United States Eases Sanctions on New Investment in Burma (Myanmar)

On Thursday, May 17, 2012, President Obama announced that the U.S. would issue a general license easing sanctions on the export of financial services and new investment in Burma, although he did not lift them, meaning that they could be reinstated if there is backsliding on reforms. Although senior Administration officials had previously indicated that sanctions would only be eased on a few industries, the White House today announced that the general license would apply to all new investments in Burma, regardless of industry.

Despite the easing of investment-related sanctions, sanctions against Specially Designated Nationals, including members of the military, will remain in place. Notably, the Administration announced that the Special Designated Nationals list for Burma will be updated, which will help answer concerns that the list had not previously been significantly updated in several years, leading some to raise questions as to whether it will effectively block business activities with those responsible for human rights abuses or corruption in Burma.

The President stated that the United States will

work to establish a framework for responsible investment from the United States that encourages transparency and oversight, and helps ensure that those who abuse human rights, engage in corruption, interfere with the peace process, or obstruct the reform process do not benefit from increased engagement with the United States.

This statement reflects a recent letter from Human Rights Watch urging the U.S. Government to maintain measures to ensure that U.S. business activities in Burma are conducted responsibly, in compliance with human rights and good environmental practices, if sanctions are lifted. It was not clear, however, from the White House’s remarks, whether the responsible investment framework that the President described would be binding or voluntary.

The United States also will send its first Ambassador to Burma since 1990. In a widely anticipated move, Derek Mitchell, the Administration’s current Special Representative and Policy Coordinator for Burma, will be nominated for the post.

The easing of U.S. sanctions occurs almost one month after the European Union announced that it would suspend its sanctions against Burma for a year, with the exception of the arms embargo. Due to the simultaneous easing of U.S. and E.U. sanctions, many have predicted a rapid influx of Western multinationals into the under-developed country. At the same time, others have suggested that companies would be prudent to exercise caution, given ongoing ethnic conflict, high levels of corruption, and weak rule of law.

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