The United States on Wednesday imposed sanctions on two banks used by Myanmar’s defense ministry and ruling military government to buy weapons and other goods from foreign countries.
The U.S. Treasury Department said in a statement that the military relies on foreign sources, including sanctioned Russian entities, to buy and import weapons, equipment and raw materials for their manufacture to support its “brutal repression.”
Washington has accused the Defense Department of importing at least $1 billion worth of goods and supplies since the military leader’s 2021 coup that seized power.
State-owned Myanmar Foreign Trade Bank (MFTB) and Myanmar Investment and Commercial Bank (MICB) were also sanctioned. The finance ministry said they allowed revenue-generating state-owned enterprises, including the Myanmar Oil and Gas Enterprise (MOGE), to enter international markets.
These banks receive and transfer foreign currency for the Myanmar government.
“The Burmese military regime has used state-run access to international markets to import weapons and materiel, including from sanctioned Russian entities, to continue its violence and repression”.
Since Myanmar seized power in a coup in 2021, the United States and other Western countries have imposed multiple rounds of sanctions on Myanmar’s military leaders, overthrowing the democratically elected government led by Aung San Suu Kyi and killing thousands of opponents in the crackdown.
Before the announcement, a spokesman for Myanmar’s junta said it was not concerned about any new sanctions.
Zaw Min Tun told state media MWD on Tuesday that the country had experienced sanctions before and that Myanmar’s state-owned banks would not face losses if new sanctions emerged.
He said the US was “doing this only to cause economic and political difficulties”.
“These things would cause unnecessary delays as we move toward a multiparty democracy.”
Bangkok Business News quoted Thai sources as saying the sanctions would hit Thailand and other countries in the region economically because of their ties to local banks.
The U.S. embassy said it had regular conversations with the Thai government about Myanmar, including how to mitigate the impact of sanctions on Thailand or other countries.
The sanctions on the banks, while not targeting gas projects, a key source of revenue for the junta, could affect the junta’s ability to fund its war against minorities and insurgents, experts said.
A February report by Earth Rights International said the two banks were “foreign exchange vaults” for the Burmese government and were now under the control of the junta.
Earth Rights says the junta relies on foreign currency to buy jet fuel, small arms production parts and other supplies that cannot be purchased in kyat.
“Thus, sanctions against the MFTB and MICB could significantly cut off the junta’s access to foreign currency, especially if combined with strong enforcement,” the report said.