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Myanmar’s Sanctions-Hit Junta Still Netting Vast Oil, Gas Profits

FILE - Anti-coup protesters stand at a barricade as they clash with security forces on Bayint Naung Bridge in Mayangone, Yangon, Myanmar March 16, 2021.
FILE - Anti-coup protesters stand at a barricade as they clash with security forces on Bayint Naung Bridge in Mayangone, Yangon, Myanmar March 16, 2021.

Vast oil and gas profits continue flowing to, and propping up, Myanmar’s military junta a year and a half into its bloody crackdown on nationwide resistance to the February 2021 coup, opposition and rights groups say.

Joined by a growing number of U.S. lawmakers, they are ratcheting up calls on Washington to help cut those revenues off in hopes of starving the military of the U.S. dollars it is using to rearm.

For the junta, “that access to foreign currency is vital,” said Ben Hardman, Myanmar policy and legal adviser for EarthRights International, a U.S.-based pressure group that studies the country’s energy sector.

“If you want to purchase weapons, aviation fuel, these essential items to continue waging war against the Myanmar people, it [the junta] needs access to U.S. dollars or international currencies,” he said.

Since the coup, the United States and other Western countries have imposed repeated rounds of sanctions on Myanmar’s top generals and arms brokers and some of the state-owned companies believed to be earning money for the military. To date, though, they have left the most lucrative of those companies, the Myanmar Oil and Gas Enterprise, largely untouched.

Projections by the World Bank and Norway’s international aid agency Norad before the coup, using Myanmar government data, pegged annual oil and gas revenues at some $1.5 billion. Most of it goes to MOGE as royalties and fees and as profits earned from the company’s own shares in a number of gas fields and pipelines that export to neighbors China and – mainly – Thailand.

Hardman said those revenues accounted for about a tenth of the government’s total income, and fully half of all foreign cash earnings. Rising global gas prices and a collapsing local economy, he added, mean they likely count for an even larger share of total and foreign earnings now.

Hundreds of local groups endorsed an open letter to U.S. President Joe Biden urging him to sanction MOGE in May. Myanmar’s so-called National Unity Government, a shadow administration that includes many of the elected lawmakers ousted by the coup, says it has put the same request to U.S. officials in several meetings.

Targeting transfers

NUG spokesman and minister of international cooperation, Sasa, who goes by one name, said MOGE’s foreign earnings are critical to the junta’s counterinsurgency.

“It’s just unacceptable that these natural resources would be turned into weapons for the military junta who are guilty of genocide against the Rohingya, against ethnic [minority] states in Myanmar, and now after the coup. They have killed so many people by using this money,” he said.

The United States formally labeled the Myanmar military’s persecution of the country’s ethnic minority Rohingya as genocide in March. A report that same month by the human rights office of the United Nations said the military’s operations since the coup might also amount to war crimes and crimes against humanity. The Assistance Association for Political Prisoners, a rights group tracking the violence, says the junta has killed over 2,160 people since the putsch.

The regime disputes the figure and claims to be using proportionate force against “terrorists” to restore peace and order.

Hardman said most of Myanmar’s contracts with foreign energy companies specify payment in U.S. dollars, which means the payments have to clear a U.S. bank at some point. Those banks, he said, would stop clearing the transfers if MOGE were sanctioned by Washington.

“So, what sanctions would mean is that it would be very hard for any payments in U.S. dollars to reach the regime,” said Hardman. “It would effectively cut off the flow of dollars.”

Sasa said that in turn would paralyze the junta’s ability to rearm with its main suppliers, China and Russia.

“When they go to Russia ... to buy more fighter jets to kill more Myanmar people, they are not carrying Myanmar kyat, they are carrying U.S. dollars,” he said. “So, it’s very, very important that we sanction them, because the payment [to] MOGE mostly comes [in] U.S. dollars.”

Myanmar has started losing its energy sector partners already. U.S. energy giant Chevron and TotalEnergies of France announced plans to exit Myanmar in January; Total said it finished its pullout last month. Those pushing for sanctions, though, say they are still needed to block payments from companies that stay — Thailand’s PTT and South Korea’s POSCO are the two other foreign energy majors left — or any that may arrive to replace whoever leaves.

'A way will be found'

Their calls have found support in Washington.

The U.S. House of Representatives passed the Burma Act – which calls Myanmar by its other name – and urges the White House to sanction MOGE in April. The Senate has yet to follow suit. Since the junta’s execution of four democracy activists on July 23, though, Senate Foreign Relations Committee Chairman Bob Menendez and minority leader Mitch McConnell have each endorsed the idea.

Publicly, the White House itself has neither backed the idea nor ruled it out. VOA asked Secretary of State Antony Blinken if the U.S. would sanction MOGE while the top diplomat was in Cambodia last week for meetings with Southeast Asia’s foreign ministers. Blinken said the Biden administration would “look at everything, including additional forms of economic pressure and sanctions” but did not mention MOGE specifically.

If Washington were to sanction MOGE, it would, in theory, be the most severe financial blow the West will have dealt the junta since the coup, said Peter Kucik, a sanctions expert and managing director in the Washington office of Mercury Public Affairs, a U.S. consulting firm.

He said he doubts it would have anywhere near the impact those calling for the sanctions hope, however, judging by the decades Myanmar spent under a previous military junta up to 2011.

“This will complicate things, yes. It will give them less access to foreign currency, yes. But does it actually make it significantly difficult enough to rearm?” he asked.

“Keep in mind, this was true 10 years ago when sanctions were comprehensively in place against Myanmar,” he added, “and unless I’m missing something, Myanmar was very much able to conduct arms trade with China and Russia back then as well.”

Kucik said other countries hit hard by Western sanctions don’t offer much hope, either.

“Both Iran and Venezuela have found ways to receive payment for oil,” he said. “It certainly has not been without impact, the sanctions that have been imposed, but it also certainly has not strangled the energy sector in either country.”

When sanctions cut off one path to oil, gas or cash, he said another usually turns up.

“However difficult it is, if there’s a desire and a need, a way will be found,” said Kucik. “That’s the way the world works.”