Myanmar Posco Picture

How Transnational Corporations are rendering Myanmar’s Sanctions Ineffective

4. Mar 2022

By Zac Goldfinch, MA Graduate in Global Development from University of Leeds

1 February 2022 marked a full calendar year since Min Aung Hlaing’s Tatmadaw (the Myanmar military) stormed the Presidential Palace, citing dubious claims of election fraud and reinstated stratocracy in Myanmar. Back on 18February 2021, the UK, in tandem with the US, EU, New Zealand, and Canada, issued a set of sanctions intended to limit the capacity and strength of the junta following an onslaught of violent suppression of protests fighting for the reinstatement of National League for Democracy government. The sanctions included freezing assets of key military officials and barring key Tatmadaw businesses from trading. In an interview with me, British Minister Mark Garnier, PM Johnson’s trade envoy to Brunei, Thailand, and Myanmar, explained the sanctions were decreed following the coup to restore the process of democratisation through diplomacy and minimise the economic impact upon citizens. To make the sanctions more effective, leading individuals were targeted in order to ensure they did not flee the country or have access to offshore accounts.

However, one year later and the junta is showing no signs of a return to democratisation or halting their brutal suppression of pro-democracy activists. Latest figures suggest that over 1,500 people have been killed and thousands arrested since the coup d’état.[1] The continued conflict and instability draws questions on the efficacy of the sanctions. I put forward here the leading factor rendering the sanctions ineffective is the role of transnational corporations (TNCs). Sanctions have been in effect since the coup, yet TNCs have managed to continue or establish trade with the Tatmadaw, despite the international community’s efforts to curtail funding. Moreover, TNCs who have been found trading have faced next to no consequences for breaching the sanctions.

‘Follow the Money’

The NGO Justice for Myanmar likens the Tatmadaw to a cartel, similar in nature to the Colombian drug cartels which had their heyday in the 1980’s. Their work has lifted a veil on the funding of the Tatmadaw and how the use of interdependent businesses enables the junta to trade internationally, evading the sanctions placed upon them. The map is a vast web of international business deals, all leading back to funding for the junta.[2] The Tatmadaw has three main operations that are directly linked to an intertwined web of industries: MEHL (Myanmar Economic Holdings Limited), MOGE (Myanmar Oil and Gas Enterprise) and Myanmar Economic Corporation (MEC). Each of these ventures leads further down a trail to various subsidiaries involved in diverse industries – from natural resources like gas, oil, and raw materials to hotel developments, rice fields, and vehicle production. A UN 2019 report shows the vast breadth and depth of the military’s business interests.[3] Tatmadaw’s funding through private interests dates back to 1962, when General Ne Win first established military rule through a coup in a troubled post-colonial state. This set a pivotal precedent in which the Tatmadaw saw self-sufficiency through enterprise as a necessity to maintain economic and military dominance.[4]

Crucially, the military’s business model would not have been successful without the help of foreign transnational corporations such as POSCO, a major South Korean conglomerate that is not subject to sanctions. The role of TNCs enable the Tatmadaw’s diverse portfolio of enterprise to continue to trade internationally escaping western economic isolation. Businesses who are based in sanction issuing states can evade any repercussions for trading with Myanmar exports due to intermediaries. Justice for Myanmar share details of how various businesses are continuing to fund the Tatmadaw through POSCO – examples include pension funds from Sweden, the Netherlands, and Canada.[i] For instance, Första AP-Fonden of Sweden, a national pension fund, has been shown investing in POSCO’s Myanmar operation thereby enriching the Tatmadaw through a chain of business.

Moreover, a lack of transparency through conglomerates and subsidiaries has been another path to evade sanctions. As recently as February 4th 2022, independent media outlet Myanmar Now has exposed a trade deal where Telenor, a Norwegian telecom giant (54% owned by the Norwegian government), is set to sell its subsidiary stake in Myanmar’s telecom industry to an EU[1] sanctioned military-linked conglomerate.[6]. Shwe Byain Phyu, the conglomerate in question has a long established history with the Tatmadaw including gem mining.[7] Justice for Myanmar writes that Telenor has refused to confirm either the involvement of the military-linked conglomerate in the deal or the legal entity they are selling to, which draws alarming questions of transparency. [8]

Notwithstanding, vested interests from an array of international businesses within sanction issuing states have continued to flaunt the international policy in favour of advantageous trade deals. The full extent of sanction evading trade is not entirely known but more of the web is slowly becoming uncovered such as a US luxury yacht builders’ import of over 1,700 tons of teak from Tatmadaw owned subsidiary.[9]

Can Sanctions be a Saviour?

Undoubtedly, international sanctions thus far have not been successful enough to cause any significant damage to the Tatmadaw as intended. If the international community is maintaining diplomacy as the best means of conflict resolution, sanctions must be stronger to create a strict economic isolation to topple the regime. Having issued a third round of sanctions against the Tatmadaw at the end of January 2022, the international community has acknowledged the meagre impact of the sanctions thus far.[10] The latest sanctions have increased the number of individuals and business leaders whose assets have been frozen. However, we have yet to see any consequences for the businesses who are funding the Tatmadaw despite the sanctions. The sanctions must be better enforced, while the businesses complicit in funding the regime ought to face repercussions for breaking the sanctions. Ultimately, it is high time the international community prioritizes preventing yet another catastrophic loss of human lives over recouping investment and maintaining revenue. This work starts from home: identifying and punishing sanction violators that trade directly with Tatmadaw or via intermediaries.

[1] Although Norway are not an EU member, they are still subject to the sanctions due to the European Economic Area membership




[4] McCarthy, G., 2019. Military Capitalism in Myanmar: Examining the Origins, Continuities and Evolution of” Khaki Capital” (No. 6). ISEAS-Yusof Ishak Institute.