Burma

US Officials Argue Sanctions Policy on Burma

By Lalit K Jha 15 May 2012

WASHINGTON DC—Noting that Burma’s process of political reform has a long way to go, an official of the Obama administration on Monday said that the United States will continue to maintain a policy of “principled engagement” and pursue a calibrated strategy combining positive actions with continued pressure and incentive for change.

The statement, made by a senior administration official, came amid calls from investors for the US government to take a cautious approach to lifting sanctions on Burma arguing that investment at this point of time could undermine progress and worsen human rights abuses.

However, top Republican Senator John McCain maintained that it is time to suspend US sanctions on Burma given the progress made in the country. He argued for establishing a “principled, and ideally, binding, standards of corporate social responsibility” for US business activities in Burma.

“The right kind of investment would strengthen Burma’s private sector, benefit its citizens and ultimately loosen the military’s control over the economy and the civilian government. The wrong investment would do the opposite, entrenching a new oligarchy and setting back Burma’s development for decades,” McCain argued before the Center for Strategic and International Studies (CSIS), an eminent Washington-based think-tank.

McCain’s argument came as a dozen investors collectively managing more than US $115 billion in assets wrote a letter to the US President, released to the press on Monday, citing concerns about the risk of derailing progress toward democracy and respect for human rights, stating that “without the rule of law or constitutional assurances that the judiciary will protect property or investments, Burma remains a volatile area for business investment.”

According to Kathy Mulvey, the director of the Conflict Risk Network, “Despite pressure from some elements of the business community, now is not the right time for a rush into Burma. Conflict continues to rage in Burma’s resource-rich ethnic national states. Investment is likely to exacerbate human rights abuses and undermine any progress that has been made toward democracy.”

A senior administration official told The Irrawaddy that considerable progress has undoubtedly been made in Burma, but the country still has a long way to go.

“Burma’s reform process has a long way to go,” he said. “Even as we recognize the government’s progress, we remain concerned about hundreds of remaining political prisoners, conditions placed on those who have been released, ongoing conflict with ethnic minority groups and associated human rights violations, and indications of a military relationship with North Korea,” said the official, speaking on condition of anonymity.

“To that end, even as we partner with President Thein Sein, Aung San Suu Kyi, and other advocates for change within the Burmese government and civil society to further advance the country’s reforms, we will continue to maintain our policy of ‘principled engagement’ and pursue a calibrated strategy combining positive actions with continued pressure and incentive for change,” the senior administration official said.

Referring to the recent developments in the country, the official said Burma has made important progress in a number of areas of core concern to the US, including releasing hundreds of political prisoners, pursuing ceasefire agreements with armed ethnic groups, and allowing greater freedom of expression and political participation.

“The United States has welcomed this progress and has met that progress with positive actions of our own, including easing sanctions on financial services and investment, loosening travel restrictions, and standing up a USAID mission in Rangoon,” the official said.

“These steps acknowledge the important changes the government of Burma has made, and will encourage and empower the government and the people of Burma to continue on the path of political and economic reform,” he added.

The official’s response came as the dozen investors released their collective letter on May 11 arguing that they do not believe that immediate relaxation of US sanctions would best serve the goal of achieving progress toward democracy and respect for human rights in Burma.

“As institutional investors, financial service providers and related stakeholders, we are concerned about the risks posed by the potential broad relaxation of US sanctions and the ban on financial transactions and investments in Burma,” the letter said.

Without the rule of law or constitutional assurances that the judiciary will protect property or investments, Burma remains a volatile area for business investment, the investors noted. “To fulfill our responsibility to respect human rights, to avoid complicity in human rights abuses, and to protect ourselves from financial and reputational liability, we as investors need comprehensive and current information about those responsible for human rights abuses and corruption in Burma,” they said.

The American investors expressed their alarm at recent reports and eyewitness accounts of escalating attacks and rising military presence in resource-rich Kachin State. “We fear that the military and its associates continue to dominate the Burmese economy. We must therefore be confident that the US government has systems in place to identify individuals and entities that are responsible for human rights abuses, contribute to corruption, or are otherwise acting to obstruct political reform,” the letter said.

At the CSIS, McCain said Burma is a major test for American diplomacy in Asia. “To be sure, they [the Burmese government] still have a long way to go, especially in stopping the violence and pursuing genuine reconciliation with the country’s ethnic minorities. But the Burmese president and his allies in the government, I believe, are sincere about reform. And they are making real progress,” he said.

“For the past year I have said that concrete actions by Burma’s government toward democratic and economic reform should be met with reciprocal actions by the United States that can strengthen these reforms, benefit ordinary Burmese and improve our relationship,” said McCain who has travelled to Burma twice in the last one year.

“Following the recent election that brought Aung San Suu Kyi and the National League for Democracy into the parliament, I think now is the time to suspend US sanctions … except for the arms embargo, and targeted measures we maintain against individuals and entities in Burma that undermine democracy, violate human rights and plunder the nation’s resources. This would not be a lifting of sanctions, just a suspension. And this step, as well as any additional easing of sanctions, would depend on continued progress and reform in Burma,” he said.

McCain said Aung San Suu Kyi has made the distinction between the right and wrong kinds of investment. “The right kind of investment would strengthen Burma’s private sector, benefit its citizens and ultimately loosen the military’s control over the economy and the civilian government. The wrong investment would do the opposite, entrenching a new oligarchy and setting back Burma’s development for decades,” he observed.

McCain said US business should align themselves with Aung San Suu Kyi and the Burmese people who want the kinds of responsible investment, high labor and environmental standards, and support for human rights and national sovereignty that define American business at its best.

“Our goal should be to set the global standard for corporate social responsibility in Burma, a standard that we, as well as Aung San Suu Kyi, could use to pressure others to follow our lead. And that could become the basis for new Burmese laws,” he said.

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