Oral Testimony of Arthur T. Downey
Vice President, Baker Hughes Incorporated

on behalf of the National Association Of Manufacturers
before the Senate Foreign Relations Committee
Subcommittee In East Asia And Pacific Affairs
February 26, 1998

Rather than address US unilateral sanctions in the context of all Asia, I would like to narrow the focus to the US sanctions against Myanmar. Within that case study, I will comment on: (a) process, (b) attitudes which need to be changed, and (c) steps the US should take in the short run.

I. Process

US policy toward Burma/Myanmar was set in legislation that was enacted on September 30, 1996, as part of an Appropriations Bill [Section 570 of the Foreign Operations, Export Financing and Related Programs Appropriations Act, the Cohen-Feinstein amendment]. This Foreign Relations Committee did not have a role in developing that statement of policy. There were no hearings by this Subcommittee. Of course, it is possible that the result would have been the same, but it is more likely that the expertise and judgment that reposes in this Subcommittee, and the Committee as a whole, would have resulted in a more informed and sounder statement of policy. Thus, the first process failure took place within the Congress, where the appropriate institutional framework was ignored.

The Administration acted on April 22, 1997, when the Secretary of State announced the Presidentís intention to impose a ban on new US investment in Burma. At the press conference announcement, there was no coherent explanation of this new action, aside from the judgment that the "repression by the military authorities of the democratic opposition in Burma has deepened since the enactment of the legislation" the previous September.

Certainly there was no rationale put forward as to why the US had failed to get any other nation to agree with our assessment of the situation, or the Administrationís reasons for believing that somehow this sanction would bring about the desired results. (In response to a serious question from the press about policy hypocrisy--the comparison of the virtual eradication of political dissent in China where there are no sanctions, on the one hand, in contrast to imposition of sanctions against Burma where legal political opposition parties are permitted though restricted--the Secretary offered a glib sound-bite: "different strokes for different folks".)

It is hard to locate an event that provoked the announcement, but clearly the timing in relationship to ASEANís consideration of Myanmarís bid for membership could not have been worse for the stated US policy of keeping Myanmar out of ASEAN. In effect, the US announcement forced ASEAN to announce the decision to admit Myanmar.

A month after the Secretaryís announcement, the President issued the Executive Order [E.O. 13047] prohibiting new investment in Burma. Aside from relying on the legislation of the previous year, the President invoked the International Emergency Economic Powers Act. The President determined that "the actions and policies of the government of Burma constitute an unusual and extraordinary threat to the national security and foreign policy of the United States." The President declared a national emergency to deal with that threat.

Obviously, there was no factual basis for such a finding, and so the invocation of emergency powers was an abuse. Regrettably, this has become commonplace in this Administration, but other Administrations have engaged in the same practice. I urge the Committee to review the abuse of this emergency authorization. Last December, the President submitted a report to Congress concerning the national emergency, and he affirmed the emergency again. I urge the Committee to hold hearings to explore that December report, and then to advise the Administration that there should be no further reliance on this emergency authority after the current termination in May.

It has now been more than nine months since the publication of the Executive Order, and there still are no implementing regulations from the US Treasury Department. Why is that important? In the absence of implementing regulations, responsible US companies err on the side of extreme conservatism in interpreting the Executive Order--and that causes a competitive harm, because companies walk away from opportunities because of the lack of clarity of the US sanctions. The absence of these regulations results from either gross incompetence or from a conscious decision by the administration to impede US business even beyond the published sanctions. I would encourage the Committee to look into this issue--why, after all this time, are there no regulations. Perhaps you should hold a hearing on the first anniversary of the sanctions, in April or May, and invite the Administration to explain why their word processors fail to work.

In addition to the investment ban of last year, the US imposes the following sanctions against Burma: suspension of aid, withdrawal of GSP and OPIC, an arms embargo, blocking assistance from international financial institutions, visa restrictions on senior leaders and downgrading the US representation in Myanmar from Ambassador to Charge. And, on top of that list, there are also state and local sanctions relating to any commercial dealings with Burma.

The result has been to isolate the US from Burma. Our sanctions are a wasting asset that has not assisted in moving the Burmese authorities in the direction we would like. Our sanctions policy is at odds with virtually all Asian governments who pursue "constructive engagement"--which, ironically, is virtually the same policy as the US pursues with North Korea, Vietnam and China.

There has been positive movement in Burma since the US sanctions, but not because of them: in July, the military leadership met with NLD Chairman Aung Shwe. These steps were in response to the prompting by the ASEAN countries and Japan--not in response to the US sanctions. In late September, the authorities permitted the NLD to hold its party congress (over 700 members) on Aung San Suu Kyiís compound. And, Burma has taken steps, however limited, to counter narcotics production and trafficking.

II. Change in Attitude

In approaching sanctions and Myanmar, it will be important for the US policy makers to make some changes in attitude:

First, we ought to understand that our policy toward Burma should not be viewed as a morality play in only black and white colors.

Second, we must recognize that this impoverished country has suffered from thirty years of self-imposed isolation, and that many of the ugly aspects of the current regime are a reflection of those years. Only by helping to bring Burma into the rest of the world can there be sustained and genuine improvement.

Third, the US must understand that we do not have the ability to further isolate Burma; we can only further isolate the US from activity in Burma.

III. Short Term Steps

Here are some specific steps the US ought to take in the short run:

1. We ought to increase the official US representation in Burma, especially in the information, educational and political areas. This is exactly the time we should be expanding the US Embassy in Yangon, including benefiting from a full Ambassador. Downgrading US representation is self-defeating.

2. We ought to remove our blockage of World Bank funding, and that of other international financial institutions, with respect to primary healthcare and education in Burma at a minimum. (Last November, at a briefing hosted by Senators McCain and Robb, three former US ambassadors proposed that step.) This action should be taken for humanitarian as well as political reasons. There is simply no moral basis for depriving the Burmese people of those basic needs.

3. We ought to reverse our policy of not assisting the Burmese authorities in their fight to suppress narcotics. It is hypocritical for the US to criticize the Burmese for not doing enough while at the same time we refuse to provide any assistance. This step is clearly in the interests of the US.

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