U.S. urgently needs plan to support reform of Myanmar’s vast, dirty jade trade after Obama announces sanctions lift

Efforts must focus on clearing army companies and families out of sector worth up to $31bn in 2014, and supporting local calls for reform and peace  

After announcing that all economic sanctions on Myanmar will be lifted, the U.S. must urgently set out its plan to support fledgling reforms in the industries that will define the country’s future, said Global Witness today.

The U.S. imposed sanctions on jade during the reign of former military dictator Than Shwe to deny money and power to members of the infamous military junta. President Obama has announced that those restrictions will be lifted despite Global Witness investigations showing that the jade industry still serves as a treasure chest for junta era figures, including Than Shwe himself. Their continuing control of this key industry represents a clear threat to reform and peace-building efforts, and increases the risks of operating in Myanmar for responsible foreign businesses. 

“The U.S. government is dropping one of the best sources of leverage over the former generals, drug lords and military companies who still secretly control critical industries like jade,” said Juman Kubba of Global Witness. “Daw Aung San Suu Kyi’s government has started to reform the sector, but the job is nowhere near complete. The U.S. has invested a great deal, across several administrations, in helping Myanmar turn the page on its past and build a peaceful and prosperous future for its people. This simply won’t happen unless the new government can clear the most notorious figures from that past out of the jade trade – so what is the plan?”

In October 2015 a landmark Global Witness investigation revealed how Myanmar’s vast, murky jade industry was worth up to $31 billion in 2014 alone – equivalent to 48% of GDP for the whole country. Jade: Myanmar’s Big State Secret showed how the trade remains firmly in the grip of military elites, drug lords and crony companies, hidden behind networks of proxy companies and straw men. These elites cream off vast profits while local people see almost no benefit from the exploitation of their most valuable asset. Mining operations have triggered deadly landslides and local protests in Kachin State where jade is mined.

Jade is also a significant driver of the conflict between the central government and the Kachin Independence Army / Kachin Independence Organisation (KIA/KIO), which has claimed thousands of lives and seen 100,000 people displaced since it reignited in 2011. This creates incentives for military commanders and hardliners in government to prolong the conflict and protect their ill-gotten assets, as seen in recent escalations in fighting. Delivering peace in Myanmar is the top priority for the new government – if it is to succeed, it must clear the military out of the jade trade and put a fair and robust resource-sharing agreement at the heart of a new peace deal.

The industry now stands as one of the key obstacles to progress under the new civilian-led government, and its first months have seen important action on jade. It has called a halt to new permits and permit extensions until a reformed legal framework is in place, begun reviewing environmental concerns, and initiated a more inclusive peace process has been initiated. These are important initial steps, but there is a long way to go.

The U.S. has announced that it will be lifting economic and financial sanctions, including the trade embargo on jade and rubies from Myanmar, before the end of the Obama Administration. While this is a major setback to the reform effort, the U.S. has said that it will develop new policies to tackle the disproportionate role of the military in the economy, and the need for transparent and responsible investment and business practices in jade. Before sanctions are lifted, the U.S. must set out a plan to capitalise on the leverage points which remain in supporting the continuing transition to democracy, inclusive development and peace, including:

• Using visa bans which will remain in place to stop notorious figures like former dictator Than Shwe from travelling, along with counter-narcotics sanctions and indictments over key jade players like drug-lord Wei Hsueh Kang
  
• Supporting transparency measures, including making public the real owners of companies in jade and other key industries, through initiatives such as the Extractive Industries Transparency Initiative.
  
• Supporting reform of the legal framework for the jade and gems industry, empowering local people to scrutinise these reforms and helping to ensure management and sharing of these resources is prioritised within the peace process.
  
• Backing reform efforts with new U.S. legislation. U.S. Congress has introduced two bills this week which could set the scene for a new approach to relations with Myanmar.
  
• Building on past U.S. efforts to encourage responsible business by requiring companies to report on their activities, so as to reduce the risk of contributing to harm or suffering reputational damage from involvement in Myanmar’s murky business environment.  
  

The Coca Cola Company has outlined its support for measures to shine a light on Myanmar’s trade sector:

The Coca-Cola Company has been a strong advocate of promoting transparency in business practices in Myanmar through its annual submissions to the U.S. State Department’s Responsible Investment Reporting Requirements, as well as engaging with stakeholders – including government, business and civil society – to encourage transparency and foster greater respect for human rights in Myanmar. Transparency in business practices, through mechanisms like the Responsible Investment Reporting Requirements, have helped guide our ongoing due diligence efforts and are an important vehicle for us to publicly communicate our efforts to support a responsible, safe and vibrant local business that respects human rights.

“The U.S. has decided it was time for sanctions to go – that makes the other tools at its disposal all the more important. Jade is enriching the people with most to lose from reform, fuelling a terrible conflict and depriving the broader population of transformative amounts of cash. Unless the U.S. stays the course in helping to fix this crisis, it can’t credibly claim to have improved the plight of Myanmar’s people,” said Kubba.