On Wednesday, June 21st, the US Department of the Treasury expanded its sanctions regime against Myanmar and the military junta that overthrew the elected government more than two years ago. The sanctions now target the two biggest state-owned banks: the Myanma Foreign Trade Bank (MFTB) and Myanma Investment and Commercial Bank (MICB), stopping them from using US dollars and effectively blocking Myanmar’s state-owned enterprises (SOEs) from accessing international markets.
Forest Trends welcomes these steps, which are in line with recommendations we have been making since the coup to deprive the junta of revenue used to purchase arms and related material.
Myanmar’s military junta has increasingly relied on revenue from natural resources to support their operations and their ongoing campaign to retain power, which has included an escalation of attacks on civilians. Following a coup d’état against the newly re-elected government of Myanmar on February 1st, 2021, the junta has been accused of massive human rights violations, arresting more than 12,000 people, killing more than 1,500, and instigating a growing humanitarian crisis that has seen more than 400,000 internally displaced people.
The new sanctions add to existing sanctions that the US, EU, UK, Switzerland, and Canada have all passed on entities involved in Myanmar’s forestry sector that effectively constitute a ban on all trade in timber products. The new measures will make these sanctions more effective. Forest Trends analysis shows that as of March 2023, exports of forest products have exceeded half a billion US dollars in the years since the coup. Timber prices in Myanmar have also reportedly increased by 30 percent.
Trade has continued in part because timber sanctions have only been placed on the Myanma Timber Enterprise (MTE), the SOE that is the exclusive source of timber in Myanmar. The US Department of the Treasury is now targeting two state-owned banks that channel payments in US dollars to the MTE and other SOEs. This is expected to significantly reduce the junta’s access to foreign currency. The Independent Economists for Myanmar has calculated that freezing deposits linked to these banks could deprive the military of roughly US$2 billion annually.
Moreover, the frozen money creates a pool of money that, one day, can be used by a legitimate, elected government of Myanmar.
Already, the shortage of US dollars in circulation sent black market exchange rates in Myanmar soaring; the value of local currency has plunged by more than half from its level before the coup and could fall farther now.