On June 21, the US Department of Treasury imposed the biggest sanction yet to junta Min Aung Hlaing and his administration, State Administration Council (SAC)’s ability to finance their terror campaign by putting two state-owned banks which are in charge of foreign currency exchanges. The statement by the US government reads as follows: “Myanmar Foreign Trade Bank (MFTB) and Myanmar Investment and Commercial Bank (MICB) are state-owned financial institutions in Burma that primarily function as foreign currency exchanges and enable the conversion of kyat to U.S. dollars and euros and the reverse. This conversion allows Burma’s revenue-generating state-owned enterprises, including Myanmar Oil and Gas Enterprise (MOGE), access to international markets using offshore accounts and to transact more easily with foreign entities. While MFTB and MICB allow MOGE and other state-owned enterprises access to foreign markets for revenue generation, these financial institutions also enable Burma’s Ministry of Defense and other sanctioned military entities to purchase arms and other materials from foreign sources”.
With the announcement, the market panics. Within days, the US$ to Myanmar Kyat (MMK) exchange rate which was trading at the levels around MMK2,850 for 1US$ since the last quarter of 2022 reached MMK3,200. Worse, the market fails with no seller and lots of buyers. Since the coup, mismanagement and disregard for economic performance by SAC side, coupled with gradually increasing international sanctions, have strangled the economy, deprived investor confidence, and drove down millions of Myanmar citizens into poverty. On the other side, the generals who dreamt of a country where they can steal at will are now finding increased costs and decreased revenue.
Of all the economic indicators, nothing is more vivid to people’s eyes than the exchange rate. In a country where most of the essential commodities such as fuel and medicine are imported, a fall in MMK means rise in prices of everything. Thus, by the end of June, people became weary that annual jumping of the exchange rate event had arrived early this year. The US$-MMK exchange rate, which was around MMK1300 to US$1 before coup faced two sudden jumps till now: one in Aug/Sept 2021 and another in Aug/Sept 2022. In the 2021 episode, the exchange rate which was declining gradually since the coup suddenly fell from around MMK1,650 to US$1 to approximately MMK2,700 in roughly one week of mania. When the MMK began to turn around, it stabilized at around 1,850 and still higher than before the drop. Likewise, in 2022 episode, the MMK price dropped from around 2,300 to 4,500–5,000 and stabilized below 3,000. The pain and the losses of these episodes are still fresh in people’s mind.
The most devastating blow to people (and disproportionately to the poorest people) is the inflation caused by these sudden fall in MMK. For instance, while the MMK eventually recovered from MMK5,000 to US$1 in less than 10 days, the jump in prices of essential imports such as medicines and commodities did not fall at all until 2023 arrived, and even then the price fall was not proportionate to the recovery in exchange rate. With the sanction on MFTB and MICB creating higher costs for foreign trades and further weakening MMK, there are genuine fears that people of Myanmar would have to bear the cost of sanctions against the junta.
However, the general sentiment of the people of Myanmar on the sanction was that of “Why so little? Why so late?” As opposed to the peace-loving and kind members of the international community who are urging cautions against sanctions to the junta be- cause any sanctions would harm the poor people more, Myanmar people are in favor of putting harsher sanctions against the junta with little regard to their own well-being. At a glance, this seems like madness. What kind of lunacy would compel to favor more poverty over less poverty? However, on a deeper examination, it is a rational desire, and the international community who are reveling at excuses for inaction should heed their voice.
It is true that crippling sanctions are imposed by so-called democratic countries over various authoritarian countries from time to time, and it is also true that ordinary citizens who have no love to authoritarian regimes of sanctioned countries suffer the most. Worse, with dictators generally uncaring to the people, the sanctions usually fail to nudge these authoritarian regimes to soften their stance. Likewise, not a lot of sanctions intended to promote regional stability work well (Has North Korea given up furthering their nuclear ambitions despite sanctions wreaking havocs to their people’s wellbeing?). When a dictator does not care about the people, and when the people are not in a position to challenge dictator’s power, sanctions would only hurt the already suffering people more.
However, in Myanmar, people are challenging the junta’s grip over the country. They are willing to suffer now because there is genuine possibility that the regime would fall. The changes in territorial controls over the country between February 2021 and now reflect how the regime is losing grounds across the country. When the junta’s authority is not as firm, any efforts to stifle its war efforts have concrete potential for regime change.
Despite the call from the National Unity Government (NUG) and other pro-democratic forces of demanding military aids from western democracies by citing Ukraine example, there is no realistic way of this happening because Myanmar is not Ukraine and would never get even 1% of the strategic and media attention Ukraine gets. However, the Myanmar regime is also not Russia and that gives more reason to sanction it effectively. When energy and other major commodity supplier such as Russia could be sanctioned at the risk of disruptions in the global supply chain and global economy, the economic turbulences of sanctioning the Myanmar junta would be paltry to nothing in comparison. For those who are citing all-encompassing compassion towards the people of Myanmar as a reason for not putting further sanctions, similar kindness should be shared towards the people of Iran, Russia, North Korea, and other heavily sanctioned countries whose authoritarian governments have repeatedly demonstrated that they do not care for the people’s wellbeing.
The impossibility of military aid towards people dying for a just future is unfortunate, yet understandable of the practical constraints.
Empowering the Myanmar junta by withholding further sanctions is just hypocrisy.