In this update, we examine recent developments in sanctions affecting Myanmar, following the military coup last month.

What led to this situation?

Myanmar held a national election in November 2020, which was overwhelmingly won by Aung San Suu Kyi’s ruling National League for Democracy. The party backed by the Myanmar military won only 33 of 476 seats.

The military then alleged significant electoral fraud, but this was rejected by Myanmar’s election commission in late January. Myanmar’s military reacted to this on February 1 by taking control of the country and declaring a state of emergency for a year, after detaining Aung San Suu Kyi and other senior members of her political party.

Imposition of sanctions

Following the military coup, U.S. President Joe Biden announced an immediate review of U.S. sanctions policy applicable to Myanmar, ‘followed by appropriate action’.

Presidential Executive Order 14014 of 10 February followed, containing broad language empowering the Treasury Secretary to sanction any person:

  1. operating in the Myanmar defence sector, and such other sectors as may be determined from time to time
  2. undermining democratic processes or institutions; threatening the peace, stability and order of Myanmar; limiting freedom of expression or assembly or access to media; responsible for arbitrary detention, torture, serious human rights abuses, etc.; and
  3. who is a leader or official of the military or security forces of Myanmar, or the Government of Myanmar from 2 February onwards, or of entities that have engaged in any activities described in (b).

Entities owned or controlled by, or acting for on or behalf of such persons; or more broadly, the military or security forces of Myanmar, can also be sanctioned.

Spouses, adult children and material supporters of sanctioned persons may also, themselves, be sanctioned.

Sanctioned persons

In terms of what has actually happened as a result of the Executive Order, OFAC (the U.S. Office of Foreign Assets Control, of the Treasury Department, which administers and enforces U.S. economic and trade sanctions) sanctioned 13 parties on February 11 and a further two on February 22. Of these, 12 are individuals and three are companies, all connected in various ways to the military coup.

On February 17, the U.S. Commerce Department’s Bureau of Industry and Security (BIS) also issued a notification that it will apply a presumption of denial for licence applications for the export and re-export of items to Burma’s military and security services.

Commentary

While the U.S. authorities have stressed that this remains an evolving situation, their reaction to date has been restrained. These sanctions do not place a general prohibition on dealings in Myanmar, nor the export of financial services to it. In fact, they do not broadly prohibit dealings with the new government of Myanmar.

This mirrors the general reaction of the international community. Canada and the U.K., for example, have also sanctioned particular parties while the E.U. has announced an intention to impose targeted sanctions but it remains to be seen exactly what these are.

At present, in broad terms, doing business in or with Myanmar remains legally possible but we recommend that those doing so closely monitor the situation for further developments and are diligent in avoiding dealings with sanctioned parties, even inadvertently, that could expose them to significant penalties as well as creating damaging publicity.

There have been recent reports of multiple killings of protestors against the military coup and it may then be worth recalling the words of U.S. Treasury Secretary Janet Yellen: ‘If there is more violence against peaceful protestors, the Burmese military will find that [sanctions already imposed] are just the first.’