Foreign Policy

Washington’s Window Is Closing Quick in Myanmar

The early morning coup that took place in Myanmar on Feb. 1 caught many longtime observers by surprise. After all, the military had promised only two days prior to “abide by the constitution,” alleviating growing fears of the military’s intervention following vague threats by the commander in chief earlier in the week. For the new Biden administration, the coup has posed a major challenge as it seeks to reincorporate U.S. values and support for democracy into American foreign policy.

As demonstrations continue across Myanmar, policymakers around the world are being confronted with the urgent need to respond. Many Western governments have issued strong statements condemning the military’s actions and calling for the immediate release of State Counsellor Aung San Suu Kyi and other members of her National League for Democracy (NLD) who have been detained. But in the region itself, responses have generally been more reserved. In Washington, talk has quickly turned to the Biden administration’s options for response and whether there will be a return to the broad-based sanctions regimes of the past.

On Feb. 10, U.S. President Joe Biden announced he had signed an executive order granting him powers to sanction the military leaders behind the coup. During a short speech at the White House in which he was flanked by Vice President Kamala Harris, Biden shared his intention to apply sanctions to senior military officials, their families, and their business interests; to apply strict export controls; and to freeze “$1 billion in Burmese government funds” in U.S. banks. At the same time, the president asserted that U.S. support for the Myanmar public would continue, including aid for health care and civil society organizations.

It remains unclear on whom or what entities the Biden administration will impose sanctions; however, according to the president, a first round of targets will be shared by the end of the week. In his announcement, Biden also alluded to this action as the first in a “series of steps” Washington will take to address the military coup and noted he had consulted with Senate Republican Leader Mitch McConnell and his team, signaling bipartisan support.

To assess Biden’s announcement, it’s helpful to step back and consider the full range of options Washington has at its disposal to respond to the situation unfolding in Myanmar. As a maximalist response, the administration could return to its broad-based ban on U.S. investments as well as sanctions on businesses in Myanmar seeking to export to or work with foreign corporations or governments. A similar alternative would be to reimpose elements of the sanctions regime that was in force prior to 2016, including the Junta’s Anti-Democratic Efforts (JADE) Act of 2008, or even broad-based bans on all U.S. investments and imports of “any article that is a product of Burma.” As many experts believe these sanctions were largely ineffective due to their failure to isolate Myanmar’s military from the globe (as well as their sharp negative impacts on the country’s broader economy), this seems to be an unlikely prospect in the near term. Indeed, Biden’s comments seem to suggest that any actions taken under his administration will be carefully targeted so as not to cause undue harm to the Myanmar public.

It now appears more likely that the administration will expand targeted sanctions under an emergency declaration made pursuant to the International Emergency Economic Powers Act (IEEPA). Although the executive order referenced in Biden’s announcement has not been publicly shared yet, it is likely that he utilized IEEPA authorities.

Under IEEPA, the president can direct the U.S. Treasury Department’s Office of Foreign Assets Control to add certain officials to the Specially Designated Nationals and Blocked Persons List, which bars U.S. citizens and businesses from dealing with specified individuals. The list can also include “companies owned or controlled by” targeted individuals or countries. Many of Myanmar’s top generals, including Commander in Chief Min Aung Hlaing, are already included on the list through a Global Magnitsky designation; however, the White House could aim to include additional military officials, family members, or entities on the list through the IEEPA framework. Biden could also look to bring back more narrowly targeted aspects of the previous sanctions regime, which the Obama administration suspended (but did not permanently remove), including the JADE Act, which targeted military officials “involved in the repression of peaceful political activity or in other gross violations of human rights in Burma or in the commission of other human rights abuses.”

In seeking a balanced response, there are several guiding principles the Biden team should bear in mind. As a first principle, the administration should be careful to do no harm. This means avoiding the kinds of sanctions that would destabilize the overall economy and hurt the Myanmar people more than the military, which has a variety of alternatives to maintain cash flow. The Biden administration should continue to make it clear that it supports Myanmar’s economic growth and development along democratic lines and does not intend to punish the people of the country for the actions of the military. Beyond this, the United States should not just protect but double down on assistance to civil society organizations, media groups, and activists in the country.

Although the administration has announced that it is freezing “U.S. assets that benefit the Burmese government,” details are still forthcoming on how this will work in practice. Biden’s reference to military business interests could point to a sanctions package that would target Myanmar Economic Holdings Ltd. and Myanmar Economic Corp., military-owned entities that have reaped billions of dollars in unreported revenue that flow directly to Myanmar’s defense budget. According to a report by Amnesty International, leaked internal documents show that Myanmar Economic Holdings Ltd. transferred roughly $16 billion to the military between 1990 and 2010. Another 2020 document filed with Myanmar’s Directorate of Investment and Company Administration identifies nearly 400,000 shareholders, all of whom are active or retired military officials. Given the prevalence of these companies and their affiliates in Myanmar’s domestic economy, the Biden team will want to implement any such sanctions in a careful manner that does not effectively ban doing business in the country or immediately halt all foreign investment (which could have devastating secondary impacts on ordinary citizens).

In addition to targeting the military’s purse, Washington can work through the U.S. State Department to expand application of visa bans on the generals and their extended families. Although such restrictions may not move the generals themselves, elite families are often keen to visit the United States either to study or for tourism and shopping. Banning the extended families of military officials could create leverage (as well as a potential incentive for cooperation) in negotiating a military withdrawal from the civilian political space.

As a second principle, the Biden team should make good on its promise to closely coordinate with its partners in the region and around the world. Ensuring these actions are effective will require cooperation with partners such as the European Union, the United Kingdom, India, Japan, South Korea, and Australia. Given the Indian military’s recent cooperation with the Tatmadaw (as Myanmar’s military is known) as well as New Delhi’s strategic interest in avoiding seeing Myanmar thrust back into Beijing’s orbit, India may be able to play an outsized role in enabling dialogue and finding a path forward with the military.

At the same time, Washington should work behind the scenes to rally support among its partners in the Association of Southeast Asian Nations (ASEAN) to facilitate a diplomatic resolution and pressure the Tatmadaw to play ball. Although individual countries in the grouping have given mixed responses to the crisis, ASEAN (under Brunei’s chairmanship) produced a surprisingly assertive statement calling for dialogue and a return to normalcy, while Indonesia and Malaysia called for a regional meeting to discuss the coup. The Biden team could also coordinate closely with friends in Singapore to cut off access to Myanmar’s financial markets and the overseas banks its military officers have reportedly used to stash their reserves.

The ultimate goal of any set of actions should be to develop leverage for eventual dialogue with the military. Though politically unpalatable, Washington should be prepared with a private list of potential incentives in exchange for releasing prisoners and guaranteeing a return to dialogue with the NLD on a path forward. Early moves indicated that Biden’s national security team wanted to retain the option for direct talks with the military, but those efforts seemed to have gone nowhere. The White House reportedly directed Joint Chiefs of Staff Chairman Mark Milley to reach out to his counterpart in Naypyidaw, Min Aung Hlaing, and requested the head of U.S. Indo-Pacific Command, Adm. Philip Davidson, to try to make contact. Although the Biden team can’t be seen as rewarding the military’s decision to oust the legitimately elected civilian government, a positive resolution to this crisis will require an unconventional approach.

Engagement with the military—even in the context of a broader approach utilizing sanctions—carries real risks for the Biden administration. Human rights groups and prominent politicians in Congress have exerted pressure on the White House to take a firm stance against the generals by standing up for Myanmar’s democracy. If the Biden team is perceived as naively trying to engage the Tatmadaw without any hope for results, pressure will mount for a tougher response. At the moment, the Biden administration seems to enjoy bipartisan support for its approach, particularly from McConnell, whose long public friendship with Aung San Suu Kyi has shaped U.S. policy toward Myanmar over the past several decades. If the White House can get McConnell publicly on board with its intended plan of action, it should have sufficient cover from immediate partisan attacks.

Whatever actions it takes, Washington will need to strike a balance that meets several difficult criteria simultaneously: demonstrating steadfast support for the people of Myanmar in their struggle for democracy, appeasing a progressive Democratic base while fending off potential partisan critiques from the right, and signaling to the generals in Naypyidaw that there are incentives for returning their country to a democratic path.

As hundreds of thousands of protesters take to the streets in Myanmar, the risks of spiraling escalation have risen dramatically. The window of opportunity for the Biden administration to convince the generals to step back from the precipice of a violent crackdown on peaceful demonstrations is closing quickly. Washington’s efforts to contain the Tatmadaw’s worst impulses will be far more convincing with allies and partners united in their opposition to the junta. The Feb. 10 announcement of imminent sanctions was a good start, but Western sanctions have failed to sway Myanmar’s military in the past. A coordinated response with partners around the world that employs targeted sanctions, while at the same time holding open a path for engagement, will provide the best opportunity for a successful diplomatic resolution to this crisis and for the sustainment of Myanmar’s democratic transition.

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