WikiLeaks Document Release http://wikileaks.org/wiki/CRS-RS22737 February 2, 2009 Congressional Research Service Report RS22737 Burma: Economic Sanctions Larry A. Niksch and Martin A. Weiss, Foreign Affairs, Defense, and Trade Division August 27, 2008 Abstract. On October 19, 2007, President George W. Bush issued Executive Order 13449. This followed a September 25, 2007 statement by President Bush that sanctions against Burma, which have been in place since 1997, would be tightened to specifically target leading Burmese officials and impose additional financial and travel sanctions. This report provides background information on existing economic sanctions against Burma and possible options to expand sanctions. ¢ http://wikileaks.org/wiki/CRS-RS22737 ¢ Prepared for Members and Committees of Congress ¢ On October 19, 2007, President George W. Bush issued Executive Order 13449. This followed a September 25, 2007 statement by President Bush that sanctions against Burma, which have been in place since 1997, would be tightened to specifically target leading Burmese officials and impose additional financial and travel sanctions. This report provides background information on existing economic sanctions against Burma and possible options to expand sanctions. It will be updated as events warrant. http://wikileaks.org/wiki/CRS-RS22737 Future Options to Expand Sanctions ............................................................................................... 8 Table 1. Summary of U.S. Economic Sanctions on Burma............................................................. 5 Author Contact Information .......................................................................................................... 10 http://wikileaks.org/wiki/CRS-RS22737 .amruB ni secruoser fo tnempoleved s'ynapmoc eht morf devired yltnanimoderp era stiforp s'ynapmoc eht fi ynapmoc yrtnuoc-driht a ni serahs gnisahcrup morf snosrep .S.U stibihorP .amruB ni tnemtsevni .amruB ni seitivitca suoigiler ro s'ytrap ngierof a gnitroppus ro ,gnidia ,gnivorppa morf ynapmoc nairatinamuh ni egagne ot snoitazinagro tnemnrevog-non ot sesnecil ro nosrep .S.U a stibihorP .snosrep .S.U yb amruB ot secivres laicnanif eussi nac lortnoC stessA ngieroF fo eciffO .S.U ehT ".ytrap dekcolb fo tropxe-er ro tropxe eht dna amruB fo stcudorp fo setatS detinU a fo flaheb no ro ot ,yb tnes gnieb ton era sdnuf eht taht dedivorp eht otni noitatropmi eht snaB .spuorg ro slaiciffo esoht fo yna fo flaheb ,amruB ni tnediser yliranidro laudividni na" rof amruB morf dna no gnitca ro ,yb dellortnoc ro denwo era taht seititne ro slaudividni ot 003$ naht ssel fo secnattimer lanosrep fo refsnart rof noitpmexE etangised ot yrusaerT eht sezirohtuA .noitaicossA tnempoleveD .secivres laicnanif naht rehto secivres dna sdoog fo tropxe eht no dna ytiradiloS noinU eht dna amruB fo tnemnrevoG eht fo slaiciffo noitibihorp oN .knab .S.U-non a hguorht detcudnoc eb tsum amruB roines gnieb sa tnemtrapeD yrusaerT eht yb detangised snosrep ni sknab htiw snoitcasnart hcus tub ,amruB ni ytitne yna dna ynapmoc dna redrO evitucexE eht ot xennA eht ni detsil snosrep fo stseretni .3002 ,82 ro nosrep .S.U a neewteb ,7991 ,12 yaM ot roirp snoitcasnarT ytreporp dna ytreporp skcolB .16-801 .L.P tnemelpmi ot deussI yluJ ,01331 redrO evitucexE .)noitazinagro ssam tnemnrevog -orp a( noitaicossA tnempoleveD ytiradiloS noinU eht ro tnemnrevog esemruB eht fo sredael tneserp dna remrof ot setatS detinU eht otni yrtne dna sasiv yned ot tnediserP eht sezirohtuA .snoitutitsni laicnanif lanoitanretni yb amruB ot ecnatsissa laicnanif yna fo noisnetxe eht tsniaga etov ot tnemnrevog .S.U eht seriuqeR .tnemnrevog taht ni snoitisop roines dloh ohw slaudividni dna tnemnrevoG esemruB eht fo .93-901 .L.P dna ".setatS detinU eht fo tseretni setatS detinU eht ni stessa ro sdnuf no ezeerf a esopmi yam tnediserP 272-801 .L.P yb dednetxE lanoitan eht ni si" os od ot taht seettimmoc lanoissergnoc etairporppa ehT .dewener sselnu raey eno ni seripxe nab tropmi ehT .tnemtcane .3002 ,82 yluJ ,3002 fo tcA eht seifiton dna senimreted tnediserP eht fi amruB morf tcudorp fo etad eht retfa syad 03 gninnigeb ,amruB fo stcudorp niatrec fo ycarcomeD dna modeerF yna fo tropmi eht no noitibihorp eht eviaw yam tnediserP ehT setatS detinU eht otni noitatropmi eht nab ot tnediserP eht seriuqeR esemruB ,16-801 .L.P ).254 .p .5002 enuJ-yaM ,yevruS naisA http://wikileaks.org/wiki/CRS-RS22737 ".emigeR nairatirohtuA na gnihsinuP :snoitcnaS .S.U dna amruB" .M dlanoD ,snikeeS( .yllaunna tnemnrevog esemruB eht ot noillim 746$ .amruB ni detacol secruoser fo tnempoleved ot noillim 004$ sedivorp tcejorp eht taht detamitse si tI .dnaliahT cimonoce eht morf stiforp ro ,sgninrae ,seitlayor ni noitapicitrap a otni amruB ssorca dna erohsffo enilepip dna noitarolpxe sag larutan rof sedivorp taht tnemeerga na otni gniretne ro ,tcejorp a ni pihsrenwo )802-401 .L.P( ni latoT noitaroproc hcnerF eht htiw tnemtsevni sti dna LACONU fo erahs a gnisahcrup ,amruB ni detacol secruoser fo tnempoleved eht 7991 ,tcA snoitairporppA noitaroproc .S.U eht sedulcni noitpmexe ehT .7991 ,12 yaM rof amruB ni ytitne latnemnrevog-non a ro amruB fo tnemnrevoG eht ngieroF eht fo 075 noitceS ot roirp ecalp ni tnemeerga tnemtsevni na htiw snosrep ro seinapmoc htiw tcartnoc a sa denifed si tnemtsevni weN .7991 ,12 yaM retfa ro rednu deussI .7991 ,02 dna ,7991 ,12 yaM ot roirp amruB ni stnemtsevni htiw seinapmoC no seinapmoc dna snosrep .S.U yb amruB ni tnemtsevni wen stibihorP yaM ,74031 redrO evitucexE noitpmexE noitcnaS noitcA yrotutatS amruB no snoitcnaS cimonocE .S.U fo yrammuS . 1 elbaT he following table provides summary information on existing Burma sanctions. T .esirpretnE rebmiT ramnayM dna ,esirpretnE meG ramnayM ,esirpretnE lraeP ramnayM :seinapmoc esemruB eerht htiw ssenisub .8002 ,03 lirpA gniod morf smrif .S.U detibihorp dna setatS detinU eht ni stessa ezorF ,46431 redrO evitucexE .yrtnuoc taht dna setatS detinU eht neewteb srotisiv yb smotsuc fo ecnaraelc-erp eht rof yrtnuoc taht htiw tnemegnarra yna ni noitapicitrap morf setatS detinU eht fo secruoser dna lennosrep eht wardhtiw ro/dna ;yrtnuoc taht dna setatS detinU eht neewteb noitatropsnart ria liatruc ot ,htob ro ,noitces siht fo )2()d( ro )1()d( noitcesbus ni debircsed spets eht ekat )4( ;merolav da tnecrep 05 deecxe ot ton etar a ta ytud a yrtnuoc taht fo stcudorp eerf -ytud erom ro eno ot ylppa )3( ;tnelaviuqe etar cificeps eht ro merolav da tnecrep 05 deecxe ot ton etar a ta ytud lanoitidda na yrtnuoc taht fo stcudorp elbaitud eht fo lla ro yna ot ylppa )2( ;tnemtaert http://wikileaks.org/wiki/CRS-RS22737 ffirat laitnereferp gnidivorp wal rehto yna ro ,].qes te 1072 .C.S.U 91[ tcA yrevoceR cimonocE nisaB naebbiraC eht ,secnereferP fo metsyS .)283-101 .L.P( 0991 fo dezilareneG eht rednu tnemtaert ffirat yrtnuoc taht fo stcudorp eht tcA edarT dna smotsuC eht fo lla ro yna ot yned )1( :gnidulcni snoitcnas edart lareves ot tcejbus dna )5942-1942 .C.S.U 91( si amruB ,etats gnicudorp gurd rojam a sa noitangised sti ot euD tcA edarT lortnoC scitocraN .ecnatsissa ngierof .S.U .dednema sa ,1691 emos gniviecer morf derrab yltneuqesbus si dna "yrtnuoc gnicudorp fo tcA ecnatsissA ngieroF gurd ticilli rojam" a sa etatS fo tnemtrapeD eht yb detsil si amruB eht fo )1()a(984 noitceS .amruB fo tnemnrevog eht ot ro slaudividni eseht ot gnikcab laicnanif dna lairetam edivorp ohw esoht dna ,noitpurroc cilbup sa llew sa sesuba sthgir namuh rof elbisnopser slaudividni snoitcnas .7002 ,91 rebotcO rof etangised ot ytirohtua dednapxe tnemtrapeD yrusaerT eht stnarG ,84431 redrO evitucexE noitpmexE noitcnaS noitcA yrotutatS .ecivreS hcraeseR lanoissergnoC eht yb delipmoC :ecruoS .tcejorp anadaY eht yb detareneg tnemnrevog esemruB eht ot troppus laicnanif fo tnuoma eht dna tnemtsevni eht ni elor rieht esolcsid ylcilbup dluohs srotsevni eht dna ;yllacitilop mrofer ot sliaf tnemnrevog esemruB eht fi "emit revo tnemtsevid yratnulov redisnoc" dluohs )norvehC ,mrif .S.U eht gnidulcni( tcejorp http://wikileaks.org/wiki/CRS-RS22737 sag larutan anadaY eht ni srotsevni eht taht "ssergnoC fo esnes" eht sesserpxe tcA ehT .slaiciffo esemruB roines fo stessa dloh taht sknab ngierof dna seirtnuoc dna ;tnemnrevog esemruB eht ot dia ecnegilletni dna smra ylppus taht seititne dna seirtnuoc no stroper ssergnoC ot timbus llahs tnemtrapeD etatS ehT .amruB rof rotanidrooC yciloP dna evitatneserpeR laicepS a tnioppa llahs tnediserP ehT .selcitra nigiro -esemruB ni edart tsniaga snoitaluger dna swal etaloiv ohw snosrep tsniaga "seitlanep evisaussid" hsilbatse tsum stnemnrevoG .tropxe ot gnihsinif lanif ot enim morf slortnoc dna selcitra esemruB-non fo sdrocer lluf niatniam tsum ;amruB morf selcitra fo noisulcni tibihorp ot tca tsum setatS detinU eht ot seirtnuoc rehto morf yrlewej dna ,seibur 8002 ,92 yluJ ,etiedaj fo sretropxE .amruB ni edam seibur ro etiedaj gniniatnoc ,8002 fo tcA EDAJ esemruB yrlewej dna amruB ni denim seibur dna etiedaj fo tropmi eht snaB sotnaL moT ,682-011 .L.P noitpmexE noitcnaS noitcA yrotutatS ¡ In response to the Burmese government's suppression of demonstrations at the end of September 2007, the Bush Administration published a large number of names of persons and companies connected with the Burmese government, imposed bans on their travel to the United States, and froze their financial assets in the United States. Existing sanctions against Burma may be viewed as adequate and as necessitating no further action. However, policymakers may seek to exercise additional options. P.L. 110-286, the Tom Lantos Block Burmese JADE Act of 2008 struck provisions in the House version of the bill that would have prohibited "United States persons" from entering into economic-financial transactions, paying taxes, or performing "any contract" with Burmese government institutions or individuals under U.S. sanctions. The prohibition of the payment of taxes specifically included the payments of taxes to the Burmese government by the Yadana natural gas project, in which the U.S. corporation, Chevron, is a major partner. These stricken provisions were replaced in the final bill by a "sense of Congress" statement that Chevron and the other foreign investors should consider voluntary disinvestment from the project. Other options to expand sanctions include the following. http://wikileaks.org/wiki/CRS-RS22737 Impose provisions of the USA PATRIOT Act on third country banks and financial institutions that do business with Burmese banks and individuals associated with the Government of Burma: Under Section 311 of the USA PATRIOT Act, Special Measures for Jurisdictions, Financial Institutions, or International Transactions of Primary Money Laundering Concern, the Secretary of the Treasury is authorized to impose any of five certain regulatory restrictions, known as "special measures."1 These can be used upon finding that a foreign jurisdiction, financial institution, or certain transactions or accounts is "of primary money laundering concern." Prior to making such a finding, the Treasury Secretary must consult with the Secretary of State and the Attorney General and consider certain factors relating to the foreign jurisdiction or the particular institution targeted. Among the factors to be considered are: involvement with organized crime or terrorists, bank secrecy laws and regulations, the existence of a mutual legal assistance treaty with the United States, and level of official corruption. Of the five types of special measures, four of the five impose information-gathering and record- keeping requirements on U.S. financial institutions dealing either directly with the jurisdiction designated as one of primary money laundering concern, or dealing with those having direct dealings with the designated jurisdiction. Under the fifth special measure, a U.S. financial institution may be prohibited from opening or maintaining in the United States a correspondent or payable-through account2 for a foreign financial institution if the account involves the designee. On November 18, 2003, the Secretary of the Treasury designated Burma as a jurisdiction of primary money laundering concern and applied a "special measure" under Section 311 of the USA PATRIOT Act. The special measure prohibits covered U.S. financial institutions from establishing, maintaining, administering, or managing in the United States any correspondent or payable-through account for, or on behalf of, a Burmese banking institution. Covered U.S. 1 For more information on Title III of the USA PATRIOT Act, see CRS Report RL31208, International Money Laundering Abatement and Anti-Terrorist Financing Act of 2001, Title III of P.L. 107-56 (USA PATRIOT Act), by M. Maureen Murphy. 2 A payable-through account is an account established at a U.S. financial institution that extends check-writing privileges to the customers of other, often foreign, financial institutions. financial institutions also are similarly prohibited with regard to any correspondent or payable- through account in the United States for any foreign bank if the account is used by the foreign bank to provide banking services to a Burmese banking institution. However, the special measure applied to Burmese banks does not prohibit U.S. financial institutions from maintaining correspondent accounts otherwise prohibited by this rule if such accounts are permitted to be maintained pursuant to Executive Order 13310 and the Burma-related activity of those accounts is solely for the purposing of conducting exempted activity. This is in contrast to the Treasury Department's imposition of Section 311 on Banco Delta Asia in the Chinese territory of Macau for money laundering for North Korea. Section 311 measures have arguably had their largest success in this designation of Macau-based Banco Delta Asia in September 2005 and the full imposition of Section 311 in March 2007. The North Korean government had used Banco Delta for the majority of its international transactions. Reportedly, following the U.S. proposed designation, over two dozen financial institutions ceased their transactions with North Korea.3 Most importantly, China froze North Korean accounts in the Macau branch of the Bank of China and reportedly cracked down on North Korean efforts to circulate counterfeit U.S. dollars in China near the North Korean border.4 Reports of third country banks that do business with Burmese banks or individuals connected to http://wikileaks.org/wiki/CRS-RS22737 the Burmese government (including drug traffickers) are sparse. Past reports have cited banks in Thailand, Singapore, and China. Burmese accounts in Chinese banks were confirmed in January 2006 when the Bank of China ordered Chinese banks to terminate all U.S. dollar business with the Myanmar Foreign Trade Bank and the Myanmar Investment and Commercial Bank.5 3 "Press reports indicate that some two dozen financial institutions across the globe have voluntarily cut back or terminated their business with North Korea, notably including institutions in China, Japan, Vietnam, Mongolia, and Singapore. The result of these voluntary actions is that it is becoming very difficult for the Kim Jong-Il regime to benefit from its criminal conduct." Testimony of Daniel Glaser, Deputy Assistant Secretary for Terrorist Financing and Financial Crimes, U.S. Department of the Treasury before the Senate Committee on Banking, Housing, and Urban Affairs. September 12, 2006. 4 Ibid. 5 Turnell, Sean. Burma's Economic Prospects. Testimony before the Subcommittee on East Asian and Pacific Affairs, Senate Foreign Relations Committee, March 29, 2006. Sweeney, John. "How Junta protects Mr. Heroin." The Observer (London, internet version), April 8, 2001. Casanier, Francois. "A Narco-dictatorship in progress." BurmaNet News, June 13, 1996. Larry A. Niksch Martin A. Weiss Specialist in Asian Affairs Analyst in International Trade and Finance lniksch@crs.loc.gov, 7-7680 mweiss@crs.loc.gov, 7-5407 http://wikileaks.org/wiki/CRS-RS22737