edge review24-30 May 2013

Photo: Myanmar’s President, Thein Sein, addresses the World Economic Forum held in Naypyidaw in June (World Economic Forum\flickr).

U.S. businesses push to lift remaining sanctions on Myanmar as Thein Sein visits Washington

Nay Myo Zin, a former military officer and social activist in Myanmar, was released from prison in January 2012 after serving six months of a 10-year politically motivated sentence. Upon his release, his sentence was suspended – rather than rescinded – under section 401 of Myanmar’s penal code, the same order that was applied most other released prisoners of conscience. In the first week of May, he was re-arrested and his sentence was reinstated for six more years, gaining him the dubious distinction of being the first released prisoner of conscience to have his suspended sentence reinstated.

In what might appear to have been an abrupt about-face, Nay Myo Zin was released last Friday after less than two weeks in detention, along with 22 others as part of the ninth prisoner amnesty since May 2011. But the devil was in the timing: President Thein Sein was in Washington this past week, the first official visit to the United States by a Burmese head of state since 1966. This is not the first time in recent memory that political prisoners were released to coincide with a major diplomatic event: amnesties occurred just before President Barack Obama’s landmark visit to Yangon last November, and another occurred the day after the EU removed the last of its sanctions in April.

Activists have decried Thein Sein’s audience in Washington as legitimising a regime that shows little regard for basic rights, as evidenced by the continued presence of political prisoners and ongoing repression against minorities. The fact that Naypyidaw openly uses political prisoners as bargaining chips to extract concessions from the West should cast serious doubts on the sincerity of Thein Sein’s reforms; one can only wonder what Naypyidaw will do once it has none left to release. To Obama’s credit, however, he had no qualms about addressing these issues with Thein Sein at a meeting in the Oval Office on Monday, while promising that Washington would “make every effort to assist you [Myanmar] in what I know is a long and sometimes difficult, but ultimately correct, path to follow.”

Although Naypyidaw’s motives are suspect, Washington’s self-styled “calibrated approach” does have the potential to induce positive changes for Myanmar – so long as Washington continues to pair high-level diplomatic overtures with binding economic mechanisms to promote transparency and human rights. In theory, such mechanisms are already in place – but how they are employed will likely depend on how much influence powerful business lobbies in Washington have in the matter.

The Sanctions Puzzle

The U.S. Treasury Department maintains a list of entities – Specially Designated Nationals, or SDNs – that are barred from doing business with Americans. But the list is far from complete: a recent Associated Press article outlined many problems with the SDN list, claiming that the U.S. government failed to include many prominent companies and individuals linked to human rights abuses and corruption, despite suggestions from the American embassy in Yangon to do so.
While this revelation rightfully brings into question the effectiveness of targeted sanctions, the SDN list and the Block Burmese JADE Act, a complementary piece of legislation, are not the only sanctioning measures at Washington’s disposal. On July 11, 2012, Obama issued a presidential decree – Executive Order 13619 – that, in theory, serves many of the same functions as the targeted sanctions list without maintaining a “negative” list of entities that U.S. interests are barred from doing business with.

Order 13619 prohibits the transfer of assets to U.S. entities from individuals that meet vaguely-defined criteria, including “threaten[ing] the peace, security, or stability of Burma [and/or] the commission of human rights abuses,” as well as being involved in military links with North Korea. The order authorises the Secretary of the Treasury, in consultation with the Secretary of State, to “take such actions, including the promulgation of rules and regulations… to carry out the purposes of this order.”

In practice, this may mean that the U.S. government has the power to block American investment in Myanmar on an ad-hoc basis, outside of the legal framework provided by the SDN list, although it has not yet done so. The same day as Obama signed off on the order, the US announced reporting requirements that oblige American businesses to detail their dealings in Myanmar if their investments total more than US$500,000. This appears to be intended to allow the U.S. government to prioritise scrutiny on large deals while allowing smaller transactions to slip through the cracks. While no U.S. firm has yet fallen afoul of the order, it serves as a self-policing mechanism, giving companies motivation to conduct due diligence above and beyond checking against names on the SDN list.

Enter the Multinationals

But American commercial interests are pushing for these reporting requirements to be rescinded, and it remains to be seen if lobbying pressure will influence how zealously the U.S. government will pursue investigations into potential transgressions in the future. Following his reception at the White House on Monday, Thein Sein was the guest of honour at a lavish gala dinner hosted by the U.S. Chamber of Commerce, the single largest lobbying organization in Washington. The gala follows a visit to Myanmar by a 50-member Chamber delegation in February that included executives from major American companies including General Electric, Chevron and Cargill.

The Chamber routinely supports deregulatory policies in the interests of American multinationals, both at home and abroad, and funnels substantial sums towards politicians who support such policies each election cycle. High on the Chamber’s agenda is reform of the Foreign Corrupt Practices Act (FCPA). Enacted in 1977, it sets harsh penalties for American companies found guilty of bribing foreign officials. The reforms the Chamber is pushing for would render the FCPA toothless, and would give American firms almost total deniability for corrupt activities committed abroad. Most developed countries have some form of anti-corruption legislation on the books, but the FCPA is particularly rigorous, as it does not include provisions for a “compliance defence,” which would absolve companies of corruption-related fines if bribes are paid by local partners or rogue employees. Recently released lobbying disclosure forms show that a consortium of oil and gas companies linked to the Chamber have been pressuring the U.S. State Department to overturn the new reporting requirements, a clear indication that American business interests cannot be trusted to avoid corrupt practices without continued U.S. government oversight.

Rights vs. Profits

Unlike previous amnesties in Myanmar, the sentences of the prisoners released last Friday have been truly lifted this time. But hundreds of sentences remain suspended under section 401 – including those of some of the country’s most prominent dissidents – raising fears that activists may be re-incarcerated in the future. Despite exhortations by Thein Sein’s office that the Obama administration has fully embraced “Myanmar’s Spring,” its diplomatic overtures towards Thein Sein have been pragmatic and cautious, reflecting the reality that there are still many unknowns clouding Myanmar’s future prospects and that serious issues remain. On Tuesday, Senator Mitch McConnell – among the staunchest American supporters of democracy in Myanmar – stated his intention to completely lift a previously-suspended import ban. This is arguably a measured reward for Thein Sein’s reforms, despite the problems that remain, as better access to the American economy will likely act as a net benefit for Myanmar’s people overall. But American multinationals are all too keen to chip away at the limited leverage Washington retains on human rights and corruption issues; if the Obama administration is serious about constructive engagement with Myanmar, it must block the efforts of powerful lobbies in order to maintain the integrity of its stated agenda.

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