US eases Myanmar sanctions after civilian gov't takes power

WASHINGTON (AP) - The Obama administration lifted sanctions against 10 state-run Myanmar companies and banks Tuesday in response to the Southeast Asian nation's historic transition to democracy, but it retained restrictions on trade and investment with the still-powerful military.

The Treasury Department also amended regulations to support trade and financial transactions, intended to coax more U.S. investment and support economic growth under the new civilian government in the country also known as Burma.

Ben Rhodes, the deputy national security adviser, said that by easing sanctions, the U.S. wanted to demonstrate that there is a "dividend" for making the transition from "dictatorship to democracy."

A new government took power in April after the party of former political prisoner Aung San Suu Kyi swept historic elections, ending five decades of direct military rule. But the military retains political clout and major economic interests.

"Our actions today demonstrate our strong support for this political and economic progress while continuing to pressure designated persons in Burma to change their behavior," Adam Szubin, acting under secretary for terrorism and financial intelligence, said in a statement.

The U.S. waived its longstanding bans on investment and trade in 2012 after Myanmar began political and economic reforms, but has retained restrictions on dozens of companies and individuals designated by Treasury's Office of Foreign Assets Control because they oppose reform, or are implicated in human rights abuses and military trade with North Korea. The U.S. also prohibits arms trading and business with companies majority-owned by the military.

The U.S. business lobby complains that despite the easing of the broad economic sanctions, doing business remains difficult in Myanmar, one of the last major untapped markets in Asia.

Although several major U.S. firms like Coca-Cola, General Electric, Chevron and Caterpillar are now operating in Myanmar, U.S. investment of $248 million represents less than 1 percent of total foreign investment there, a much lower proportion than in other Southeast Asian countries.

Several U.S. lawmakers welcomed President Barack Obama's decision to renew Tuesday his authority to impose sanctions under the International Emergency Economic Powers Act.

New York Democratic Rep. Joe Crowley and Ohio Republican Rep. Steve Chabot said they remained concerned about attacks against ethnic minorities and the military's institutional power.

"Renewing the sanctions authority while easing some sanctions sends a clear message that the United States continues to stand in support of true democratic reform in Burma," the lawmakers said in a statement.

Democratic Sen. Ben Cardin was also supportive. He said Myanmar "is making meaningful political and economic progress, but its future remains uncertain."

Rhodes said the military continues to have "disproportionate influence" over the legislative process, control of key ministries and parts of the economy, and the new government will need to address those issues to continue its democratic transition.

Under the current, junta-era constitution, the military controls the ministries for defense, home affairs and border affairs, and 25 percent of parliamentary seats. Rights groups say stateless Rohingya Muslims and other minorities still face repression.

In a sign it was keeping up the pressure, Treasury said it was adding six companies to its list of Specially Designated Nationals, or SDN, that are barred from U.S. business dealings. The businesses are owned 50 percent or more by Stephen Law and Asia World Co. Ltd, a conglomerate he heads. Law had ties to the former ruling junta and has been accused of involvement in the drugs trade.

The administration eased some bureaucratic requirements for U.S. businesses.

Treasury extended indefinitely a sanctions workaround it announced in December, allowing trade-related transactions with designated companies which run ports and transportation services. Among the beneficiaries of that measure is Law's Asia World, which runs Myanmar's main port in Yangon.

The administration is also preparing within weeks to increase from $500,000 to $5 million the threshold of U.S. investment in Myanmar that requires reporting to the State Department, according to U.S. officials who briefed reporters on condition of anonymity under ground rules set by the administration.

Dealings are now permitted with all Myanmar banks which have either been removed from the SDN list or been covered by waivers. The three that were taken off the list Tuesday are Myanma Economic Bank; Myanmar Foreign Trade Bank; and Myanma Investment and Commercial Bank.

The following state-run companies were taken off: Myanmar Timber Enterprise; Myanmar Pearl Enterprise; Myanmar Gem Enterprise; No. 1 Mining Enterprise; No. 2 Mining Enterprise; No. 3 Mining Enterprise; and Co-Operative Export-Import Enterprise. Treasury said these companies are organized under civilian ministries or no longer exist.

However, administration officials said a ban on the import of jade and rubies, one of Myanmar's most lucrative industries, remains in place.