The Obama administration announced Thursday that it would ease restrictions on U.S. investment in Burma, its latest and furthest-reaching step to encourage reforms in the long-isolated country.
The policy change — announced after a meeting between Secretary of State Hillary Rodham Clinton and Burmese Foreign Minister Wunna Maung Lwin — will include safeguards that prevent U.S. companies from doing business with individuals who have engaged in human rights abuses and with firms tied to Burma’s military.
Overall, however, the move opens the door to significant investments in a country rich in natural resources, including oil, gas and minerals.
“Today we say to American business, ‘Invest in Burma, and do it responsibly,’ ” Clinton told reporters at the State Department.
The shift on sanctions is part of a series of U.S. actions to reward Burma’s leaders for reforms undertaken in the past year after decades of often-brutal rule by a succession of military regimes. The White House on Thursday also nominated Derek Mitchell, who serves as the U.S. special envoy to Burma, to be the first American ambassador to that country in 22 years.
But the decision to ease sanctions is among the most controversial steps the administration has taken.
Human rights groups expressed concern at the move, saying the Burmese government’s reforms have not gone far enough and could still be reversed. Many plan to voice those concerns at a meeting with White House officials Friday.
Some of the most crucial details of the new investment policy still need to be worked out, said a senior administration official, who was not authorized to speak by name. In coming days, U.S. officials will hammer out what requirements will be placed on American corporations going into Burma and how strictly they will be bound by those rules.
“That, to us, is the crux of the matter,” said John Sifton, Asia advocacy director for Human Rights Watch. “Will those regulations allow companies to invest in projects, for example, that appropriate land and force people out of their homes as has been going on? Does it allow for actions that are only going to worsen the conditions and fighting in the ethnic areas?”
In part to allay concerns, officials say, the State Department plans to produce an updated list of “bad actors” who will continue to be excluded from U.S. investment — individuals and entities with ties to past military regimes or corruption or a role in human rights abuses.
The suspension of sanctions across industries is a significant departure from the policy maintained by the administration as recently as last month. Shortly after democracy leader Aung San Suu Kyi’s election to parliament, State Department officials said they planned to allow for investment but only in targeted sectors.
Officials at the time emphasized that sectors closely tied to the powerful Burmese military or directly benefitting the government, such as gem mining, oil and timber, would not be included.
Since then, however, large corporations, including dominant energy companies, have lobbied the administration, pointing to recent decisions by the European Union and Australia to similarly suspend sanctions and arguing that U.S. businesses would be left behind.
Explaining the administration’s approach to Burma, Clinton cited the E.U. suspension action as precedent and stressed that although suspended, the U.S. sanctions would remain “on the books as an insurance policy.”
“The United States is committed to supporting this reform. We encourage it, we acknowledge it, but more than that, we want to be partners in seeing it continue,” she said.
The idea of suspending the investment ban on Burma, also known as Myanmar, had gained traction in recent days, with lawmakers on both sides of the aisle speaking out on the issue.
On Thursday, the administration’s decision garnered praise from Sen. James Webb (D-Va.), as well as cautious support from Republican Sens. John McCain (Ariz.) and Mitch McConnell (Ky.).
“It is important to note that today’s announcement is not a lifting of sanctions. It is a conditional suspension,” the two noted in a joint statement.
Suu Kyi also has expressed cautious support for such a move.
“This is a possible first step,” she said in a video teleconference call during an event held this week by former president George W. Bush. “I am not against the suspension of sanctions as long as the people of the United States think this is the right thing to do at the moment.”
Even with Thursday’s announcement, it could take months and years for Burma’s economy to open up, said the senior administration official. “It’s not a very welcoming environment right now for businesses,” the official said, citing an uncertain legal climate and worries such as continuing human rights abuses. “There are still a lot of problems within the country, and [businesses] need to be extraordinarily careful.”
The U.S. government will act to intervene, he said, if businesses “move in quickly and we find out they’re working with the wrong people.”