US embassy cable - 03RANGOON769

C O N F I D E N T I A L SECTION 01 OF 02 RANGOON 000769 
 
SIPDIS 
 
STATE FOR EAP/BCLTV, EB/ESC, EB/TPP 
COMMERCE FOR ITA JEAN KELLY 
TREASURY FOR OASIA JEFF NEIL 
USPACOM FOR FPA 
 
E.O. 12958: DECL: 06/25/2013 
TAGS: ETRD, EFIN, ECON, BM, Economy 
SUBJECT: LOCAL REACTION MIXED ON NEW BURMA SANCTIONS 
 
REF: RANGOON 4 
 
Classified By: COM CARMEN MARTINEZ FOR REASONS 1.5 (B,D) 
 
1. (C) Summary: The Embassy has received much solicited and 
unsolicited reaction to the impending U.S. sanctions. We've 
heard from foreign diplomats, businessmen, resident U.S. 
citizens, some NLD members, and GOB economic officials. 
Generally people understand our motives, but are very 
skeptical that our choice of action will prove effective. 
Even the bureaucrats seem resigned to the inevitable 
punishment.  The NLD members with whom we spoke support the 
U.S. efforts, though they agree that sanctions imposed 
without the support of ASEAN or China would not be enough to 
force this regime to change its mind on political reforms. 
As for American citizens, the two most specific concerns come 
from long-term residents, concerned about their ability to 
continue living and working here, and from U.S. exporters 
with containers on the docks who are unsure whether they 
should give the order to load. End summary. 
 
The Diplomats 
 
2. (SBU) Both the Korean and French commercial attaches 
requested meetings to discuss pending U.S. trade sanctions. 
The Korean attache raised his concerns about the likely fate 
of around 40 Korean investors who are running garment 
factories.  Garments make up a very large portion of Burmese 
exports to the United States.  He told us that most of these 
investors would have to pack up and try to move on should the 
U.S. market become inaccessible to them.  He said, though, 
that the larger Korean investors (such as Daewoo, which has a 
joint venture garment factory with the Union of Myanmar 
Economic Holdings, Ltd.) would likely remain in Burma, 
attempting to sell more to the European market. 
 
3. (SBU) The French attache was not critical of the new 
possible sanctions, admitting that his government too was 
considering (in the EU context) additional measures.  Both he 
and his Korean colleague understood the reasons the United 
States wanted to take action.  However, they both questioned 
whether the import ban could damage the government when the 
vast majority of garment sector factories and output is in 
private sector hands.  (This is a fact, reported in reftel, 
we've noticed various editorials and NGO press statements 
seem to misunderstand.)  Both pointed out that the import ban 
would lead to factory closures and unemployment at a time of 
pre-existing economic hardship. 
 
The Businesspeople 
 
4. (SBU) Garment factory owners are understandably frightened 
by the likely import ban.  They repeated their oft-heard 
refrain that the garment industry contributes very little to 
government coffers, employs about 100,000 workers (mostly 
women), and is nearly 100 percent private sector.  However, 
they understand that the root of their problems was not U.S. 
sanctions, but inept GOB economic policies.  Other exporters 
of products to the United States (a fishery owner and a 
timber merchant) said they are not really concerned about the 
ban, as their major markets are elsewhere, but scoffed at the 
notion that the new sanctions would have even a psychological 
effect on the country's policymakers. 
 
The US Citizens 
 
5. (SBU) The economic and consular sections have been getting 
a steady stream of calls from U.S. citizens concerned about 
the impact of the pending import ban, and the possibility of 
a travel ban.  In both sections these inquiries have followed 
a familiar thread: What are the details of the new sanctions? 
 Will it hurt my business/ability to travel to, or live in, 
Burma?  As these measures will have no impact on the regime, 
why is the U.S. government imposing them? 
 
6. (SBU) The two most specific concerns come from long-term 
American residents in Burma, concerned about their ability to 
continue living and working here, and from U.S. exporters 
with containers on the docks who are unsure whether they 
should give the order to load.  This latter group fears that 
the sanctions will come into effect while their shipment is 
en route, and Customs in the United States won't accept any 
grandfathering.  When more details are available on these two 
topics, we plan to put out a bulletin to U.S. citizens in 
Burma and hold a town meeting to try and address their 
concerns. 
 
The Opposition 
 
7. (C) We had a chance to brief a few of the remaining free 
mid-level NLD officials on the proposed U.S. sanctions. 
Those with whom we spoke have little economic background, but 
understand sanctions and their use as a policy tool.  They 
were quite supportive of sanctions as a gesture of U.S. 
displeasure with the SPDC and its recent actions.  The 
officials opined that the psychological impact on the regime 
would outweigh the comparatively minor economic damage and 
unemployment (100,000 workers out of a workforce of roughly 
10-20 million) that would be caused by the new sanctions. 
The NLD members support the U.S. efforts, though they agreed 
that sanctions imposed without the support of ASEAN or China 
would not be enough to force this regime to change its mind 
on political reforms. 
 
The Government 
 
8. (C) We also discussed impending sanctions with officials 
of one of the state-owned trade banks, and of the 
GOB-affiliated Union of Myanmar Federation of Chambers of 
Commerce and Industry (UMFCCI).  The UMFCCI official, 
representing Burmese private sector interests, told us he and 
most of the UMFCCI membership understood the motivation for 
sanctions, and who was really to blame for Burma's dismal 
business climate.  He quizzed us carefully on what, if 
anything, could stop the rush toward an import ban.  We told 
him that at this point, nothing short of a significant and 
irreversible step toward political transition (i.e., more 
than just the release of ASSK) would change the direction of 
U.S. policy.  We advised him to use UMFCCI's limited, but 
existent, lobbying power with the SPDC to try and convince 
the regime to take these steps if it wanted a chance to stave 
off the new sanctions. 
 
9. (C) The banker asked for an explanation of all of the 
pending sanctions, but did not seem surprised at our actions. 
 He asked us to keep him apprised of the changing situation, 
particularly as regards the asset freeze, as the two 
state-owned foreign trade banks (Myanmar Foreign Trade Bank 
and Myanmar Investment and Commercial Bank) both have some 
assets remaining in accounts at their U.S. correspondent 
banks.  He said that the bank had not noticed any slowdown in 
the number of Letters of Credit requests at the bank, but 
that he'd heard several bank customers complaining of 
canceled export orders from the United States and Europe. 
Martinez