Blocking Property of the Government of Burma and Prohibiting Certain Transactions

Background

The executive order issued by President George W. Bush in 2003 sought to target the oppressive regime in Burma (Myanmar), particularly focusing on the financial and political networks that supported the military junta. It effectively froze Burmese government assets and prohibited specific financial transactions conducted by U.S. persons involving parties associated with the Burmese regime. By blocking property and interests in property of designated individuals and entities, the U.S. aimed to exert economic pressure on the regime and limit its capacity to suppress pro-democracy movements. These financial restrictions were part of a broader strategy to promote human rights and democratic governance in the region, backed by the International Emergency Economic Powers Act (IEEPA) and the Burmese Freedom and Democracy Act of 2003.

The Treasury Department, in collaboration with the State Department, implemented operational measures to enforce the order. This included issuing directives prohibiting the export of financial services to Burma and blocking transactions involving Burmese financial institutions. Specific Burmese banks, as listed in the executive order's annex, found their operations significantly hindered as they were cut off from U.S. financial markets. This impinged on the Burmese government's ability to access international financing and conduct overseas transactions, effectively isolating it from crucial financial networks and thereby amplifying the economic strain the order intended to impose.

Socially, the order had ramifications for both local Burmese citizens and expatriates. Burmese nationals in the United States found themselves in a precarious financial situation as remittance flows were impacted. Furthermore, the prohibition on importing Burmese products, notably affecting the garment industry, disrupted what was for many Burmese workers a vital economic lifeline. Although well-intentioned, the order's restrictions inadvertently contributed to economic hardships for civilian populations that depended on these sectors for employment and income. The U.S. maintained the embargo as central to its policy on Burma, reflecting a broader international consensus on isolating the junta until democratic reforms were initiated.

Reason for Revocation

In 2016, President Barack Obama's decision to revoke the executive order came amid significant geopolitical and strategic shifts. The revocation was consistent with a broader diplomatic engagement strategy signaling the U.S.'s support for Burma's nascent democratic reforms. Following the landmark 2015 elections in Burma, which led to a peaceful transfer of power to a civilian government led by the National League for Democracy, the circumstances had changed markedly from those in 2003. With these changes, the Obama administration pursued a recalibration of U.S. policy to recognize and encourage democratic progress in Burma.

Revocation was part of a strategic pivot aimed at improving relations with Southeast Asian nations, an objective that aligned with the U.S. 'rebalance' toward the Asia-Pacific region. This strategy sought to enhance U.S. presence and influence in a region marked by rapid economic growth and significant geopolitical realignments. By lifting sanctions, the U.S. aimed to incentivize further political and economic reforms in Burma, providing a pathway for integration into the global economy while countering the influence of regional powers like China.

Barack Obama's administration embraced the ideology that engagement, rather than isolation, could better promote democratic values and economic development. This was a significant ideological shift from previous sanctions-based policies that prioritized punitive measures, reflecting a broader liberal internationalist approach to foreign policy. This policy change underscored a commitment to supporting democratic transitions through diplomatic means, fostering stability, and encouraging greater alignment with international norms and values.

Critics, however, voiced concerns that the move might have been premature, potentially reducing leverage over the Burmese military, which retained significant political power. Nonetheless, the administration maintained that fostering economic growth and institutional development through open engagement would ultimately consolidate the democratic gains and weaken the military’s grip over time. The executive order’s revocation was a calculated risk, balancing immediate geopolitical goals with the long-term vision of a stable, democratic Burma.

Winners

With the lifting of the financial sanctions, several specific groups stood to benefit significantly from U.S. economic engagement with Burma. American corporations and multinationals, particularly in sectors like oil and gas, telecommunications, and consumer goods, found new investment opportunities in a market eager to modernize and develop its infrastructure. Companies like Chevron and Coca-Cola, which had previously sought to venture into the Burmese market, emerged as potential beneficiaries of the newly opened economic landscape. These corporations viewed Burma as an untapped growth market for investment and business expansion, particularly as its economy adjusted to integrate with global trade.

The Burmese civilian government, led by the National League for Democracy, also gained from the revocation, as it provided the political leadership with international legitimacy and reinforced their reformist agenda. The influx of foreign investment and the reduction of economic isolation allowed the government to pursue economic development projects aimed at improving infrastructure, healthcare, and education sectors. This in turn bolstered political stability and support for the civilian administration, which could point to tangible outcomes of its reform efforts.

Local industries, particularly those hindered by the import restrictions under the executive order, felt the immediate revitalization. The garment and textiles sector, which had been a significant source of employment and revenue, benefited from increased access to international markets, fostering job opportunities and economic growth. Small and medium-sized enterprises found an enlarged consumer base and increased capacity for innovation, driven by improved access to capital, technology, and best practices from foreign partners.

Losers

The revocation of these sanctions potentially disadvantaged specific groups that had held leverage under the old regime. Some human rights organizations and advocates expressed concern that the lifting of economic pressure might undermine efforts to hold the Burmese military accountable for human rights violations. These groups feared that the normalization of economic relations could inadvertently embolden the military, who might perceive the revocation as tacit acceptance of the status quo regarding their past conduct.

Burmese communities deeply affected by the military's policies, particularly ethnic minorities and activists, were apprehensive about the pace and depth of genuine political reforms. The relaxation of international pressure could retard progress on resolving longstanding issues of ethnic conflict and human rights abuses. Without the underlying push for systemic change, these communities worried that military influence might remain entrenched, threatening their aspirations for autonomy and justice.

Inside Burma, businesses that failed to capitalize on the opening economy could find themselves disadvantaged. Local firms that were initially shielded from external competition by sanctions now had to contend with larger, more established international entities entering the market. This competition could stifle small local enterprises lacking the capital or expertise to compete globally. Without adequate support or capacity building from domestic economic policies, this could lead to market monopolization by international players, marginalizing local businesses in their home markets.