July 21, 2021
Beyond the Coup in Myanmar: The Tatmadaw Must Be Hit Where it Hurts – Its Wallet
Posted by Chris Sidoti
(Editor’s Note: This article is part of a Just Security series on the Feb. 1, 2021 coup in Myanmar. The series brings together expert local and international voices on the coup and its broader context. The series is a collaboration between Just Security and the International Human Rights Clinic at Harvard Law School.This post first appeared on Just Security on July 14, 2021.)
The Tatmadaw, the Myanmar military that tried to seize outright power in an illegal coup in February, has to be one of the world’s most incompetent armed forces. Since its first coup in the early 1960s, it has turned one of the richest countries in Asia – with a GDP several times higher than some of its neighbours – into what is fast becoming a failed state.
The military has spent decades ruining Myanmar’s institutions and economy, while committing atrocities at will (in conflicts it is mostly losing), including leading genocidal persecution of the Rohingya minority. The army leadership is known to operate by its own baffling internal logic, where numerology and soothsayers are often key to decision making.
We have watched in anguish as security forces killed more than 900 civilians in under six months since the coup began. How can you convince a junta that is as ruthless as it is utterly irrational to abandon its murderous, disastrous policies? Appeals and ultimatums from leaders around the world have had no impact so far. There is, however, something even the Tatmadaw understands: money.
The Myanmar military is a multibillion-dollar enterprise. It has placed itself at the center of the country’s economy through a complex web of commercial interests, which include military-linked businesses and subsidiaries and private crony companies in everything from beer to precious stones. And now, since the coup, it has got its hands on state-owned enterprises too.
Two conglomerates – the Myanmar Economic Holding Limited (MEHL) and Myanmar Economic Corporation (MEC) – are at the heart of much of this activity. MEHL and MEC, which were both established explicitly to support the military, own over 100 businesses and are affiliated to another 27 companies through corporate structures. The revenue they generate has not only sustained the Tatmadaw’s grip on power. It has also shielded it from scrutiny as it commits atrocity crimes with impunity. In 2019, a U.N. investigation – which I co-led – found that any foreign government or business with commercial links to these companies is at best morally complicit in the Tatmadaw’s crimes, and in some cases even legally so.
Thankfully, the world is starting to take note. Since the coup, several States have imposed financial sanctions on the military junta and its businesses, and more and more companies have seen the ethical and business sense in cutting commercial ties. In May, the Biden administration announced targeted sanctions on 13 Tatmadaw officials and their children. It is enormously positive to see the United States taking a leading role for human rights on the world stage again. This was the third round of U.S. sanctions since the coup, and they add to an already extensive sanctions regime. Junta leader and Commander-in-Chief Min Aung Hlaing is among those who have had their assets frozen since 2019, for example. The United States and other countries have also now acted against MEHL and MEC, as well as against military-owned mining, gems, and timber enterprises.
There is, however, still one of the junta’s cash cows that remains untouched: Myanmar’s state-owned oil and gas enterprise. Now is the time to act on the oil and gas industry too.
Myanmar Oil and Gas Enterprise (MOGE) is particularly lucrative. The natural gas sector as a whole is now the military’s largest source of foreign currency income, totalling some 1 billion USD in taxes and other profits every year. It is also a rich vehicle for corruption.
The U.S. and French oil giants Chevron and Total have long had ties to MOGE. Chevron, which holds a 28.3 percent stake in the hugely lucrative Yadana gas fields, is effectively paying the junta tens of millions every year through its taxes – prioritizing continued profits from its operations in the country over the people being murdered by the junta. Responding to public outcry over their dealings with the junta, Chevron and Total in late May suspended direct payments to the military and MOGE, citing “violence and human rights abuses” since the coup. This is a positive step, but one that does not go nearly far enough: the companies suspended a 15 percent dividend on transportation profits paid by Moattama, a company in which they jointly own a majority stake. But according to Human Rights Watch, the suspension does not cover “the hundreds of millions of dollars in additional tariffs, fees, and tax payments” Moattama pays into military-controlled bank accounts. In total, the suspension amounts to less than five percent of the junta’s natural gas revenues.
Businesses like Chevron should take immediate steps to disengage from any military-owned companies. It is also crucial that the United States expands its sanctions regime to include MOGE and other state-owned enterprises, over which the military has seized full control since the February 2021 coup.
These steps are not without practical challenges. The opaque financial sector in Myanmar can make it extremely difficult to uncover what the military’s financial interests are. The activist group Justice for Myanmar, however, has done highly credible work to list both individuals and entities directly controlled by or linked to the military. The Special Advisory Council for Myanmar (SAC-M) – of which I am part – supports the call for all of these individuals and entities to be the target of sanctions.
To be clear, sanctions are not a panacea that alone will solve this crisis. Neither are we calling for a return to the comprehensive sanctions regime the international community imposed on Myanmar up until 2015, which would disproportionally hit the poorest people in the country. But targeted sanctions are among the many steps the United States and other governments should take. There must also be a global arms embargo imposed on Myanmar, and a significant increase in support for justice efforts against the Tatmadaw, including at the International Court of Justice and the International Criminal Court.
In the short term, however, sanctions send a powerful signal, and will eventually chip away at the junta’s hold on power. There is already evidence of that. But to be truly effective, they need to be imposed multilaterally. The European Union, the United Kingdom, Norway, Switzerland, Canada, and New Zealand have all imposed sanctions on companies or individuals since the coup.
It is also hugely positive that several businesses have decided to suspend activities or cut ties to the military over the last few months. These actions have been taken across a range of sectors, including technology, clothing and renewable energy – reflecting widespread corporate revulsion against the Tatmadaw’s brutal treatment of people in the country. A detailed list of actions by both State and corporate entities can be found on SAC-M’s website.
More corporations and countries need to follow suit, not least in Myanmar’s own neighbourhood. In Asia and the Pacific, few States have taken action so far. Australia has stopped short of imposing sanctions, clinging to the flawed belief that “engagement” with the military is more effective at this stage, but it has suspended defense cooperation. Japan and South Korea have also taken limited steps to suspend aid and military engagement, but these are mostly symbolic moves.
The Association of Southeast Asian Nations (ASEAN) remains paralysed by internal division. Since holding a high-profile meeting on Myanmar in April, the bloc has done little. At the meeting, ASEAN committed to appointing a new Special Envoy for Myanmar to serve as its focal point for the crisis. Five months later, however, no Envoy has been appointed, apparently because of internal divisions between Member States over the Envoy’s mandate.
It is high time for the bloc to step up and lead on ending a crisis in its own backyard. Wendy Sherman, U.S. Deputy Secretary of State, expressed confidence in ASEAN’s efforts during a recent visit to the region, but it is time for genuine action to back up such optimism. It is particularly worrying that even countries like Singapore, which have taken a strong and critical stance against the junta since the coup, have publicly made their opposition to sanctions clear.
In that sense, the resolution on Myanmar that passed at the U.N. General Assembly on June 18 offers real hope that united global action is possible. While the text of the resolution could have been stronger and was watered down in the negotiation process, it was still remarkable to see such unity behind condemnation of the coup, and – crucially – a call to “prevent the flow of arms” to Myanmar. With only Belarus voting against, the resolution passed with a resounding 119 votes to one.
The regional voting patterns were particularly telling. Of the ASEAN States, Indonesia, Malaysia, Philippines, Singapore, and Vietnam all voted in favor of the resolution. Hanoi’s support was both surprising and welcome, given that the country hardly has a track record of speaking out on regional human rights issues. Vietnam is also a member of the Security Council this year and so it has a larger role to play in U.N. responses to the coup. Other ASEAN countries abstained, while Myanmar – still represented by its anti-coup U.N. ambassador Kyaw Moe Tun – voted in favour.
The General Assembly vote was a step forward, but words must now be translated into action. I fear that, more than five months since the Tatmadaw launched the coup, it is becoming normalised. Myanmar is fading from global headlines and the world’s attention is moving on to other crises. This is troubling not least since human rights abuses show no sign of abating in Myanmar: civilians are still being killed; routine arrests and torture of pro-democracy activists continue, while a renewed bombing campaign by the military in ethnic minority areas has displaced tens or perhaps hundreds of thousands. There is also a looming humanitarian crisis in the country, where rising food prices and shrinking access for aid agencies are adding to the suffering of ordinary people, while COVID-19 is also raging. The international community should not become complacent in light of the recent prisoner release as the fundamental situation has not changed.
The United States and the rest of the world must act quickly to hit the Tatmadaw where it hurts: its wallet.