The Obama administration formally lifted prohibitions on U.S. investment in Burma on Wednesday, opening the door to American companies, particularly in the energy sector, that have argued they were losing business to international competitors.
“Easing sanctions is a strong signal of our support for reform, and will provide immediate incentives for reformers and significant benefits to the people of Burma,” President Obama said in a statement issued by the White House.
The move was the most far-reaching to date in the administration’s increasingly rapid normalization of relations with Burma. It came despite calls for caution from human rights groups and Burmese democracy activists.
Obama’s announcement coincided with the arrival in Burma of Derek Mitchell, the first U.S. ambassador there in 22 years, and a meeting of foreign ministers of the Association of Southeast Asian Nations attended by Secretary of State Hillary Rodham Clinton.
Although plans to lift investment restrictions were announced in May, the change awaited what administration officials said were detailed reporting requirements on U.S. companies doing business in Burma, along with creating mechanisms to prevent U.S. economic ties to the powerful Burmese military and individuals and companies involved in human rights abuses.
In his statement, Obama said, “The United States Government remains deeply concerned about the lack of transparency in Burma’s investment environment and the military’s role in the economy.”
The new policy requires U.S. businesses investing more than $500,000 to file regular reports on any payments to the Burmese government and on procedures adopted to address human rights, corruption and environmental risks associated with their activities.
Obama also issued an executive order expanding existing sanctions against individuals who violate human rights to include those who threaten Burma’s political restructuring process.
The decision to allow U.S. investment is part of a series of U.S. actions over the past year as Burma began emerging from a half-century of repressive military rule. Among the changes was the election of a new parliament whose members include democracy leader Aung San Suu Kyi, released in 2010 from 15 years of house arrest.
While Suu Kyi has generally supported the slow lifting of restrictions in response to government revisions, she has urged caution until the changes have fully taken root.
Suu Kyi and other activists have focused their concerns on Burma’s state-owned energy company, the Myanmar Oil and Gas Enterprise, and its connections to the military. In a speech last month in Geneva, she said that the energy company “lacks both transparency and accountability at present.” She said countries should not allow their firms to do business with the company until it signs internationally recognized standards of transparency and accountability.
“The U.S. government should have insisted that good governance and human rights reform be essential operating principles for new investments in Burma,” said Arvind Ganesan, business and human rights director at Human Rights Watch. “By allowing deals with Burma’s state-owned oil company, the U.S. looks like it caved to industry pressure and undercut Aung San Suu Kyi and others in Burma who are promoting government accountability.”
The U.S. Chamber of Commerce, which had heavily lobbied the administration for the new policy, said in a statement: “Every other major economy, including Australia, Canada and the [European Union] has moved more swiftly than the U.S. to allow their companies to do business in Burma. Continuing U.S. sanctions would only add to the head start Asian and European companies have seized in the Burmese market.”