US Congress weighs sanctions on Myanmar’s oil and gas

The powerful chairman of the House Foreign Affairs Committee is set to unveil a bill to levy new U.S. sanctions on oil and gas, some of Myanmar's most important industries, and prod the State Department to determine whether Myanmar's crimes against the Rohingya minority constitute a genocide.

Democratic Rep. Gregory Meeks is planning to introduce the legislation in the coming weeks, an effort to pressure the nation's military junta to pursue political reconciliation. It comes just as Myanmar's shadow government declared war on the regime earlier this week, threatening to upend months of efforts led by the 10-member Association of Southeast Asian Nations bloc to bring the military to the table for talks.

"We want these to be targeted sanctions," a congressional aide involved in drafting the bill told Foreign Policy on condition of anonymity to discuss the internal deliberations informing the legislation. "We've been fairly broad in the legislation to give the administration the flexibility to go after the enterprises [and] entities that are being actively controlled by the military … and allowing them to continue their violence."

The bill, which will have a companion version in the Senate, would target Myanmar's oil and gas industry and gem production, as well as top military officials and members of the junta government, which took power in a February coup. Aides are also working on humanitarian provisions that would give millions of dollars in aid directly to the Myanmar people and refugees in countries like Thailand. Meeks also wants the U.S. government to hold China and Russia to account for their support of the military regime by highlighting the issue at the United Nations.

Aides insisted the bill was about giving the Biden administration new authorities to target such entities as the Myanmar Oil and Gas Enterprise and the gems industry, both of which the junta has tapped for revenue, with the aim of getting both the junta and opposition groups to the bargaining table as quickly as possible. The Biden administration has slapped sanctions on the top generals and officials behind the coup, froze $1 billion in assets held in the United States, and placed export restrictions on two major military-linked holding companies.

What it hasn't done is go after the economic sectors that have been vital both to Myanmar's economic resurgence over the past decade and the junta's own fortunes. Natural gas revenue is the military's largest foreign currency source, according to the nonprofit watchdog Extractive Industries Transparency Initiative. Though the French oil giant Total and the American-owned Chevron have suspended some payments to a joint offshore gas venture that would have directly funded the junta, other countries in the region, such as Thailand, continue to have a major stake in Myanmar's hydrocarbons industry.

The State Department has expressed fears that the Myanmar economy is close to collapse from pro-democracy strikes and the military's violent response, according to internal documents seen by Foreign Policy. In a report to Congress sent in April, the State Department suggested that the nationwide civil disobedience campaign launched in the wake of the coup and violent crackdowns by the new regime "have brought Burma's economy to a virtual halt." Some protesters have pledged to strike until Myanmar's fragile democracy is restored, which would kneecap what remains of the Myanmar economy.

One U.S. official said that the administration has been worried that the dire state of the economy could cause more refugee outflows—something that has weighed heavily on the decision about whether to impose further sanctions.

"They're trying to strike a balance with what they can do to put pressure on them by squeezing [them] financially," said one U.S. official, who spoke to Foreign Policy on condition of anonymity. "It's really an art rather than a science doing this." (The congressional committee aide said a representative of the opposition government "welcomed" sanctions on the oil and gas industry in a conversation this week.)

On the flip side, some former officials and members of Congress have been concerned that the White House is not applying enough pressure on the regime over alleged human rights abuses. The State Department also has yet to act on a recommendation from the agency's Office of the Legal Adviser to declare the military's persecution of the Rohingya minority a genocide, current and former officials said, a debate that was put on pause at the end of the Trump administration. Meeks is asking the Biden administration to make a formal legal determination of whether the military committed genocide against the Rohingya.

"They have plenty of authority, and there's no lack of authority. It's just a lack of political will," said Kelley Currie, a former ambassador-at-large for global women's issues and deputy U.N. ambassador during the Trump administration. "The only reason why [the opposition] is doing things like declaring war on the junta is that the Burmese themselves have basically given up on the U.S. and the rest of the so-called international community as being willing to actually do anything meaningful to help them."

Even as the violence has escalated in recent months, some worry that the Biden administration's post-coup Myanmar policy remains framed too much by the Obama administration's hopes of promoting democracy and openness to foreign investment that have been dashed by the new facts on the ground. Myanmar's previous government had pledged liberalization and financial reforms, but the junta has parked those efforts, according to the State Department.

"The Biden administration is basically looking at the situation in Myanmar, very much framed in the manner in which it was being framed in the second term of the Obama administration," said Michael Martin, a former Myanmar researcher at the Congressional Research Service who now works as an independent analyst based in Washington. "The coup is a major monkey wrench in advancing that policy."

Jack Detsch is Foreign Policy's Pentagon and national security reporter. Twitter: @JackDetsch