Monday, July 23, 2012

Can we fine-tune the sanctions against Burma?


Posted By Min Zin  


Last week, the Obama Administration suspended some of the most important financial sanctions against Burma. U.S. companies are now allowed to invest in Burmese industries (including oil and gas) and to sell services.
Yet on Wednesday of this week, the U.S. Senate Finance Committee took a decision that pointed in exactly the opposite direction. It voted to renew trade sanctions passed nine years ago inresponse to the military junta's attempted assassination of Aung San Suu Kyi. (She survived, but the attack resulted in scores of other deaths.) The renewal of the legislation -- if it passes a vote of the full Senate and the House, which still have to confirm the decision -- will technically ban all imports from Burma for another three years. Since the ban was first imposed in 2003, imports from Burma to the U.S. have fallen to almost zero, a sweeping prohibition that has done a lot of damage to Burma's nascent manufacturing industry. For that reason, Aung San Suu Kyi actually askedU.S. Senator Mitch McConnell to remove the remaining sanctions early last week. But her plea didn't seem to help.
Burma's nominally civilian government has been working hard lately to persuade the U.S. to remove further western sanctions against the country. President Thein Sein (shown above with Hillary Clinton) last week called for all sanctions to be lifted in order "to make possible the sort of trade and investments that this country desperately needs at this time."
Lower House Speaker Shwe Mann, an ex-general, told a visiting U.S. official that the suspension of U.S. investment sanctions was one-sided and mainly benefited U.S. firms. He asked the U.S. to review the trade sanctions and to take the interest of Burmese citizens into account. He asked his interlocutor, Under Secretary of State Robert Hormats, to convince Congress not to renew the sanctions.
(Shwe Mann's remarks showed that he doesn't entirely get it. He doesn't seem to understand is that lifting the investment ban will allow a considerable inflow of capital into Burma and bring immediate benefit to the country. Foreign investors, by contrast, will have to wait some time to enjoy the fruits of their investments -- assuming that they make a profit, of course.)
In any case, it's hard to make sense of U.S. policymakers' decision to maintain the ban on imports, which hinders the possible emergence of diversified business players in labor-intensive sectors such as the textile industry. The ban on imports has never hurt the military and its cronies, which have always managed to find profitable alternatives (usually involving the exploitation of Burma's rich natural resources). In fact, U.S. policymakers have failed to aim sanctions at those who propped up Burma's dictatorship (and their business cronies).
"By reauthorizing the import sanctions for three years, we maintain pressure on the Burmese government to undertake reforms," Senate Finance Committee Chairman Max Baucus said. To be sure, maintaining leverage is a good strategy. But why does it have to take the form of misguided import sanctions that do more harm than good?
The renewal of the import ban will actually force the Burmese government to continue relying on capital-intensive resource extraction, and the benefits will keep accruing to the state-owned oil and gas conglomerate and the military's proxies, who own most of the capital in this sector. (U.S. law still doesn't allow American companies to do business with the Burmese military.) Foreign investment in capital-intensive industries tends to alienate unskilled laborers and exacerbates unemployment. Failing to create jobs for the broader Burmese population will only worsen the already dire state of inequality in the country.
A growing gap between rich and poor (and its larger political implications) will likely threaten the vested interests of the ruling elites and cronies, and serve as a disincentive to pursue broader reforms. (Political liberalization can encourage impoverished population to claim their socio-economic rights -- a process that can range from demands for income redistribution to physical onslaughts on elite individuals, property, or privileges.) One possible scenario is that the rulers will seek to protect themselves with a "reactionary alliance" of multinational corporations, the ruling elites, their cronies, and even some ethnic insurgent leaders, since almost all of the natural resources are located in ethnic minority regions, potentially leading to development-driven abuses committed against local populations.
In fact, what Burma needs is not just the removal of trade sanctions, but also favorable trade conditions from the U.S. and the West that will help the country to attract more investments in labor-intensive sectors, ultimately enabling its products to gain a competitive edge in the international market.
In short, the strategy should be to favor measures that can empower the autonomy of positive forces (like labor) while reinforcing the sanctions that target oligarchic criminals.
Let's hope that the renewal of sanctions doesn't get final approval. If it does, we can gain some consolation, perhaps, from the fact that the law will preserve the White House's authority to waive the sanctions (and "reward" Burma) if need be.

1 comment:

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