[co-author: Jamila Cambridge]
- On February 11, 2021, in the first deployment of sanctions since assuming office, President Biden issued EO 14014, authorizing sanctions against members of the Burmese military and related parties responsible for a coup d’état carried out in early February. OFAC immediately designated 13 SDNs, including six current and former military officers who led the coup, four members of the new government established by the military and three military-owned business entities. On February 11 and February 17, the Commerce Department also implemented additional restrictions on certain exports or reexports to Burma, including the elimination of four license exceptions that were previously available for Burma.
- The actions taken by the Biden administration so far represent a targeted approach, attempting to pressure those specifically responsible for the coup, while also providing time for U.S. allies to consider taking further action in a multilateral effort. While U.S. persons are generally prohibited from dealing with these SDNs and entities that they own by 50 percent or more, they may still engage in economic activity with Burma generally.
- EO 14014 provides broad and flexible authority for the U.S. government to target in the future any political subdivision, agency, or instrumentality of the government of Burma, or individuals and entities determined to, for example, operate in the Burmese defense sector.
On February 1, 2021, the Burmese military effected a coup d’état (“the coup”) to seize control of the civilian government, declaring invalid the results of Burma’s 2020 election and deposing democratically elected members from Burma’s ruling party, the National League for Democracy. In response, on February 11, the Biden administration announced a series of U.S. actions, including sanctions on individuals and entities related to the military, restrictions on the export of certain items to Burma, and freezing more than $1 billion of Burmese government funds held in the United States.
These are the first substantive actions that the Biden administration has taken in response to the coup specifically and more generally to sanction a foreign regime. As President Biden has noted and administration officials have reiterated, the administration aims to impose a cost on the military leaders responsible for the coup while avoiding inflicting any unnecessary damage on the Burmese people and private sector. At the same time, the Biden administration has been “in frequent contact” with “likeminded allies and partners in the region” such as Japan and India, reflecting an effort, as Secretary of State Antony Blinken has stated, to “galavaniz[e] other [U.S. allies] into collective action” with regard to the coup in a multilateral way.
The United States already has limited economic ties with Burma, and some observers warn that overly burdensome sanctions could leave Burma open to even greater influence from China. The United States has spent significant time and effort in recent years attempting to bring Burma closer to a free and open democracy, and we can expect that the Biden administration will be careful not to unwind the progress made in U.S.-Burma affairs since the easing of comprehensive sanctions in 2016.
Overview of EO 14014
On February 11, 2021, President Joe Biden issued Executive Order (EO) 14014, “Blocking Property with Respect to the Situation in Burma,” which authorizes sanctions on any foreign person or entity determined by the Secretary of the Treasury, in consultation with the Secretary of State:
- To operate in the defense sector of the Burmese economy or any other sector of the Burmese economy.
- To be responsible for or complicit in, or to have directly or indirectly engaged or attempted to engage in:
- Actions or policies that undermine democratic processes or institutions in Burma
- Actions or policies that threaten peace, security or stability in Burma
- Actions or policies that prohibit, limit, or penalize the exercise of freedom of expression or assembly by people in Burma, or that limit access to print, online or broadcast media in Burma
- The arbitrary detention or torture of any person in Burma
- Other serious human rights abuse in Burma.
- To be or have been a leader or official of:
- The military or security forces of Burma
- The government of Burma on or after February 2, 2021
- An entity that has, or whose members have, engaged in any of the sanctionable activities noted above as listed in subsection (a)(ii) of the EO
- An entity that is blocked pursuant to the EO as a result of activities related to the leader’s or official’s tenure.
- To be a political subdivision, agency or instrumentality of the government of Burma.
- To be a spouse or adult child of any person blocked pursuant to the EO.
- To have materially assisted, sponsored or provided financial, material or technological support for, or goods or services in support of any person blocked pursuant to, the EO.
- To be owned or controlled by, or acting for or on behalf of, directly or indirectly, the military or security forces of Burma or any person blocked pursuant to the EO.
February 11, 2021 SDN Designations
On February 11, 2021, the U.S. Department of Treasury’s Office of Foreign Assets Control (OFAC) designated the following individuals and entities pursuant to EO 14014:
- Six current and former military officers who led the coup in Burma:
- Commander-in-Chief of the Burmese military forces Min Aung Hlaing
- Deputy Commander-in-Chief of the Burmese military forces Soe Win 1
- First Vice President and retired Lieutenant General Myint Swe
- Lieutenant General Sein Win
- Lieutenant General Soe Htut
- Lieutenant General Ye Aung.
- Four members of the newly established State Administrative Council (SAC):
- General Mya Tun Oo, who was appointed Minister of Defense
- Admiral Tin Aung San, who was appointed as Minister for Transport and Communications
- Lieutenant General Ye Win Oo, who was appointed Joint Secretary of the SAC
- Lieutenant General Aung Lin Dwe, who was appointed Secretary of the SAC.
- Three business entities that are owned or controlled by the military:
- Myanmar Ruby Enterprise
- Myanmar Imperial Jade Co., LTD
- Cancri (Gems and Jewellery) Co., LTD.
As a result, U.S. persons are prohibited from dealing with such persons, as well as entities that they own, directly or indirectly, by 50 percent or more, absent authorization from OFAC. All property and interests in property of the Specially Designated Nationals (SDNs) that are in the United States or in the possession or control of U.S. persons are also blocked and need to be reported to OFAC. Additionally, any person that provides material assistance or provides financial, material or technological support for, or goods or services to, any of these SDNs or entities that they own by 50 percent or more could be at risk for sanctions designation under EO 14014.
The Biden administration has stated that these sanctions “need not be permanent,” indicating that it would consider lifting such sanctions if Burma’s military were to “restore power to the democratically elected government, end the state of emergency, release all those unjustly detained, and ensure peaceful protestors are not met with violence.”
Export Control Restrictions
The Department of Commerce’s Bureau of Industry and Security (BIS) separately announced measures restricting exports or reexports of certain items to Burma. Effective February 11, BIS applied a presumption of denial for license requests for the export or reexport to Burma’s Ministry of Defense, Ministry of Home Affairs, armed forces and security services of items subject to the Export Administration Regulations (EAR) that are controlled for export to Burma. In addition, BIS revoked certain previously issued licenses to export or reexport to these departments and agencies, and it suspended four license exceptions under the EAR that were previously available to Burma: Shipments of Limited Value (LVS), Shipments to Country Group B countries (GBS), Technology and Software under restriction (TSR), and Computers (APP).
In its announcement, BIS also noted that it is assessing additional actions, including: (1) adding Burmese persons to BIS’s Entity List, which would generally prohibit the export, reexport or transfer of items subject to the EAR to these listed persons; (2) adding Burma to the list of countries subject to military end use and end user (MEU) and military intelligence end use and end user (MIEU) restrictions; and (3) downgrading Burma’s Country Group status in the EAR, which would require licensure for more items subject to the EAR to be exported or reexported to Burma, regardless of end user.
The recent sanctions and export control restrictions are intended to place immediate pressure on the individuals responsible for the coup and entities connected to them, while at the same time providing an opportunity for a multilateral approach to develop with respect to Burma. U.S. persons must cease business activity with these SDNs, as well as any entity owned 50 percent or more by these SDNs. To this end, U.S. persons operating in Burma or doing business with entities connected to Burma should conduct enhanced diligence on the ultimate beneficial owners of their business partners to determine whether they may be restricted from engaging such partners in accordance with OFAC’s 50 percent rule, and non-U.S. persons that engage in business with these blocked persons should be mindful that continued business could potentially put them at risk for sanctions under EO 14014. Furthermore, companies that previously exported or reexported goods, technology or software to Burma subject to the EAR under License Exceptions LVS, GBS, TSR and APP will now need to seek an export license from BIS to continue such activities.
While the EO only explicitly names the defense sector of Burma in the EO as a target of sanctions, OFAC has discretion to target other economic sectors in the future. As a result, U.S. persons involved with the energy, mineral, mining and manufacturing sectors in Burma, among others, should pay especially close attention, as these sectors tend to have larger degrees of ownership by Burma’s military. Moreover, as the U.S. continues to designate Burmese military officials, U.S. persons should be mindful that their interactions with nonsanctioned Burmese state-owned enterprises do not involve these sanctioned individuals. For example, OFAC takes the position that U.S. sanctions prohibit a U.S. person from entering into a contract signed by a SDN, even if the SDN does so on behalf of a nonsanctioned entity.
Notably, while EO 14014 authorizes sanctions against any “political subdivision, agency, or instrumentality of the Government of Burma,” this does not indicate that all property and property interests of the government of Burma are automatically “blocked,” e.g., as we saw in the Venezuela context in August 2019. Rather, this authority allows OFAC and the State Department broad flexibility and discretion to increase pressure on the government of Burma as necessary as events on the ground unfold. Given the broad authority of the U.S. government to expand sanctions against the government in the future, companies should determine the extent to which their activities involve the government of Burma and assess the impact that additional sanctions against the government could have on their business activities.
1 Hlaing and Win had already been designated as SDNs by OFAC in December 2019, pursuant to the Global Magnitsky sanctions authorities.