be argued that this tactic was more effective than sanctions. However, the measures imposed by Western governments were clearly not tough enough to have any significant impact. The impact of Japans carrot approach did not last long either, as the regime later arrested many others of its political opponents. In January 1997, top world brands such as Heineken, Carlsberg, Apple, Walt Disney, and Pepsi Co announced their complete withdrawal from Burma. This action coincided with increased restrictions placed upon Daw Aung San Suu Kyi and the closure of universities following the student protests of December 1996. However, in a move that undermined the importance of this global measure, oil companies Unocal and Total signed new offshore oil exploration contracts with the junta in late January. As with the world leaders of politics in 1996, world leaders in business have disparate policies to deal with the regime which therefore made it harder for boycotts and proscriptions to have anything more than a negligible effect on the actions of the junta. In May 1997, President Clinton tried to strengthen the impact of these measures by issuing an Executive Order banning any new investments in Burma. Existing firms with investments in Burma were allowed to continue their business operations, however, providing companies such as Unocal and Total a loophole with which to progress their deals. This was particularly problematic as both the oil and gas sectors created such large revenues for the military regime. Regime who took further measures to strengthen their grasp on power and continued to impose harsh restrictions, untouched by the actions of the international community.

Both the political situation within Burma and international action against it remained relatively quiet over the next two years. Furthermore on 30 May 2003, Daw Aung San Suu Kyis motorcade was attacked by the regimes militia. Hundreds of opposition supporters were killed (Depayin massacre). A number of senior NLD members, including the Lady herself, were detained on the grounds of protective custody. The NLD Head Office and several others across the country were forced to close in June 2003. As a reaction, the US established the Burma Freedom and Democracy Act (BFDA) which banned all imports from Burma. The EU also strengthened its existing measures by imposing new and additional sanctions against the regime. Canada which excluded Burma from its Least Developed Country (LDC) market access initiative in January 2003 imposed visa restrictions against senior members of the regime in July of the same year. The objective of the BFDA was to sanction the ruling Burmese military junta, to strengthen Burmas democratic forces and support and recognise the NLD as the legitimate representative of the Burmese people. This was significant development in that it both strengthened existing sanctions and introduced new ones. The new measures included a ban against all trade which supported the military regime, a freeze on the assets of the junta in the US, an intention to oppose and vote against the extension of financial loans from financial institutions, and an expansion of the existing visa ban. Some positive progress followed. In July 2001, there occurred some dialogue between the junta and Daw Aung San Suu Kyi, resulting in her release in May 2002 after 19 months of house arrest. Hundreds of other political prisoners were released just two months later. The regime went so far as to extend an olive branch to the USA by inviting officials to discuss Burmas political deadlock in February 2003. Washington however, remained cautious, warning that more sanctions would be imposed should no further progress be seen. (NOTE: Critics of this move have argued that, had the USA engaged in dialogue with the Burmese military leaders, important developments could have ensued.) It could be further argued that, by raising the pressure on the regime through the establishment of the BFDA, the US had encouraged dramatic progress in Burmese politics. In August 2003, the New Prime minister, General Khin Nyunt announced a roadmap to democracy and the introduction of a series of political reforms. Though flawed in many ways, this was perhaps the most important development to have occurred since the regime gained power in 1988 and a large reason for this development was the application of tough measures by the international community. Though Prime Minister Khin Nyunt was ousted in October 2004, several political prisoners including student leader Min Ko Naing, were released in November. The junta released 249 political prisoners in July 2005. In 2005, the junta initiated hostile action against ethnic groups in Burma. As well as arresting and imposing a sentence of more than fifty years on key Shan activists, the military government launched a sharp military offensive against ethnic Karens.

No progress had been made on both democratisation and human rights throughout 2006. Student leaders Min Ko Naing, Ko Ko Gyi and Htay Kywe were arrested in November for issuing a statement in support of the United Nations Security Council debate on Burma. Intense military operations in the southern Karen state claimed the lives of almost 30,000 innocent civilians and were responsible for the destruction of more than 300 villages. The situation in Burma finally made it on to the agenda of the United Nations Security Council briefings in September 2006. However UNSC action was vetoed by both China and Russia. Had UNSC action been fully endorsed, there is little doubt that positive developments would have ensued. 2007 was a year of the biggest public protests since the demonstrations of 1988. Peaceful marches were initially organised by 88 generation students and eventually Buddhist monks participated in the event that became known as the Saffron Revolution. The demonstrations spread to other towns and cities across the country. However, government crackdowns stepped up and, following midnight raids at several monasteries, up to three thousands monks and others were arrested. Subsequent to the brutal clampdown the USA, the EU, Australia and Canada imposed punitive measures which continued throughout 2008. The year 2008 was the most unfortunate year for Burma of the past few decades as the Cyclone Nargis devastated the Irrawaddy delta on 2 May 2008, claiming more than 150,000 lives and affecting another 2.4 million people. The junta, in fear of political conditions attached to international relief measures, initially blocked the Western assistance to emergency relief efforts. Private individuals and local NGOs stepped in to aid those in need of desperate relief measures. The ASEAN ultimately intervened to resolve the political deadlock between the regime and international actors. Despite devastations in Irrawaddy delta, the regime continued to undertake its constitutional referendum on the new constitution which sought to legitimise the militarys dominant role in the politics of the country. The new constitution was approved through a referendum which was widely alleged to have been manipulated on 10 May 2008. Following the disaster in the Irrawaddy delta, many social and political activists who attempted to deliver aid to affected areas were arrested and sentenced. The junta continued suppressing the political opponents and the numbers of political prisoners reached more than 2,000 in 2009, double the number for 2007. The opposition leader, DASSK was also sentenced an additional eighteen months of house arrest in August following the trespassing of an American citizen to her residential compound. The Obama Administration introduced the dual-track policy of engaging the regime while keeping the sanctions in place. Although the US has shifted its policy on Burma, the regime continued its repression of dissidents while steadfastly progressing towards legitimised military rule as outlined in the seven-step roadmap formulated in 2003. The first national elections in two decades were held in November 2010 with the regimes proxy party, the Union Solidarity and Development Party (USDP), winning the majority votes.

---------------------Why Have the Sanctions Failed? The Western sanctions failed to weaken and isolate the ruling junta. The sanctions could be made successful if they were targeted to cost the regime significantly. Factors that help explain why they have not as yet done so: The sanctions are not imposed multilaterally, either in a UN context or within ad hoc coalitions; the Burmese sanctions regime is largely imposed by the US and the EU alone; The USA has been the only major state to impose a series of serious sanctions. The measures by the EU have been less effective and significant; There has been little contribution by the ASEAN to the sanctions measures; There has been little contribution by the regional powers, China and India, to the sanctions regime; The existing sanctions measures have loopholes and have been imposed slowly, incrementally and piecemeal.

There have never been UN sanctions against the ruling military junta despite several decades of substantial human rights violations. The regional players such as ASEAN member countries and the regional powers, China and India, have opted against punitive measures and exploited the lucrative commercial opportunities of Burma instead. On the other hand, the measures taken by both the USA and the EU have not been implemented properly and have been little more than a moral statement. The sanctions have crucial loopholes that benefit both the sender states and targeted regime. It is a disturbing fact that the investment ban introduced by the United States in 1997 excluded the US firms that were already operating in the country and providing major revenue for the regime. For instance, Unocal which later merged with Chevron continues to contribute to the oil and gas sector which is the major income resource for the ruling junta. In addition, the EU measures against the regime are far weaker than those of the USA as they are more limited and have allowed French oil giant Total to generate crucial income for the regime. Europe was the largest investor in Burma between 1995 and 2005 with cumulative FDIs worth US$1.8 billion; in comparison, the total FDIs from ASEAN member countries were about half this. The UK and France were the major investors in Burma for the same ten-year period of 1995-2005 while the USA was top investor from North America. Better targeted and harsher sanctions came into effect only after the Depayin Massacre in 2003 and the 2007 Saffron Revolution. The United States introduced Burma Freedom and Democracy Act (BFDA) nearly fifteen years after the military took power and the existing measures were strengthened through the

Tom Lantos Block Burmese JADE (Juntas Anti-Democratic Efforts) Act in 2008, a full five years after the BFDA. Similarly, the European Union only introduced an investment ban in the regimes state-owned enterprises in 2004 and the imports and investment restrictions on timber, gems and metals were not added until 2008. The measures imposed by Australia are relatively minimal in nature. Canada introduced tougher sanctions measures only after the regimes brutal crackdown of protests in 2007, and its measures have been relatively significant. The measures include a prohibition of its exports to Burma as well as Burmese imports into the country, an assets freeze of the regimes officials and its supporters, their relatives and business entities including the governments enterprises, a ban on new investment in Burma, a prohibition on the provision of Canadian financial services to and from Burma and the export of any technical data to Burma, a restriction on Canadian-registered ships or aircraft from docking or landing in Burma and a restriction on Burmese-registered ships or aircraft from docking or landing Canada and passing through Canada. Although the visa bans and financial sanctions on senior members of the regime and their family members, the cronies and their families as well as their businesses have also been imposed, these targeted measures are not well coordinated and the list of financial and visa restrictions still needs to be lengthened in order to have a significant impact on the regime and its supporters. As a consequence, the sanctions by Western governments in the last two decades or more have failed to produce anything but a negligible impact on the political situation in Burma.

Evaluation of other Policy Options

Engagement through Economic Incentives The ASEAN states have practiced a policy of constructive engagement with the regime since Burma became a member country. The regional blocs involvement has immunised the regime from the penalties intended by the Western sanctions. This engagement policy has benefited both the regime and the ASEAN countries through better and stronger economic ties over the past two decades while the Burmese people are impoverished and their basic rights and liberties are eliminated. The release of Daw Aung San Suu Kyi in 1995 was largely claimed as a consequence of Japans engagement with the junta through business incentives but the subsequent mass arrests of political opponents, including NLD members, has proven that the regime has little integrity. It is clear that the Burmese authorities are ready to superficially accept any incentives and engage with any parties, yet comply minimally in practice. As they have proven unwilling to make significant concessions in its engagement with ASEAN and Japan, further engagement of the dictatorship through economic incentives is not encouraged.

Democratising through Economic Engagement There are claims that economic growth is positively influencing democratic transition and the emergence of stronger civil society and the middle class is needed for faster democratisation. Nonetheless, many transitions to democracy elsewhere in the world have proven that economic development is neither a necessary nor a sufficient condition for democratic transition. Although economic development and modernisation might sustain and consolidate democracy where successful and genuine transition has taken place, it is not an essential factor in the current political climate of Burma where the old regime has not collapsed and a genuine transition has not taken place. In fact, a study on certain successful democratic transitions by Przeworski and Limongi (1997) has indicated that democracy is not necessarily a product of modernization. On the other hand, civil society in totalitarian Burma has barely survived and is under constant scrutiny and harassment, even for its social and charitable activities. Thus, civil society in Burma will never become strong and vibrant as long as the dictatorship flourishes. It is very unlikely that the Burmese middle-class will initiate democratic change in the foreseeable future. As it is not an independent middle-class but which sides with the authorities to maintain the status quo and is thus reluctant to support for a democratic revolution. A considerable part of the middle class is comprised of current or retired military officers and businessmen who benefit from the corrupted mechanisms of dictatorship and thus are unlikely to embrace the idea of democracy. Economic engagement with the regime is therefore strongly opposed. A Dual-track Policy of Pressure and Principled Engagement The United States introduced a dual-track policy, combining sanctions and direct dialogue with the regime in 2009. However, no tangible result has been seen after nearly two years in which the USA has shifted its policy, urging the regime to address core human rights concerns through dialogue. The regime has been defiant against US calls for reform and has repeatedly insisted that human rights and the pursuit of democratic reforms are internal issues. Although direct dialogue with the junta was initiated in 2009, the continuous presence of US oil and gas companies as well as other firms not affected by the new investment ban introduced in 1997 has provided a more than ample carrot over the past two decades. Therefore, the United States government needs to revise its Burma policy by ending all US economic ties with the regime, withdraw the dialogue and reinforce the existing sanctions with additional measures. RECOMMENDATIONS Sanctions remain the best option to push the regime towards a genuine reconciliation process in the country. The governments of both the West and the region should recognize that the recent political changes are simply aesthetic ones and that real change will only take place by

crippling the military regime. While sanctions are the most important to achieving this, the level of pressure must be escalated and reinforced with any additional measures necessary in order to ensure that the regime is completely isolated and genuinely weakened. It is crucial that the existing sanctions are reinforced by the following additional measures. (1) Closing the Loopholes (2) Widening the Scope of Sanctions (3) Multilateral Sanctions (4) UN Mandatory Arms Embargo