EU Sanctions On Burma: Is Tide Turning? – Analysis

A delegation of approximately twenty-four European companies visited Myanmar towards the end of April in what was designated as an ‘economic fact-finding trip’. The visit took place amidst the renewed debate of the efficacy of western sanctions on Myanmar. Thus it is imperative to consider whether the European Union (EU) sanctions policy on Myanmar is softening? If so, then why this turn after more than a decade? What are the views of the opposition parties within Myanmar? Also what are the future possibilities for EU sanctions policy?

Austrian ambassador to Thailand and Myanmar, Dr. Johannes Peterlik, led this delegation that met the members from the Union of Myanmar Federation of Chambers of Commerce and Industry (UMFCCI). The meeting followed by a visit to an industrial zone culminated with a dinner at a luxury golf resort. The two-day trip was undertaken to evaluate different business prospects in Myanmar wherein the profile of the companies was quite impressive. Some famous names included the luxury crystal house Swarovski, P&P consulting group and Roxcel RMG. Any allegations of breaking the EU sanctions policy were neatly swept aside for the trip was described mainly as an ‘economic fact-finding trip’ with no contracts yet signed.

Mark Farmaner of Burma Campaign UK summarised, “European trade delegations may not break the letter of sanctions law but they certainly break the spirit of EU policy”. Concerns over some of the member countries of EU flagging sanctions have led many analysts to speculate whether the sanctions policy is as stringent as usually portrayed. Partly the reason for the above speculations lies within the nature of the EU sanctions policy itself. Recently a diplomat emphasised that the sanctions do not constitute a ‘blanket ban’ on trade with Burma but features only in some sectors which includes gems, timber, arms embargo and travel ban on some political figures within the regime. Furthermore, the sanctions policy is ‘self-regulated’ and individual countries are responsible for its best implementation. The articulation of such statements lately does underscore a commencement of change in positions and views within the EU with regard to sanctions.

At the annual review of sanctions in beginning of April, the debate renewed between pro and against factions within the EU. Germany, Italy, Spain and Austria reportedly pushed for the modification of sanctions whereas United Kingdom, Czech Republic and others urged that they should remain in place. Not surprisingly, though the sanctions were renewed, travel ban on some civilian leaders of Myanmar was lifted for a year and a decision was taken to keep all the diplomatic channels open. Likewise ban on EU officials visiting the country was also lifted.

Disagreements between EU members about the best way of handling Myanmar have been on forefront since 2007. The main bone of contention constitutes Germany’s trade with Myanmar leading many activists to accuse the country of just paying a lip service to the human rights situation. A report from Wikileaks cable in 2009 indicated that Germany exported sophisticated equipment to Myanmar which was followed by a visit of German diplomats to the factories where the machinery was installed. Although, International Atomic Energy Agency (IAEA) later confirmed that the machinery was for civilian use only. The furore was quite significant as it was a topic of discussion between Germany and the U.S. State Department. Moreover in 2009-10, Germany was also the biggest trade partner of Myanmar in EU. However Germany is not the only country to be held accountable. The nature of EU sanctions as examined is such that it does give some leeway to its members to operate in certain sectors. For instance, France’s company Total has a major offshore contract with Myanmar as it is largely largely exempted from sanctions.

The second factor that re-ignited the evaluation of EU sanctions policy is the distinctive position adopted by opposition democratic parties in Myanmar. Since the November elections, various opposition parties consistently profess a different view from the dominant National League for Democracy (NLD). NLD has maintained that sanctions do not affect the common populace of the country. The mismanaged economic policies and the corruption within the governance hierarchy are cited as the main culprits. This could be ascertained from the fact that despite the increase in foreign exchange reserves over the past few years, health and education facilities have not improved but have steadily worsened. Nevertheless, NLD indicated that foreign investment in certain sectors was required to improve the well being of Myanmar, provided it kept in purview the interests of democracy and human rights. A complete opposite position is maintained by Khin Maung Swe, the leader of National Democratic Force (NDF), who suggested that sanctions worked as a stranglehold on small and medium enterprises which would get more space to thrive once the sanctions were lifted. To this end a consortium of ten opposition parties sent an open letter to Brussels requesting to lift the sanctions altogether. Indeed, this environment of contradictory claims has created a difficult situation especially for the sanctions’ enthusiasts.

A third factor to affect the sanctions policy is that over the years the efficacy of the sanctions has become questionable. Myanmar’s integration into sub-regional organisations like Association of Southeast Asian Nations (ASEAN), Greater Mekong Sub-region (GMS) and Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Corporation (BIMSTEC) along with the ‘open door policy’ has allowed the country to comfortably be at the centre of the economic growth powerhouse, further leading to an uncertainty of whether sanctions will make any dent at all in the conduct of the regime. For instance, the garment industry exports in 2002 suffered a massive setback when U.S. slammed sanctions, yet with the onset of 2009, impressive demand from China and Japan again propelled the industry forward which made US$280 million in the fiscal year 2009-10. This has certainly led the pragmatists within EU to speculate as to just stand aside because any investment holes will be filled by its regional partners or else apply practical foresight and make good use of opportunities available. This dilemma was clearly reflected in a statement by Thomas Polacek, the Asia sales manager of Roxcel RMG, “If as Europeans we want to sit back and watch others do the business, that is one way…but there is a big debate within Brussels about it”.

Ultimately with passage of time, the futility of sanctions regime has created cracks within the EU and the issue is once again on the fore. A sort of realism-idealism debate has sparked between the members, with some seeing wisdom in making most of the opportunities available and some still keen upon seeing a long term governance change in Myanmar. Now that the doors to diplomatic negotiations are wide open, the stage is set for the drama to unfold. This year and the next might bring forth some crucial developments in the EU sanctions policy and it is no longer fanciful to imagine that the tide might actually turn.