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Sanctioning Redemption

by Gabrielle Hick

Oppressive regimes are not known for their tendency toward democratic reform. They are characterized by repression, the imprisonment of political opponents and the concentration of power in the hands of a few, and the longer they remain in command, the more entrenched their position and power become. So if a despotic military junta decided to develop a new constitution and hold elections for the first time in 20 years, it would be difficult to believe that their true pursuit was progress and democracy. Faced with such an unprecedented and ambiguous diplomatic dilemma, how should the United States government respond?

The case at hand is Burma, formally known as the Republic of the Union of Myanmar. Between 1988 and 2010, the military-led State Peace and Development Council (SPDC) held the country’s 55 million people in an iron grip, perpetrating horrible human rights abuses, recruiting child soldiers in its attempts to fight ongoing rebel insurgencies and encouraging a genocide against Burma’s Muslim minority. This went hand in hand with the embezzlement of huge sums of money by a small military elite in a country were poverty is endemic. As a result, the United States imposed sanctions through the 2003 Burmese Freedom and Democracy Act. The Act banned trade between both countries, restricted visas for Burmese officials and froze overseas Burmese assets.

The SPDC has since attempted to reform its tarnished image. In 2003 the regime announced its seven-step “Roadmap to a Discipline-Flourishing Democracy.” In 2008 the government proposed a new democratic constitution. And in 2010 the SPDC oversaw the country’s first parliamentary elections in two decades.  But this process is neither swift nor comprehensive.  The military-backed Union Solidarity and Development Party (USDP) “received” close to 80 percent of the popular vote and did not permit its main challenger, the National League for Democracy (NLD), to participate. The new constitution, heralded by the government as a new commitment to democracy, reserves over 25 percent of its legislature seats for military appointments.

As insufficient as they are, the government’s reforms have brought about major democratic advancements in Burma, rolling back many of the severe human rights violations that were common under military rule. NLD Secretary General and Nobel Peace Prize winner Aung San Suu Kyi, one of the world’s most respected prisoners of conscience, has been formally released after two decades of intermittent house arrest. In addition to her release the government has enacted several amnesties, freeing roughly 15,000 prisoners, among them other prominent political dissidents. In December 2011 peaceful public demonstrations were allowed for the first time. Four months later the NLD was finally permitted to participate in parliamentary by-elections, sweeping 43 of 45 available seats, including one won by Suu Kyi herself.

In response to recent reforms, the United States has vastly improved its foreign relations with the country. A December 2011 visit by then-Secretary of State Hillary Clinton marked the beginning of increased trust and cooperation between the two countries. Last May, President Obama appointed Derek Mitchell as ambassador to Burma, the first since 1990. Later that July, the United States eased sanctions on the country — albeit with some major conditions, such as a prohibition against investment in military-owned enterprises.

While progress is undeniable, the United States should not be so quick to normalize its diplomatic and economic relations with Burma. Democracy there is far from consolidated, and despite the pretense of a new transparency law, Burma still remains near the bottom of Transparency International’s worldwide rankings of perceived corruption. The United States should first address Burma’s rampant corruption, which has created severe inequality problems and has exacerbated social unrest across the country. In this regard, while the Obama administration’s decision to ease the sanctions against Burma allows for the inflow of much-needed capital, it seems an unwise decision at this point in time.

Compelling economic arguments remain for lifting sanctions. Prior to the imposition of sanctions, the Burmese textile industry constituted a major source of economic revenue for the country, employing thousands of citizens. But over half of Burma’s 300 textiles factories were shut down upon the introduction of sanctions, devastating the country’s economy. In addition, the Asian trading partners to whom Burma turned in the United States’ absence, such as China, Korea and Japan, have even lower standards of labor than U.S. corporations overseas and created even worse working conditions for the remaining Burmese factory workers. Allowing U.S. companies to re-enter the Burmese market may very well boost the overall economy as well as improve the working conditions and living standards of unskilled laborers.

There are also some restrictions placed on U.S. businesses newly operating in Burma. In an effort to monitor the effects of enhanced economic ties between the two countries, companies investing more than $500,000 are required to log detailed annual accounts of their activities with the State Department.  U.S. companies or individuals are prohibited from conducting any transactions with either affiliates of the Burmese military or certain “specially designated nationals” — Burmese citizens who, according to the Obama administration, “undermine the reform process, engage in human rights abuses, contribute to ethnic conflict or participate in military trade with North Korea.”

These regulations, however, do not go far enough to be truly effective. As of today, there are no limitations on investments in the lucrative Burmese energy sector, which means U.S. companies can partner with the state-run monopoly Myanma Oil and Gas Enterprise (MOGE). Emblematic of the cronyism that has for years permeated all facets of political and economic life in Burma, MOGE has been denounced for its lack of transparency and for its ties to “antidemocratic military figures.” What’s more, an investment in MOGE, which is wholly owned by the Burmese government, would only serve to strengthen the old military elites who still hold high posts in the new, “reformist” administration.

More importantly, the degree to which multinational corporations — and the capital they will pour into Burma — could undermine the country’s stability encourages skepticism toward the desirability and efficacy of lifting sanctions. Corporations such as General Electric are already investing heavily in the country, generating massive inflows of capital. This is not a bad thing in itself, but given the government’s corruption and the military’s enduring grasp on power, the likelihood is that profits will remain concentrated in the hands of a few.  How will such a corrupt elite ensure that multinational corporations do not exploit the Burmese people for cheap labor or wreck the environment as they mine natural resources? And many of the country’s vast mineral and energy resources, which include copper, coal, natural gas and gold, are found on Burma’s periphery, in regions where armed rebel groups regularly challenge the state’s authority. As U.S. companies race to invest in these areas, the ensuing land grabs and deforestation may shatter the country’s attempts to stabilize.

The rash removal of restrictions on trade with Burma also risks causing the country to overlook many of the non-economic problems that plague its people. Although the government has allegedly reached a ceasefire agreement to end a decades-old confrontation with ethnic rebels in the resource-rich state of Karen, the current situation there does not appear to be improving. In addition, violent clashes between Burmese Buddhists and Muslims have only increased since a new breakout of hostilities last summer.  Hundreds have died and tens of thousands have been displaced since the government declared a state of emergency in the coastal state of Rakhine, the site of these most recent attacks. The government has only seemed to exacerbate the problem, because public authorities and military officers themselves have been accused of targeting Muslims and supporting Buddhist extremists. Engulfed in such ethnic and religious conflict, Burma could easily become overwhelmed by the socioeconomic challenges that come with the removal of sanctions. Societal stability must precede economic growth; if incoming revenue keeps failing to reach the people, it remains water pouring through a sieve.

The overnight reinstatement of unrestricted trade with Burma clearly threatens the delicate progress that has been made so far. The Burmese government appears to be on the correct path,  but there is still much progress to be made. Although poverty levels in Burma — the poorest nation in Southeast Asia — are intolerable, the United States should wait to economically engage with the country until its internal situation is more stable. Along with other countries that have decided to ease their sanctions against Burma — such as Canada, Australia and the European Union member states — the United States should instead push for much stronger restrictions on trade in order to pressure the Burmese government to continue to move in a positive direction. The impact of sanctions should not be ignored. As Suu Kyi pointed out back in September 2012, “The very fact that there’s a strong desire to have sanctions limited shows they were effective.”

The United States government should be more hesitant to restore unlimited economic access for U.S. companies to a country still under the grasp of a repressive and corrupt regime. The economic boon that foreign capital provides to recovering, developing countries should not be underestimated, but neither should its destabilizing effects. In pursuing its own economic interests in Burma, the United States should neither disregard the country’s economic and social instability nor overlook the many abuses that the Burmese government still commits.  Rather than strengthening the democratic processes that the sanctions were meant to promote, U.S. policies could cause unintended damage.

Art by by Gabrielle Hick

About the Author

Thomas Nath, Class of 2016, Staff Writer, concentrating in Public Policy & American Institutions, Political Science, and English. Enjoys policy analysis, political theory, music, tennis, literature, movies, and football. In constant search of a rug that really ties the room together.

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