Burma-U.S. Relations

Prepared for Members and Committees of Congress

On May 2-3, 2008, Cyclone Nargis hit the Irrawaddy delta and the Rangoon area of Burma.
Estimates of the number of people who died was 135,000 as of early June 2008. Hundreds of
thousands of people lost their homes and sources of livelihood. Foreign governments and relief
organizations sought to bring in massive aid, but the Burmese government (SPDC) restricted the
volume of goods that came in and access of disaster experts and relief workers to the affected
areas. In the meantime, the SPDC proceeded to hold a referendum on a new constitution in areas
not affected by the cyclone. It announced on May 15 that voters approved the constitution by


Many observers assessed the referendum process as not being free and open. This appeared in
line with the SPDC’s reported poor human rights record since 1990, including the suppression of
anti-regime protests in September 2007.
The SPDC appears unaffected by sanctions imposed by the United States and other Western
nations. Western sanctions are uneven with U.S. sanctions being the heaviest. Burma has been
able to expand exports of a variety of commodities, including growing earnings from natural gas
production. China and India have signed deals with the SPDC for substantial purchases of natural
gas. Burma also reportedly earns between $1 billion and $2 billion annually from exports of
illegal drugs, heroin and methamphetamines. Most of these earnings go to drug traffickers
connected to the Wa and Shan ethnic groups, but Burmese military officials have means to gain a
substantial share of these earnings. Burma’s fellow members in the Association of Southeast
Asian Nations (ASEAN) have grown more critical of the SPDC, but they continue to oppose
sanctions. Chinese diplomatic support of the SPDC and military and economic aid is very
important: $2 billion in military aid since the early 1990s, $200 million annually in economic aid,
substantial foreign investment including new investment in natural gas, and a huge influx of
Chinese migrants into Burma, mainly traders. China’s role is a prime justification for India’s
“constructive engagement” policy toward Burma, although India suspended arms sales after the
September 2007 uprising. Burma has reestablished diplomatic relations with North Korea amidst
reports of growing military cooperation between them.
Since 1988, the United States has imposed sanctions against Burma, including congressional
passage in 2003 of the Burma Freedom and Democracy Act (P.L. 108-61) banning imports from
Burma (renewed by Congress in 2006). The Bush Administration proposed that the U.N. Security
Council consider the Burma situation and introduced a resolution in the Council in December
2006. China and Russia vetoed the resolution in January 2007 and blocked a U.S. attempt to
secure Security Council consideration of sanctions in September 2007. Since then, the
Administration issued several executive orders prohibiting U.S. financial dealings and imposing a
travel ban on named Burmese individuals and companies connected to the SPDC.

Cyclone Relief Controversy............................................................................................................1
Constitutional Referendum..............................................................................................................2
The September 2007 Uprising.........................................................................................................3
Burma’s “Extremely Poor Human Rights Record”.........................................................................4
International Pressure Mixed With Foreign Support for the SPDC...............................................6
U.S. Policy......................................................................................................................................11
H.R. 3890..........................................................................................................................14
Figure 1. Map of Burma................................................................................................................15
Author Contact Information..........................................................................................................16

Estimates of the death toll of Cyclone Nargis on May 2-3, 2008, were 135,000 as of early June
2008. The United Nations estimated that between 1.6 million and 2.5 million people were
affected by the storm, left homeless or without basic sources of livelihood such as food and water.
Immediately, foreign governments, the United Nations, and international relief organizations 1
offered massive disaster relief to Burma. The Bush Administration pledged $16.25 million. The
Burmese government (SPDC) initially took the position that it could handle the situation. It
followed a policy of allowing a limited amount of foreign relief goods into the country and
permitting a relatively small number of foreign relief workers to operate within a restricted set of
rules. The SPDC imposed special restrictions against the United States, France, and other Western
countries that had long imposed sanctions on the SPDC over human rights issues.
The SPDC did allowed a large number of U.S. C-130 transport aircraft to bring relief supplies 2
into the country. However, it barred U.S. disaster experts, relief specialists, and search and rescue
teams from the country. It also prohibited the U.S. military from bringing relief goods directly
into the country despite the large relief capacity of several U.S. naval vessels off Burma’s coast.
Restrictions on the United States, France, and Great Britain (which also had naval contingents
offshore) were the most severe. However, the SPDC imposed limitations on other governments
and on private aid groups. It limited the number of entrance visas issued to foreign relief workers,
and it restricted access of foreign relief workers into the Irrawaddy delta, the area hit hardest by 34
the cyclone. However, the trend into June 2008 was a gradual easing of these SPDC restrictions.
The Singapore Foreign Minister announced on May 20 that the SPDC had agreed to allow its
fellow members in the Association of Southeast Asian Nations (ASEAN) to coordinate the inflow
of foreign relief aid. ASEAN, he said, would work with the United Nations. The SPDC appears to
have decided to allow a larger presence of relief workers and medical workers from neighboring
Asian countries: the ASEAN countries, China, and India. These personnel were reported to be
entering the countries. Singapore’s Foreign Minister cautioned that the SPDC still would impose 5
limits on foreign access.
Many foreign governments, including the Bush Administration, and United Nations officials and
private aid groups criticized the SPDC for these restrictions. The Bush Administration and
European governments considered sending aid into Burma, including aid transported by military
units, without the permission of the SPDC. There were proposals to invoke a “responsibility to 6
protect” doctrine that the United Nations General Assembly had adopted in 2005. However, they
have hesitated, partly because China threatened to veto any proposed resolution in the U.N.

1 USAID administrator delivers aid to Burma and announces an additional $13 million in humanitarian assistance, PR
Newswire, May 12, 2008.
2 Eric Schmitt, Gates accuses Myanmar of ‘criminal neglect’ over aid, New York Times, June 2, 2008, p. A5.
3 Aid groups say some Myanmar food aid is stolen or diverted by the military, New York Times, May 15, 2008, p. A14.
Second storm nears Burma, Washington Times, May 15, 2008, p. A16.
4 Simon Montlake, Burma cracks open door, but still wary, Christian Science Monitor, May 27, 2008, p. 6.
5 Seth Mydans and Alan Cowell, Myanmar to widen neighbors aid role, New York Times, May 20, 2008, p. A10.
6 As an example, see the Washington Post editorial, With the junta or without it, May 20, 2008, p. A15.

Security Council authorizing forcible “humanitarian intervention.” U.S. officials reportedly also
were concerned that the SPDC might react to a forcible U.S.-Western “humanitarian intervention” 7
by harming Aung Sann Suu Kyi, the longtime Burmese opposition leader under house arrest.
China has pledged several million dollars in aid but reportedly has not pressured the SPDC to
grant wider access to foreigners. Chinese President Hu Jin-tao reportedly was “unresponsive”
when Japanese Prime Minister Fukuda appealed to him at their summit meeting to influence the 8
Burmese government to open Burma to international disaster and relief aid. China has asserted
that other countries must show “due respect” to the Burmese government and that relief work 9
would be dependent on the government.

On February 9, 2008, Burma’s military-led government announced that a national referendum on
a new constitution would be held in May 2008 and, if approved, a “multi-party election” under
the new constitution would be held in 2010. The government’s announcement said that “the time 10
has come to change from military rule to democratic civilian rule.” The announcement
culminated a long process in which a constitutional convention operated intermittently since late
1992 in the aftermath of the government’s voiding of an election for a constituent assembly in

1990 in which the opposition National League for Democracy (NLD) has won most of the seats.

The convention announced general principles for a new constitution on September 3, 2007. A 54-
person commission appointed by the government convened in October 2008 to write the
constitution. The government announced on February 19, 2008, that the drafting of the
constitution was completed.
The text of the new constitution was made public in April 2008. It would give the military the
“leading political role” in the state. It would establish a presidential form of government with two
legislatures, a Union Parliament and a House of Nationalities. The military would have 25% of
seats both bodies, appointed by the armed forces’ commander-in-chief. Political parties could
operate and run candidates for parliament. Military officials would head the ministries of defense,
security, home affairs, and border affairs. The constitution bars anyone from running for public
office who has been married to a foreigner—a provision aimed at opposition leader, Aung Sann 11
Suu Kyi, who was married to a British subject.
At the beginning of May 2008, the U.N. Security Council passed a resolution stating that the
SPDC should ensure “fundamental political freedoms” in holding the referendum. However,
China blocked two earlier drafts of the resolution that specified freedoms and made reference to

7 Glenn Kessler and Dan Eggen, Bush plans call to Chinese leader over Burma’s stance on aid, Washington Post, May
10, 2008, p. A10.
8 Jim Hoagland, New allies in Asia? Washington Post, May 11, 2008, p. B7.
9 Seth Mydans and Alan Cowell, Myanmar to widen neighbors aid role, New York Times, May 20, 2008, p. A10.
10 Aye Aye Win, Myanmar junta schedules constitutional referendum for May, election for 2010, Associated Press,
February 9, 2008.
11 Myanmar publishes text of military-backed proposed constitution, Associated Press, April 9, 2008. Voting proceeds
in Myanmar despite cyclones devastation, Los Angeles Times, May 11, 2008, p. A11.

Aung Sann Suu Kyi, the leader of the National League of Democracy under house arrest, and said 12
that the SPDC should allow independent monitoring of the vote.
The SPDC decided to proceed with the referendum in the areas unaffected by Cyclone Nargis. It
announced on May 15 that the voters had approved the constitution by 92.5%. The cyclone
affected areas voted on May 24, 2008. The government reported that 92.9% of these voters had 13
approved the constitution. A number of reports indicated that the referendum did not meet
objective standards for being a free and fair process. The SPDC reportedly instituted a number of
policies to ensure that the vote would approve the constitution by a wide margin. It instituted
selected arrests of people who attempted to campaign in public for a “no” vote. It allowed no 14
access to the media for advocates of rejection of the constitution. It rejected international 15
monitors of the vote, including United Nations proposals for such monitors. It reportedly forced 16
civil servants and teachers to vote “yes” publicly in their workplaces.
The coercion of civil servants and teachers reportedly was part of a government plan, which also
included a scheme under which precinct monitors were limited to the last ten voters. The regime
organized members of its mass political organization, the Union Solidarity Development
Association, to vote last in the precincts. Moreover, there was no counting of votes at the precinct 17
level. All results were announced by the central government in the capital of Naypidaw.

By October 1, 2007, the Burmese military government had suppressed with force large-scale anti-
government protests that began in late August 2007 and escalated in size and objectives in mid-
September. Thousands of protesters led by Buddhist monks marched in Rangoon and Mandalay,
Burma’s two largest cities. The size of the protests reached a reported 100,000 in Rangoon on
September 24. Anti-government, pro-democracy activists joined the protests along with thousands
of ordinary citizens.
Equally as important, the objectives of the protests became more political. The early protests
called for a rescinding of the August 15 fuel price increases. Spokesmen for the monks joined the
pro-democracy activists in calling for political reforms, including a release of political prisoners
and negotiations between the government and opposition leader Aung Sann Suu Kyi. Several
hundred monks visited Aung Sann Suu Ky on September 22, 2007, at her home where she is
under house arrest. An organization called the All Burma Monks Alliance issued a statement
calling for an expansion of protests “in order to banish the common enemy evil regime from
Burmese soil forever;” in short, regime change.

12 Edith M. Lederer, Security Council calls for Myanmar referendum to respect ‘fundamental political freedoms,
Associated Press, May 2, 2008.
13 When it comes to politics, Burmese say, government is all too helpful, New York Times, May 28, 2008, p. A6.
14 Burmapress forbidden to refer to campaign for a No vote in referendum on new constitution, Canada NewsWire,
April 24, 2008.
15 U.N. envoy disappointed by Myanmar visit, New York Times, March 19, 2008, p. A3. Aung Hla Tun, Myanmar
cracks down onno’ campaign—opposition, Reuters News, April 10, 2008.
16 Aung Hla Tun, Myanmar “forces” civil servants to vote for charter, Reuters News, May 2, 2008.
17 Burma said intends to rig constitution referendum, BBC Monitoring Asia Pacific, April 24, 2008. Burma: junta
appears set to rig referendum on constitution. Global Information Network, April 23, 2008.

The growth of the size and objectives of the protests led to the government’s decision to crack
down with military force. The crackdown began on September 25, 2007, with a ban on
assemblies and a curfew. Troops entered Rangoon and Mandalay. They employed tear gas and
warning shots, and there were reported instances where the troops fired into crowds of protesters.
The military began mass arrests, especially of monks. Troops surrounded and fenced off Buddhist
monasteries. The government announced ten deaths, but opposition groups claimed a much
higher death toll. The government cut off access to the internet and arrested a number of domestic 18
and foreign journalists. A Japanese journalist was murdered by Burmese soldiers in Rangoon.
Arrests continued into October 2007. An official of the United Nations Human Rights
Commission estimated in December 2007 that at least 31 people were killed in the September

2007 protests and that the Burmese government was detaining 500 to 1,000 people arrested 19

during and after the protests.
On October 4, 2007, the official Burmese media reported that General Than Shwe, the top official
of the government told the U.N. envoy that “he would meet directly with her [Aung Sann Suu
Kyi] for dialogue” if she promised to stop “promoting four things—confrontation, utter 20
devastation, economic sanctions on Myanmar, and other sanctions.” The government’s media
did not provide explanations of these conditions, but they appear to focus on Aung Sann Suu Kyi
promising not to encourage street demonstrations and protests against the government and to
cease calling on foreign governments to impose economic and other sanctions on Burma. The
SPDC appointed a cabinet minister as a liaison with Sung Sann Suu Kyi. He met with her four
times as of the end of January 2008. Little apparently was accomplished.

In 1988, the Burmese military established rule through a military junta (subsequently called the
State Peace and Development Council—SPDC). One of its first acts was to change the official
name of the country from Burma to Myanmar. However, the U.S. government has continued to
use “Burma” in official statements, and this report will use “Burma” unless statements are quoted
using “Myanmar.”
Since 1988, numerous reports, including the annual reports of the U.S. State Department, have
described extensive abuses of human rights perpetuated by the SPDC and the Burmese military.
These assessments have changed little over the subsequent 17 years. The State Department’s
human rights report for 2004 concluded that the SPDC has an “extremely poor human rights
record”; and the 2004 and 2005 reports asserted that the situation had “worsened” in each year.
Numerous reports throughout 2006 and 2007 indicate a continuation of this trend. The
Department’s reports and reports of private groups have laid out a familiar pattern of government
and military abuses: extra-judicial killings, torture, rape, arbitrary arrests for political reasons,
forced impressment into the service of the military, forced labor and relocations, and tight
restrictions on the press, speech, and assembly. The number of political prisoners has been over

18 Edward Cody, Deadly crackdown intensifies in Burma, Washington Post, September 27, 2007, p. A1.
19 Warren Hoge, U.N. Myanmar report cites new arrests and deaths, New York Times, December 8, 2007, p. 10.
20Burmese juntas Than Shwe willing to meet Suu Kyi if she ends sanctions call,” Agence France Presse, October 4,
2007. “Myanmar junta chief willing to meet opposition leader Suu Kyi—but with conditions,” Associated Press,
October 4, 2007.

1,000 for several years (including the house arrest of Aung Sann Suu Kyi and NLD deputy leader 21

Tin Oo (which the SPDC extended for one year in February 2008).
Many human rights abuses reportedly are committed by the military against members of Burma’s
ethnic minorities. The government negotiated cease-fire agreements with 17 ethnic insurgencies
in the 1990s; but three groups, the Karen, Karenni, and Shan have continued to fight. Ethnic
minorities make up the bulk of an estimated 540,000 internally displaced people in eastern Burma
and over 150,000 refugees who have fled across the border into Thailand. A large-scale Burmese
military offensive against Karen insurgents throughout 2006 and 2007 reportedly has included 22
burning of villages, forced relocations of civilians, mine-laying in civilian areas, and rapes.
Government policies reportedly are particularly oppressive against members of the Muslim 23
Rohingya minority in western Burma, whom the SPDC has barred from citizenship.
The worsening human rights situation has been influenced by the deteriorating political situation
since 2002. It began with the physical attack by SPDC supporters on Aung San Suu Kyi and her
followers in May 2003 and her subsequent house arrest. In October 2004, the SPDC arrested
Khin Nyunt, chief of Burma’s Defense Intelligence organization, and scores of his intelligence
officials. Khin Nyunt had been the arm of the SPDC in dealing with foreign governments,
including the United States and Burma’s partners in the Association of Southeast Asian Nations
(ASEAN). He reportedly had advocated that the regime open negotiations with the NLD and be
responsive to some of the international criticisms of the SPDC. He reportedly had convinced the
junta to release Aung San Suu Kyi from house arrest in April 2002, and his representatives had
contacted U.S. officials, urging a positive U.S. response to the SPDC’s decision. Khin Nyunt’s
fall from power apparently removed from within the SPDC the main element in favor of greater 24
flexibility. Since the purge, younger Burmese military commanders have assumed higher
positions of power. Many have been field commanders in areas of reported high levels of human
rights abuses. They have had little foreign contacts and little apparent awareness of foreign 25
attitudes toward Burma.
With Khin Nyunt’s ouster, power in the SPDC is vested in 75-year-old Senior General Than Shwe
and Vice Senior General Maung Aye, the army’s commander-in-chief. Rumors of a power
struggle between them have not been substantiated. Than Shwe appears to be the top decision-
maker, and he reportedly is deeply hostile to Aung Sann Suu Kyi. Many analysts believe that 26
Maung Aye’s power has increased since the ouster of Khin Nyunt.
In November 2005, the SPDC ordered government ministries to leave the capital city of Rangoon
and move to a new designated capital of Pyinmana, 200 miles north of Rangoon. Foreign
embassies were given no notice of the move. They were told to communicate with government 27
offices by fax and that foreign governments could build new embassies after December 2007.

21No progress on Burma rights,” British Broadcasting Corporation, January 18, 2006. “Myanmar freed 40 political
prisonersopposition,” Reuters News, January 4, 2007.
22 Anthony Faiola, Misery spirals in Burma as junta targets minorities, Washington Post, November 17, 2006. p. A1.
23 U.S. Department of State, Country Reports on Human Rights Practices—2005, March 8, 2006. Chapter on Burma.
24 Michael Casey, Burma muzzles Suu Kyi, her party, Washington Times, December 17, 2005. p. A10.
25 Larry Jagan, Rangoon’s generals prepare for the changing of the guard, Bangkok Post (internet version), October 12,
26 Michael Casey, Paranoid and xenophobic, Myanmar junta leaders only know force in dealing with critics, Associated
Press, September 30, 2007.
27 Embassies can move to new Myanmar (Burma) capital in two years, says junta, Thai News Service, January 5, 2006.

The move came as a new U.S. Embassy was being constructed in Rangoon and had been half

The SPDC seems relatively unaffected by the economic and diplomatic sanctions placed on
Burma by the United States, the European Union, Japan, and Australia. There are five apparent
reasons for the failure of international sanctions to pressure the regime to institute political
reforms. The SPDC undoubtedly has benefitted by the lack of uniformity of the sanctions
imposed on it. U.S. sanctions are the broadest (see “U.S. Policy” section). European, Japanese,
and Australian sanctions are more limited in scope and do not totally cut off trade and investment
with Burma. The European Union (EU) has imposed a visa ban on Burmese officials, an arms
embargo, a freeze on Burmese assets in EU countries, and a suspension of most-favored-nation
trade treatment; but there is no ban on imports of Burmese products or EU private investments in
Burma. Great Britain reportedly is the third largest private investor in Burma with investments
valued at $1.4 billion in 2004. In 2005, the EU provided nearly $45 million in aid primarily for 28
health, education, and the environment. Japan has funded aid projects in Burma reportedly
totaling more than $18 million in 2004, including hydro-electric power and the Rangoon airport.
After a Japanese reporter was killed in Rangoon during the September 2007 uprising, the
Japanese government stated that it would consider new sanctions against Burma, but in January
2008, Japan pledged $1.79 million in humanitarian aid. The Japanese government defines its aid
as “humanitarian,” but other governments, including the Clinton and Bush administrations, have 29
countered that the aid is actually infrastructure aid.
Even U.S. sanctions do not include the biggest U.S. business activity in Burma, the Yadana
offshore natural gas production and the gas pipeline into Thailand constructed and operated by a
consortium that has included the U.S. UNOCAL Corporation (UNOCAL recently was taken over
by Chevron). Chevron has a 28% share of the consortium. The other consortium members are the
French corporation Total with a 31% share, PTT Exploration and Production Public Company of
Thailand with a 26% share, and the Burmese government-owned Myanmar Oil and Gas
Enterprise with a 15% share. The newspaper, The Myanmar Times, reported in its August 20-26,

2007, edition that the Yadana project earned $2.16 billion in 2006. An estimate for the 30

consortium’s earnings in 2007 is $2.8 billion. Chevron’s 28% share of the $2.16 billion profit in
2006 would be approximately $600 million. A conservative estimate of the Burmese
government’s income from the Yadana project in 2006 is about $500 million. Of the $2.16 billion
profit, the Myanmar Oil and Gas Enterprise would receive about $330 million based on its 15%

Alan Sipress, As scrutiny grows, Burma moves its capital, Washington Post, December 28, 2005. p. A1.
28 Z Brake, Messages of investment: acceptance of the Burmese regime, BurmaNet News, (internet), August 11, 2004.
Benedict Rogers, Burma needs a stronger international effort, Asian Wall Street Journal, August 26, 2003, p. A7. Linda
Sieg, EU presses Myanmar on prisoner release, dangles aid, Reuters News, May 6, 2005.
29 Japan’s aid to Burma criticized as U.S. calls grow for international sanctions, Carbaugh Daily Report, October 13,
2004. Edith Lederer, U.S. plans to pursue U.N. resolution on Myanmar but Russia, China and Japan object. Associated
Press, May 31, 2006.
30 Thomas Fuller, For Myanmars neighbors, mutual needs trump qualms, New York Times, October 2, 2007, p. A8.

share. Top Burmese military officials are believed to control and profit from a number of these
major government corporations. A conservative estimate of Burma’s corporate income tax intake
would be 10% of $1.83 billion (the consortium’s 2006 profit minus the share of the Myanmar Oil
and Gas Enterprise): about $183 million. The government may be able to draw in additional
money from the project in other ways, but this is not known.
The second factor is the ability of Burma to expand exports of a variety of commodities to
countries of Asia and beyond. These include natural resources such as natural gas, nickel,
precious gems, and timber; shrimp and other sea-based products; and illegal drugs (heroin and
methamphetamines). Reportedly, exports of textiles have picked up since the U.S. import ban of 31

2003, as Burma has found other markets in Asia and Europe. Burma earned an estimated $1 32

billion in exports of natural gas in 2004 and 2005, and earnings could grow substantially in the
future from new natural gas explorations and production. The South Korean company, Daewoo,
announced in August 2006 the discovery of a gas field off Burma’s coast that could produce
between 5.7 and 10 trillion cubic feet of gas that could lead to annual production for the next 20-
25 years. The British Petroleum Statistical Review puts Burma’s proven gas reserves at 19 trillion
cubic feet. China and India have signed deals with the SPDC, which would make them primary
customers for this gas and future discoveries of gas. The Chinese deal reportedly would have
Burma supply 6.5 trillion cubic feet of gas to China over 30 years. In April 2006, Russia’s
Zarubezhneft oil company signed an agreement with the SPDC’s energy ministry, which 33
reportedly will open the way for Russian investments in Burma’s oil and gas industry. Investors
must conclude profit or production-sharing agreements with state-owned corporations or with
regional military commands, which insures a significant flow of money to the SPDC and
members of the ruling, military-based elite.
Burma reportedly earns between $1 billion and $2 billion annually from exports of the illegal
drugs, heroin and methamphetamines. This seems to be at least as much and possibly
substantially more than the $900 million annually, which the U.S. Embassy in Rangoon estimated 34
that Burma earned in the mid-1990s. Most of these earnings, predominately foreign exchange,
go to drug traffickers who produce and ship the drugs across Burma’s borders. Most of the
traffickers are connected to particular ethnic groups along Burma’s borders with China and
Thailand, such as the Wa and the Shan. However, Burmese military officials at various levels
have a number of means to gain a substantial share of these earnings. Local military commands
reportedly collect high government taxes on the drug traffickers as well as fees for military
protection and transportation assistance. U.S. State Department annual international narcotics
reports have stated that “there is no reliable evidence that senior officials in the Burmese 35
Government are directly involved in the drug trade.” However, the SPDC allows and
encourages drug traffickers to invest in an array of domestic businesses, including infrastructure

31 Alan Sipress, Asia keeps Burmese industry humming, Washington Post, January 7, 2006. p. A11.
32 Ibid. Mohan Malik, Mohan, Regional Reverberations from Regime Shake-up in Rangoon, Asia-Pacific Center for
Security Studies, January 2005, p. 6.
33 Tim Johnson, While others push to free Myanmar, China takes a more profitable path, Philadelphia Inquirer, March
8, 2006, p. A2. Myanmar keeps gas options open with India pact, Reuters News, March 8, 2006. Russia, Myanmar
agree to strengthen economic ties, Dow Jones International News, April 3, 3006. Amanda Battersby, Chinese in frame
for Burmese gas, Upstream News, January 20, 2006.
34 Europa Publications, The Far East and Australasia 2005. London and New York, Europa Publications. p. 718. Bertil
Lintner, Burma: a blind eye to drugs, Far Eastern Economic Review, November 7, 1996, p. 88.
35 U.S. Department of State, International Narcotics Control Strategy Report. Volume I: Drug and Chemical Control,
March 2006, p. 244.

and transportation enterprises. The SPDC reportedly gets start-up fees and taxes from these
enterprises. Military officers sometimes are partners in them. The traffickers usually deposit the
earnings from these enterprises into banks controlled by the military. Military officers reportedly
deposit much of their drug-related money in foreign bank accounts in places like Bangkok and 36
Singapore. However, in 2005, the SPDC did shut down three banks allegedly due to drug-
related money laundering.
The Burmese military has had an especially close relationship with the Wa tribe, including the Wa
drug producers and traffickers. In a cease-fire agreement of 1989, the military allowed the Wa
wide autonomy, including the maintenance of armed Wa military forces and the freedom to
produce drugs. The Wa soon became a dominant factor in the heroin trade. In 2001, Burmese
military intelligence officials and the Wa leadership reportedly concluded an agreement under
which the Wa were encouraged to reduce their production of opium and heroin but were given a 37
free hand to expand production of methamphetamine pills for export. Opium production
dropped from an estimated 2,500 metric tons in the mid-1990s to 953 tons in 2001 to just over 38
600 tons in 2002, and to 380 metric tons in 2005, according to U.S. estimates. Nevertheless, at
the same time, the Wa were expanding their production of methamphetamine pills; smuggling 39
into Thailand rose from an estimated 300 million tablets in 1999 to 1 billion in 2003. Wa
earnings from methamphetamine sales was estimated at $300 million in 2002, and Wa earnings 40
from heroin smuggling was estimated at $250-$300 million. Reports on the 2001 agreement
between the Burmese intelligence officials and Wa leaders assert that the agreement included
profit sharing provisions, which give the military a share, possibly as high as 50%, of Wa 41
earnings from drug trafficking.
A third factor limiting the impact of international sanctions is the “constructive engagement”
policy of Burma’s fellow members in the Association of Southeast Asian Nations (ASEAN),
which eschews sanctions and diplomatic pressure. Thailand has important economic interests in
Burma, including $1.29 billion in private investments in 49 projects within Burma in 2004 and
imports from Burma valued at $1.06 billion in the Thai FY2003-2004. Singapore’s investments in 42
Burma reportedly totaled $1.4 billion in 2004. Singapore reportedly is a major travel destination
for the Burmese elite, and SPDC leader Than Shwe reportedly has been treated for intestinal
cancer at a Singapore government hospital. Singapore also is believed to have sold arms to 43
Burma’s military. However, several ASEAN governments turned more critical of Burma after
the re-arrest of Aung Sann Suu Kyi in 2003. This is due in part to the increasing democratization

36 Christopher Wren, Road to riches starts in the golden triangle, New York Times, May 5, 1998, p. A8. Robert S.
Gelbard, Slorcs drug links, Far Eastern Economic Review, November 21, 1996, Anthony Davis, The Wa challenge
regional stability in Southeast Asia, Jane’s Intelligence Review, January 2003, p. 6, 13.
37 Minority misuses Burmese land gift, Far Eastern Economic Review, December 20, 2001, p. 8. Surath Jinakul,
Dangerous escalations, Bangkok Post (internet version), May 20, 2001.
38 Seth Mydans, Small victories in recorded in Burmese war on drugs, New York Times, July 7, 2002, p. NE4. Burma
urges more US cooperation in war on drugs, Agence France Presse (Hong Kong), March 2, 2003. U.S. Department of
State, International Narcotics Control Strategy Report. Volume I: Drug and Chemical Control. March 2006, p. 241.
39 Larry Jagan, Fighting Burma’s drug trade, Bangkok Post (internet version), January 19, 2003.
40 Anthony Davis, The Wa challenge regional stability in Southeast Asia, Jane’s Intelligence Review, January 2003, p.
41 Wa and Burmese commanders strike a new deal, BurmaNet News, October 1, 2001. Surath Jinakul, Dangerous
escalations, Bangkok Post (internet version), May 20, 2001.
42 Z Brake, Messages of investment: acceptance of the Burmese regime, BurmaNet News (internet), August 11, 2004.
43 Eric Ellis, Web of cash, power and cronies, The Age.com.au, September 29, 2007.

within these states, especially Indonesia, and Burma’s disruptive influence on ASEAN’s relations
with the European Union and the United States. Malaysian and Indonesian officials have stepped
up criticisms of the SPDC Members of ASEAN country parliaments have formed an ASEAN
Inter-Parliamentary Caucus on Democracy in Myanmar. In 2005, ASEAN governments pressured
Burma to either institute political reforms or give up its scheduled chairmanship of ASEAN in
2006. The SPDC chose to give up the chairmanship, another indication of its continued resistance
to outside pressures. Malaysian Foreign Minister Syed Hamid Albar went to Burma in March

2006 as a special ASEAN envoy to discuss democratic reforms, but his visit accomplished little.

The SPDC did not allow him to meet with Aung Sann Suu Kyi.
Despite diplomatic pressure, ASEAN leaders stressed to the Bush Administration that ASEAN
assertiveness has limits and will not include economic sanctions against Burma. However,
ASEAN took a first diplomatic step when its Secretary General publicly called on China and 44
India to “take a larger role in encouraging Myanmar to speed reform measures.” Indonesian
Foreign Minister Hassan Wiradjuda followed up with a statement on May 19, 2006, in
Washington, D.C., that China, India, and South Korea should use their aid and investments in 45
Burma “to make sure that Myanmar changes itself to be more democratic.” Nevertheless,
Indonesia demonstrated the limits of ASEAN’s assertiveness when it abstained in the U.N.
Security Council vote in January 2007 on a U.S. resolution condemning the SPDC and calling for
reforms. Malaysian Prime Minister Abdullah Badawi also expressed opposition to the U.S.
resolution. In the September 2007 crisis, ASEAN leaders criticized the Burmese government, but
they indicated no support for the U.S.-EU effort to get the U.N. Security Council to consider
sanctions. ASEAN governments reactions to the SPDC’s February 2008 announcements of a
constitutional referendum and 2010 elections were guardedly positive.
The fourth and probably biggest factor is Chinese economic and military aid to Burma. China
takes the position that political and human rights conditions in Burma are the “internal affairs” of
Burma. The SPDC’s Prime Minister, Soe Win, stated after his February 2006 trip to China that
Chinese Premier Wen Jiabao had pledged China’s unwavering support and said that Beijing 46
would oppose the imposition of economic sanctions by the United Nations. China fulfilled that
apparent pledge when it vetoed the U.S. resolution in the U.N. Security Council in January 2007
and blocked the U.S.-EU initiative in the Security Council in September 2007. China (and
Russia) argued that despite Burma’s internal problems, Burma does not constitute a threat to
regional and international peace and security that would bring it within the purview of the
Security Council. China reportedly has counseled the SPDC to moderate its behavior and has
expressed concern over the flow of narcotics into southern China. Since the September 2007
protests and SPDC crackdown, China has supported the dispatch of a United Nations mediator,
but it claims to have minimal influence. China reportedly has initiated quiet contacts with exiled 47
Burmese opposition leaders, but it refuses to pressure the SPDC publicly, and apparently
privately, to free Aung Sann Suu Kyi and negotiate with her. However, some experts believe that

44 Malaysia tells U.S. official ASEAN to seek ‘acceptable’ role on Burma, British Broadcasting Corporation, January
16, 2006. S.E. Asian nations ask China, India, to prod Myanmar, Reuters News, March 30, 2006.
45 Paul Eckert, Indonesia urges Myanmar trade partners to use clout, Reuters News, May 19, 2006. Wiradjuda said that
his reference to South Korea was in reference to South Korea’s recent investment activities in natural gas and
46 Agence France Presse report, December 14, 2005. Statement by Chinese Foreign Ministry spokesman Liu Jianchao.
Tim Johnson, While others push to free Myanmar, China takes a more profitable path, Philadelphia Inquirer, March 8,
2006, p. A2.
47 Chris Buckley, Chris. China quietly reaches out to Myanmar opposition, Reuters News, September 26, 2007.

the SPDC’s February 2008 announcements of a constitutional referendum and elections were due 48
to pressure from China.
China took a diplomatic initiative in June 2007 when it arranged a meeting in Beijing between a
State Department official and Burmese government representatives. The State Department
provided little information on the content of the meeting. Chinese officials have not discussed
publicly their objectives in setting up the meeting. It may be that China seeks to facilitate a
sustained U.S.-Burma dialogue similar to the U.S.-North Korean dialogue that China encouraged
and helped to facilitate in late 2006 and throughout 2007.
China’s extensive role in Burma has five components. First, China has provided Burma with an
estimated $2 to $3 billion in military aid since the early 1990s, which has enabled the Burmese
army to expand from 180,000 to 450,000 in 2005. China was active in shipping weapons to 49
Burma in 2006, coinciding with the Burmese army’s offensive against the Karens. Second,
China’s economic aid is estimated at $200 million annually, much of which goes into 50
infrastructure, including electric power. Third, China is believed to be the largest foreign
investor in Burma; Chinese companies reportedly have invested in more than 800 projects with 51
direct investment estimated at close to $3 billion. A report by an expert at the Asia-Pacific
Center for Security Studies, a research organization of the U.S. Pacific Command, estimated that 52
China “controls more than 60 percent of the Burmese economy.” Visitors to Burma report a
large Chinese economic presence in Burma from Mandalay northward, including an estimated
one million or more Chinese migrants into Burma since 1995, mainly traders. Fourth, China
officially has been Burma’s third largest trading partner, but there reportedly is a huge, informal
cross-border trade that is unrecorded. The Burmese and Chinese governments projected bilateral 53
trade reached close to $2 billion in 2007. The fifth component is China’s interest in Burma’s
natural gas and potential pipelines across Burma into China. The Chinese-Burmese natural gas
deal, discussed earlier, undoubtedly will increase China’s interest in supporting the SPDC. China
also reportedly is planning the construction of oil and natural gas pipelines from Burma’s coast on
the Indian Ocean northward into China, through which Chinese oil purchased in the Middle East
and Burmese natural gas could be transported to China rather than by sea through the Strait of 54
Malacca and the South China Sea.
China’s growing role also is cited by Indian officials as a prime justification for India’s
“constructive engagement” policy toward Burma. This has included India-Burma agreements on
Indian aid, trade, and counter-insurgency cooperation, and as stated previously, an agreement for

48 Amy Kazmin, Hand of Beijing seen in events, Financial Times, Asia Edition, February 12, 2008, p. 3.
49 Democratic Voice of Burma broadcast, December 13, 2006.
50 Joe Cochrane, Stubborn survivor, Newsweek International (internet version), March 21, 2005.
51 U.S. Campaign for Burma, Chinas support blocks international diplomacy and keeps Burmas regime in power,
2007, p. 3.
Mohan Malik, Regional Reverberations from Regime Shake-up in Rangoon, Asia-Pacific Center for Security Studies
(internet version), January 2005, p. 8.
Alan Sipress, Asia keeps Burmese industry humming, Washington Post, January 7, 2006, p. A11. Zhang Yunfei, New
progress has been achieved in China-Burma economic and trade cooperation, Xinhua Asia-Pacific Service, December
9, 2007.
54 Jane Perlez, Myanmar is left in dark, an energy-rich orphan, New York Times, November 17, 2006. p. 1. Lam, Willy.
“China’s energy paranoia.Asian Wall Street Journal, July 30, 2004. p. A9.

Indian purchases of Burma’s natural gas.55 In 2006, India began to sell arms to the Burmese
military. India initially took a low posture toward the SPDC’s crackdown on the September 2007
protests, but it later halted arms shipments to Burma.
Another negative development is the reestablishment of Burma’s diplomatic relations and
military links with North Korea. Burma broke diplomatic relations with North Korea in 1983
after North Korean agents planted a bomb in Rangoon which killed 17 high-ranking South
Korean officials. In April 2006, they reestablished diplomatic relations. It is known that since the
late 1990s, Burma has purchased artillery and ammunition from North Korea, has sent military
delegations to Pyongyang, and has received North Korean technicians at a Burmese naval base.
North Korean ships and diplomats have been caught carrying heroin with Double U-O labels, a
brand of heroin produced in the Golden Triangle region of Burma. There also are reports that
Burma is interested in acquiring North Korean short-range surface-to-surface missiles and
submarines, although no purchases have been confirmed. Observers, too, have speculated that
Burma and North Korea might collaborate in developing nuclear facilities inside Burma, but there 56
appears to be little hard evidence to substantiate this.
A likely fifth factor in the failure of U.S.-led sanctions to pressure the SPDC into making political
concessions is that the SPDC requires significant income, including foreign exchange, for a
relatively narrow segment of Burma’s population. Several hundred high-ranking military officers
and their families are the core of the ruling elite. They reportedly are involved in many business
ventures and manage state corporations that regulate and enter into partnership agreements with 57
private companies, including foreign investors. Income earned domestically and from foreign
transactions appears to be easily sufficient to ensure that the ruling class enjoys a high standard of
living. Moreover, the priority given to the military in government budgets appears to provide
adequate resources for rank and file military personnel.

Since 1988, the United States has imposed a wide range of sanctions against Burma. By 2004,
these had terminated nearly all economic relations with Burma. The main sanctions currently are:
a suspension of aid, including anti-narcotics aid; opposition to new loans to Burma by the
international financial institutions; an executive order by President Clinton on May 20, 1997,
prohibiting U.S. private companies from making new investments in Burma; and congressional
passage of the Burmese Freedom and Democracy Act (P.L. 108-61) banning imports from Burma
into the United States, affecting mainly imports of Burmese textiles, and banning travel to the
United States by Burmese connected to the SPDC and U.S. financial transactions with individuals
and entities connected to the Burmese government. In response to the September 2007 uprising,
the Bush Administration issued a number of executive orders under The Burmese Freedom and
Democracy Act. These orders named Burmese officials, Burmese companies, and Burmese
businessmen as subject to the sanctions authorized under the act. The orders froze any financial

55 Cropley, Ed. “Myanmar junta leader to make historic India visit.Reuters News, October 21, 2004.
56 Bertil Lintner and Shawn Crispin, Dangerous bedfellows, Far Eastern Economic Review, November 20, 2003, p. 22-
24. Andrew Selth, Burma’s North Korean Gambit: A Challenge to Regional Security? Canberra, Strategic and Defence
Studies Centre, The Australian National University, 2004. p. 17-41.
57 Blaine Harden, The new Burmese leisure class: army capitalists, New York Times, November 21, 2000, p. A3.
Economist Intelligence Unit, Country Profile: Myanmar (Burma), 2005. p. 17, 21.

assets these individuals and companies have in the United States, prohibit Americans from
conducting business with them, and bar them from traveling to the United States. (For the details
of the executive orders, see CRS Report RS22737, Burma: Economic Sanctions.)
President Bush announced new sanctions, a freezing of the assets in the United States of Burmese
several state-owned Burmese companies on May 1, 2008, on the eve of Cyclone Nargis. These
firms were covered by previous sanctions. Both he and First Lady Laura Bush voiced criticisms
of the SPDC immediately after the storm struck. In response to the cyclone, he stated that the
United States wants to help the Burmese people deal with the disaster and “at the same time, of 58
course, we want them to live in a free society.” Laura Bush described the SPDC as “a friendless
regime” that “should step aside.” Their statements drew criticisms from some Burmese exiled
opposition figures, officials of other Southeast Asian governments, and from the European
Union’s director of humanitarian affairs as being inappropriate in the aftermath of a natural 59
The United States has not had an Ambassador to Burma since 1992 when the Senate Foreign
Relations Committee refused to confirm the nomination of an Ambassador because of the human
rights abuses. The State Department also concluded that Burmese officials were profiting from
groups that produced and exported heroin and other illicit drugs despite some SPDC moves to
limit opium production and drug-related money laundering. Burma is on the U.S. list of
uncooperative drug-producing or transit countries.
The dominant objective of Bush Administration diplomacy has been to strengthen international
sanctions against Burma. President Bush raised the issue with other heads of government at the
APEC summit of November 2005. The Administration stepped up bilateral diplomacy with the
ASEAN countries; and apparently for the first time, the Administration included Burma on the
U.S. bilateral agenda with China. The Administration’s major initiative was the effort to have
Burma placed on the agenda of the U.N. Security Council. A report issued in mid-2005 by Nobel
Peace Prize winners Vaclav Havel, former president of the Czech Republic, and Archbishop
Desmond Tutu of South Africa proposed that the Security Council take an initiative on the human
rights situation in Burma. The Bush Administration succeeded in securing a private Security
Council meeting on Burma in December 2005. After the SPDC extended the house arrest of Aung
San Suu Kyi in May 2006, the Administration proposed a formal resolution on Burma in the
Security Council.
The U.S. draft resolution included the following points: Burma “poses serious risks to peace and
security in the region”; the SPDC should release Aung San Suu Kyi and all political prisoners; the
SPDC should allow full freedom of expression and allow the National League for Democracy and
other political parties to operate freely; the SPDC should “begin without delay a substantive
political dialogue, which would lead to a genuine democratic transition, to include all political
stakeholders”; the SPDC should “cease military attacks against civilians in ethnic minority
regions” and end human rights violations against ethnic minorities; the SPDC should allow
international humanitarian organizations “to operate without restrictions” and cooperate with the
International Labor Organization to eradicate forced labor.

58 Business Wire, May 1, 2008.
59 Richard Cronin, Perspective, in the Nelson Report, May 19, 2008, p. 8-9. Amy Kazmin, Bush offers navy units,
criticizes junta as storm aid begin to reach Rangoon, Washington Post, May 7, 2008, p. A1. Sanctions will not help
Myanmar people: EU aid chief, Agence France Presse, May 17, 2008. Richard Cronin is a former CRS Specialist in
Asian Affairs now with The Stimson Center.

Despite its diplomatic efforts, the United States suffered a major defeat in January 2007 when
China and Russia vetoed the U.S. resolution in the U.N. Security Council and Indonesia abstained
on the vote. Future U.S. diplomatic options to bring about U.N. appear minimal, given China’s
blockage of the U.S.-EU initiative in the Security Council in September 2007.
The Administration’s stepped-up diplomacy with China did produce in 2007 a single U.S.
diplomatic move not related to sanctions. In June 2007, the Bush Administration agreed to send a
diplomat to Beijing for a Chinese-arranged meeting with a Burmese government official. The
Administration and the State Department did not disclose information about the meeting. In the
aftermath of the September 2007 uprising, the Bush Administration does not appear interested
further meetings.
In the past, the Administration has indicated that it would use sanctions to initiate a kind of “road
map” process with the SPDC in which the Administration would respond to a positive measure by
the SPDC by selectively lifting an individual sanction with the prospect of additional lifting of
sanctions in response to additional positive measures by the SPDC. U.S. business groups and
several U.S. academic experts support such a strategy. They argue that sanctions will not produce
a total SPDC capitulation or a regime collapse and that U.S. sanctions are contributing to China’s 60
increased role in Burma. They assert that the United States should engage the SPDC. When the
SPDC released Aung San Suu Kyi from house arrest in 2002, the State Department discussed
with Burmese officials a resumption of anti-narcotics aid. The Department reportedly considered
recommending that Burma be certified as eligible for U.S. anti-narcotics aid in view of the
SPDC’s apparent success in reducing opium and heroin production. However, this initiative drew
strong negative reactions from the press and especially from key Members of Congress, which 61
reportedly resulted in its abandonment.
In a statement of May 23, 2006, Assistant Secretary of State Christopher Hill indicated that the
Bush Administration might consider a road map process if the SPDC took some specific actions.
He mentioned the release of “the many hundreds, even thousands of political prisoners,” the
release of Aung Sann Suu Kyi, and “a resumption of dialogues” between the SPDC and the
opposition. Hill suggested that if the SPDC took a positive measure on any of these issues, the
Administration would initiate a positive measure in return: “If we see a movement in this 62
direction, if we see an effort, of course we’ll respond.”
However, sentiment in Congress appears to be against a “road map” approach and favors
maintaining the full range of U.S. sanctions until the SPDC and the Burmese military terminate
major human rights abuses and make fundamental political concessions to Aung Sann Suu Kyi in
a comprehensive agreement for a democratic system. The Burmese Freedom and Democracy Act,
which Congress renewed in the summer of 2006, specifies that the ban on imports from Burma
and other restrictions are to remain until the President certifies to Congress that the SPDC has
made major progress to end human rights violations; has released political prisoners; has allowed

60 David I. Steinberg, Engage Burma, Washington Post, July 15, 2003, p. A19. The National Bureau of Asian Research
in Seattle issued a lengthy report in March 2004, which contained essays from seven leading critics of U.S. sanctions
strategy. See Reconciling Burma/Myanmar: Essays on U.S. Relations with Burma, National Bureau of Asian Research,
Seattle, 2004.
61 Glenn Kessler, Reward for Burma’s Anti-Drug Efforts Unlikely, Washington Post, December 18, 2002, p. A29. Top
Senators keep pressure on Burma. Far Eastern Economic Review, March 20, 2003, p. 8. Glenn Kessler, U.S. may take
Burma offmajor drug list, Washington Post, November 22, 2002, p. A25.
62 U.S. urges Myanmar to release prisoners, Associated Press, May 23, 2006.

political, religious and civil liberties; and has reached agreement with the NLD for a civilian 63
government chosen through democratic elections. A sense of the Senate resolution, passed
unanimously on May 18, 2006 (S.Res. 484), called on the Bush Administration to take the lead in
securing a U.N. Security Council resolution calling for the immediate and unconditional release
of Aung San Suu Kyi and other political prisoners, condemning the Burmese army’s “atrocities”
against the Karen, and “supporting democracy, human rights, and justice in Burma.” U.S. human
rights organizations and most Burmese exile groups appear to back this approach and emphasized
in 2006 the need for the United States to push for U.N. Security Council consideration of 64
Introduced in the House of Representatives on October 19, 2007, H.R. 3890 passed the House on
December 12, 2007. The Senate passed it on December 19, 2007. However, the two versions
contain differences. One minor difference is that the House and Senate versions have different
names. The House version is entitled Block Burmese Jade Act of 2007. The Senate version is
entitled Burma Democracy Promotion Act of 2007. Both versions ban the import into the United
States of jade, rubies, or jewelry containing jade or rubies that are mined or extracted from
Burma. The Senate version also bans the importation of teak or other hardwood timber that
originated from Burma. Most importantly, the Senate version does not contain a key provision of
the House version that prohibits “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 House prohibition of the payment of taxes specifically
includes 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.
The Senate version contains a section requiring that the President appoint a “Special
Representative and Policy Coordinator for Burma,” the appointment to be subject to Senate
confirmation. The Special Representative would “promote... multilateral sanctions, direct
dialogue with the SPDC and democracy advocates, and support for nongovernmental
organizations operating in Burma and neighboring countries” aimed at restoring civilian
democratic rule. The Special Representatives would consult with other key government and assist
the efforts by the United Nations special envoy to secure the release of Burmese political
prisoners and promote dialogue between the SPDC and pro-democracy leaders, including Aung
San Suu Kyi.

63 See also John McCain and Madeleine Albright, A need to act on Burma, Washington Post, April 27, 2004, p. A21.
64 For an example of the debate between critics and supporters of strong sanctions against Burma, see Foreign Policy in
Focus Strategic Dialogue of January 18, 2007, featuring statements by Professor David Steinberg of Georgetown
University and Dr. Kyi May Kaung, a Burmese political analyst.

Figure 1. Map of Burma
TaunggyiAkyab LAOS
Bay of
Gulf of
Source:Map Resources. Adapted by CRS. (K.Yancey 5/4/06)

Larry A. Niksch
Specialist in Asian Affairs
lniksch@crs.loc.gov, 7-7680