Washington DC 7 March 2022 – Just over one year since the Myanmar military, known as the Tatmadaw, led a coup against the legitimately re-elected government, a new study finds that more than $190 million in imports of timber were reported from Myanmar in 2021, including to countries with sanctions, potentially exposing entities importing from Myanmar to risk of civil and criminal penalties.
In response to the coup and to evidence that revenue from natural resources is funding the junta, the European Union (EU) and four countries (the United States (US), United Kingdom (UK), Canada, and Switzerland), have introduced sanctions that aim to limit the regime’s ability to collect revenue from sectors such as mining, forestry, and most recently, oil and gas.
Since February 1, 2021, Myanmar’s economy has collapsed and the junta has increasingly turned to natural resources to support its regime, financing both military operations and violence against civilians, much like the previous military regime did for decades. The elected government had brought in anti-corruption reforms, but these are being undone.
Sanctions can be effective, if enforced. This is being clearly demonstrated by recent sanctions from the US, UK, EU, and others on Russian banks and freezing assets belonging to Vladimir Putin’s top allies in response to Russia’s invasion of Ukraine on February 24, 2022.
“The role of forests in Myanmar really can’t be overstated,” says Michael Jenkins, CEO and Founding President of Forest Trends, “The return of military control last year was a shocking development as Myanmar was still transitioning from 50 years of harsh military rule to democracy, rule of law, and federalism. In the past, illegal logging, corruption, and illicit trade of wood products ran rampant. Money from illegal logging helped finance Myanmar’s decades long civil war and we need to move past that reality.”
Forest Trends’ new report focuses on the role of forestry sanctions by the US, UK, EU, Canada, and Switzerland on the Myanma Timber Enterprise (MTE), the State-owned Enterprise that monopolized the forestry sector.
The US sanctions prohibit even the indirect benefit of the MTE. The Executive Order also has no grace period – the sanctions take immediate effect. The US Department of the Treasury’s Office of Foreign Assets Control (OFAC) has previously prosected entities that used US dollars in payments to sanctioned entities, even if the entities themselves have no other connection to the US.
In other words, all trade with the MTE would be a violation of US sanctions, because teak is purchased in US dollars, even if no US companies are involved. All banks that facilitate these transactions would also be violating US sanctions. So far, only Canada has sanctioned the Myanmar Foreign Trade Bank, which facilitates all MTE US dollar transactions (all are held in foreign banks).
“To close this loophole and make sanctions more effective, countries should expand financial sanctions to include the Myanmar Foreign Trade Bank,” says Kerstin Canby, Senior Director of Forest Trends’ Forest Policy, Trade, and Finance Initiative, “Doing so would help stop spill over to non-sanctioned markets by making it a violation to facilitate this trade with any country. Countries that have not yet imposed sanctions should do so, otherwise they are bankrolling the junta.”
The stakes in war-torn Myanmar could not be higher as the junta continues its violent crackdown against its people. The crimes of illegal harvest, sale, and export of Myanmar’s resources, much of it extracted from conflict areas claimed by the country’s ethnic minorities, are producing revenues that allow the military to perpetrate horrific crimes, not only against the country’s democracy but also its civilians. To date, the regime has killed over 1,600 unarmed civilians and arrested over 12,500 more. Sanctioning the junta – and implementing those sanctions – is one thing the international community can, and should, do to support the people of Myanmar.