Oil and gas are a critical economic lifeline for Myanmar’s military junta.
The Biden administration is considering sanctions targeting Myanmar’s energy sector, according to a U.S. official and aides familiar with the matter, following a crackdown on pro-democracy activists by the country’s ruling junta.
The decision, which the sources said was likely and could be announced in the coming month, comes amid mounting frustration from Congress and human rights organizations that Washington isn’t doing enough to crack down on Myanmar’s military rulers. The military took power in a coup last February.
During a closed-door congressional briefing on July 27, senior lawmakers who are important allies of U.S. President Joe Biden, including Rep. Gregory Meeks, the chair of the House Foreign Affairs Committee, pressed top administration officials on why they were dragging their heels on levying sanctions against Myanmar’s energy sector, according to the official and congressional aides familiar with the matter. All officials and aides spoke on condition of anonymity, as they were not authorized to publicly discuss internal government deliberations.
“There are Members in Congress with genuine frustrations that the crisis is getting worse,” said a House Foreign Affairs Committee aide familiar with the matter. “Chairman [Meeks] feels strongly that the United States can be doing more to squeeze the military economically and isolate it diplomatically.”
Among the officials grilled by lawmakers was Daniel Kritenbrink, the top State Department envoy for East Asian and Pacific affairs, as well as senior officials from the U.S. Agency for International Development and Treasury Department.
While the United States and other Western allies have slapped sanctions on people and businesses in Myanmar that were involved in carrying out the military coup last year, Washington has so far left Myanmar’s energy sector—including the state-owned Myanma Oil and Gas Enterprise (MOGE)—effectively untouched. The European Union sanctioned MOGE in February, a year after the coup, but advocates have since called on others, including the United States and the United Kingdom, to follow suit. The energy sector is a crucial source of revenue for Myanmar’s military, which earns $1 billion a year from MOGE alone. It is also an important conduit for foreign currency reserves.
“That’s a lifeline,” Salai Za Uk Ling, the deputy executive director at Chin Human Rights Organization, a nonprofit group advocating for the rights of ethnic Chin and other minority groups in Myanmar, said of MOGE’s significance to the junta’s armed campaign.
The United States has been reluctant in recent years to sanction the country’s energy sector, the sources said, because of the undue hardships it would place on average Myanmar citizens. (One natural gas project, called Yadana, supplies Myanmar’s largest city, Yangon, with half its power, for example.) They also point to the fact that neighboring countries, including Thailand, rely heavily on Myanmar for energy imports. Washington is working to carefully balance its human rights concerns regarding Myanmar with rallying support among its neighbors, including Thailand, for other regional security priorities, the sources said. The United States also wants to keep the region from falling into China’s orbit against the backdrop of mounting geopolitical competition between Washington and Beijing.
But inside the Biden administration, the sources said, a possible turning point on energy sanctions came after Myanmar’s government announced in late July that it had executed four prominent pro-democracy activists. It was the first of such formal state-sanctioned executions in decades.
Although the United States and other foreign governments quickly condemned the executions, human rights advocates and civil society activists were frustrated that Washington didn’t go further.
“How many more people need to be sacrificed for them to do something practical rather than issuing statement after statement, concerns, and condemnations?” said May Phyu, a leading human rights activist on Myanmar who is currently a fellow in the Dorothea S. Clarke Program in Feminist Jurisprudence at Cornell Law School. “We are all really tired of reading only words and statements. What people need right now is something practical, actions.”
A State Department spokesperson declined to comment on the matter, instead referring Foreign Policy to recent comments from State Department spokesperson Ned Price. “All options are on the table,” Price said during a July 28 press briefing when asked whether the United States would levy new sanctions on Myanmar in the wake of the executions. “We have consistently said that as long as the junta continues to stand in the way of a return to Burma’s path to democracy, we will continue to impose costs and consequences on the junta,” he added, using the official U.S. government name for the country.
Meeks sponsored a House bill, the Burma Act, that would explicitly empower Biden to slap sanctions on Myanmar’s state-owned enterprises and top junta officials involved in the February 2021 coup. While the bill passed the House in April, it hit a wall after a proposed companion bill lost momentum in the Senate. Meeks is trying to include a version of the bill that would make U.S. sanctions on MOGE mandatory into the National Defense Authorization Act, a must-pass defense policy bill.
The proposed sanctions on MOGE, the junta’s main source of revenue, would deal an immediate blow to the junta’s ability to engage in further attacks against civilians and the armed resistance, said Salai Za Uk Ling of the Chin Human Rights Organization.
About half of Myanmar’s foreign currency revenue—around $1.5 billion annually—comes from its energy sector, according to Myanmar government data. The junta has been using jets and attack helicopters to quell civilian protests and independent defense forces, Salai Za Uk Ling said. Isolating its energy industry would effectively ground the junta’s military machine, from funds to fuel.
“It shouldn’t have taken the four activists to be executed for the international community to get a wake-up call,” Salai Za Uk Ling said. Since Feb. 1, 2021, the junta has killed 2,145 individuals during its widespread crackdown on pro-democracy protests, according to the Thailand- and Myanmar-based human rights organization Assistance Association for Political Prisoners (Burma).
Two international energy giants, U.S.-based Chevron and France-based TotalEnergies, announced this year that they were withdrawing from operations in Myanmar that supported MOGE’s oil and gas projects in response to the deteriorating human rights situation.
U.S. Secretary of State Antony Blinken is set to meet with regional leaders during the Association of Southeast Asian Nations (ASEAN) meeting in Phnom Penh, Cambodia, this week. There, Blinken will discuss with ASEAN foreign ministers the situation in Myanmar, as well as other pressing regional issues such as the COVID-19 pandemic, economic cooperation, climate change, and the global response to Russia’s war in Ukraine, according to a State Department press release.
Myanmar will not attend the summit, an ASEAN spokesperson said on Monday. Its military rulers declined an invitation by the regional bloc to send a non-junta representative, according to the spokesperson.
Instead, the junta is hosting Russian Foreign Minister Sergey Lavrov, who is traveling this week to Myanmar, where he will meet with the junta-appointed foreign minister, Wunna Maung Lwin, a spokesperson for the Russian Foreign Ministry said on Tuesday.
Russia, as a major supplier of weapons, is one of the only nations with leverage over the historically isolated, domestically oriented junta. From 2017 to 2021, Russia accounted for more than a quarter of Myanmar’s total weapons imports, according to a report by the Stockholm International Peace Research Institute. That number has soared as Myanmar has looked to decrease its dependency on Beijing.
“[Junta leader] Min Aung Hlaing looks to Russia as an alternative to China,” said Hunter Marston, a researcher at Australian National University with a focus on Southeast Asian affairs. The Myanmar military, in general, sees China as a national security threat, and Russia plays an important role in lessening its dependence on Beijing, Marston said. Plus, Russia is a desirable partner as Myanmar experiences severe lack of funds.
The Central Bank of Myanmar issued a statement ordering local companies and banks to suspend the repayment of foreign loans, Myanmar Now reported in July. The statement is a sign that foreign reserves—which the junta uses to purchase arms—are dwindling, said a Thailand-based Burmese independent analyst who spoke on condition of anonymity. Blanket sanctions, including sanctions on MOGE, would further bleed the junta’s wallet.
“Many Myanmar people are saying that our country will become the next Sri Lanka,” said the independent analyst, referring to Sri Lanka’s recent political turmoil and near economic collapse. “But Myanmar people—they don’t care. Because their main motive is to remove the military from power.”
While the sanctions targeting Myanmar’s energy sector would be the most sweeping yet, secondary sanctions are still important, experts say. For example, U.S. officials and experts say many regime enablers are based in Singapore, which has an expansive banking system that indirectly supports funding the junta, Marston said. A next step some U.S. lawmakers are pushing for is that the administration increase its monitoring of Singapore-based financial institutions that may have ties to Myanmar’s junta.