Emerging Markets

US pledges to remove sanctions on Myanmar despite concerns over military, human rights


The U.S. has declared its commitment to removing all sanctions on Myanmar, marking yet another milestone for the former pariah state as it gets further integrated into the global economy. But some are questioning the move's timing amid worries about the military's dominance and human rights violations.

Lifting sanctions "is the right thing to do in order to assure that the people of Burma see rewards from a new way of doing business and a new government," President Barack Obama announced on Wednesday.

Washington already lifted tight rules against several state-owned enterprises and banks earlier this year after first easing sanctions in 2012.

US President Barack Obama shakes hands with Aung San Suu Kyi, Myanmar state counselor, in the White House following a bilateral meeting on Wednesday, Sept. 14, 2016.
Aude Guerrucci | Bloomberg | Getty Images

Obama also said he would reinstate the nation formerly known as Burma to the Generalized System of Preferences (GSP), a tariff program that would provide Americans with duty-free access to Myanmar exports.

The news comes as Myanmar's de-facto leader Aung San Suu Kyi tours Washington, her first official visit to the world's largest economy after her political party, the National League for Democracy (NLD), won November's general election.

The news is undoubtedly positive for Myanmar, a nation experiencing an incredible boom in foreign direct investment following decades of isolation.

Obama's announcement is now likely to facilitate fresh investment into the world's hottest frontier market. Once implemented, it's expected that U.S. firms will no longer be restricted in their dealings with locally listed companies. Moreover, the restoration of GSP trade privileges will eliminate tariffs on 5000 categories of goods from Myanmar, helping the nation move forward with trade, said Peter Kucik, principal at Inle Advisory Group.

"The original focus of sanctions was to bring Myanmar to where it is now, a country with a recognized democratically elected government. Sanctions were imposed in the aftermath of the 1990 election when the military rejected the vote results," Kucik explained.

"There is no rationale to keep sanctions on. The original objective has been satisfied as far as our government is concerned. This will help American businesses but more importantly, it will bring a new chapter in Myanmar's democracy," echoed Serge Pun, one of the country's top entrepreneurs and founder of diversified conglomerate Serge Pun & Associates.

But if lifting sanctions was a reward for being more democratic, has Myanmar truly earned it?

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Human rights groups and U.S. politicians remain cautious, citing worries over the military's power in business and politics as well as the plight of Rohingya Muslims.

A controversial constitutional clause imposed by the military bans Suu Kyi from the presidency—she indirectly calls the shots via proxy leader and official President Htin Kyaw—a powerful reminder of just how influential the armed junta remains.

On Wednesday, U.S. Republican senator Cory Gardner called for close consultation with Congress regarding any changes in sanctions. An easing of economic penalties could potentially further aggrandize the military and its cronies who profit from the junta's prominence in business and politics, Gardner told Reuters.

Myanmar's armed junta officially dissolved in 2011, having initially staged a coup in 1962, but military dominance still prevailed under ex-president Thein Sein. The Union Solidarity and Development Party—the military's political vehicle—continues to exercise control in the defense, home affairs, and border affairs ministries. It also holds 25 percent of parliamentary seats and commands a legislative veto, further complicating the NLD's mandate.

The U.S. Campaign for Burma and STAND, two non-profit organizations, are fully opposed to a sanction-free Myanmar, noting the persecution and genocide of Rohingya Muslims as well as the military's abuse of ethnic minorities, whose number exceeds more than a hundred across the country.

Washington is well aware of these concerns but its decision is aimed at improving livelihood conditions for the general population, pointed out Romain Caillaud, senior director at FTI Consulting.

While Suu Kyi has come under criticism for her silence on human rights violations, Caillaud noted that "she is slowly starting to drive change."

Last month, the former political prisoner appointed an advisory council led by former United Nations Secretary General Kofi Annan to come up with recommendations on the Rohingya crisis. She also held a large peace conference in Naypyitaw on August 31 with representatives from various ethnic groups to discuss, political representation, language and cultural issues.

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