Sanctions Relief for Myanmar: A Case Study

Efforts to undo sanctions—which serve as potent geopolitical leverage tools—are almost always fraught with domestic and international challenges. The U.S. government, for example, looks to ease sanctions only when it demonstrably serves national security interests. And even once the U.S. begins to rollback sanctions, relief can be slowed down by complex inter-agency bureaucratic processes. On the other side of the Atlantic, differing sanctions postures and policy priorities amongst EU member states also often result in sticky sanctions programs—unlike the case of Syria. The swift sanctions scale-down recently granted to Syria by the UK, the EU and further by the U.S. on the heels of President Trump’s announcement that he “will be ordering the cessation of sanctions against Syria” stands in sharp contrast with the historical record in this regard. As sanctions and export controls increasingly become a go-to tool in Western foreign policy, it is important to remember that the diplomatic utility for the states that use them as leverage tools hinges on how easily they can be relaxed or removed. The United States’s rollback of sanctions against Myanmar in the 2010s presents—despite their reimposition the following decade—a rare case study with notable lessons about the importance of ensuring that any reversal of economic coercion is part of a holistic and timely approach to international support: one that emphasizes robust diplomacy attuned to civil society assessments, sustained economic aid, technical assistance for domestic reforms, and engagement with the private sector to make use of licenses and suspensions.

Context

In the late 1980s and early 1990s, Western governments imposed broad economic sanctions and an arms embargo on Myanmar aimed at the military junta that had ruled the country since 1962 for its repression of pro-democracy protests and human rights violations. In a historical reversal, between 2011 and 2016 the U.S. and EU granted significant sanctions relief to Myanmar, easing nearly three decades of restrictions. (A full timeline of these sanctions relief measures can be found below.) As part of this process, the country’s military junta began to cede power to civilian rule and took steps toward political liberalization. This led to elections in November 2015, which were won by the party of opposition leader Aung San Suu Kyi. 

The broader geopolitical, political, and economic context was key to Washington and the EU’s alignment in the decision to roll back sanctions against Myanmar. In particular, U.S. re-engagement with Myanmar was part of a wider contest with China for influence over the region and President Barack Obama’s effort to “pivot” U.S. foreign policy toward Asia. In parallel, many U.S. and European companies were keen to re-enter a country that they viewed as a key source of raw materials, particularly oil and gas. And proponents of sanctions easing found a potent and emotive figurehead in human rights activist and opposition leader Aung San Suu Kyi, who would be able to re-enter the political scene as a consequence of nascent political liberalization.

What’s more, Myanmar’s political elite welcomed outside support as a quid pro quo for domestic changes at home. In December 2011, then-U.S. Secretary of State Hillary Clinton met with newly elected President Thein Sein who reportedly "very frankly acknowledged the lack of democratic traditions in the country, and said outside help was welcome and appreciated.” The United States laid out its conditions for sanctions reversal early on—including the release of political prisoners, reforms toward democratization, the end of abuse against ethnic minorities, and severing the ties with the Democratic People’s Republic of Korea—and Myanmar expressed that it was ready to accept them. For example, President Sein quickly made commitments to achieve Clinton's stated goals of stopping army violence, releasing prisoners, and distancing from the Democratic People’s Republic of Korea. Less than a year later, Aung San Suu Kyi—leader of the opposition party the National League for Democracy—openly welcomed the United States’s decision to lift significant sanctions.

Another factor that facilitated sanctions relief was that the United States had never designated Myanmar as a State Sponsor of Terrorism (SST). The SST label—which the U.S. has assigned to Iran, Cuba, Syria, and others—creates a significant challenge when considering sanctions relief. Even as several U.S. sanctions on Myanmar directly derived from specific laws that tied relief to congressional accountability, using national security waivers was comparatively easier than in the SST instances. The latter brings additional significant challenges, including the political costs of persuading deeply skeptical figures across all spheres of government and Congress over the potential threat of terrorism looming against U.S. national security and the fact that there is a legal mechanism for Congress to block the delisting. While offering inducements or rewards via sanctions relief can be politically costly for any U.S. administration, the lack of a terrorism label granted the White House more latitude in decision making without these political and bureaucratic pressures mentioned above. 

A Generous Approach to Sanctions Relief 

In November 2010, Myanmar held multiparty elections for the first time in 20 years. Despite the wide criticism and skepticism, these elections—combined with the release of political prisoners, reforms to decentralize government, and efforts to facilitate a ceasefire with ethnic groups—were deemed enough to move the needle in Washington. 

The U.S. began taking steps to end Myanmar’s decades-long isolation. To be sure, the U.S. left sectoral sanctions in place, including a ban on the import of goods from Myanmar into the U.S., a ban on the provision of U.S. financial services, and restrictions on U.S. investments in the country as well as on bilateral and multilateral assistance. While, it also left most of the major designations (several individuals close to the government) in place, the U.S. government eased restrictions on Myanmar’s engagement with the International Monetary Fund, with the mission in November 2012 “to hold discussions on macroeconomic policies that could support the authorities’ ambitious reform program.” The U.S. also organized Secretary of State Clinton’s aforementioned visit in December 2011. While these early actions did not involve lifting or easing any sanctions, Washington pledged further easing in the future on the condition of “genuine reform.” This agreement kickstarted a cycle of quid pro quos between the two countries that worked like this: Senior U.S. officials announced a step toward sanctions removal, with a promise of more to come, but only if reforms in Myanmar continued. The more sanctions Myanmar wanted lifted, the more U.S.-sponsored reforms it would have to enact.

And so Myanmar followed suit. The release of more political prisoners and general amnesties in 2012, a closely watched parliamentary by-election the same year, and a set of economic reforms prompted Washington to scale back its sanctions infrastructure. In response, the U.S. eased significant restrictions such as the ban on U.S. investment in the country, lifted the ban on Myanmar’s exports to the U.S., and issued de-listings of high-ranking officials. 

From 2012 to 2016, Washington’s posture then rapidly shifted to one of wholesale relief. But this shift was not accompanied by deeper substantive political reforms in Myanmar. Indeed, in 2016, President Obama reportedly “acknowledged that Myanmar… was falling short in several key respects, including its refusal to amend a constitutional provision that makes Ms. Aung San Suu Kyi ineligible to run for president, as well as its unwillingness to curb the violence against the Muslim Rohingya minority in the country’s west.” Still, critics reportedly said that, “the White House [was] too lenient with Burmese rulers about the pace of change.” 

At first, the United States’s de-escalation strategy opted to undo the most economically impactful sanctions by lifting the bans related to financial services to listed individuals and entities in Myanmar and those aimed at facilitating U.S. investments, as well as removing restrictions on new U.S. investments in the country. This prioritization was a judicious choice given that it would, at least in principle, enable the removal of those bans with far-reaching and unintended implications for the wider population.   

But eventually, the United States’s fine-tuned approach to sanctions removal evolved to become sweeping. In October 2016, President Obama announced the end of U.S. sanctions on Myanmar despite the fact that the military remained in power and the country did not undergo constitutional reforms—both of which were conditions that were publicly set out by then-Secretary of State John Kerry. Still, the Obama administration canceled several executive orders enshrining the U.S. sanctions, and waived significant provisions of statutory sanctions—particularly the Tom Lantos Block Burmese Jade Act (Junta’s Anti-Democratic Effort Act) of 2008.

Civil society groups—who had previously urged the U.S. to maintain restrictions as leverage over Myanmar’s military—criticized the Obama administration's move. (Note that President Donald Trump, after assuming office a few months later, did not change Obama’s trajectory despite pressure for a renewed imposition of sanctions from Congress.) Only a year after Obama had lifted the sanctions against Myanmar, and in light of what was perceived as insufficient action by the subsequent administration, several non-governmental organizations signed a joint letter asking the then U.S. Secretaries of State Rex Tillerson and of Treasury Steven Mnuchin to use congressional authorities still in place to issue sanctions against the “Burmese security forces” violating the human rights of the Rohingya population. The administration’s decisions also prompted warnings in Congress about the extent and durability of change in Myanmar, with lawmakers demanding the “reinstatement of some of the waived sanctions and/or the imposition of new restrictions on relations with Burma.” 

Such warnings proved prescient. In February 2021, five years after the U.S./EU sectoral sanctions removal, the Biden administration began to impose fresh measures against military leaders, the jet fuel sector, iron export controls, and coordinated international bans on the provision of financial services to the state-owned Myanmar Oil and Gas Enterprise in response to the Myanmar military coup. The EU/UK’s sanctions policy, once again, followed suit, and this time, even escalated: In late April, the EU Council extended the bloc’s restrictive measures (involving some specific trade restrictions and over 120 listings) for another year, until April 2026. The UK has applied similar narrowly delineated trade bans while exponentially adding more targets, with more than 1300 listings.  

Making Sanctions Relief Politically Palatable 

The U.S. carefully crafted public messaging for sanctions relief that consistently emphasized the conditional and reversible nature of sanctions suspensions. Washington’s framing was clear: it was taking “measured steps” in response to “concrete steps to promote political reform”; “starting the process of a targeted easing”; monitoring developments with the intention of “meeting…action with action”, and warning that “additional listings or de-listings will be pursued as appropriate to meet changing conditions in Burma.” The U.S. also reminded Naypyidaw that it was effecting change “for the people.” This framing was intended as a message not only to Myanmar’s leaders but also to the domestic U.S. audience to help the president mitigate the inevitable blowback from lawmakers.

The U.S. also sought to influence its European allies with its messaging. The EU had maintained their own autonomous sanctions on Myanmar, but quickly moved to relax them after the U.S. offered the first signs of re-engagement in 2012. That year, the European bloc announced suspensions of travel bans against senior government officials and of sectoral restrictions, the UK called for the wholesale suspension of sanctions, and Norway ended a late-1990s policy that officially discouraged investment in Myanmar by Norwegian companies (though it said it would continue to abide by EU sanctions). 

In April 2013, the EU phased out their sanctions “remarkably swiftly.” It began by suspending its visa bans on several individuals including Myanmar’s president, vice president, its cabinet and the speakers of the country’s parliament. Subsequently, it suspended all other sanctions—including asset freezes, bans on investment, loans and joint ventures, and restrictions on timber trade and related activities—except for the arms embargo, which was left in place for only one more year. (Many of these sanctions were reinstated in 2018, however, following the EU’s assessment of “widespread, systematic grave human rights violations committed by the Myanmar/Burma military and security forces” against the Rohingya Muslim community and Rakhine Buddhist community in the Rakhine State.)

The Obama administration sought to put a premium on the value of targeted designations by leaving them in place, tempering its otherwise progressive approach towards Myanmar. The U.S. suspended some travel restrictions and delisted only top political leaders, while around 200 figures deemed to be regime cronies remained labelled as Specially Designated Nationals (SDNs) four years after the U.S. first lifted sectoral sanctions. Similarly, the U.S. left sanctions on military-to-military assistance in place as well as travel bans for military leaders. While this move was intended to hold Myanmar accountable, it posed significant challenges for economic re-engagement. For instance, companies reportedly faced issues when shipping goods at Myanmar’s largest port, which was controlled by Asia World (an SDN). This challenge highlighted the importance of granting sectoral suspensions in lockstep with the targeted delistings of relevant individuals and entities with dominant roles in an economy—if the latter are not part of the rollback, sectoral suspensions are rendered ineffective. The economic benefit and the overall credibility of a sanctions relief process hinge on this tactical overlap.  

From the outset, the push for economic reform in Myanmar was coordinated with sanctions relief. Myanmar’s admission that foreign exchange reforms were needed and its commitment to restructuring the Central Bank helped create the perception in Washington that Myanmar had positive intentions to reform its government and economy. This and the push for Myanmar’s macroeconomic reforms through the conditional assistance from international financial institutions set the ground for the sanctions rollback. However, this case study demonstrates that throttling back sanctions does not in itself bear fruit without parallel steps to undo some of their longstanding effects on a country’s economic infrastructure. After decades of isolation, Myanmar’s manufacturing industry, for instance, was in dire need of investment, financing, and equipment to resume production, and exports at the scale needed to bring it up to speed with regional competitors. These elements were reportedly “seen as a key prerequisite for opening the country's economy up to more foreign investment, greatly reducing the complexity of doing business there.” Important players such as Japan, Europe, the Asian Development Bank, and the World Bank committed to offer technical assistance and activate business relationships early on. However, U.S. banks remained reluctant to step in and large-scale investment was deterred by caveats in the licenses of 2013 (GL19) and 2015 (GL20) which precluded (direct) dealings with the military and SNDs—groups with a systemic presence across Myanmar’s economy. While the value of Myanmar’s exports to the U.S. increased in the years after the backbone of the sanctions was terminated (2016), the overall volume remained comparatively low in terms of export partner share. 

Difficult Calibrations

Washington’s stance toward developments in Myanmar in the 2010s demonstrated how sanctions relief—and not just sanctions imposition—can be used as leverage to encourage political and economic change in a country of interest. Insofar as sanctions are meant to serve clear policy goals—despite oftentimes not being clearly delineated—setting out clear, consistent, concrete, and globally coordinated benchmarks that are directly relevant to such original goals is crucial to the credibility of the efforts and the tool itself. Rapidly dialing down economic pressure was possible in Myanmar’s case because dialogue remained open and the sanctioning states accepted the need to make concessions even amid criticisms; the U.S., in particular, opted to absorb the inevitable domestic political costs that come with sanctions relief policy. Still, the military coup, subsequent violence, and human rights violations that ensued years later confirmed that the political transformation was not as deep as the U.S. expected or encouraged. It’s important to note, however, that the easing tools as such were subject to a broader foreign policy that was fixated on inducing—not rewarding—change. 

In Myanmar and beyond, sanctions relief processes will always be transactional. But more factors must be considered than simply national security interests. Determining how far is far enough when it comes to dispensations by a sanctioning state is ultimately a political decision that responds to national security imperatives. However, other factors that directly concern the target state and the welfare of its population—in whose interests sanctions are often ostensibly imposed in the first place—must also be part of this calculus. Decisions on sanctions relaxation need to be made in light of the sectors that have been most severely impaired by sanctions, prioritizing the loosening of sectoral restrictions and corresponding targeted de-listings to secure peace dividends. If the target state undergoes genuine political reform as opposed to lukewarm adjustments, and responds to clear yardsticks (per the original policies of sanctioning states), the question is no longer whether to maintain sanctions—but for how long, and for what.  

Timeline of Sanctions Relief Measures

November 2010

• Myanmar's Actions
• Myanmar holds multi-party (but highly criticized) elections for the first time in 20 years. The pro-regime Union Solidarity and Development Party takes over 75 percent of seats in parliament.

April 2011

• European Union's Response
• EU suspends visa bans on members of the new government with no formal ties to the military or who are "essential for dialogue" with the international community.

October 2011

• Myanmar's Actions
• Government releases 241 political prisoners. Loosens restrictions on the internet, the press, labor unions, and political parties.

December 2011

• United States's Response
• U.S. Secretary of State Hilary Clinton visits Myanmar and outlines goals for sanctions relief.
• Myanmar's Actions
• Myanmar's new President Thein Sein welcomes Washington's stated goals and makes the following commitments: dialogue with ethnic groups, release of remaining political prisoners, and abide by UN resolutions restricting transfers of military supplies from DPRK.
• United States's Response
• After the meeting, joint counter-narcotics operations are resumed. Includes Myanmar in the Lower Mekong Initiative.

January 2012

• Myanmar's Actions
• Release of 130 political prisoners. Government eases restrictions on the Internet, legalizes the opposition party, and expands dialogue with ethnic minorities.
• United States's Response
• President Obama announces restoration of full diplomatic relations with Myanmar. Met with some pushback from Congress.
• Norway's Response
• Ends policy that officially discouraged Norwegian companies' investment in Myanmar.
• European Union's Response
• Extends the suspension of travel bans for Myanmar's senior government officials.

February 2012

• European Union's Response
• EU Commissioner for Development Andris Piebalgs visits Myanmar and pledges increased aid.

April 2012

• Myanmar's Actions
• Holds parliamentary by-election dominated by opposition leader Aung San Suu Kyi. Launches a new foreign exchange regime. Announces reforms to revamp the financial system.
• United States's Response
• Eases restrictions blocking U.S. investment in the country. Suspends restrictions on the export of U.S. financial services. Allows senior Myanmar officials to travel to the U.S. Opens USAID office in Myanmar. Announces plans to nominate a U.S. ambassador to Myanmar.
• European Union's Response
• EU High Representative Catherine Ashton visits Myanmar. Opens an office for the EU Delegation to Myanmar in Yangon.
• United Kingdom's Response
• Prime Minister David Cameron calls for the suspension of sanctions against Myanmar. Cameron visits Myanmar.

September 2012

• Myanmar's Actions
• Myanmar releases 88 political prisoners and grants amnesty to 514.
• United States's Response
• U.S. Treasury Department announces it has delisted President Thein Sein and Lower House of Parliament Speaker Thura Shwe Mann.

November 2012

• United States's Response
• Allows the International Monetary Fund and World Bank to begin needs assessment missions in Myanmar.

March 2013

• Myanmar's Actions
• President Thein Sein becomes the first-ever Myanmarese president to visit the EU. Welcomes foreign investment in offshore oil and gas blocks.
• European Union's Response
• EU announces a €150 million aid and development package for Myanmar.

April 2013

• European Union's Response
• EU votes to "permanently end" sanctions on Myanmar. Leaves arms embargo in place for one more year.

November 2015

• Myanmar's Actions
• Holds peaceful, democratic elections won by Aung San Suu Kyi's opposition party, the results of which are accepted by the military-linked establishment. Still, there are signs that the military holds significant power.

May 2016

• United States's Response
• Maintains designations of nearly 200 individuals and entities with ties to the former military junta. Extends a license allowing companies to trade using infrastructure controlled by blacklisted individuals. Removes seven state-owned enterprises and three state-owned banks from SDN list.

September 2016

• United States's Response
• President Obama announces end of U.S. sanctions on Myanmar. Delists more than 100 individuals and eases trade restrictions.

December 2016

• Myanmar's Actions
• Still, no constitutional reform. Military remains in control of much of the government, including Myanmar's defense and interior ministries. Violence on the rise.