Burma, situated between India, China and Thailand, is one of the largest countries in South East Asia. For the last 44 years it has been ruled by one of the world’s most brutal military dictatorships. The National League for Democracy (NLD) won a landslide victory in Burma’s 1990 election. But the result has never been honoured. The NLD, led by Nobel Peace laureate Aung San Suu Kyi, has urged the international community to impose targeted economic sanctions against the dictatorship. This document explains why.

Fuelling the Oppression

Following the 1990 elections the regime was vulnerable and the economy was in ruins, following years of economic isolation. To cling on to power the regime had to strengthen the army but they needed money to do it. They accelerated plans to open up the economy to foreign trade and investment. The influx of investment and increasing exports boosted revenue for the regime. Military spending increased to such a degree that it now makes up to half of government spending. At the same time the regime reduced spending on health and education. As the regime doubled the size of the army, people in Burma were becoming poorer. It was only in the mid 1990s that Burma’s democracy movement started calls for economic sanctions after witnessing how trade and investment, rather than helping people, was helping to entrench military rule.

There is currently no legal barrier preventing European or Asian companies from fuelling this dictatorship through investment and trade. The regime survives through foreign investment, revenue from exports and illegal narcotics. Many foreign companies have withdrawn from Burma because of human rights concerns. It is clear after years of constructive engagement, that this approach has been an unequivocal failure. The anti-sanctions lobby has ignored the uncompromising nature of the regime, the connection between the military’s economic base and its political support, and the need to provide leverage for the NLD in its negotiations with the military.

Preventing Prosperity

The greatest obstacle to peace and prosperity in Burma is the dictatorship itself. Aid and investment is of little help to the majority of Burma’s 47 million people while the military controls and manipulates most aspects of their lives. The NLD has asked the world to cut the life-lines that keep the regime alive. Like Nelson Mandela and the ANC during Apartheid, Aung San Suu Kyi and the NLD have called for economic sanctions.

Our government can play a crucial role in supporting the NLD. EU sanctions are slow in coming because European governments have not yet reached agreement on this issue. EU members are committed to a common foreign policy on Burma. As all 25 EU members have to agree on sanctions or any issue, it only takes one country to say no, and nothing happens.

Current EU measures against Burma include:

As a member of the EU, Britain is bound by the EU Common Position. However, it has the power to unilaterally impose economic sanctions on Burma but refuses to do so. Although the UK does not encourage trade, investment or tourism with Burma, Britain ranks as the second largest source of approved investment in Burma. China ranks 16th. The reason for this is not just because of massive investment by British companies. It is because companies all over the world use Britain to invest in Burma via the dependent territories. Tax benefits and the lack of transparency make the British Virgin Islands and Bermuda the perfect place for investors wanting to do business with the regime. The British government has done nothing to stop it.

What we are asking the UK and EU to do:

UK: To ban all new investment in Burma. To push for similar action amongst European partners.

EU: To ban all European companies and citizens from investing in Burma. To ban the import of Burmese gems and timber into the European market.

The UN
In the light of the critical situation in Burma, political intervention from the international community is essential to avert impending confrontation and bloodshed. The UN Security Council should pass a binding resolution requiring the restoration of democracy to Burma, and the release of all political prisoners, including Aung San Suu Kyi.

Your questions answered

1. What right do we in Britain have to impose sanctions on another country?

The NLD, led by Aung San Suu Kyi, won 82% of the seats in Burma’s 1990 election. It has called for investment sanctions against the regime. All the major ethnic Burmese leaderships have whole-heartedly supported the case for sanctions. The mandate for such sanctions comes from within Burma and could not be clearer or more legitimate.

2. Won’t sanctions harm the Burmese people?

The sanctions we are calling for will cut off investment to Burma and ban a limited number of exports, such as teak and gems, from leaving the country. Three quarters of Burma’s people live off the land, the vast majority do not work in industries targeted by these sanctions and will not be affected.

A minority of ordinary people may be affected but this has to be weighed against the fact that every day women are raped, villages are burned, prisoners are tortured, and Burma’s 47 million people further impoverished by this regime. We have a stark choice to make. To allow the regime to obtain finance that will ensure its survival, thereby condemning Burma to continued violence and impoverishment. Or to make a concerted effort to cut the regime’s financial lifelines while limiting the effects on ordinary people. The first strategy is a surrender to tyranny; the second is a struggle for the freedom and prosperity of a whole nation.

3. Haven’t sanctions already failed to change Burma?

There is a perception that sanctions have been tried and have failed, but in fact the opposite is true. The past 16 years have seen massive foreign investment in Burma and a policy of engagement pursued by neighbouring countries. This policy of engagement has failed. Benefits of foreign investment and trade have not reached most ordinary Burmese people, and in fact poverty has increased and health spending has fallen. There has not been a single political democratic reform.

An international sanctions policy against Burma has not yet been attempted. The USA is the only country that has imposed effective sanctions on Burma. It banned new investment in 1997 and banned imports in 2003. The EU imposed a limited investment ban in 2004, but the British government has admitted that no investment has been affected. There are no United Nations sanctions against Burma, not even an arms embargo.

4. Isn’t it more effective to engage with the military?

The single greatest myth is that you can’t employ both sanctions and diplomatic engagement. From 2000 - 2003 the US, EU and Asia held back from taking action against the regime hoping that it would respond to a softer approach. The regime responded by imprisoning Aung San Suu Kyi and by massacring a large number of her supporters. There must be continued efforts to persuade the regime to change, but at the same time there must be equal effort made to cut its financial lifelines. It is now time for tough action backed by the UNSC and for an international diplomatic effort led by the UN Secretary General. A coordinated response – targeted economic sanctions combined with an international diplomatic effort - would prevent the regime from playing one country against another.

5. How will sanctions influence the generals?

The regime depends on foreign investment and foreign trade for a substantial part of its income. It is essential to cut those lifelines in order to force the regime to the negotiating table. As long as the regime and its associates are financially secure they have no incentive to reform. Sanctions will affect the regime’s own support base far more acutely than they will affect the majority of Burma’s people.

The Union of Myanmar Economic Holdings Ltd (UMEH) and the Myanmar Economic Corporation (MEC) are the two major industrial conglomerates controlled by the military, which dominate key economic sectors. Shareholders of UMEH are limited to the military establishment. Two of UMEH’s key objectives are "to support military personnel and their families" and "to try and become the main logistics and support organization for the military by gradually establishing industries.” UMEH has current investments in banking, tourism, import and export of foodstuffs, gems and jade mining and sales, construction materials, leasing of fishing boats, real estate, and general retail. The activities of UMEH and MEC are intended in part to build the military's resource base - enabling privileged economic treatment of army officers and their families.  Economic sanctions will reduce the size of the 'economic pie' from which the regime can slice pieces for its patronage networks, and will create hardship for low and mid-level military families. These form the main base of the junta’s constituency, the people the regime needs to keep happy. If discontent occurs in this constituency, the pressure for reform will be substantial.

6. Shouldn’t we be trying to strengthen the pro-democracy forces in Burma?

Extension of economic sanctions provides critical bargaining leverage to Burma’s democrats. The NLD has consistently supported stronger economic sanctions by the international community. In a situation where the NLD has only principles and popular support, the power to reduce the burden of international sanctions is a significant bargaining chip.

7. Surely Europe and the West don’t have influence because they don’t have significant trade or investment in Burma?

Between 1990 – 2000 Western countries disbursed 65% of total foreign direct investment to Burma. Some of the regime’s most significant business partners have been Western multinationals, including TOTAL Oil (French) and Chevron (US).

8. Don’t we need to be sure that sanctions will work before imposing them?

We have to be clear what we mean by ‘work’. Some European governments have placed a unique condition on any sanctions policy for Burma; that sanctions on Burma should only be imposed if we can first be sure that they will ‘work’. There are in fact relatively few domestic or foreign policy decisions that demand a policy is absolutely guaranteed to work before implementation. European states have supported EU trade sanctions against the US, for example, which certainly don’t fulfil this criteria. Most policies are formulated out of a rational analysis of the issue at hand, with an understanding of the limitations of what they can reasonably be expected to achieve. Furthermore Burma’s democracy movement do not see sanctions as a quick fix for regime change. Sanctions are but one vital tool necessary to force the regime to the negotiating table. Sanctions – combined with a vigorous diplomatic initiative - will assist the pragmatists in Burma’s military and amongst its associates to push for change.

9. Won’t Burma’s neighbours, like China and India, replace European investment?

European investments have been some of the strategically most important to the regime. The recent exodus of companies, as well as the decision of many not to invest in Burma, has not resulted in Asian investors flooding in to fill the investment gap. Instead many have taken a cautious approach to investment in Burma as a result of the regime's mismanagement of the economy. Asian investors have already had their fingers burned in a difficult Burmese market and will not increase trade if it is surplus to their needs. The blow to political and economic confidence in the regime and in Burma of Europe imposing investment sanctions would prevent much more investment revenue from going to Burma in the future.