Inside Story

Rethinking the Burmese sanctions

Despite calls for tougher sanctions on Burma’s military regime, it’s time for a more creative approach, argues Nicholas Farrelly

Nicholas Farrelly 12 October 2009 2142 words

Above: Myanmar Beer – one of the many consumer products in the country made by a government-owned company – has been the subject of boycott calls by activists.
Photo: Nicholas Farrelly, northern Burma, 2006

LAST WEEK Australian trade unionists and pro-democracy activists announced a reinvigorated campaign to stop Australian companies from doing business in Burma. This is not the first time a call for tougher sanctions has drawn our attention to the brutality of the military regime: over the past two decades there have been countless attempts to marshal western political and economic clout against the generals who run Southeast Asia’s most notorious dictatorship. So many attempts, in fact, that it seems like time to reassess their effectiveness.

Each of these attempts has been spearheaded by the United States and Britain, with countries like Australia playing a supporting role. The US government’s Burma policy has been the harshest, matched by its efforts to impose ever more punitive sanctions. Aung San Suu Kyi’s incarceration and the Burmese military’s failure to embrace democratic governance have also justified a downgraded US diplomatic presence. The administration of George W. Bush enforced a portfolio of new sanctions, including a ban on imports, a ban on the export of financial services, and the freezing of assets associated with the Burmese government. Members of the European Union, and the governments of Canada and Australia have also, to varying degrees, imposed their own restrictions. These policies are imbued with a hope that pressure will help change conditions in Burma.

Burma’s recent political history has been defined by a military dictatorship confident in its nationalist mission. Its violent approach to what it calls “peace” and “development” has led to a catalogue of human rights outrages and injustices. In their opposition to the regime, Aung San Suu Kyi and Burma’s other democrats are held up as paragons of righteous resistance. But a singular focus on the regime’s critics ignores the political realities of military rule. The military government is thoroughly entrenched; its tentacles envelope almost every part of the economy and society. These tentacles magnify the challenges for those who hope to design policies that will improve Burma’s prospects. Can anything work? Today, in Australia and around the world, there is a fresh effort to answer that question and reconsider Burma policies. The call by the Australian Council of Trade Unions and the Burma Campaign Australia to stop Jetstar, and a small number of other Australian companies, from doing business is part of this policy debate.

Australia maintains a list of over 400 Burmese government figures, and their associates, who are banned from financial dealings in Australia. These restrictions were introduced in the wake of the Burmese military’s crackdown on pro-democracy protestors in September–October 2007. When these financial sanctions were announced, foreign minister Alexander Downer described them as “the strongest financial measures available under existing Australian legislation against countries or individuals that are not subject to UN Security Council sanctions.” Thirteen of those on the list are members of the immediate family of Senior General Than Shwe, Burma’s head of state. Other members of the ruling State Peace and Development Council are also targeted. They are joined on Australia’s blacklist by subordinate military officers and other officials, and their families. There are also thirty-four Burmese civilians, from the government-aligned tycoon class, who are described as “persons who benefit from government economic policies.”

But we should not forget that disrupting the capacity of the regime and its associates to do business in countries like Australia is only one half of the puzzle. The current sanctions campaign is designed to highlight the other half: the Australian companies that continue to do business in Burma. On that list Jetstar is joined by seven Australian-registered firms: companies like Chevron, Lonely Planet and Twinza Oil. The Burma Campaign Australia describes them as members of a “dirty list.” Lonely Planet, which continues to publish a guidebook to the country, will not be surprised by its inclusion: it has been a regular target of critical jabs. Of course, the activities of natural resource extraction companies such as Chevron and Twinza Oil attract almost inevitable opprobrium. In the recent attack on the Burma operations of these businesses, ACTU president Sharan Burrow argued that “[w]e now should be part of increased sanctions, increased pressure to make sure that everything is done to bring this military rule to an end.” Her rallying cry is informed by a sense that if Australian companies are forced to withdraw then conditions inside Burma will tilt in favour of Aung San Suu Kyi and her pro-democracy movement.

The focus on the Burmese government’s misdeeds ensures that companies from countries like Australia face constant scrutiny if they do decide to continue operations there. But we ignore how little oversight their Asian counterparts face. Thai, Chinese and Singaporean businesses have led the world in their efforts to make a profit in Burma. These companies apparently have few scruples about whom they deal with. The sanctions policy has, as such, failed to damage the economic partnerships that underpin military rule. The lucrative exploitation of natural resources, particularly oil, timber and gems, has paid for the material comfort of the generals. With hydroelectric dams and other major infrastructure projects currently under way there is every chance that the military government will weather future economic storms. The generals have found no shortage of willing partners to buy their resources or build up their local capacity.

The economy is designed to replenish government coffers even while ordinary Burmese live hand-to-mouth. Calls for stricter western sanctions surrender the Burmese economy to companies from countries where the social stigma of “blood money” carries little weight. The stern American sanctions dictate that the world’s most famous carbonated beverage cannot be made in the country. But all this means is that in the parts of the country closest to the Thai border Coca-Cola is imported from Thailand; further north, it is imported across the long Sino-Burmese border. This illicit trade takes place because Coke’s major competitor, Pepsi, was once at the centre of a fierce sanctions debate. In 1991, a few years after the current crop of generals took power, a Pepsi bottling plant was opened in Burma. What followed was a vigorous campaign to pressure the company to cease its Burma operations. By 1997 Pepsi had quietly pulled out. At the time this was trumpeted as a major victory for anti-government activists. But the end of Pepsi in Burma has, I would suggest, had a negligible impact on the Burmese military government. Today few people remember this episode or its failure to curtail the growing power of the regime.

The real impact has been felt elsewhere. Stripping western-backed industrial capacity out of Burma has left big gaps in the local economy. It now tends towards the types of development that are least conducive to social transformation. Enclave capitalism has accompanied efforts to quarantine the wealth of the country in the hands of the cosy elite who remain complicit in military control. The highest-profile members of this elite group are already targeted by Australian sanctions.

But the tens of millions of Burmese not targeted by sanctions must also be considered. In government-owned businesses, in the bureaucracy, in the military and in almost every other sphere of the economy, ordinary citizens struggle to defend their livelihoods during these years of interminable political deadlock. For many Burmese families the political situation means that their best strategy can be to cultivate economic connections to the government. These connections do not imply partisan affiliation; they are simply an acknowledgement that other economic choices are so limited. Very few of these workers, junior civil servants or soldiers will ever get rich, and they are not part of the decision-making echelon. But they do feel the trickle-down effects when western companies are encouraged to look elsewhere in Southeast Asia for commercial opportunities. Is this a price worth paying? Will our symbolic and limited sanctions help change Burma’s future? Are we prepared to tolerate further drift towards the military’s dominance of the economy?

Such a drift is the outcome of two decades of western pressure and disengagement. Recent reports that Russia and North Korea are working to strengthen Burma’s technical capacity, harden its military infrastructure and initiate a nuclear program are another obvious outcome. There is a lingering worry that the generals are convinced their future security can only be guaranteed by a credible deterrent against invasion. A Burmese bomb, while still only a theoretical possibility, has got chins wagging in capitals around the world. It does not help that the military leadership’s secretive and paranoid nature ensures that they send mixed, and often unhelpful, signals.

Clearly, the portfolio of sanctions implemented by the United States, Britain, Australia and others has proven ineffective for catalysing regime change in Burma. It may even have encouraged, or reinforced, some of the generals’ bad behaviour. But it does not follow that further sanctions, and even more pressure, are doomed to fail. It is impossible to know what will happen next: this is the perpetual policy conundrum for those who aspire to “fix” Burma, or any similar country. What we see is how the limited efficacy of sanctions stands in contrast to the surprising achievements of the Burmese military in managing its political affairs. The government has also shown an unheralded savvy when it comes to dealing with the rest of the world. Sanctions are inconvenient but the generals’ willingness to exploit the country’s natural assets keeps a long line of Asian investors salivating for more.

SEEKING AN ALTERNATIVE to this stagnant policy matrix, the Obama administration in the United States is tentatively charting a new course. For the moment they have announced a desire to maintain sanctions but also to seek fresh opportunities for dialogue and “engagement.” These moves, which have already seen high-level meetings between the governments, threaten to wrong-foot those who consider sanctions alone will lead to progress. The recent visit to Burma by Democrat Senator Jim Webb was pivotal in this respect. His meetings with Senior General Than Shwe and leader Aung San Suu Kyi point to a newfound willingness to take policy risks.

On the one hand any such change in US policy will be greeted as a victory by the generals. The senior leadership rejoices in its survival and in the combative instincts that have seen it weather years of critical opinion and bad press. As self-proclaimed custodians of Burma’s independence they are prepared to wear a damaged reputation if the country remains united. It is, after all, a nationalist mission that defines their esprit de corps. On the other hand we should not assume that a shift away from sanctions-led policies means that all pressure will evaporate. A well-crafted strategy for re-engaging with key parts of Burmese society, including the military and bureaucracy, is likely to increase pressures in ways that make the generals uncomfortable.

Their current discomfort does not come from western sanctions but rather from the ethnic armies that continue to retain their weapons. It is notable that the current debate about sanctions in Australia is happening at a time when the Burmese military is moving to neutralise some of these ethnic armies before the planned 2010 elections. All of the ceasefires are now under tremendous strain and some have already been broken. Fighting in the northern Shan State has seen a major Burmese army attack on a former ceasefire ally. The ceasefire forces, unprepared for a full-frontal assault, have scattered. Understandably, ongoing negotiations about the future of the other ethnic armies have become even more fragile. A spark from any direction could ignite new conflagrations. Renewed war with the Kachin Independence Army and the United Wa State Army, both forces with thousands of well-trained and provisioned troops, are now on the agenda for the first time in a generation.

The debate in Australia about Burma policy cannot be divorced from this political and ethnic situation. So while the sanctions debate preoccupies coverage of conditions in the country, it is the generals’ plans for the upcoming elections and their efforts to sideline potential opponents that are testing their resolve. They have proven impervious to activist criticism and remain unmoved by western sanctions. Any change will take time and great effort. And good policies will necessitate new levels of dialogue with the Burmese government. Encouraging Australian companies and the Australian government to play a more active role in those new conversations could be one way of breaking the Burma policy stalemate. •

Nicholas Farrelly is a Southeast Asia specialist in the College of Asia and the Pacific at the Australian National University. In 2006 he co-founded New Mandala, a website on mainland Southeast Asian affairs.