Myanmar: Neighbours Dilute Impact of Sanctions


Frank Milne

The persistent failure of the Myanmar regime to move towards democratisation or towards restoring the freedom of National League for Democracy leader, Aung San Suu Kyi, has aroused strong international criticism and the intensification of sanctions by Western countries. Western companies have come under increased pressure to withdraw from Myanmar. The regime’s imprecise road map for progress, starting with a revived National Convention to draft a new constitution, has failed to disarm its critics. The UN Human Rights envoy to Myanmar, Paulo Sergio Pinheiro, who visited Yangon in early November, noted that the regime provided no time-frame, nor plans to release political detainees or to allow the expression of opposition views.

New US sanctions imposed in August 2003 include a total ban on trade and investment; a freeze on Myanmar assets, and tighter visa restrictions. The US will continue to oppose new international loans or technical assistance for Myanmar, and will urge other countries to do likewise. Myanmar exports to the US in 2002 were worth US$356 million, and the closing of this market has already caused the shut-down of over 100 garment and textile factories. The ban on financial transfers has shut down credit card facilities.

Japan, previously a major aid donor, has also tightened its approach, suspending new economic aid. European Union sanctions remain, though some humanitarian aid is channelled through NGOs. Another British company, British American Tobacco, has recently withdrawn its investment in Myanmar at the request of the British Government, as Premier Oil did earlier, though the practical effect of both moves is diminished by the sale of their interests to Singapore and Malaysian companies, respectively.

These measures have had some impact on Myanmar whose foreign trade declined by 17.8 per cent in the first three quarters of 2003. However, Myanmar’s neighbours seem likely to take up the slack. India and China are competing for influence in Myanmar, and ASEAN countries, despite some concern at the political situation, also oppose sanctions and are actively pursuing business.

A visit by the Indian Vice President in November 2003 produced various agreements on regional cooperation, the offer of a US$57 million credit to upgrade the Yangon-Mandalay railway, and plans to expand two way trade from US$400 million to US$1 billion by 2006. An Indian/South Korean consortium is drilling for gas in the Bay of Bengal. For its part, China continues to expand its economic cooperation; its latest contract, worth US$176 million, is for a major hydro-power station in the Shan state, which will substantially increase Myanmar’s inadequate generating capacity.

Despite differences over the drug trade and other border problems, Thailand sees Myanmar as a useful market and a supplier of natural resources. It has recently offered 1.9 billion baht (US$47 million) mostly as a very soft loan, for road construction including a road linking Mae Sot to Myawaddy in Myanmar. The state owned oil company PTTEP has just invested US$15.8 million in two offshore gas fields in Myanmar waters.

WATCHPOINT: Without the support of Myanmar’s neighbours, can the West exert any positive influence on the regime’s policies?


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