The United States is imposing sanctions on two major conglomerates of the Myanmar army. These are two holding companies, MEHL and MEC, which cover dozens of companies. They can no longer trade with Americans and their American bank accounts are frozen. The United Kingdom imposes similar sanctions on MEHL.
The sanctions are triggered by the continued violence against demonstrators since the coup in early February. The British also mention the violence that the army uses against the Rohingya Muslims as a reason. The sanctions can have far-reaching consequences for companies; they can no longer use the US dollar in international transactions.
Many aid organisations that have been calling for sanctions for a long time have responded positively, although they also see room for more penalties. For example, some organisations are calling on the European Union to impose sanctions and Human Rights Watch wants the US to curb the Myanmar gas industry.
According to a UN report from 2019, at least 120 companies are covered by MEC and MEHL. These include banks, construction companies, pharmaceuticals, tobacco producers and the tourism sector. Also, a large part of the ruby and jademines are owned by the Tatmadaw, the official name of the Myanmar army.
“ The military governments after 1962 have made every effort to gain control over the economy,” says Laetitia van den Assum, former Ambassador to Myanmar. Precise numbers are not known, but it is clear that a large part of the income of the Tatmadaw comes from business. “They get 12 percent of the state budget. Thats a lot, but not enough to do what theyre doing now.”
The influence the Tatmadaw has on the economy of Myanmar is not unique. In countries such as China, Ethiopia and Cuba there are also conglomerates with strong ties to the armed forces.
It is the first time that sanctions have been imposed on the conglomerates. However, international partners of Tatmadaw-affiliated companies decided to stop their cooperation earlier. The Japanese Kirin Beer stopped brewing beer in MEHL breweries in February.
But also within the country, people are trying to hit military companies. “Consumer goods producers are particularly affected,” says Van den Assum. “Beer and cigarettes from those companies are hardly bought anymore.”
Previous sanctions, including those of the EU and Canada, focused on high-ranking individuals in the military government. According to Van den Assum, companies have not been dealt with before because it is easier to put individuals on a sanction list. “Then you limit yourself to an entry ban and freezing of assets; a company is much more radical.”
Van den Assum suspects that sanctions will soon be announced in Brussels too. “But first of all, this is a signal to companies to better see who they are working with. Some companies dont do that research, and then engage with a company affiliated with the military government.”