A direct result of the 2003 Act was that import orders for textiles from the United States worth $350 million were lost by Burmese companies. Despite the fact that most of these garment factories were privately owned and so did not affect the military government directly, the nature of business in Burma is such that there is no clear separation between private enterprise in terms of the formal economy and the junta. The system of cronyism and patronage in this sphere is rife. One would assume at the very least therefore that associates, apologists and supporters of the Junta were affected.

However in achieving their ultimate goal the effectiveness of the sanctions is highly questionable. Since US sanctions have been introduced what moves have there been toward a meaningful and inclusive democratic system? The answer is none. The so called initiatives such as Prime Minister Khin Nyunt’s “Road Map to Democracy” reconvened in late 2003, failed to demonstrate that there would be genuine debate about the key issues of a civilian elected government and the future role of Burma’s ethnic groups. Further still the deposition of Khin Nyunt in October 2004, was seen by many as the consolidation of hard line, isolationist elements within Burma’s power structure.

When looking at the effectiveness of US sanctions, their unilateral nature has to be stressed. The fact of the matter is that only the USA has been willing to impose what one would call “hard sanctions”. Those introduced by the EU have been decidedly limited in scope. In 1996 and 1998 an embargo on arms and visa bans for the government, their families and security officers were introduced. However it was not until September 2004 that investment sanctions were imposed. These were significantly diluted during negotiations due to objections from the French, German and Austrian governments2. The practical consequences of the sanctions were therefore somewhat restricted. The investment sanctions prohibited EU companies from making financing available to certain businesses owned by the state but no ban on actual investment by European Union companies or citizens was introduced. Also no action was taken to halt the import of goods and services from Burma. Perhaps most significantly the most profitable sectors for the Junta, oil, timber and gas were omitted from any sanctions imposed3. In the words of Harn Yawnghwe director of the Brussels based European Office for the Development of Democracy in Burma, “In reality these sanctions are nothing. They just say we are unhappy with the situation.4”

The toothless nature of such measures gives carte blanche to companies to follow the example of French energy giant TOTAL whose investment in Burma has provided substantial revenue to the junta who can use income from the project in any way they please. TOTAL in partnership with the US company UNOCAL, who bought shares in the project in 1993 before the first wave of US sanctions, and the State owned Myanmar Oil and Gas Enterprise (MOGE) undertook the Yadana Pipeline Project. During construction there was substantial use of forced labour. It has been reported that since 2002 the junta has earned between $200 and $450 million dollars from the venture. This represents a significant proportion of the regimes total income when one considers that central taxes earned by the government have been estimated to be worth $110 million5. The “blunt” nature of the 2004 EU sanctions is clear. They are pretty much useless in motivating the Junta to address concerns about human rights and democracy about which the EU has previously been vocal.

In reality these sanctions are nothing

The above further emphasizes that the sanctions currently in place have proved to be ineffectual. Put simply their consequences are insufficiently severe for them to motivate the generals to yield to any demands. The stance of constructive engagement”, first adopted by the Thai government in 1991 has also significantly contributed to this fact. The policy which became regionalized in 1997 with Burma’s admittance to ASEAN in the same year has contributed significantly to huge increases in foreign investment into the previously pariah state. Since Burma switched to an “open economy” in 1988 some $7 billion dollars have been invested, almost half of which has come from ASEAN countries6.

The result has been that Burma’s leaders have little to fear from a western led embargo. In an interview with the BBC in 2003 the Burmese Ambassador to London, Dr Kyaw Win made this point crystal clear. He commented, “We are not worried about US and European sanctions as trade with India, China and Thailand is already good.”7 Economic indicators support this statement. Trade between Burma and its neighbours has mushroomed in the past ten years. Bilateral trade with China was officially estimated at $650 million in 2001, although due to a large informal economy, this figure is thought to be grossly understated8. India’s cross border transactions were put at $323.24 million in the period 1991-92 and deals with Thailand, amounted to some $1.9 billion for the period 2003-2004. Foreign investment has also risen dramatically. The Ministry of National Planning of Burma reported an increase of more than 34 percent in the period 2003-2004. South Korea, China and Thailand have all been significant contributors particularly in the oil, gas and manufacturing sectors.

As shown above Burma’s regional neighbours are concerned with exploiting Burma’s abundant natural resources but equally important for some is bringing the long isolated state into their sphere of influence. This affords the generals further leverage in resisting pressure directed at them by the US and to a lesser extent the EU. For China and India particularly, Burma is strategically vital with regard to each other. Beijing has long had a tangible influence over Rangoon. Since 1988 they have supplied more than $1.6 million in arms and made significant contributions to Burma’s infrastructure.

Such links have no doubt greatly concerned India in both a military and monetary sense. A Burmese state under China’s influence could place India at a disadvantage with Pakistan, China’s ally on its western flank and Burma to its East9. With this in mind, India has abandoned their previous policy in relation to Burma of espousing democratic values10. Engagement with the generals is central to counteracting Chinese influence in the region. India have shown a keen interest in developing infrastructure projects of their own and developed significant trade deals with Burma. This has afforded the junta added legitimacy and strength. This contributes further to the impotence of the sanctions from the US and others.

Of the existing empirical studies on the use of sanctions all conclude that they lead to major concessions on the part of the target state only in a minority of cases11. Currently it appears that those instituted by the US and the EU in Burma cannot be included in this minority. Essentially, it is clear that democratic ideals are not high on the agenda of Burma’s neighbours. Their geo political rivalries and lust for the economic spoils of a nation on its knees are ultimately more important to them than the continual suffering of the Burmese people. They simply have too much to lose for them to adopt a moral standpoint towards their neighbour. The focus has to be on diluting this outlook. By themselves sanctions cannot do this. If sanctions are to have any purpose they must be directed as part of a wider international campaign to keep up the pressure for lasting change in Burma.

Endnotes:

1. An overview of the Burmese Sanctions Regulations, US Department of the Treasury Office of Foreign Assets Control
2. Council of the European Unioin, Council Common Position, Official Journal of the European Union, October 2005
3. Ibid
4. Effect of Sanctions against Rangoon Weighed, Interpress Service, November 21, 2003
5. Total Pollutes Democracy, Stop TOTALitarianism in Burma, July 2005
6. Foreign Investment in Burma up 34%, Irrawaddy (Online), September 12, 2005
7. Do Sanctions against Burma work?, www.bbc.co.uk, June 20, 2003
8. Why China and Myanmar are drawing closer, South China Morning Post, January 9, 2003
9. Sanctions Revisited, Irrawaddy, May 2001
10. India's Burma Policy tempered by pragmatism, Irrawaddy (Online), October 28, 2004
11. Hovi and Huseby, http://www,ima.org.uk/conflict/papers/Hovi.pdf

To go to the other articles published in the September 2005 BI Newsletter click on the links below:

National Reconciliation
The End of the "Buffer Zone"