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There are no technical difficulties about the transfer of US dollars into and out of Burma, but normally transfers must not be routed via New York. By mistake, such routings will no doubt be made, transfers will be blocked and funds seized. Provided traders have taken steps to issue appropriate instructions to banks, it is the latter who will have to pay compensation when mistakes are made.

When the latest US sanctions were imposed, there was quite a flurry in Burma and in the region as traders and local banks sought to clarify the situation. With the typical banking caution, some foreign banks, even those represented in Rangoon, declined to accept Letters of Credit denominated in US currency. For purely practical reasons there has been a move to euros, but this is likely to be o­nly a transitional arrangement as banks and traders around Southeast Asia will work out alternative routing procedures to avoid US controls.

Burmese experience with the euro as a trading currency may well encourage them to persist with this alternative. There has been some temporary disruption, but the panic is already over. I discount altogether the prospect that the EU might, under British pressure, seek to disrupt the utilization of the euro by Burma. Britain, which is not even in the euro-zone, would not waste its time o­n such folly.

Vietnam faced far worse US sanctions until 1994, but US foreign asset control regulations issued under the 1917 Trading with the Enemy Act failed to stop, or even seriously to inhibit the transfer of US currency to Vietnam.

US sanctions, designed to be punitive, will however have disturbed some countries, in Southeast Asia particularly. They are aware that some of the sponsors of the latest sanctions are dead keen o­n regime change, not o­nly in Burma, but in Cambodia as well. There is also a lobby in the US in favor of regime change in Vietnam and Laos. Asean countries will be increasingly wary of US intentions. Malaysia’s Dr Mahatir will no doubt have some crisp words to say at the right time. Britain has already had its fingers burnt over its uncritical acceptance of the US case for war in Iraq, and must be wondering whether they would be wise to join up with the US over Burma as well.

Germany continues to be doubtful of the effectiveness of further sanctions against Burma, while France, Austria, Portugal and Italy continue to feel some unease. The latest US intervention will have increased their doubts. In this, they will be joined by China and Russia. It would be very sad if the main result of US sanctions against Burma were to be a line-up reminiscent of the split over Iraq—with the US and UK at odds with the rest of Europe, and with China and Russia as well.

The latest US sanctions against Burma have indeed stirred things up, but when the waters eventually settle you may well find that the US is now perceived in Southeast Asia primarily as the bully-boy bent o­n regime change, with Burma as its first target. Some Asean countries may well be wondering whether they might be next in line.

It would have been more sensible and constructive for the US to have nurtured Asean misgivings over Burmese intransigence than to have raised doubts in Asean minds about US interventionist intentions. Asean countries no doubt feel that they need to continue to exert political pressure o­n Burma to resolve the impasse over Daw Aung San Suu Kyi, but I think it unlikely that US and UK endeavors to persuade them to apply economic sanctions as well will have any success. Vietnam, Indonesia, Cambodia and Laos have already experienced "punitive" US sanctions. Burma has now joined the club.

The Burma activist lobby in the US has, I fear, overplayed their hand. So determined were they to get back at the regime at almost any cost that they failed to look at the broader regional picture and put things in a balanced context. The sanctions card has now been played. Their initial elation will, I predict, be followed by growing disillusion.

Derek Tonkin, Guildford, UK  [Top]

On the Chinese Tango

September 23, 2003—Pho Thar Aung’s commentary "Tango with China" (Online, Sept 16, 2003) gives an interesting historical background o­n China-Burma relations.