US to ease sanctions on Myanmar

Washington/Tokyo: The US is to begin easing sanctions on Myanmar following the weekend by-election victory by opposition leader Aung San Suu Kyi and her allies, starting with a relaxation of restrictions on travel by Myanmar officials and on financial transactions and investment.

Hillary Clinton, the US secretary of state, who made a historic trip to Myanmar in December, said the elections represented real change in a country dominated by military rule for decades and that the US would consider further steps if the pace of reform were maintained.

"We applaud the president [Thein Sein] and his colleagues for their leadership and courage," she said. The country had embarked on "a historic new path".

The announcement came as the European Union, Japan and Australia all said they were considering ways to ease sanctions and restrictions on doing business as a result of the by-elections, in which Ms Suu Kyi's National League for Democracy party won 40 of the 45 seats at stake.

The decisions underline the remarkably rapid turnround in attitudes towards Myanmar, which was treated as an international pariah for years but whose leaders have consistently surprised the international community with their commitment in recent months to political and economic reform.

The US is constrained in its ability to respond to the political changes by the complex nature of the sanctions built up over 20 years, which include five different overlapping laws and which a senior administration official described on Wednesday as "Byzantine, to say the least". The initial steps would not require any legislative changes by Congress, where there is strong support in the Senate for relaxing some of the sanctions, although there is more resistance in the House of Representatives.

The visa ban on Myanmar officials would be relaxed, with the foreign and health ministers expected to visit Washington shortly, although Mrs Clinton said this would not include those elements of the government "on the wrong side of these historic reform efforts".

A senior administration official said that restrictions on investment in sectors such as tourism, agriculture and telecoms could be relaxed, although the mining and resources sectors would remain off-limits. Financial sanctions would also be amended to allow credit card transactions to be conducted. "We are taking the bluntness out of the sanctions," he said. "However, this can all be turned off and reversed quickly if there is backtracking."

In Japan, the government has been quick to signal its interest in rebuilding economic and trade ties with Myanmar, which is considered a promising growth market, particularly for infrastructure projects.

When Yoshihiko Noda, Japan's prime minister, met Thein Sein at the Association of South-east Asian Nations summit last November, Mr Noda said the Japanese government would consider wider economic relations with Myanmar. Since then Japan has been reviewing its aid policy towards Myanmar and is expected to announce the resumption of yen loans when Mr Thein visits Japan later this month.

In the private sector, Japan's trading houses are already strengthening their presence in the country, in anticipation of warmer diplomatic ties.

Marubeni Corp was the first to launch a liaison office in Myanmar's capital city of Naypyidaw in January, intending to develop stronger relationships with government officials. Mitsui & Co expects to establish a new office in Naypyidaw by the end of May.

Current EU sanctions expire at the end of the month, requiring European foreign ministers to decide at their scheduled meeting in Brussels in a fortnight which sanctions they will retain. According to one European diplomat briefed on the discussions, the arms embargo will almost certainly remain, but almost all others – which include prohibitions on exports of multiple raw materials as well as visa bans and asset freezes on individuals and companies linked to the military regime – will be up for debate.

Australia has also signalled that it will move to ease sanctions. Bob Carr, the foreign minister, on Wednesday said Canberra was "committed to providing tangible rewards for progress in Burma, including by easing our sanctions"