executive summary
The Burma Sanctions Coalition has been established to press the UK government to impose investment sanctions on Burma. The Coalition, comprising businesses, trades unions and non-government organisations is calling for investment sanctions for the following reasons:

1. Burma is ruled by a brutal military dictatorship that both oppresses and impoverishes its people, while enriching itself and the foreign businesses that work with it. The regime continues to ignore the 1990 electoral victory of Aung San Suu Kyi and the National League for Democracy.

2. Over the last decade Foreign Direct Investment has flowed into Burma, largely for tourist infrastructure and natural resource extraction projects. During the same period Burma’s military has expanded from 180,000 personnel to 450,000 while the country’s health, education and public services have almost collapsed.

3. The regime has failed to end the practice of forced labour as demanded by the UN’s International Labour Organisation. It has failed to release all political prisoners including Aung San Suu Kyi. It has also failed so far to engage in substantive dialogue with Aung San Suu Kyi and Burma’s ethnic minorities.

4. Foreign investment in Burma has reduced considerably since 1998. However, the current talks process between Aung San Suu Kyi and the regime, brings with it the threat of premature investment by international companies. Political change has yet to take place. A few premature and significant investments in Burma would remove a key incentive for the Generals to move towards substantive dialogue with Aung San Suu Kyi. Major investment now could destroy the fragile process underway in Rangoon.

5. The UK has been a leading investor in Burma since 1990. There is no legislation stopping a UK multinational from signing a major new contract with the Generals today.

6. Investment sanctions against Burma would prevent new investment from damaging the talks process, would give support to Aung San Suu Kyi and Burma’s democrats, and would be a clear signal to the Generals that relations will not be normalised until democratic reform takes place.

7. The UK government has been waiting for its European counterparts to agree to firmer economic measures against Rangoon. This agreement has not been forthcoming.

The Burma Sanctions Coalition recommends:
1. That the UK government enact legislation enabling a ban on all new UK investment in Burma.

2. That the UK government simultaneously encourage its European partners, particularly the Benelux and Scandinavian countries, to follow suit.

foreword
There were many moments in our struggle against apartheid when it appeared as if the forces of evil were on the rampage, as if evil, lies and injustice would have the last word. But during those hours when hope was fragile, we were strengthened by the support of our brothers and sisters around the world. Sanctions were imposed, governments and citizens worked hard against the regime, and my people are now free.

Burma is the next South Africa. Its people are engaged in an epic struggle for freedom. Burma’s military has put millions of civilians into forced labour, imprisoned hundreds of political prisoners, has created more child soldiers than any other country in the world, and has forcibly ‘relocated’ half a million ethnic people. The people of Burma have peacefully protested but have been met with tanks, live fire, and bayonets; they have voted for a Government led by Aung San Suu Kyi and have been denied this government; their leaders have been imprisoned, tortured and some killed, yet they refuse to give up their fight for freedom. The ugly face of brutality stands against the serene courage of a people peacefully resisting. The people of Burma need support in the same way we South Africans did. The Burma Sanctions Coalition which is launched today aims to provide such support. Its members include the Body Shop, the Co-operative Bank, Friends of the Earth and MSF. Our aim is to transform this coalition into a movement, to push on, until we reach our goal of a free and democratic Burma.

Immediately after the brutal massacres against peaceful pro-democracy protesters in 1988, Burma’s military was in financial crisis and so opened its doors long closed to foreign investors. Shamefully, some foreign companies ran to their aid. They helped a bankrupt regime to expand its army to one of the largest in Asia, while the people of Burma have become some of the poorest and most oppressed in the world. We cannot in good conscience turn a blind eye to the dollar that passes from the hand of the businessman to the hand of the General, that buys the bullet, or the landmine, or the mortar, that eventually ends the life of a child, woman or man in Burma. We must cut this life-line to the Generals in Rangoon, we must stop the investment. The UK government, and indeed the governments of Europe must prevent their companies from investing in tyranny. The United States has already taken such action. If other countries follow suit, then sanctions will have a powerful political, economic and psychological effect on the regime. Such sanctions will also bolster those brave citizens of Burma who are struggling to free their fellow countrymen and women.

We cannot depend on either the altruism of a few companies to leave Burma, nor the successes of the boycott movement to force them out. In the post-September 11th economic and political climate, we must be more aware than ever of the role that companies play in buttressing tyranny, and the unpredictable consequences of such a short-sighted policy. Burma’s military continues to push drugs, HIV/AIDS and desperate humanity over its borders. It is imperative that companies no longer play a part in supporting those who destroy the lives of others. If the actions of these companies are allowed to go unchecked, it reflects on the values of our society, it reflects on me and you. As citizens, as a Coalition, as a community, we must press our Governments to prevent these companies from fuelling the oppression in Burma.

My courageous sister, Aung San Suu Kyi, separated from her family, from her comrades, and from her people, still speaks forcefully of the need for international support - ‘Please use your liberty to promote ours’, she asks. We must heed this call. Governments the world over give my sister so much praise for standing courageously against the Generals and the military machine they command. But praise can be empty. Words are not enough. We can help bring about the liberation of Burma. Freedom is a dangerous message, and we want it to ring loud in the dark hallways of the dictators in Rangoon.

We find ourselves in a situation where governments are waiting on other governments to act – and so everyone simply waits. No country should wait for another to act first on this issue. No government should hide behind the need for multilateral action. A journey of a thousand miles begins with one step. Collective action is the gathering of many individual actions. The UK can take a lead within Europe by imposing sanctions against Burma now. It can also encourage others to follow.

I believe wounded justice can be healed, I believe that good can only be temporarily defeated, I believe that unarmed truth will overcome. This is a moral universe. Good and wrong matter, lies and truth matter, and there is no way in which injustice and oppression can ever ultimately prevail. I know that one day we will celebrate a free and democratic Burma.

- Archbishop Desmond Tutu

business and burma
"What do these advocates of precipitate economic engagement see when they look at our country? Perhaps they merely see the picturesque scenery, the instinctive smiles with which Burmese generally greet visitors, the new hotels, the cheap labour and what appear to them as golden opportunities for making money. Perhaps they do not know of the poverty in the countryside, the hapless people whose homes have been razed to make way for big vulgar buildings, the bribery and corruption that is spreading like a cancerous growth, the lack of equity that makes the so called open market economy very very open to some and hardly ajar to others, the harsh and increasingly lawless actions taken by the authorities against those who seek democracy and human rights, the forced labour projects where men, women and children toil away without financial compensation under hard taskmasters in scenes reminiscent of the infamous railway of death of the second World War.

It is surprising that those who pride themselves on their shrewdness and keen eye for opportunity cannot discern the ugly symptoms of a system that is undermining the moral and intellectual fibre and, consequently, the economic potential of our nation. If businessman do not care about the numbers of political prisoners in our country they should at least be concerned that the lack of an effective legal framework means there is no guarantee of fair business practice or, in cases of injustice, of reparation. If businessmen do not care that our standards of health and education are deteriorating, they should at least be concerned that the lack of a healthy, educated labour force will inevitably thwart sound economic development. If businessmen do not care that we have to struggle with the difficulties of a system that gives scant attention to the well-being of the people, they should at least be concerned that the lack of necessary infrastructure and an underpaid and thereby corrupt bureaucracy hampers quick, efficient transactions. If businessmen do not care that our workers are exposed to exploitation, they should at least be concerned that a dissatisfied labour force will eventually mean social unrest and economic instability."

- Aung San Suu Kyi

the burma sanctions coalition
Not since the Anti-Apartheid movement, has such a broad alliance of civil society groups coalesced to support the democratic struggle of a single country. The Burma Sanctions Coalition comprises business, trades unions and non-governmental organisations. All have decided to put their voice behind the call for investment sanctions against military ruled Burma. All bring their unique perspective on the need to limit UK investment, where that investment buttresses and supports oppression overseas. And all agree that this is indisputably the case with Burma. The Coalition comprises: Anti-Slavery International, The Body Shop, The Burma Campaign UK, The Co-operative Bank, Free Tibet Campaign, Friends of the Earth, Global Witness, Graphical Paper and Media Union, MSF, National Justice and Peace Network, People and Planet, Tourism Concern, World Development Movement, and the United Nations Association.

the problem of burma
Burma’s military dictatorship
Burma is a country ruled by one of the longest running and most brutal military dictatorships in the world; a dictatorship charged by the United Nation’s International Labour Organisation with a “crime against humanity” for its systematic abuses of human rights, and condemned internationally for refusing to transfer power to the legally elected Government of the country – the Party led by Nobel Peace Laureate Aung San Suu Kyi.

Democracy denied
Burma’s people have had one single and dramatic opportunity to reject the dictatorship that has ruled them for four decades. In 1990 free elections were held. To the amazement of Burma’s Generals who had done all they could to fragment the vote (through the creation of hundreds of political parties), Aung San Suu Kyi’s National League for Democracy (NLD) won a landslide victory, taking 82% of the seats. However, the aspirations of Burma’s people were ignored and further repression of the democratic movement took place; political power has never been transferred from the military to the elected assembly. Indeed, since the election around half of all NLD MPs have been detained - many have suffered torture, and some have died in custody. In recent years thousands of ordinary NLD members have been coerced into resigning their membership of the Party.

Burma’s military regime is responsible for:

• Millions of men, women and children in forced labour often imposed with the threat of physical abuse, torture, rape and murder.
• One and half million internally displaced people, in part the result of ethnic cleansing campaigns against minority groups.
• The detention of at least 1,500 political prisoners, many of whom are routinely tortured.
• More child soldiers than any other country in the world.
• The refusal to transfer power to Aung San Suu Kyi’s party, the National League for Democracy, elected to Government in 1990.
• Thousands of refugees who have fled to Thailand, China, India and Bangladesh.
• The production of more illegal opium and heroin than any other country over the last decade.
• One of the largest armies in Asia despite having no external enemies.
• Reducing what was once one of the richest countries in Asia to one of the world’s poorest.
• The closure of Burma’s universities for most of the last decade in an attempt to prevent civil unrest. A whole generation’s education and opportunity has been lost.

The ‘talks’ between Aung San Suu Kyi and the junta
Since October 2000, the military has been involved in talks with Aung San Suu Kyi. More than a year has passed since the talks started, yet they remain at the ‘confidence building’ stage with as yet no dialogue on substantive issues. While there is room for cautious optimism for the first time in many years, it may well be that the regime is trying to use the talks to decrease internal and external pressure against it. Certainly the military is going to want to make as few compromises as possible. The international community must guard against this strategy, which has already had some success. The criticism of western governments has been tempered and quietened over this period. Governments claim to be holding their fire to allow the forces inside Burma the political space to progress. However, that waiting game must come to an end at some point, the question is when? Foreign minister, Ben Bradshaw said of the talks: “we need to be convinced that these moves are a step towards genuine national reconciliation, leading to a restoration of constitutional rule in Burma. Until we are, there will be no softening of our position”. There is no clear evidence at present that the regime has any real intention of moving towards a democratic form of government. Pressure has led them to talk, but clearly additional pressure is needed for them to change. Investment sanctions can contribute the added pressure necessary to move them towards real reform. But if the international community misses this opportunity to act decisively, Burma may be destined to suffer yet another decade of dictatorship.

fuelling the oppression: foreign investment
The Junta’s lifeline
In 1988 the regime was left bankrupt in the aftermath of its crackdown on the popular democracy uprising, the massacre of thousands of civilians and as a result of three decades of economic mismanagement. The regime immediately reversed thirty years of economic isolationism and welcomed foreign investment in order to re-establish government control of the budget and balance of payments (see graph 1). The windfall of income generated through the sale of natural resources and the investment of oil exploration companies has helped the regime to defer essential economic reform and to massively expand Burma’s armed forces. Foreign capital has bred a 'new class' within Burma exclusively tied to the senior generals. The people of Burma have been left poorer than when the investment bonanza began.

The model of engagement
• Many foreign investors operate through joint ventures with either state enterprises or companies set up by the regime's associates. Though investment flows have dropped dramatically since 1998 future revenue from these ventures will help the regime to neglect and postpone essential economic reforms.
• In order to stabilise urban food prices and sustain revenue from the regime's rice export monopoly, it continues to squeeze the rice sector and maintain price controls. The price of rice is an important factor in monitoring political risk in Burma.
• The overvalued exchange rate is defended partly for reasons of keeping social order while also rewarding certain business agents tied to the state.
• Spending on political monuments and propaganda is required to boost the regime's legitimacy. Resource allocation is based on political prerogatives instead of social needs and symbolic, rather than substantive development, is favoured. For example, school constructions are given priority over teacher-training; youth sports festivals are held whilst universities have been rendered ineffectual.

Fuelling the Oppression
One of the most worrying consequences of investment and trade with Burma is the way it has enabled the regime to expand the army. In 1988 there were 180,000 personnel, there are now 450,000. The regime’s ultimate target is half a million military personnel. By 1993, military spending from the state budget had reached the peak level around 50% (see graph 2). A country of only 47 million people has one of the largest armies in Asia, and yet it has no external enemies.

Graph 1.

Jane's Defence Weekly reported in its July 2001 that Rangoon was buying 10 MiG-29 jet fighters from Russia for US$130 million and that the money was coming from Thai gas purchases . The down-payment for the MIGs (30% of the total) came in the same week that the state-owned Petroleum Authority of Thailand paid Burma $100 million in royalties for gas due to be piped ashore from fields in the Gulf of Martaban (operated by Premier Oil UK, TotalFineElf and Unocal). Before the Thais made this payment under the terms of a 1995 contract, Burma had almost depleted its foreign exchange reserves.

According to Robert Karniol, Asia editor of Jane's Defence Weekly , the Russians were unwilling to sell aircraft to Burma until revenue began to flow from the Martaban gas-field, which is one of the country's few sources of significant foreign exchange.

companies – who’s in, who’s out?
The Good
A large number of foreign companies have pulled out of Burma over the last five years, the reasons for doing so include: difficulties in working with the regime, consumer boycotts, damage to company reputation, or incompatibility with corporate values. These companies now include amongst others: Levi Strauss, Pepsico, Ericcson, Heineken, Carlsberg, British Home Stores, Burton, River Island, Apple, Best Western, Reebok and Compaq.

In 2001 significant divestment continued. Eighteen Australian companies cut their economic ties with Burma as a result of an international campaign against human rights abuses in the country. The companies include Fosters Brewing Group, Ikea Australia, Intrepid Travel, Mitsubishi Motors Australia, Telstra Corp and Multiplex Constructions.

The Anglo-Norwegian engineering group Kvaerner ASA announced the cancelling of a $30 million deal with Premier Petroleum Myanmar Ltd. within 24 hours of having signed the deal. The cancellation came after fierce public criticism from the Norwegian media and human rights groups.

Sara Lee, a leading retailer of underwear in the United States with nearly $17.5 billion dollars in annual revenue and owners of Hanes, Hanes Her Way, Leggs, and Just My Size brands ceased production of its garments in Burma. In a letter to the Free Burma Coalition Sara Lee Vice President and Chief Counsel Melvin L. Ortner wrote, ‘We want the Free Burma Coalition to know that production in Burma violates both our Global Operating Principles and our Supplier Selection Guidelines... two of our licensees did use Burma facilities in direct violation of their contract with us... We have taken immediate steps with both licensees to confirm that neither will make our product in Burma again.’

In January 2002 the Burma Campaign UK, won a major victory over the Swiss company Triumph International who have been producing garments in Burma. After a short and aggressive high profile campaign against Triumph, the company agreed to withdraw from Burma by May 2002.

The Bad
Despite the success of the international pro-democracy movement in pushing companies to withdraw and dissuading others from investing, some multinationals still refuse to act responsibly.

These companies include: Premier Oil, TotalFineElf, Unocal, British American Tobacco, Sea Containers, Mitsubishi and Suzuki.

Though few, they are critical to the survival of the dictatorship. The energy sector companies in particular have played a significant role in buttressing the regime financially (see fuelling the oppression above).

the uk and investment
The UK’s former foreign minister, the late Derek Fatchett, recognised the consequences of economic activity in buttressing the regime. In September 1998, he wrote to tour operators’ associations in the UK saying:

“Tourism is an important source of income for the Burmese regime. Last year official Burmese figures suggested that over 260,000 tourists visited the country, contributing over £50 million of much needed hard currency in revenue. Since most large hotels and the internal airlines are owned partially or wholly by the government, a great deal of that money goes directly into central government coffers.”

“The Burmese government admits to spending 30% of total revenue on the army, compared to the total of only 3.25% it spends on health. It is a sad fact that the government of Burma, a very poor country, chooses to spend more of its budget on military spending than almost any other country in the world...”

“There is a strong argument that the economic benefits and political legitimacy derived from tourism hardens the government’s resistance to change.”

Though not explicit in Mr Fatchett’s comments these arguments also apply directly to foreign investment in Burma. The European Parliament, the British government, Burma’s democrats, the US government and many other bodies and institutions recognise the role of investment in strengthening the regime and impoverishing Burma’s people. And yet there remain no legal barriers to that investment. Robin Cook when Secretary of State for Foreign Affairs, made an unprecedented call to Premier Oil to pull out of Burma, because of the support that company’s investment provides to Burma’s military. Of all foreign investment in Burma, investment by the United Kingdom’s was listed as the third largest in 93/4 and 94/5, the second largest in 95/6 and the largest in 96/7 and 97/8.

european investment in burma
European policy on Burma is critical for two reasons, firstly because Europe has provided much of the investment that has buttressed Burma’s dictatorship, and secondly because Europe’s relationship with ASEAN is key to the prospects for successful diplomatic initiatives on Burma.

EU investment in Burma has increased in importance over the last decade. Though estimates of Foreign Direct Investment (FDI) inflows to Burma vary according to different sources, it is clear that in the energy sector EU investment has been vital. Between 1995/6 and 1997/8 FDI in the oil and gas sectors accounted for US$1,278,000 of a total FDI for all sectors of US$1,780,000 . In 1999 European FDI accounted for 43% of all investment in Burma, and in 2000 the figure rose to 71.2% . In both years the UK was the largest EU investor.

The regime’s Economics Minister, Brig-Gen David Abel has said that: "Asean investors accounted for almost 60 per cent of FDI prior to the (Asian financial) crisis. Their investment fell by 70 per cent in the calendar year 1998," . Over the period of Asia’s financial crisis EU investment as a share of total FDI in Burma has increased. In 1997 more than 60% of the foreign investment in Burma came from the EU.

Graph 2.

Note: The percentages are calculated through the combination of current and capital spending
Source: International Monetary Fund. ‘Myanmar: Recent Economic Development’. December 10, 1999.

The costs
Military expansion and politically motivated expenditure have been carried out at the expense of Burma's people. The high proportion of the state budget spent on the military has resulted in an allocation to education and health that seriously neglects the needs of Burma’s people (see graph 2). In 2000, the World Health Organisation ranked Burma near rock bottom, 190 out of 191 countries, in health care delivery. The people of a resource rich country are slipping further into poverty.


UNDP Human Development Report 2000, and Burma Economic Watch

Thailand has been chosen for comparison with Burma in this table because of the nations’ shared history, long border, similar population size and resource endowment. Also, and though not without considerable problems of its own, Thailand provides a not unreasonable example of ‘what might have been’ in Burma. Perhaps surprising in the data of these selected social indicators is the extent to which Burma trails not only newly industrialised Thailand, but the record of developing countries generally.

the international response so far
Schizophrenia
Since the 1988 crushing of the democracy uprising, the international community's approach to Burma has been schizophrenic. Western countries have made limited attempts to isolate the regime - politically rather than economically - while Asian governments have made significant attempts to engage the regime - economically rather than politically. This has resulted in the ruling military feeling insufficient pressure to reform. The United States (US) has been the only major country to take measures to isolate the regime economically, through a federal ban on new investment.

'Constructive engagement' - a policy based on the belief that the development of political and economic relations will lead to democratisation in Burma has proved a failed experiment. Its predicted results have simply not come to fruition. The political, economic and social situation in Burma today is as critical as at any time during the last ten years with one possible exception - the lull in Burma's civil war - although this results from fragile cease-fire agreements rather than political settlements.

The European Union’s response
Over the last decade the EU has taken a number of measures with regard to Burma. All of these measures, except the withdrawal of trade privileges and the freezing of the regime’s assets, have been related to the EU’s political and aid relationship with Burma - they do not have the effect or intention of applying economic pressure on the regime. The EU Common Position, which is reviewed every six months, currently comprises:

• An arms embargo
• The expulsion of military personnel attached to the diplomatic representations of Burma in the EU
• A ban on non-humanitarian aid
• A visa ban on all individual members of the SPDC and their families
• A freeze on the personal assets held in Europe by the SPDC
• The suspension of high level governmental (ministers and officials at the level of political director or above) visits to Burma.

The EU has also withdrawn the preferential trading terms that Burma enjoyed as a developing country under the General System of Preferences and made a statement echoing the view of Aung San Suu Kyi that tourism to Burma is inappropriate.

However, in October 2001, the EU offered the regime six gestures of good will, outside of the Common Position, which remains as outlined above. The Council, “specifically stressed its readiness to accompany the deepening of the reconciliation process with humanitarian assistance which it regarded as entirely compatible with the common position”. The measures were “designed to recognise the process that has been set in motion in Burma in expectation of further positive developments”.

These are the measures the EU has expressed willingness to undertake:

• In consultation with all relevant parties, including the NLD, the European Union is prepared to play a more active role in helping confront the scourge of HIV/AIDS. Five million Euros (approximately £3m) have been made available to be used through independent ngos.
• Member states would make contributions through UN agencies combating HIV/AIDS.
• The EU would invite the Foreign Minister of Burma to the next EU-ASEAN meeting this year. A visa would be granted to him for that purpose.
• Member states will support Burma’s application to join the International Hydrographic Organisation.
• Member states may advise Burma on what steps it needs to take to qualify for bilateral relief under the IMF/IBRD’s ‘Heavily Indebted Poor Countries’ initiative.
• An EU troika mission to Burma in 2001 to discuss the reconciliation process within the country and further EU measures to help that process.

Within the EU the European Parliament’s resolutions on Burma have called on the European Council to take stronger action in the form of economic sanctions.The European Parliament resolution of October 2001 states that the Parliament:

“Believes that in the absence of any progress in the talks in Rangoon the EU common position should not be weakened in any way, and should in fact be strengthened to include action on investment sanctions if no progress is made in the talks by the next time the EU common position is reviewed.”

the impact of sanctions on burma
Economic sanctions, which are not currently used against Burma by any country except the United States, are but one crucial weapon within the international community's armoury. It is not suggested that they be used in isolation. Their purpose is as much political as economic. Investment sanctions imposed by the EU would encourage the Association of South East Asian Nations (ASEAN) to place Burma high on its political agenda. Burma has steadily become a thorn in ASEAN’s side. Such a ratchetting up of pressure through economic sanctions will increase the incentive for ASEAN to look for an invigorated diplomatic process regarding Burma. Current EU measures do not provide that incentive.

More specifically sanctions on Burma would have four impacts:

Moral: A clear expression of moral support for the people of Burma and their democratic leaders.

Psychological: A clear expression to the regime that the international community will not allow them to join the world community by stealth.

Practical: The reduction of business confidence in Burma for potential investors and a reduction in the financial resources available to the military through the prevention of new investment. Thus making the management of the economy and financing of the armed forces increasingly difficult, and resulting in an economic climate more conducive to reform.

Political: The maintenance of Burma as an issue of serious concern for the EU and a problem for ASEAN - resulting in ASEAN putting pressure on the regime to reform.

why sanctions now?
Many international companies refuse to look at the harm their investment causes in Burma. The Burmese pro-democracy movement has had many successes in persuading companies to pull out of Burma. However, we believe that Burma’s future is important enough to warrant government intervention. As Archbishop Tutu says, “We cannot depend on either the altruism of a few companies to leave Burma, nor the successes of the boycott movement to force them out. In the post-September 11th economic and political climate, we must be more aware than ever of the role that companies play in buttressing tyranny, and the unpredictable consequences of such short-sighted policy… It is imperative that companies no longer play a part in supporting those who destroy the lives of others. If the actions of these companies are allowed to go unchecked, it reflects the values of our society, it reflects on me and you. As citizens, as a Coalition and as a community, we must press our Governments to prevent these companies from fuelling the oppression in Burma.” US sanctions, EU measures and the boycott movement have succeeded in pushing the regime into talks, we cannot allow foreign multinationals to jeopardise what has been gained.

what the uk government can do
There are essentially two sorts of sanctions a country can, in principle, impose on another country: (a) trade sanctions; and (b) investment (or financial) sanctions.

Trade sanctions prohibit trading links with the country concerned; investment sanctions prohibit investing there. In each case, they are addressed to the imposing country’s own nationals and companies, although the aim, of course, is to persuade the other country to change its ways.

The UK’s freedom to impose sanctions on other countries is now much more limited that it used to be. This is due to our membership of the European Union (EU). Free movement of goods and capital are fundamental principles underpinning the Treaty of Rome. As a result, EU member states cannot impose sanctions on each other. In addition, a member state cannot unilaterally impose trade sanctions on a non-EU country. Only the EU as a body can authorise this.

A member state can only impose investment sanctions unilaterally on a non-EU country where there are ‘serious political reasons and on grounds of urgency’. This is under Article 60.2 of the Treaty of Rome.

Imposition of sanctions by the UK
Even when Article 60.2 applies, it does not directly give a member state the power to impose investment sanctions. It only authorises it to do so. The member state must still have the power to impose such sanctions under its own law.

In the case of the UK, there are two possibilities: (a) use of the royal prerogative (part of the common law); and (b) specific statutory authority. It is thought that the royal prerogative is probably not available for this purpose, which therefore leaves legislation.

The UK Parliament would therefore need to pass an Act - primary legislation – authorising the Government to impose investment sanctions. Traditionally, sanctions have actually been imposed by Orders-in-Council, a form of secondary legislation. They spell out the detail. The primary legislation simply gives the Government authority to make an Order in Council.

Again, the primary legislation can take two forms. It can confer (a) a general authority on the Government to make an Order in Council imposing investment sanctions, against any non-EU member state, wherever the circumstances warrant it; or (b) a specific authority, relating to a particular country. Both models have been used. The United Nations Act 1946 gives the Government a general authority to adopt measures (including sanctions) to give effect to UN resolutions. Similarly, the Emergency Laws (Re-enactments and Repeals) Act 1964 gives the Government the power, in relation to any country, to order companies and individuals to break contracts in specified circumstances. By contrast, the Southern Rhodesia Act 1965, as its name suggests, gave authority for sanctions against a specific country.

BCUK believe that it is better to have a general authority. Secondary legislation (such as an Order in Council) can be introduced more easily and more quickly than primary legislation. Since investment sanctions can only be imposed, under the authority of Article 60.2, where there is urgency, speed is obviously of the essence. This would mean that the Government is given considerable power, but some accountability can be achieved by building in a requirement that an Order in Council must be approved by both Houses of Parliament.

recommendations:
1. That the UK government enact legislation enabling a ban on all new UK investment in Burma.

2. That the UK government simultaneously encourage its European partners, particularly the Benelux and Scandinavian countries, to follow suit.