Obama to Lift Myanmar Sanctions, Including Those on Dirty Jade, Sooner Than Human Rights Organizations Wanted

Some experts fear that the decision will hurt America's ability to influence Myanmar's most troubled sectors.

U.S. President Barack Obama, right, and State Counsellor Aung San Suu Kyi of Myanmar at the White House on Sept. 14, 2016. (Alex Wong/Getty Images)
U.S. President Barack Obama, right, and State Counsellor Aung San Suu Kyi of Myanmar at the White House on Sept. 14, 2016. (Alex Wong/Getty Images)

After meeting Wednesday with Myanmar’s de facto leader and fellow Nobel laureate Aung San Suu Kyi, U.S. President Barack Obama made an announcement that few would have expected when he took office in 2008: The United States would roll back economic sanctions and restore trade benefits to the Southeast Asian nation amid its democratic transition.

Most notably, the sanctions rollback will derestrict the country’s dirty jade industry. The jade trade is worth billions of dollars that flow through tangled channels to shady interests, including illicit gangs and corrupt military officials. Jade profits fuel ethnic conflict and sustain the military’s influence — forces that threaten to thwart five years of rapid progress.

“When I was first elected, Daw Suu was still under house arrest,” Obama said after the meeting, referring to the 15 years Aung San Suu Kyi spent confined by Myanmar’s military government. “And because, in part of advocacy by the United States and others in the international community, but, more importantly, because of the courage and strength and resilience of the Burmese people, what we’ve seen over the last several years is a transition to elections.”

Myanmar’s ongoing democratic transition has been a high point of Obama’s time in the White House — a relative success story in a region where not all has gone according to plan since the administration’s “pivot to Asia” in 2012. And recent developments in Myanmar have implications for U.S. politics beyond Obama’s legacy: Democratic presidential candidate Hillary Clinton points to progress there as a key diplomatic outcome of her tenure at the State Department.

The United States has eased broader economic sanctions since reforms in Myanmar began five years ago. However, Washington kept in place penalties on military-owned companies, as well as dozens of associates of the former military government. U.S. banks and companies have been hesitant to do business there in fear of running afoul of American restrictions.

A U.S. official told The Associated Press that 111 individuals and businesses will no longer be blacklisted by the U.S. Treasury. In addition, restrictions on new investment with Myanmar’s military will be removed, as well as penalties on the import of jade and rubies.

Some experts fear the removal of sanctions will hurt the United States’s ability to influence Myanmar’s most troubled sectors.

“The devil is in the details — no one is arguing that sanctions should be in place forever,” Juman Kubba, a senior campaigner for the watchdog group Global Witness, told Foreign Policy. “The question is how they are removed, and if they will be removed in a way to leverage some change.”

Myanmar’s jade sector is worth up to $31 billion, but it is controlled by drug lords and entrenched military elites who prevent much of that wealth from going to the Burmese people, one in four of whom live in poverty.

“If the issue is leverage, the decision today makes almost no sense: Obama and Suu Kyi just took important tools out of their collective tool kit for dealing with the Burmese military and threw them into the garbage,” said John Sifton, the deputy Washington director of Human Rights Watch.

Caterpillar, a U.S. heavy-machine giant, has pushed since 2012 for fewer restrictions on activity in Myanmar. Global Witness found ties between a Caterpillar dealership in Myanmar and a U.S.-blacklisted drug lord.

The Jade industry also funds conflict in the country’s resource-rich frontier and causes environmental degradation in areas subject to little scrutiny.

On top of sanctions relief, the new trade benefits will allow Myanmar to export some 5,000 products to the United States duty-free, the U.S. Trade Representative said in a statement.

Some restrictions remain in place. Sanctions meant to curb Myanmar’s drug trade still exist. Also, military trade is still prohibited. And visa bans against traveling to the United States are still on the books.

Obama’s decision does not normalize relations between the U.S. military and Myanmar troops. This means no U.S. weapons, equipment, or support will be sold or given to Myanmar’s military.

In addition, the White House on Wednesday advised Congress that America would offer preferential trade benefits to Myanmar that have been suspended since 1989, one year after the violent crackdown by the military.

Obama said the United States would implement these latest changes “soon.”

Myanmar’s transition still faces imposing obstacles. Among them: the continued power and influence of the military, ethnic civil wars, the plight of the country’s ethnic Rohingya — tens of thousands of whom live in internally displaced-persons camps and many of whom are not considered citizens — and a troubled gem sector worth up to almost half of the country’s GDP but controlled by “military elites, U.S. sanctioned drug lords, and crony companies,” according to Global Witness.

“We want to get [Aung San Suu Kyi] thinking on what we can do that is most effective in promoting the democratic transition and promoting greater economic growth,” U.S. Deputy National Security Advisor Ben Rhodes told NPR. “The question is, how do we balance the need to continue to demonstrate that this transition is not complete with the fact that we don’t want to shut ourselves and responsible investment out of the country?”

Some human rights watchdogs say the administration got that balance wrong.

“The U.S. cares more about countering China’s influence in Burma than human rights,” Tun Khin, a Rohingya rights activist living in Britain, told FP. “The U.S. should be increasing pressure, not relaxing it.” Development along the China-Myanmar border has increased in recent months as trade between the countries grows.

“Lifting restrictions on doing business with Burma’s military and its corporate enterprises, as well as the friends and cronies who have been enriched by their decades of rule, is not the right thing to do. It benefits largely them, and few others, and certainly not the people of Burma,” Sifton said.

“If the issue was growing Burma’s economy, there are plenty of other ways to do that without pulling off all of these important restrictions,” he said.

History will understand Obama’s foreign policy toward Myanmar in terms of the country’s rapid transition, but also its human rights issues.

“[Today’s decisions] jeopardize Obama’s legacy,” Kubba said. “If he wanted this to be a foreign-policy success, this isn’t the way to do it.”

David Francis contributed reporting.

Benjamin Soloway is an associate editor at Foreign Policy. Twitter: @bsoloway

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