The world awoke on July 25th to news that Myanmar’s military junta had executed four democracy activists following a sham judicial process, the first death sentences carried out in Myanmar in decades. Although the military has killed thousands, including dozens who have been tortured to death in military custody, since attempting to wrest control of the country from the democratically elected government in a February 1, 2021 coup d’état, the executions, and reports that a further 41 may be planned, represent a significant escalation of the junta’s campaign of repression against the people of Myanmar. The executions also show irrefutably the junta’s indifference to appeals from the international community. It is past time for US policy toward Myanmar to respond meaningfully to the junta’s depravity by taking truly meaningful action to restrict the junta’s access to foreign currency through sanctions that target its largest source of foreign income: Myanmar’s oil and gas industry. The arguments against this approach do not withstand scrutiny.
Ma Thazin Nyunt Aung, the wife of hip-hop activist turned pro-democracy politician Ko Phyo Zayar Thaw, summed up the situation in an interview with Frontier Myanmar shortly after learning that her husband had been executed. She said:
“The military has been killing people in Myanmar since the military coup. But they always denied these crimes. Now, they killed publicly. They show now that they kill people, and they don’t care who. If they want to kill, they can kill. They don’t care about our human rights.”
The executions demonstrate the disdain with which the junta views international opinion and a disregard for diplomatic pressure, as even sympathetic dictators such as Cambodia’s Hun Sen had urged the junta to call off the executions. Not that this demonstration was needed. The junta has spent over a year thumbing its nose at ASEAN by ignoring the “Five Point Consensus” to which it agreed in April 2021 and has consistently refused to allow the United Nations Special Envoy to Myanmar access to the country.
The international community must take immediate action to weaken the military’s ability to retain power and the impunity with which it commits abuses. Condemnation of the junta’s actions, while necessary, is clearly insufficient. For the United States, this starts with leveling long-overdue sanctions on Myanmar’s oil and gas industry, and in particular the Myanmar Oil and Gas Enterprise (MOGE) – the government entity that acts as both the industry regulator and commercial partner for oil and gas projects in Myanmar. The junta may not care about international opinion, but it relies on the international financial system for the funds it needs to fuel its repression and enrich its leaders. The junta needs foreign currency to purchase weapons, surveillance technology, and jet fuel – all the products that have allowed it to terrorize the people of Myanmar.
Prior to the coup, Myanmar’s offshore gas sector was the single largest source of foreign currency income for the government. MOGE was estimated to earn up to $1.5 billion in annual revenue, representing approximately 10% of the pre-coup budget. The increase in global gas prices coupled with the irresponsible decision by TotalEnergies to withdraw from Myanmar by gifting some of its shares in Myanmar’s largest gas field to the junta means it is possible that the junta has earned even more over the past year.
MOGE sanctions are already months overdue. The oil and gas industry has always been the most obvious and impactful target for US sanctions due to the small number of companies and limited employment in the sector, its disproportionate importance to junta revenues, and its reliance on the foreign financial system to process payments. Activists, NGOs, Myanmar’s National Unity Government, and the United Nations’ Special Rapporteur have been calling for US sanctions since shortly after the coup. The EU sanctioned MOGE in February. Some international gas companies, after months of lobbying against sanctions, have changed their tune and called for the United States to act.
Calls have also come from the U.S Congress. In April 2021 a bipartisan group of US senators, led by Marco Rubio (R-FL) and Jeff Merkley (D-OR) sent a letter to the administration calling for MOGE sanctions, as did House Financial Services Chairwoman Maxine Waters in August. Following last week’s executions, Senator Foreign Relations Committee Chairman Bob Menendez and Senate Minority Leader Mitch McConnell added public calls for MOGE sanctions as well.
Targeting Myanmar’s state-owned enterprises is already official US policy, especially those involved in resource extraction. The United States has sanctioned the state-owned enterprises that oversee the timber, pearl, and gemstone industries. In January, the US government released a business advisory warning of the risks of doing business with state-owned enterprises.
In spite of this, the Biden administration has thus far refused to take action against MOGE and the gas industry, instead targeting sanctions at industries that either provide minimal revenues to the junta or lack connections to the global financial system that would make them vulnerable to US sanctions. There appear to be two primary reasons for this refusal to target MOGE:
1. Concern about potential humanitarian impacts both in Myanmar and in Thailand (the importer of most of Myanmar’s gas), and
2. A related, but broader, opposition from the Thai government to US sanctions.
Both of these reasons are grounded in the inaccurate assumption that US sanctions would lead directly to a shutdown in gas production, which could then reduce electricity supplies to Yangon and disrupt Thai energy markets. This concern is a red herring.
Sanctions can, and should, be written to ensure that companies involved in gas production are not forced to suspend operations. Instead, sanctions should target financial transactions to ensure that revenue payments can be frozen or diverted from the military’s coffers and directed into restricted or escrow accounts. Only the junta could decide to suspend production, and there are four reasons to think that it would be unlikely to do so.
1. Domestic legitimacy. Gas fields provide supplies domestically, especially to the industrial base around Yangon. If the junta responded to sanctions by halting gas production, this would directly harm the businesses that provide a production and tax base for the military regime. This would undermine the junta’s claims to legitimacy, which are based on its self-image as the only institution that can maintain stability in the country;
2. International politics. China and Thailand, the export recipients of most of Myanmar’s offshore gas, are also key supporters of the military junta. These relationships are too important for the junta to antagonize by cutting off gas supplies;
3. Greed and economic self-interest. The junta will desire to gain access to this money in the future, even if sanctions freeze gas revenues right now. Shutting down production and export would prevent the junta from ever collecting these funds, but as long as production continues, money will continue to build up. Further, restarting gas fields is time-consuming and potentially cost prohibitive for a near-depleted field like the Yadana field; and
4. Precedent. EU sanctions did not lead to a shutdown in production, even though an EU company (TotalEnergies) was heavily involved in the largest field. US sanctions should be crafted with waivers to allow production to continue.
Even if the junta did decide to halt production, the Thai energy sector would see little impact. Research by EarthRights International shows that Thailand already has excess generation capacity. Further, Thailand could easily switch to fuel oil to manage immediate shocks while moving forward its plans to replace Myanmar gas with increased liquid natural gas imports.
There is a deeper reason for Thai opposition to sanctions. Myanmar’s coup-leader Min Aung Hlaing enjoys close ties with Thailand’s military establishment, to the point where he was adopted by a Thai general in 2012. In 2018, as the Myanmar military was committing genocide against the Rohingya people, he was given Thai military honors.
Mere days after the coup, Min Aung Hlaing reportedly wrote to Thai Prime Minister Prayut asking the Thai leader to “support the democracy of Myanmar” that he was in the process of trampling. Prime Minister Prayut, who first seized power himself in a 2014 coup, assured Min Aung Hlaing that Thailand would not interfere in Myanmar’s internal affairs. While US officials publicly tout Thailand’s role facilitating cross-border assistance, the reality on the ground tells a starkly different story, with the Thai government continuing to restrict aid, arrest activists, and force thousands of refugees back across the border.
In truth, the Thai government, dominated by former military officers and born from multiple military coups, has little interest in seeing resistance to a military coup succeed next door. We need only look at the Thai response to incursions by Myanmar’s air force into Thai air space during bombing raids on villages and opposition outposts, including a recent incident that forced Thai schoolchildren to seek safety in a bomb shelter. Prime Minister Prayut claimed the incident was “not a big deal” while Thai Air Marshall Napedej Thupatemi said, “Bear in mind, Myanmar is a friend.” He was not referring to the pro-democracy movement or deposed leader Aung San Suu Kyi.
It is also clear that a successful coup would leave Myanmar almost entirely dependent on Chinese and Russian investment and political support, setting US regional influence back decades. Weakness in current US policy in Myanmar undermines the Biden administration’s stated efforts to re-prioritize support for democracy following four years of neglect under President Trump. The current US posture also calls into question the administration’s willingness to stand up to an increasingly assertive China in a key geostrategic area. Instead, the US has deflected responsibility by deferring to ineffective “ASEAN centrality” and blaming China for not doing more to rein in the junta. This could not be further from President Biden’s exhortation shortly after taking office: “Democracy doesn’t happen by accident. We have to defend it, fight for it, strengthen it, renew it.”
This is not to say that sanctions on MOGE will immediately cause the junta to change course or lead directly to its collapse.
Sanctions like those proposed on MOGE should be put in place specifically to degrade the ability of the military junta to entrench its power and murder the people of Myanmar by reducing the foreign currency that the junta can use to purchase weapons and surveillance technology. While not decisive on their own, sanctions on MOGE are crucial to any broader strategy the US wants to pursue.
Instead, US refusal to sanction MOGE undermines its already haphazard sanctions efforts by ensuring that the junta’s largest source of revenue remains intact. As seen in the international response to Russia’s invasion of Ukraine, no credible effort to disrupt the Russian war machine can ignore the oil and gas industry. Yet in Myanmar, where the military junta is also heavily reliant on gas revenues, US policy has insisted on doing just that — ignoring the reality. No wonder US sanctions have had little effect on the junta’s income.
Within this context, the Biden administration’s refusal to place sanctions on MOGE is an abdication of political responsibility that risks helping entrench a junta reliant on China and hostile to US interests. The humanitarian risks of MOGE sanctions are limited, especially compared to the clear and obvious costs of refusing to cut this key source of revenue as the junta drags Myanmar deeper into a humanitarian crisis while giving no indication that it will turn from the destructive course it has charted.
Youth activist Thinzar Shunlei Yi, in her own recent call for US sanctions on MOGE in the New York Times, put it best: “As the gas revenue flows, so will the blood of Myanmar’s people.” Time to stop that flow, President Biden.