Human rights and pro-democracy groups are criticizing the suspension of US sanctions on Burma as a premature concession to a regime still marred by rights abuses. But the head of the civilian-led, military-backed government insists that the scrapping of the penalties is “extremely important” for the success of the country’s fragile reform process.
In a move described as “a rare snub” for opposition leader Aung San Suu Kyi, the Obama administration this week lifted a ban on investment by US oil and gas firms imposed since 1997. The National League for Democracy issued a tentative welcome for the decision to ease sanctions, but Suu Kyi called more “transparency” as foreign firms invest in the country’s rich energy resources.
“President Thein Sein, Aung San Suu Kyi and the people of Burma continue to make significant progress along the path to democracy, and the government has continued to make important economic and political reforms,” President Barack Obama said. “Easing sanctions is a strong signal of our support for reform, and will provide immediate incentives for reformers and significant benefits to the people of Burma.”
The relaxing of sanctions “does not authorize investment with Burmese Ministry of Defense, state or non-state armed groups, or entities owned by the foregoing,” said White House spokesman Tommy Vietor.
“Encouraging further liberalizations by a government still riddled with former generals and their cronies is a dicey process and an inexact science,” notes one observer. “The initial reforms came so quickly and abruptly that many Western governments (and many Burmese activists) were simply caught off guard.”
Rights groups fear that investment in the military-linked oil and gas sector will undermine the reform process by stifling moves to secure greater transparency.
“Suddenly funneling money into the country’s opaque, scandalously corrupt business environment is no way to help Burma progress economically or politically,” note Rhonda Mays and Robert Herman of Freedom House. “This is all the more true when the main investment goal is the exploitation of natural resources.”
But the country’s president insists “major” Western investment is essential to fund plans to accelerate the pace of democratization.
“It’s only if you lift the lid entirely that it allows everything to come out,” Thein Sein told the Financial Times. “It is extremely important that sanctions be lifted – both financial and other economic sanctions – to make possible the sort of trade and investments that this country desperately needs at this time.”
The former general highlighted the importance of opposition leader Aung San Suu Kyi’s engagement in the political process.
“All these economic sanctions have political reasons behind them,” he said. “It is one of the reasons why it has been so important to engage with [Ms Suu Kyi] and to include her in the process of political reconciliation.”
In a rare interview in the presidential palace in Naypyidaw, Thein Sein promised a “second wave” of reforms, rejecting suggestions that this week’s elevation of a former army intelligence chief to vice-president (“The military chose someone who they can count on,” said Aung Zaw, editor of the Thailand-based Irrawaddy magazine) illustrated the potentially destabilizing influence of hard-liners opposed to the reform process.
“This is an armed forces that the country has had to rely on for a very long time for security and to meet external threats as well in the past,” he said. “So it was important at this time that they were not left behind entirely.”
The long delay between Secretary of State Hillary Clinton’s May 17 announcement that the U.S. would ease sanctions and the Treasury issuing new licenses was partly due to an internal debate among officials over disclosure requirements, a source told Reuters.
“The central point of all of this is to focus on transparency, the theory being that the more information the greater the incentive to comply with responsible norms and practices,” the source said.
But the United States remains “deeply concerned about the lack of transparency in Burma’s investment environment and the military’s role in the economy,” Obama said, announcing the easing of sanctions and outlining a series of corporate governance rules to which investors must adhere:
The rules require U.S. individuals and entities making new investments of more than $500,000 to submit annual reports to the State Department on issues such as human rights, workers’ rights and environmental stewardship, the department said.
Annual payments exceeding $10,000 made to Myanmar government entities including state-owned enterprises must also be reported, while those investing in the Myanma Oil and Gas Enterprise must notify the State Department within 60 days.
“The purpose of the public report is to promote greater transparency and encourage civil society to partner with our companies toward responsible investment,” the departments of State and Treasury said in a fact sheet explaining the policies.
Activists believe the West should maintain sanctions until concerns over rights abuses are addressed, according to Irrawaddy, citing a recent joint letter by several advocacy groups—including the AFL-CIO labor federation, Freedom House, Human Rights Watch, Institute for Asian Democracy, Open Society Foundations, and the US Campaign for Burma.
“Despite holding by-elections and taking other positive steps, the government has yet to institute the reforms necessary to move Burma toward democracy, and basic political power remains with the military,” said the coalition. “It is imperative for the United States to retain its leverage until real reform occurs.”
Lifting investment sanctions on a nation where forced labor and other rights violations continue may “undermine progress toward political reforms in Burma, rather than encourage movement toward democracy,” said AFL-CIO President Richard Trumka. The labor federation’s Solidarity Center provides assistance to Burma’s independent trade unions and is a long-time campaigner for labor rights in the country.
A new report from the UK government raises serious concerns about ongoing human right violations, including atrocities arising from ongoing armed conflicts in ethnic regions.
“There is more work to be done to address the serious human rights concerns that remain,” according to the British Foreign and Commonwealth Office’s Human Rights and Democracy 2011.
“2011 was marked by some unexpected and positive political developments in Burma, although significant long-term challenges remained,” says the report, detailing government soldiers’ destruction of 30,000 houses from seven villages in Shan State in March last year and the arbitrarily detention and torture of civilians in Kachin State.
Many observers believe the ongoing conflicts between the military and ethnic minority militias are the principal obstacle to Burma’s democratization. But Thein Sein insists that ethnic insurgents, including Kachin rebel groups, will become “part of the solution” by being incorporated into the reform process.
“As a soldier for my whole career, fighting these armed groups, I saw them as ‘the enemy’ – but when I became president, I realised the death of a Kachin soldier is the same as the death of a national army soldier – it is the death of a Myanmar citizen and therefore a loss to the country,” he tells the Financial Times in one of the first interviews he has given since becoming president 18 months ago. “Now I no longer see [rebel forces] as part of the ‘enemy’ but as part of the solution.”
For Mr Thein Sein, the critical turning point was his appointment as prime minister in 2007, having attained the rank of full general under Than Shwe – the junta leader known as the “senior general”. Suddenly, after years in the relatively cloistered military world, Mr Thein Sein was visiting neighbouring countries to liaise with counterparts, and even attending a UN session in New York. His formative experience from these years, however, was dealing with the devastation of Cyclone Nargis, which killed more than 130,000 people in 2008.
General Than Shwe, though brutal, xenophobic and highly superstitious, was quietly laying the groundwork for radical change, setting in train plans for a parliamentary system, a government overhaul and, crucially, his own retirement.
In another move that still confounds critics, General Than Shwe anointed Mr Thein Sein as his successor to run in the 2010 election. The poll was boycotted by opposition leader Aung San Suu Kyi and her party and condemned by the international community as fraudulent. Mr Thein Sein came to power under that cloud, branded the senior general’s key henchman.
Yet by mid-2011, Mr Thein Sein had launched radical reforms and was rapidly opening up a harsh and hermetic society under economically ruinous military management. Since then, he has driven reforms encompassing everything from labor unions and pensions to land use and crucial economic changes.
However, he stresses, “the system has changed”. “There was an understanding that things could not go on the way they were, there was a need for this change – and the legacy of General Than Shwe was to establish this system – now we are in this new era where this government and I are trying to lead things forward.”
While dismissive of suggestions that military hardliners are exercising undue influence or even striving to sabotage the reform process, he hinted that a forthcoming ministerial reshuffle will target figures resistant to change.
“There are some in the cabinet who may be slower or who may not be performing as well in terms of trying to realize the objectives the government has set out,” he said. “It is because of that that there may need to be changes.”
The administration’s announcement opens up Burma’s oil-and-gas sector to investment by U.S. firms, despite pleas by opposition leader Suu Kyi that foreign companies and governments refrain from working with the state-owned Myanmar Oil and Gas Enterprise.
New investments should be deferred until the M.O.G.E. , which operates without transparency or accountability, meets labor standards set by the International Monetary Fund, she said last month.
“Many businesses are still controlled by the Burmese military and [its] cronies, and have been for a decade, so it is difficult not to engage with them,” she says. “We need to pass legislative framework to ensure that they are transparent and accountable and that local people can be protected. [Until then] I do not think the US government can ensure that there are accountable and transparent businesses in [Thein Sein's] administration.”
“By allowing deals with Burma’s state-owned oil company, the U.S. looks like it caved to industry pressure and undercut Aung San Suu Kyi and others in Burma who are promoting government accountability,” said Arvind Ganesan, the business and human rights director at Human Rights Watch.
Pro-democracy activists believe that in the absence of transparency, accountability and corporate governance reform, Burma’s democratic transition may fall victim to the “resource curse.”
“It is no coincidence that around the world, growth strategies based on extractive industries tend to reinforce the concentration of wealth and power and do little to advance general economic well-being — unless the country in question has a strong system of checks and balances and the rule of law,” notes Freedom House analysts Rhonda Mays and Robert Herman. “Despite the recent steps toward reform, Burma still has neither.”
Irrawaddy and several Kachin rights groups are supported by the National Endowment for Democracy, the Washington-based democracy assistance group. The Solidarity Center is one of the NED’s four core institutes.