The United States is preparing to amend sanctions on Myanmar after banks complained they can’t finance trade that goes through the nation’s main port terminal because it is run by a blacklisted business tycoon.
State Department officials have been sounding out Congress about remedial policies, which an administration official said could take effect as early as next week.
The administration is keen to promote economic growth but its fix could draw criticism from the U.S. lawmakers and human rights groups.
It would mean giving the green light to banks to process transactions related to trade that passes through a container port terminal in the main city of Yangon that is run by Steven Law, the son of a deceased heroin kingpin. He heads one of Myanmar’s largest conglomerates, Asia World, that flourished under the former ruling junta.
Two associations representing many of the world’s largest commercial banks, The Clearing House and The Bankers Association for Finance and Trade, have requested a sanctions work-around to Treasury’s Office of Foreign Assets Control. In a letter they warned that trade with Myanmar could otherwise be impacted badly.
But the request comes at a sensitive time.
Myanmar is in the throes of a historic transition to a civilian-led government after five decades of military domination. The November 8 elections saw the opposition party of Aung San Suu Kyi thrashing the current pro-military ruling party. But the new government will only be complete by April. Washington won’t want to be seen as giving up its leverage, at least until then.
Congressional aides who were briefed by the State Department this week said the administration was not proposing taking Law or any sanctioned individual or entity off the blacklist and allowing them to trade directly with the U.S. companies. But the aides and rights activists expressed concern that an exemption now could be seen as hasty and as compromising sanctions policy.
The aides and the administration official spoke on condition of anonymity because they were not authorized to comment on the plans being discussed. Legislative approval is not needed.
“Loosening a restriction on business persons who were listed by the U.S. Government because of their involvement in massive criminal enterprises and support for an abusive military junta isn’t a well-tailored idea for improving Burma’s economy,” said John Sifton, Asia advocacy director for Human Rights Watch. “These sorts of business people are precisely the sorts of people who are responsible for the poor state of Burma’s economy in the first place.”
Asia World was set up in 1992 by Law’s father, the late Lo Hsing Han, who was described by the Treasury as one of the world’s key heroin traffickers. The father and son were put on the Treasury’s Specially Designated Nationals, or SDN list, in 2008. Dozens of senior officials, businessmen and companies linked to the junta remain on the list, and are barred from holding assets in the U.S. financial system or doing business with U.S. companies.
Asia World was awarded contracts to run ports, build highways and oversee airport operations during the junta’s rule, and today its subsidiary, Asia World Port Management Co. Ltd, provides the most efficient way of getting goods into Myanmar by sea, handling about 60 percent of the container trade that comes in via Yangon.
There are alternatives. At least two other deep water ports in or near Yangon could be used for U.S.-Myanmar trade, including a terminal operated by Hong Kong-based Hutchison Port Holdings Ltd., 15 miles (25 kilometers) south of city, but the Asia World facility is reported to be better located and equipped.
It’s hard to gauge what impact the difficulties of the banks complying with sanctions has had on trade.
The U.S. trade with Myanmar is small, but growing. In 2014, two—way goods trade was 185 dollar million, according to U.S. Census Bureau figures. In the first 10 months of 2015, it totaled 306.1 dollar million.
The Obama administration suspended broad U.S. restrictions on investment and trade on Myanmar three years ago to reward steps toward political and economic reform, but it says it wants to see a smooth postelection transition to a new government before making any dramatic changes to the targeted sanctions that remain.