Why does it matter? The coup has arrested a decade of political and economic liberalisation. It has prompted almost universal outrage from Myanmar’s people, who have taken to streets across the country to demand its reversal. The military is unlikely to back down, and the risk of deadly violence against protesters is high.
What should be done? Foreign governments must unanimously condemn the coup. Nonetheless, all should be realistic about the limits of international leverage over the generals. Those responsible for the coup should be sanctioned but the population and economy should be protected from harm. Asian and Western powers should work together to deter violence.
I.Overview
The Myanmar military took the world by surprise on 1 February, staging a coup d’état that abruptly curtailed the country’s democratic transition and has sparked mass protests that could lead to deadly violence. The generals say their move is constitutional, alleging fraud in November 2020 elections that saw the National League for Democracy (NLD) defeat the military-backed party. These claims lack substantiation. The detention of civilian leader Aung San Suu Kyi, as well as her anointed president, Win Myint, has generated immense popular anger. Foreign governments are now grappling with how to respond. Some (largely Western) governments threaten sanctions to punish democratic backsliding; the U.S. has already imposed some restrictions. Asian powers that have expressed concern focus on the risk of instability. Governments that impose sanctions should adopt measures that target coup leaders and insulate Myanmar’s people and broader economy from their effects. Regional governments should consider such steps to protect regional stability. All external actors should cooperate to prevent violence.
Complicating efforts by foreign governments to react is a dynamic situation on the ground. The new regime has tried to tamp down protests by issuing a curfew order that prohibits public gatherings of five or more people, rolling back some reforms that protected civil liberties and using heavy-handed crowd control devices such as water cannons and rubber bullets (compounded, some reports suggest, by live fire in some instances). Still, demonstrations show no sign of abating. Indeed, the junta’s sharp response, which resulted in the reported killing of at least one person, appears to have drawn even more people onto the streets, including in the capital city of Naypyitaw, suggesting significant support among government workers. The security forces’ approach could take an even darker turn fast. Soldiers and armoured vehicles have begun to reinforce the police lines and, should the generals become impatient with the status quo, could easily become the sharp end of a bloody crackdown, as has happened in the past.
Riot police in front of Yangon’s City Hall. The crowd of peaceful protesters is chanting “the people’s police” and has given them roses, water and snacks to signify that their protest is against the military junta, not the police. February 2021. CRISISGROUP/Richard Horsey.
Responses around the world have varied. Many governments denounced the military takeover. The UN Security Council issued a press statement expressing “deep concern” about the “arbitrary detention” of members of the government, calling for the release of those detained and emphasising the need to “uphold democratic institutions and processes, refrain from violence, and fully respect human rights, fundamental freedoms and the rule of law”. For Western governments invested in Myanmar’s democratic transition, initial statements were only an opening salvo. U.S. President Joe Biden has already approved sanctions on coup leaders, their business interests and close kin, and redirected more than $40 million of aid from the Myanmar government to civil society. New Zealand rejected “the legitimacy of the military-led government” and suspended high-level military and political contacts. Asian governments and commentators have been more muted; many expressed concern for regional stability, but prominent voices have cautioned against a severe international reaction unlikely, in their eyes, to sway the generals.
Targeted sanctions and the like can serve as a signal to the generals in Myanmar and others similarly inclined elsewhere.
Western leaders will have to thread a needle. Targeted sanctions and the like can serve as a signal to the generals in Myanmar and others similarly inclined elsewhere. Sanctions might impose costs that will not reverse the coup but could offer modest leverage or deterrence in the future. Some measures, such as cutting off weapons shipments, can also help ensure those governments previously supplying arms are not complicit should the military again use force against Myanmar’s people. Yet sanctions should be formulated with a clear grasp of their shortfalls. Prior to Myanmar’s transition that began in 2010, the U.S., EU and others imposed ferocious sanctions that, alongside the junta’s economic mismanagement, harmed the population. The sanctions alienated Myanmar’s neighbours, which saw them as disproportionate, creating an unhelpful West-versus-East dynamic that inhibited cooperation. Sanctions did not play a decisive role in Myanmar’s 2011 democratic opening. Steering a policy course today requires humility about and historical perspective on external actors’ limited sway over internal developments.
Still, outside powers can take useful steps. Governments wanting to signal the importance of a return to democracy should – as the U.S. has done – adopt tailored measures that seek to punish those responsible for the 1 February actions but avoid penalising the country’s population who are the coup’s victims and, in many cases, are risking their lives protesting it. Such punitive measures could include sanctions on military-owned enterprises, provided they do not hurt the broader economy and the people. Myanmar’s neighbours should join these efforts – whether or not, given their own systems, they are concerned about democracy in Myanmar – to help push the generals onto to a more stable path. All governments should suspend delivery and sales of weapons and other defence and dual-use equipment during this volatile period and maintain this policy until genuine civilian government is restored. At the same time, there is little to gain from cutting off communication with the Tatmadaw (as the Myanmar military is known), an institution that, however objectionable its actions, holds the country’s immediate future in its hands.
Finally, external actors should bear in mind that even if they cannot act in concert on every element of policy concerning Myanmar’s dispiriting democratic reversal, they must retain the ability to work together to reduce risks of further bloodshed. Crackdowns on protesters are a real danger and, given that Myanmar is a highly militarised country with dozens of heavily armed ethnic armed groups and militias, violence could escalate in other ways, too. In charting their response, Western and Asian governments should place a premium on keeping space open for coordination among them. Unfortunately, there is good reason to believe that such cooperation will be crucial in the days to come.
Myanmar’s future is uncertain but even were it to return to the status quo ante – awkward power sharing between an unpopular military and a popularly elected government – many challenges would remain. Multiple ethnic conflicts persist and the state’s disenfranchisement of and atrocities against the Rohingya are an open wound. The optimal way forward would not only end military rule but also replace the 2008 constitution with a charter that brings the military under civilian control and allows for a process of ethnically and religiously inclusive nation building. These are deep structural challenges that, beyond the military’s acquiescence, require broad social changes to achieve. But without these, Myanmar will continue to be beset by its many problems.
II.After the Coup, What’s the Plan?
A.The Military and the NLD
Early in the morning of 1 February, the Tatmadaw detained State Counsellor Aung San Suu Kyi, President Win Myint and other key NLD and government figures; shut down internet access in the country; and deployed soldiers in strategic locations. It took these actions only hours before the new parliament – elected on 8 November 2020 – was to convene. Later in the day, it seized legislative, administrative and judicial power.
A demonstrator holds up a sign during 7 February protests in Yangon, Myanmar. CRISISGROUP/Richard Horsey.
Myanmar has seen coups before, in 1958, 1962 and 1988, but unlike in those cases, this time around the Tatmadaw has been at pains to paint its overthrow of the elected government as constitutional and seems intent on maintaining the existing constitutional setup. Its first step in creating the appearance of legitimate rule, in the morning of 1 February, was to appoint Vice President Myint Swe, an ex-general, as interim president. The move, although it did not satisfy constitutional requirements for when a president can be replaced, created a pretext for Myint Swe to exercise the president’s constitutional power to invoke a state of emergency, transferring executive, legislative and judicial power to military Commander-in-Chief Min Aung Hlaing under Articles 417 and 418(a) of the constitution. The military has also said it will remain in power for one year, reflecting the constitutional time limit for such a state of emergency.
New regime leaders, now constituted as a State Administration Council chaired by Min Aung Hlaing, have since tried to project an air of normalcy, signalling that they will continue governing as the previous government did – and indeed improve upon its performance. It will not be easy, given the massive demonstrations against the coup, and a broad civil disobedience movement that has crippled many government functions. The coup could also alter the dynamics of the country’s multiple conflicts with ethnic armed groups in unpredictable ways.
A sign showing the Hunger Games three-finger salute which has come to symbolise revolutionary defiance in neighbouring Thailand and Myanmar. 7 February 2021. CRISISGROUP/Richard Horsey.
The Tatmadaw’s concern in seizing power does not appear to be the system of hybrid civilian-military governance set out in the constitution but, rather, the political popularity of State Counsellor and NLD leader Aung San Suu Kyi. The constitution the military drafted in 2008, after half a century of its direct rule, lays out a framework the generals still appear to consider apt, but which has done little to help Myanmar tackle its many challenges: an elected government; a politically empowered and largely autonomous military; and a president with broad executive powers who the military expects would be its ally. By crafting a constitution that reserves 25 per cent of parliamentary seats for itself and requires more than 75 per cent of parliamentarians to approve amendments to the constitution, the military dealt itself a veto over constitutional change. What it did not contemplate was a scenario in which a figure as popular as Aung San Suu Kyi, as de facto civilian head of government, would be able to use her position to control the president’s selection, as has been the case since 2016, and then wield power through her appointee.
If the military hoped the 8 November election would curb this power, it was surely disappointed. The NLD’s margin of victory expanded the party’s influence, gaining it 83 per cent of the elected seats in parliament – slightly better than even its 2015 landslide. By contrast, the military-backed Union Solidarity and Development Party (USDP) made a weak showing by winning only 7 per cent of the same pool of seats. Other national opposition parties failed to win a single seat, and ethnic parties – widely expected to do better than in the past – were not able to improve on their 2015 performance. The failure of other parties to make a dent in the NLD’s commanding position meant that even with a quarter of parliament’s seats reserved for military officers, the commander-in-chief had no pathway to becoming president, long believed to be his ambition. His toxic personal relations with Aung San Suu Kyi and her perceived failure to treat the military and its concerns with due respect added to the friction.
It seems that a second NLD term [...] was too much for the generals to swallow.
The November election drove home that, a decade after it initiated the transition to partial democracy, Myanmar’s military had two major problems on its hands: Aung San Suu Kyi’s persistent domestic popularity and its own enduring unpopularity, as evidenced by the USDP’s abysmal performance and the lack of improvement in results for other opposition and ethnic minority parties. It seems that a second NLD term, with no imminent prospect of a return to the kind of military influence over the government and presidency envisaged by the authors of the 2008 constitution, was too much for the generals to swallow. Without evidence, they issued a long succession of accusations of massive electoral fraud to justify the coup, and then, on 1 February, made their move.
Military leaders have sustained this narrative in the post-coup period. They claim their objective is to repair the fraud through fresh elections. Immediately after seizing power, the new military regime published a five-point roadmap, in which it promised to name a new election commission, hold elections in a year’s time and hand over power to the winner. Given the scale of the NLD’s November victory, it is inconceivable that such a vote, if essentially free and fair, could have a radically different result. Indeed, the coup has boosted both Aung San Suu Kyi’s popularity and anger at the military. At this juncture, even a return to the status quo ante, with the military exercising autonomous control over all security matters, would be difficult for many people to accept.
To avert another failure at the polls, the military has two options. The first would be for it to continue holding onto power after one year, delaying the promised elections. This approach, however, would strain even further its effort to create the appearance of acting constitutionally, and would make its stated adherence to the 2008 constitution even more implausible. If it jettisoned the constitution, it would then need to draft a new charter – a daunting prospect considering that the 2008 text was two decades in the making. The second and more likely Tatmadaw strategy would be to use the coming year to tilt the playing field in favour of pro-military political forces, in order to secure for itself a positive outcome in a future vote. Given the NLD’s massive popularity, the playing field would have to be extremely skewed to keep it out of power.
Protesters wave NLD “fighting peacock” flags at a demonstration in downtown Yangon, near Sule Pagoda, with the Sunni Bengali Mosque in the background. 7 February 2021. CRISISGROUP/Richard Horsey.
One way to do this might be to modify the electoral system, for example by injecting a dose of proportional representation, though that would appear to require amending the constitution – which can only be done by the parliament, not by emergency decree. Alternatively, the generals could take steps that in effect neutralise Aung San Suu Kyi and the NLD as political threats. Dubious charges filed against her and President Win Myint since the coup would allow the military to do just that. If convicted, they could be declared ineligible to stand for elected office or head a party. The NLD could then be required to dissolve. There are also persistent rumours that Aung San Suu Kyi could be tried for treason. Such an approach has precedent: the military did much the same in the run-up to the 2010 elections, loading the dice so heavily that the NLD boycotted the vote, paving the way for newly retired members of the junta to sweep the polls.
For its part, the NLD has limited options to change the course of events. With its ministers and parliamentarians ousted and its leaders detained, the NLD appears subject to the military’s whim, at least for the time being. The party seems to be adopting the same approach it did after the military nullified the NLD’s electoral victory in 1990 and kept Aung San Suu Kyi under house arrest. Deprived of their leader and unable to take their seats in parliament, the party’s MPs continued to meet in what was, in effect, internal exile, in a bid to keep alive their legitimate claim to rule, albeit to little avail.
For its part, the NLD has limited options to change the course of events.
Consistent with this precedent, on 4 February, some 70 lawmakers elected in November defied the military government by taking their oaths of office at a symbolic parliamentary meeting. This group has nominated MPs to a body to represent the parliament elected in 2020 – the Committee Representing Pyidaungsu Hluttaw [Union Parliament] – who continue to meet virtually and publish statements. The Committee has refused to recognise the new regime and invited the UN and foreign governments to discuss official business with its members rather than the generals. It has also promulgated a law reappointing Aung San Suu Kyi to the state counsellor position. The Committee is unlikely to be able to influence the course of events, however, until the military decides to reopen the door to civilian rule.
Meanwhile, peaceful public protests launched on 2 February have continued to expand across the country – including tens of thousands demonstrating in downtown Yangon every day. The new regime has tried to tamp down the protests with curfew orders, heavy-handed crowd control techniques and restrictions on public communications. To suppress popular dissent and external coverage of the protests, the Tatmadaw have ordered internet service providers to block access to popular social media sites like Facebook, Instagram and Twitter, temporarily cut off countrywide internet access multiple times, circulated a draft law that would give them sweeping new surveillance powers and rolled back civil liberties by removing restrictions on warrantless searches and requiring people to register all overnight guests with authorities.
B.External Actors
Western governments, which had been among the most vocal supporters of Myanmar’s democratic transition, quickly and forcefully condemned the coup. For example, a senior State Department official said the U.S. “denounced in the strongest possible terms Burma’s military leaders for seeking to reject the will of the people of Burma”. On 11 February, the Biden administration took the first steps in imposing sanctions, with more details to come; it also announced the redirection of $42 million of bilateral assistance from the government to civil society. New Zealand announced the suspension of high-level contacts with Myanmar’s new leadership, measures to ring-fence its foreign aid from benefitting that leadership, and the imposition of travel bans on its military leaders. The EU announced that it would meet on 22 February to review its relations with Myanmar and is considering its own targeted sanctions and adjustments to development assistance.
Initial responses from most Asian capitals were more subdued. Japan, which has forged a close partnership with Myanmar, arguably went furthest in expressing “grave concern”. The coup represents a serious setback for the Association of South East Asian Nations (ASEAN), which must once again manage the consequences of Myanmar being the sick man of the grouping. Thus far, ASEAN has called for the “pursuance of dialogue”, while several of its members characterised the developments as their neighbour’s “internal affairs”. China “noted” the situation and “hoped” the parties would “properly settle their differences”.
The UN Security Council, for its part, held closed consultations on 2 February and after some negotiation produced a press statement calling for the “immediate release” of those in “arbitrary detention” and citing the need to “uphold democratic institutions and practices”. Although the statement indicated a degree of unity in condemning the military takeover, the Chinese mission released one of its own emphasising the need for “stability” in Myanmar that other diplomats read as more favourable to the military. China may wish to keep the Tatmadaw in some doubt about how far it will go defending the Myanmar generals at the UN. New York-based diplomats do not think it likely that Beijing will support the UN Security Council adopting specific measures (for example, sanctions) in response to the coup, and see the UN more as a forum for consultation going forward.
A motorcyclist draped in a ‘fighting peacock’ NLD flag observes crowds of demonstrators in downtown Yangon. 7 February 2021. CRISISGROUP/Richard Horsey.
The question is what comes next. Around the world, and particularly in Western capitals that have asserted they will hold the military to account for the coup, policymakers are faced with the challenge of how to match actions to words. The task is particularly difficult given the limits of external actors’ influence over Myanmar’s military leadership, who have demonstrated for decades their resistance to outside pressure, and the prospect that the few tools in their toolbox – in particular, sanctions – could wind up harming the people of Myanmar while leaving the generals relatively untouched. As policymakers evaluate the costs and benefits of their next moves, they should look for lessons in Myanmar’s past experience with sanctions.
III.What Effect Did Sanctions Have Last Time Round?
A.Years of Biting Sanctions
Although it was never subject to UN Security Council-mandated sanctions, Myanmar was, for over two decades, at the receiving end of some of the toughest bilateral and multilateral sanctions ever applied. These were first imposed mostly by Western governments and the EU after the brutal army crackdown on demonstrators in 1988 and then the regime’s refusal to hand over power to the NLD following the party’s landslide victory in the 1990 elections. Sanctions were later tightened, progressively, in response to various political and human rights concerns, and only started to be rolled back in 2011.
A police roadblock near City Hall in downtown Yangon. 7 February 2021. CRISISGROUP/Richard Horsey.
While these sanctions may have had some benefits – for example, in sending a clear message of moral opprobrium to the military and support to pro-democracy advocates – they did not appear to alter the junta’s “will or capacity to maintain power and continue its repressive policies”. Nor did they appear harnessed to a viable strategy for doing so. Indeed, sanctions may have hardened Myanmar’s military leaders against diplomatic entreaties from the West, at the same time rallying Asian neighbours to the junta’s side (throughout this period, countries in Asia – including all Myanmar’s neighbours – continued to trade and engage with it). Moreover, while the generals ruling Myanmar were largely impervious to their effects, the general population was not.
Pre-reform period sanctions fell largely into three categories:
Suspension of development aid and technical assistance. Starting in 1988, most Organisation for Economic Co-operation and Development (OECD) member countries suspended aid programs, although very limited amounts of humanitarian assistance continued in ways that bypassed state structures. U.S. laws required it to block (and lobby its allies to also block) World Bank and International Monetary Fund assistance, and the UN tightly restricted some of its agencies’ and programs’ operational mandates. Aid relations began normalising in 2009, in the wake of the devastating Cyclone Nargis, which had struck the previous year. In the face of the enormous and urgent humanitarian needs the disaster created, Western governments began to interpret aid restrictions more flexibly and donors significantly increased assistance.
Sanctions targeting named individuals and entities. Starting in 1996, the EU and U.S., as well some other Western governments, imposed visa bans and subsequently also asset freezes on military and government officials, their families and associated businesses. The lists of targeted individuals and entities were periodically expanded over the following years. The initial EU list contained a few dozen individuals; by 2010, it included more than 50 individuals and 120 enterprises. Restrictions were also imposed on high-level government-to-government bilateral contacts. As discussed below, however, these “smart sanctions” were ill suited to changing the calculations of Myanmar’s military leadership.
Investment and trade bans. The broadest sanctions applied to trade and investment and were put in place by Washington and Brussels, with the U.S. taking the additional step of imposing financial sanctions (in the U.S., these were often imposed by congressional legislation rather than presidential order, making them less flexible):
1. The U.S. imposed a ban on arms exports to Myanmar in 1988. The following year, it revoked Myanmar’s access to Generalised System of Preferences (GSP) concessions and trade financing support. In 1997, Congress used appropriations legislation to prohibit new investment by U.S. persons or entities in Myanmar. In 2003, it imposed a ban on all imports from Myanmar as well as a ban on export of financial services under the Burmese Freedom and Democracy Act, which effectively excluded Myanmar from the global dollar clearing system. In 2008, it banned import of precious stones originating from Myanmar, regardless of where they were processed, under the JADE Act.
2. For its part, the EU imposed a ban on exports of arms in 1991, and the following year EU member states severed defence links, including through the withdrawal of their military attachés (something the U.S. never did). In 1997, Brussels revoked Myanmar’s access to GSP trade concessions. In 2004, it banned new investments in state- and military-owned companies, which had been the predominant joint-venture partners for foreign companies. In 2007, it introduced sanctions on logs, wood products and gemstones, prohibiting their import into the EU and banning export of technology, equipment, technical advice or financing/investment to these sectors. (Detailed lists of named enterprises in these sectors were taken verbatim from a Myanmar Yellow Pages directory, with no verification.)
Trade and investment sanctions severely reduced Western investment in Myanmar and were especially devastating for the most vulnerable.
Trade and investment sanctions severely reduced Western investment in Myanmar and were especially devastating for the most vulnerable, who lost jobs as a result, and were left with few alternatives outside the informal sector. Even before these bans came into force, many Western and multinational companies had decided to withdraw, due to reputational risks or because they were targeted by boycott campaigns initiated by Western advocacy organisations and Myanmar groups in exile. The sanctions compounded the impact of these steps. The 2003 U.S. import ban dealt a particularly grave blow to Myanmar’s garment industry, for which the U.S. was the major export market. When the ban came into force without any warning or grace period, or any attempt to negotiate concessions from the regime prior to imposition, tens of thousands of young women lost their garment factory jobs overnight.
B.Sanctions’ Counterproductive Impact
By the late 2000s, many Western leaders recognised that international pressure and sanctions had failed, and had had significant counterproductive effects. Contemporaneous Crisis Group interviews with individuals closely involved in the post-2011 opening indicated that outside pressure and sanctions played no meaningful role in triggering the reform process. Rather, the generals opened up after reaching the objective they had set themselves when seizing power from the socialist regime in 1988 – creating a political system that combined a powerful military with elected politicians to whom it could delegate day-to-day governance without giving up much of its political or economic clout. The generals’ quest to counterbalance China’s growing influence in Myanmar by seeking new alliances in the West also contributed. But in the end, the evolution toward the political system enshrined in the 2008 constitution was the military’s strategic decision more than the result of internal pressures, external sanctions or the West’s unanimous condemnation of the regime.
A huge protest in downtown Yangon. 7 February 2021. CRISISGROUP/Richard Horsey
Furthermore, sanctions were ill suited to affecting the generals’ calculations and may even have worked to the financial advantage of the military elite. The regulatory complexities and additional transaction costs that the sanctions imposed on commerce in Myanmar likely benefitted the military and its favoured business partners by crowding out competition from other businesses. Companies with high profit margins (usually as a result of monopolistic privileges conferred by the regime) and overseas connections (for example, to set up holding companies in Singapore) were the ones best able to absorb the higher transaction costs and/or find ways to circumvent the sanctions. These were precisely the entities that were the intended targets of the measures.
Sanctions also undercut the technical capacity of the civil service to run the country and carry out reform. Any government in Myanmar, whether authoritarian or democratic, has had to rely on the same bureaucracy to undertake its policy agenda. For many years, sanctions blocked technical assistance from international financial institutions and capacity-building efforts more generally for civil servants, a legacy that continues to be felt today. Denied access to capital markets, technology, information, good practice corporate standards, and models of good governance and environmental stewardship, Myanmar’s economy fell further behind its rapidly developing ASEAN neighbours. Companies from the region enthusiastically filled the gap created by Western sanctions but were not able to offer the same quality of foreign direct investment and knowledge transfer as companies from more developed jurisdictions.
As a result of the reform process initiated by President Thein Sein from 2011, Western sanctions were progressively rolled back, and remaining EU and U.S. measures – apart from the arms embargoes – were lifted once power was peacefully transferred to the Aung San Suu Kyi administration in 2016. But the military’s violence against the Rohingya in 2016 and 2017 led to a number of targeted sanctions on individuals being reimposed, including asset freezes and visa bans on the senior military officers and other security officials seen as most responsible for the violence. Because they were tailored, these sanctions did not have the same broad impact on the economy or population as pre-reform sanctions regimes, but they were not effective in nudging Myanmar to make changes in policy regarding the Rohingya.
IV.Would Outside Pressure Sway the Generals Today?
There is nothing to suggest that external actors could today exert more leverage over Myanmar’s generals than they have in the past. The sum total of leverage that international actors could summon after the brutal violence against the Rohingya, and the massive refugee flow that that prompted, had little discernible impact on even the civilian government’s decisions regarding the Rohingya. With respect to the country’s political direction, the military is likely to be just as impervious today as it was in the 1990s and 2000s.
Anti-coup poster in downtown Yangon. 7 February 2021. CRISISGROUP/Richard Horsey
There are several reasons for this. First, the fact that the generals staged a coup implies they are ready to sacrifice the international acceptability and economic gains that liberalisation delivered over the last decade in exchange for other objectives. Secondly, military-owned businesses are largely focused on the domestic market or resource exports to neighbours, and thus are unlikely to be hurt by Western sanctions. Thirdly, military leaders enjoy close alliances with important international actors, not least two veto-wielding powers on the UN Security Council, China and Russia, both of whom have protected Myanmar from opprobrium over the Rohingya crisis since 2017 and appear likely to shield it from at least some pressure now. As for ASEAN, the bloc is well known for keeping out of its member states’ political affairs, to the extent possible. The coup will certainly test some of Myanmar’s other foreign relations, but the Tatmadaw has clearly bet that they have enough international support to protect them from any degree of outside pressure that would make their lives too difficult.
As the regional heavyweight and a veto-wielding Security Council member, China’s stance is important.
As the regional heavyweight and a veto-wielding Security Council member, China’s stance is important. The relatively strong wording of the Security Council’s 4 February press statement suggested some Chinese disquiet about the military takeover and the possibility for instability in its backyard. In the past decade, Beijing forged links with Aung San Suu Kyi, while its relations with the Tatmadaw became frostier as Chinese weapons made their way to Myanmar’s ethnic armed groups. At this point, China is likely worried that major dysfunction in the country could hurt the sizeable Chinese investment in Myanmar, and that any instability could spill across its border. Still, whatever its frustrations, chances are that going forward Beijing will express them bilaterally and privately, as it tends to do with countries with which it has cultivated close relations. The Security Council statement, and a UN Human Rights Council resolution passed at a 12 February special session in Geneva, thus may be a high mark of UN action on Myanmar for some time.
Asian governments that have developed close economic, security and political ties with Myanmar over the last ten years may be able to exert some influence over the Tatmadaw, or at least could be central to probing the potential for dialogue between the military and the erstwhile civilian authorities. Japan has become a significant player in the country, through private investment, development assistance, diplomatic engagement and military cooperation. The Japanese special envoy brokered an unexpected informal ceasefire in Rakhine State following the November elections, a testimony to Tokyo’s influence with the Tatmadaw. While Beijing is a useful ally to Myanmar, its might is often a source of unease within the military; Japan, on the other hand, is seen in a generally very positive light, including as a partial counterbalance to China. Tokyo, which has already reached out to the new regime, could have an important role to play in keeping channels open with Naypyitaw.
Myanmar’s ASEAN neighbours also have influence, though early reactions from the bloc and some of its members indicate that many will adopt a hands-off approach to their neighbour’s “internal affairs”. ASEAN’s aversion to commentary on any member’s politics is well known, and several countries in the region may be little concerned with the state of democracy in Myanmar given their own political systems. Nevertheless, there are risks for ASEAN that it would be a mistake to ignore. A return to junta rule in Naypyitaw with no meaningful response from the grouping could diminish the regional bloc’s international standing, all the more so if the military cracks down on protesters; ASEAN should aim to be a more proactive and engaged part of the solution. Myanmar became a thorn in the side of ASEAN’s relations with the U.S. and EU in the 2000s, although that never translated into meaningful ASEAN pressure on the generals. Indonesia and Malaysia’s joint request for an exceptional foreign minister-level meeting on Myanmar indicates that some members at least are concerned about the coup’s potential fallout.
V.What the World Can Do
A.Coordinated Messaging to Reduce the Risk of Violence
Even as they look for ways to push the Tatmadaw toward restoring democratic rule, foreign powers’ immediate objective should be to deter deadly violence against protesters, which history shows Myanmar’s military is willing to inflict. Western and Asian capitals should keep up the rhetorical pressure in urging the Tatmadaw to remain peaceful and show the utmost restraint in the face of the mass protests that erupted after the coup. The generals have not so far attempted to decisively end the protests, but if they feel compelled to do so, deadly violence is certainly in their repertoire. The memory of the crackdown on the 8888 student-instigated protests that broke out on 8 August 1988, in which thousands died, should be on everyone’s mind. In 2007, the junta again used deadly force against demonstrations, this time to crush a popular monk-led uprising known as the Saffron Revolution.
Foreign powers’ immediate objective should be to deter deadly violence against protesters, which history shows Myanmar’s military is willing to inflict.
To be maximally effective – in reducing the risk of violence and urging a return to civilian rule – outside powers should coordinate as much as possible, ideally with their approaches mutually reinforcing one another. Forging a common front will be hard, given geopolitical friction, the economic interests important regional actors – including China, India, Japan, Korea, Singapore and Vietnam – have in Myanmar and the lack of interest some have in supporting democratic principles. Western powers should avoid the dynamics of the pre-reform period, when their imposition of broad sanctions angered some Asian governments and scuppered prospects for cooperation, for example, disrupting regional dialogues in the framework of the Asia-Europe Meeting. While West and East may respond differently to the military takeover this time, they must keep working together where there is common ground, particularly to ward off violence. Even for those disinclined to oppose the coup on grounds of democratic values, turmoil in Myanmar and the related risk of bloodshed run contrary to their economic and security interests.
B.The Sanctions Question
The temptation to fall back on sanctions is understandable, particularly in facing a regime with so few pressure points. Sanctions can signal international anger and that there are consequences for military seizures of power. But it is vital to design them in ways that limit their impact on the broad economy and the general population. This principle is especially relevant at a time when millions in Myanmar are suffering from the economic fallout of the COVID-19 pandemic, which has increased poverty.
Broad economic and trade sanctions – for example, the targeting of Myanmar’s key export sectors such as natural gas, garments and agricultural products – would punish Myanmar’s population for something they are themselves protesting. The EU, whose framework of “Everything but Arms” (EBA) trade privileges includes human rights conditionality, should be especially watchful. The scheme gives Myanmar’s export industries tariff-free access to European markets. Already in 2017, a debate, sparked by the Rohingya crisis, about removing Myanmar from the EBA resulted in the EU putting the country under a regime of enhanced monitoring. The question will now inevitably become more acute. Revoking trade privileges would be catastrophic for hundreds of thousands of workers, particularly young women in the garment industry, who have been empowered over recent years through their financial independence and ability to support their extended families. At the same time, there is no reason to believe that the revocation would influence the regime’s decisions regarding the country’s political path.
A less controversial option lies in targeting the economic interests of Myanmar’s military.
A less controversial option lies in targeting the economic interests of Myanmar’s military. Even a decade after liberalisation began, these remain substantial, though not as dominant in the economy as often portrayed. The Tatmadaw controls two conglomerates, the Myanmar Economic Holding Ltd and the Myanmar Economic Corporation, whose activities include banking, mining, telecommunications and brewing, among many others. Sanctions would force some foreign companies to pull out of partnerships with these entities, though they may be replaced by others with fewer scruples or from less vulnerable jurisdictions. Moreover, the conglomerates’ activities are largely oriented toward the domestic market and not significantly exposed to international sanctions. Given that some military-owned businesses control systemically important infrastructure such as ports, sanctions would also require careful analysis of potential knock-on effects on supply chains. These considerations deterred action against military holding companies in connection with the 2017 Rohingya crisis.
In the weeks that followed the military crackdown in Myanmar's Rakhine State in late August 2017, hundreds of thousands of Rohingyas crossed the border into Bangladesh, across the Naf river. November 2017. CRISISGROUP/Pierre Prakash.
Recent developments warrant opening that debate again. Any measures should be preceded by a careful review and evaluation of potential consequences of targeting the conglomerates as a whole, rather than some (or many) of their constituent companies. While this may be seen as blunting the effectiveness of any measures, foreign capitals also need to keep in mind that the military probably derives significant income through trade with regional allies, including China, as well as through Myanmar’s extensive illicit economy. Such profits would stand unaffected by sanctions. Also likely to curb the effectiveness of economic measures is that the military has never been primarily motivated by profit, and nothing indicates that this coup was about anything other than military disaffection with the political status quo ante, and personal ambition and desire for power on the part of Min Aung Hlaing.
Sanctions targeting individuals, along the lines of those recently implemented by the U.S., are a safer bet, in that they would have limited negative side effects on the population. They would, however, also have little impact on the military’s incentives: Myanmar’s military leaders seem quite content staying inside the country’s borders or visiting only close allies, and they have few assets in Western jurisdictions. The Tatmadaw’s main figures, including the commander-in-chief, have been targets of U.S. and EU sanctions in the wake of the 2017 violence against the Rohingya, with little evident effect. Symbolically, though, extending such restrictions to a larger group of people, including those now granted positions in the ruling body, the State Administration Council, would signal that the coup is unacceptable. Pressure on regional financial centres known to be preferred by the military, notably Singapore, could also be an effective, if difficult, avenue to pursue for freezing assets, blocking transactions or denying financial services to the same individuals.
Decisions by private entities to curtail their operations in Myanmar for reputational or commercial reasons could also have impact given the military’s stated eagerness to continue foreign direct investment. The Japanese brewer Kirin, for example, terminated its joint venture with its military-affiliated Myanmar partner days before U.S. sanctions were imposed. Others may follow suit, particularly if the military cracks down on protesters. The Norway-based Telenor, a telecommunications company serving 19 million people in Myanmar, has walked a particularly delicate line. It complied with military internet restrictions while publicly criticising the measures and even temporarily making calls and text messages free. Such balancing acts will be difficult to sustain.
C.Foreign Assistance
Over the last decade, international donors have poured vast quantities of development funding into Myanmar as a result of the country’s democratic opening. The combination of blanket sanctions, the previous junta’s inept economic management and development actors’ wariness of working under a military regime had long left the country far behind its neighbours in development indicators. Myanmar received only around one tenth of the per capita aid flows compared to other countries at the same level of development. From 2011, donors started aid programs on a massive scale, many of them in coordination with the government. Prior to the coup, Myanmar was the largest recipient of U.S. aid in South East Asia, although that may now change.
After the coup, many donors will look to review their Myanmar programs in light of the risks posed and signals sent by providing assistance to an illegitimate government. Washington’s designation of events in Myanmar as a coup automatically triggers such a review, leading to the suspension of all U.S. assistance that benefits the government. On 11 February, USAID announced it would redirect $42.4 million “away from work that would have benefited the Government of Burma” and toward non-government channels. The military will hardly welcome such a move but may be reluctant to block aid to the country.
Such reviews are appropriate and may be legally required, but donors should do all they can to prevent any recalibration from imperilling programs that have become crucial to millions of Myanmar people. The criterion for scaling down aid should not be whether it funds government-run programs but whether it primarily benefits the Tatmadaw. As always, donors should be careful to preserve humanitarian funding, which for the most part goes through non-government channels. In particular, there should be no cuts to assistance going to humanitarian agencies operating in the country’s many conflict-affected areas, which is saving lives on a daily basis.
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