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Myanmar sees "bad consequences" if U.S. imposes sanctions on military

YANGON, Nov 3 (Reuters) - Proposed U.S. sanctions targeting Myanmar's military for its treatment of Rohingya Muslims would hinder the fledgling civilian government sharing power with the generals, a spokesman for de facto leader Aung San Suu Kyi said on Friday.

The bill, introduced by members of the U.S. Senate on the eve of Donald Trump's departure on his first trip to Asia since becoming president in January, seeks to reimpose some sanctions lifted last year as Myanmar returned to democracy.

The measure would impose targeted sanctions and travel curbs on Myanmar military officials and bar the United States from supplying most assistance to the military until perpetrators of atrocities against the Rohingya in Myanmar's western Rakhine State are held accountable.

Responding to the moves in Washington, Suu Kyi's spokesman, Zaw Htay, told Reuters, "we need internal stability to improve the country's economy. Imposing international sanctions directly affects the people in travel and in business investments, and there are many bad consequences."

Myanmar officials would explain the government's efforts on Rakhine during a visit by Secretary of State Rex Tillerson scheduled for Nov. 15, he added.

"We will explain to him what we are doing when he comes here. We can not tell him not to do that. And we don't know what is U.S. policy," Zaw Htay said.

Zaw Htay, a former army major who is a holdover from the quasi-civilian administration that handed over the reins last year, said the army, known as the Tatmadaw, had to be involved in Myanmar's transition.

Myanmar was previously hit by sanctions over the military junta's brutal suppression of the then opposition led by Suu Kyi, but Zaw Htay stressed the civilian government still has to work with the military.

"The country's reconstruction cannot be done only by the government. The Tatmadaw needs to be involved, it is very clear. Everything has to undergo negotiation with the Tatmadaw under the 2008 constitution," he said, referring to the charter drawn up by the junta before Myanmar began its democracy transition.

"Sanctions and pressures affect the government's work. It won't be a positive result if they impose sanctions, as with the previous experience (of sanctions)."

He added, "Of course, it will damage all the business investments, not only military-owned (businesses). It will definitely have a bad affect. There can only be bad results."

Republican Senate Armed Services Committee chairman John McCain, and Senator Ben Cardin, the top Democrat on the Senate Foreign Relations Committee, were among the lawmakers who have sponsored the bill.

A companion bill is also being introduced in the House of Representatives.

Members of Congress have pressed for a strong response to the plight of the Rohingya, and the Trump administration has been weighing labeling the actions by Myanmar's military as "ethnic cleansing".

Myanmar has rejected that accusation, defending the military's actions as a counter-insurgency operation provoked by Rohingya militant attacks on 30 security posts in Rakhine State on Aug. 25.

More than 600,000 Rohingya Muslims have fled Buddhist-majority Myanmar since the military crackdown that has led to reports of burnt villages and widespread killings.

The United Nations has denounced it as a classic example of ethnic cleansing.

Zaw Htay said Myanmar was calling for the international community to "cooperate positively" on the Rakhine issue, rather than focusing on what he called mere allegations of abuse by security forces.

"We are not ignoring human rights abuses," he said.

"They are all allegations. The international diplomats and international organizations who are saying what happened are always using allegations, without evidence. No one can give strong evidence of their allegations, although we asked for it."

Myanmar had so far been unable to take action based on the claims made by refugees in Bangladesh, he said. "We will take action if they are right...So cooperate with us by showing strong evidence, rather than basing it on just allegations." (Additional reporting by Simon Lewis; Writing by Simon Cameron-Moore; Editing by Clarence Fernandez)