US House Backs Measures to Sanction Myanmar's Military, Nudge Gem Sector Reform

By Zsombor Peter 25 May 2018

YANGON — The US House of Representatives has approved measures that call for targeted sanctions against more of Myanmar’s military leaders over human rights abuses in Rakhine State and encourage further reform of the country’s murky gemstone industry.

The measures, added as amendments to the National Defense Authorization Act by the House in Washington on Wednesday, received strong bipartisan support.

In December, the US imposed sanctions on General Maung Maung Soe — who oversaw the military’s crackdown in Rakhine State last year — that effectively shut him out of the US financial system. The crackdown was triggered by militant attacks on security posts in Rakhine in late August and has driven nearly 700,000 mostly Rohingya Muslims to neighboring Bangladesh in what the UN and US have labeled a case of ethnic cleansing.

The amendments call on the US president to impose asset freezes and travel restrictions on other senior officials of Myanmar’s military or security forces who ordered or carried out any serious human rights abuses or impeded the investigation of allegations of serious abuse by subordinates, “including against the Rohingya community in the state of Rakhine.”

The amendments do not name any specific military officials, though a version of the measures the Senate Foreign Relations Committee passed in February singles out Senior General Min Aung Hlaing, the military’s commander-in-chief, and Major General Khin Maung Soe.

“Let me say that since August of 2017, the Burmese military has inflicted horrific violence against the Rohingya in Burma’s Rakhine State, and is today using the same tactics against the Kachin,” US Representative Eliot Engel, who sponsored the measures, said on the floor of the House, using another name for Myanmar.

“This is a man-made crisis — ethnic cleansing, perhaps genocide. And to date, there has been no accountability,” Engel said. “This measure would change that.”

A spokesman for the military could not be reached for comment.

The military has denied committing rights abuses in Rakhine and said its actions were part of a legitimate counter-insurgency operation against terrorists. In April, however, it said seven soldiers had been sentenced to 10-year prison terms for their part in the massacre of 10 Rohingya men in Rakhine in September.

In a statement issued Friday, Myanmar’s main opposition, the military-backed Union Solidarity and Development Party, accused the US of seeking to “influence” and “interfere” in the country’s internal affairs.

The party said it strongly condemned the measures and urged the government to do the same “in consideration of the reputation and long-term interests of the country.”

Erin Murphy, founder and principal of the Inle Advisory Group, a business consultancy that monitors US policy on Myanmar, said the measures add to the authorities and criteria the US already uses to designate sanctions targets. The targets include entities owned or controlled by rights abusers, their immediate family members, and anyone they provide significant financial or material support to or receive support from.

“I think it also does encourage (and remind) the Trump administration of what authorities he has…and to focus on the issue and know what is available to them to address atrocities,” she said. “I think Congress has been frustrated by the lack of engagement by the Trump administration on the issue and on Asia policy writ large.”

The amendments added to the defense bill Wednesday also limit US military cooperation with Myanmar and call on the State Department to report back to Congress on the rights abuses in Rakhine State last year and determine whether they amount to not only ethnic cleansing but also crimes against humanity or genocide.

In April, Reuters reported that the State Department had already begun an intensive investigation of alleged atrocities against the Rohingya for the possible prosecution of Myanmar’s military, interviewing hundreds of refugees about reports of murder, rape and beatings by soldiers.

“The government is trying to avoid censure and this would send a clear message that the US is taking steps to address those concerns,” said Paul Donowitz, lead Myanmar campaigner for rights group Global Witness. “This sends a message that the US is not satisfied with the current direction of the government.”

But more than seeking to target specific generals over the violence in Rakhine, Donowitz added, the amendments are “looking much more broadly at the military’s outsize role in politics and the economy.”

To that end, the amendments seek to encourage reform of Myanmar’s lucrative but opaque gemstone sector by having the State Department draw up a list of producers who meet strict transparency standards on ownership, licensing and revenue. It would exclude any producers connected to the military or security forces and allow the list to be rescinded if Myanmar caries out certain sector-wide reforms.

A 2015 report by Global Witness called Myanmar’s jade industry possibly “the biggest natural resource heist in modern history,” a “vast slush fund” for the country’s military elite that generated as much as $31 billion in 2014 alone and continues to fuel a decades-long civil war.

A prospective buyer checks a piece of jade at Myanmar’s Gems Emporium 2017 in Naypyitaw in December last year. / Htet Naing Zaw / The Irrawaddy

Last year, the non-government Natural Resource Governance Institute (NRGI) placed Myanmar’s mining sector near the very bottom of a list of 81 countries it ranked on the management of their natural resources. It placed Myanmar in the lowly company of countries with “almost no governance framework to ensure resource extraction benefits society.”

Donowitz said Global Witness was consulted on the gemstone industry measures in the amendments and was supporting them over similar measures in the Senate, which would see sanctions on jade — but not rubies — from Myanmar that were lifted in 2016 snap back in place. The House measures would only nudge US importers to source from the State Department’s list of vetted producers.

“The Senate does not recognize that there is a reform process in Myanmar,” Donowitz said, which he described as “midstream.”

Since the National League for Democracy took power in 2016, the government has stopped issuing new gemstone mining licenses or extending existing ones and started drafting a new policy for the industry with input from non-government groups.

“We believe that finding ways to incentivize reform…is the right way to go,” Donowitz said. “It’s not a panacea…. it’s part of a process in reforming the sector. Right now we have nothing.”

Though the vast majority of Myanmar’s jade exports currently heads across the border — often illegally — to China, he said the promise of broader access to a new market, and with it higher prices, could help spur reform.

NRGI Country Manager U Maw Htun Aung said he also supported the House’s approach to reforming the industry “because it’s not black and white, because the gemstone sector is complicated and the blanket sanctions did not work.”

He said the number of active licenses in the gemstone sector has plunged by more than half since the freeze to less than 10,000 and that incentives were more likely to spur further reform than the return of sanctions.

“If there is a benefit to being a good company…then it could have a chain of reactions in the long term. I don’t think it’s going to be a short-term solution,” he said.

But U Maw Htun Aung said he saw little chance of the US becoming a major importer of Myanmar’s jade any time soon and that enforcement would be key to ensuring that gemstones headed to the US, rubies especially, were not being laundered through Thailand or Hong Kong, as they often are

“It’s very easy to hide the country of origin, especially once it’s polished,” he said. “And if there [are] no penalties, I don’t see how it’s going to work.

U Than Zaw Oo, deputy director of Myanmar Gems Enterprise, the government’s gemstone sector regulator, said the measures being proposed in the US, whether incentives or sanctions, would make little difference because US restrictions on money transfers with Myanmar were still in place.

“So nothing is going to be new for us; it’s just adding black on black,” he said. “Even if there were new sanctions imposed on Myanmar, it would not impact us much because Western countries mostly buy rubies and sapphires rather than jade.”

The deputy director played down the military’s share of the gemstone sector and said the industry was much more transparent than it used to be.

“The gem industry is now taking part in the EITI [Extractive Industries Transparency Initiative] process, which is very tough because you have to submit revenue, company income and all of a company’s projects, as well as project validity and expiration dates,” he said.

He also lauded last week’s launch of an open data website on Myanmar’s jade mining sector by NRGI. Open Data: Myanmar Jade visualizes several years’ worth of official data on the country’s jade sector with interactive charts and makes the data easy to search.

“This sort of situation was impossible in the past,” U Than Zaw Oo said. “You can’t access such data on other industries.”

By drawing exclusively on official data, though, the site fails to capture the large volumes of jade still believed to be smuggled out of the country.

The next hurdle for the proposed military sanctions and gem sector reform measures in the US is making it into the Senate’s own version of the National Defense Authorization Act.

Donowitz, of Global Witness, said the massive defense policy bill was considered “must pass” legislation and that US President Donald Trump has indicated that he would sign what Congress sends him. But he sees an obstacle in Senate majority leader Mitch McConnell, who opposes measures that could compromise the position of Myanmar’s de facto leader, Daw Aung San Suu Kyi.

Much of the international community has criticized the pro-democracy icon for not doing more to hold the country’s still powerful military to account for last year’s violence in Rakhine State. Some analysts say a more forceful approach could jeopardize the country’s ongoing transition from military dictatorship to civilian rule.

Murphy, of the Inle Advisory Group, noted that even if similar measures do make it into the Senate’s defense bill, their final form could change once the House and Senate hash out any differences in the two bills before sending it to the president.

“The House vote [Wednesday] could convince the Senate about the need for this provision, or something close to it, to be in the final product,” she said.

“There are a lot of ifs, but certainly a lot of bipartisan support for accountability on the violence occurring in Myanmar. Myanmar policy has typically not fallen on political lines; any policy moves have been bi- or non-partisan and this is another example of that.”

Additional reporting by Moe Myint.