Mr Eric Rose,
lead director of Herzfeld Rubin Meyer & Rose, the first US law
firm established in Myanmar
Frontier Myanmar, Dec 1
WHEN UNITED States President Barack Obama lifted most sanctions
on Myanmar in October, many saw it as a breakthrough for the
country’s economic future. But Rose – a long-time critic of
sanctions – argues that the prohibitions that remain in place
are problematic and hard to justify given the dubious democratic
credentials of many of Myanmar’s neighbours. He spoke to
Frontier contributor Peter Janssen about sanctions as the US
prepares to enter the Donald Trump era.
What sanctions still remain against Myanmar? By this past May,
the Obama administration had exempted all Myanmar banks from US
financial sanctions, but what it did not do was to exempt the
country from the provisions of sections 311 and 312 of the USA
Patriot Act. What those provisions provide for has to do with
the laundering of money and terrorist financing, and they impose
extraordinary requirements of enhanced due diligence on
financial institutions dealing with the country. On October 7,
the US Treasury Department granted Myanmar a further exemption
from section 311, but not from section 312, which is the section
that imposes the enhanced due diligence requirements on
financial institutions. These enhanced requirements apply, with
few exceptions, to only a couple of ASEAN countries, including
Myanmar. The result is there are no American banks present in
Myanmar, even with a sales representative office; no American
banks offer trade financing with Myanmar; no American banks
finance investments in Myanmar; and no American banks repatriate
profits from Myanmar to the United States.
Can other, non-American banks get around section 312?
The same rules apply to non-American banks that have operations
in the US. They all have very serious concerns about the way
these rules have been interpreted by the US Treasury Department
and the risk is so large that they choose not to be involved in
transactions with or in Myanmar.
Why is Myanmar being singled out?
Well, that’s my question: why is Myanmar still so special today
– after having held two free elections, [the results of] which
were recognised by the military – that the [section] 312
enhanced due diligence requirements are maintained? These rules
were imposed with good reason in 2004 … The result [for Myanmar]
has been that the banking system here is still in its infancy.
The local banks don’t have the tools that would enable them to
be involved in international banking. The result is they don’t
have a SWIFT number. They don’t have the ability to directly
transfer money because no one will do business directly with
them. You have to do it through a correspondent bank in
Singapore or Thailand, which will conduct its own due diligence.
What I’m saying is that, for years, successive American
administrations have treated Myanmar banking as a pariah, as
opposed to working to gradually improve its systems. Today, the
Myanmar banks still have to operate under these remaining US
sanctions, even though the rest of the world has pulled back.
What’s more important is that the rest of the world, except for
the US government, is trying to train and invest in the banking
system here in order to lift all boats at the same time, so that
Myanmar will be integrated, once again, in the global economy.
If President Obama didn’t lift the section 312 sanction, what
are the chances of Donald Trump doing so?
It is really up to Mr Trump, as I do not expect that the Obama
administration will take any additional regulatory actions
concerning Myanmar. Let me give you an example: a couple of
years ago, Mr Trump gave a speech in which he said that
the Foreign Corrupt Practices Act is anti-competitive and should
be set aside. Now, I don’t believe that he intends to remove the
FCPA, which would be a horrible idea. Having said that, though,
let’s look at his actions once he comes into office on January
20, and not to his words. If one is to believe that his
administration is going to be pro-business – that it is going to
unshackle business in order to enhance global growth, that he
will make every effort to create jobs in the US – then I would
suggest that Myanmar is a prime example of what should be done.
What other US sanctions remain against Myanmar?
There are a number of legislative acts which are still to be
removed, as well as regulatory leftovers from previous laws no
longer in effect, like the Jade Act. Under these regulations,
for example, a number of Myanmar citizens, some of whom have
never been [included on the US Treasury’s Specially Designated
Nationals List], are unable to receive US visas. So, you have a
number of leading businesses here that may have been affiliated
at some point in the past with cronies … [and now] some of these
cronies have died, or the SDN lists have been removed. Still,
their families are not allowed to come to the US to do any type
of business, or even to sightsee or visit relatives.
By the way, we don’t represent any of these people [but] it
makes little sense to me to tell people who have not broken any
US law, and who may want to invest in or trade with the US,
actions which would create jobs in the US, that they cannot even
come to the US to engage in transactions.
What are the chances that Mr Trump even knows about Myanmar
and might address these issues?
If God keeps me healthy, he and members of his administration
will find out at some point in time. All I want, and what AmCham
[the American Chamber of Commerce] wants, is for Myanmar to be
treated the same way as the surrounding countries. No better, no
What’s the lesson learned from past US foreign policy towards
It’s about having ideology run your foreign policy, rather than
a policy which is pro-growth and charged to improve the status
of all of Myanmar’s hard-working people, while bringing back the
rule of law to a proud country that hasn’t experienced it in
over half a century.
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