On March 25, 2021, the US Department of the Treasury’s Office of Foreign Assets Control (OFAC) placed sanctions upon two Burmese military holding companies, Myanmar Economic Holdings Public Company Limited (MEHL) and Myanmar Economic Corporation Limited (MEC), both of which control significant portions of the country’s economy, including trading, natural resources, alcohol, cigarettes, and consumer goods. The goal of these sanctions is to target the economic resources, or the “financial lifeline” that fuels the Burma military regime. The OFAC reiterates that the sanctions are not directed at the Burmese people and that the US stands with the people of Burma in hopes that one day they can return to a democratically-elected government.
Data shows that MEHL’s profits are distributed to sectors of Burma’s military that are responsible for widespread human rights abuses. The enormous number of shares that are held by divisions of the military, as well as institutional shareholders, are consistently distributed across the armed forces and are used to create “secret slush funds” that the military puts toward its operational budget. The MEC supplies natural resources to the military, as well as operates military factories. The leader of the MEC is Sr. Gen. Min Aung Hlaing, who the OFAC sanctioned on December 10, 2019, for his connection to human rights abuses. In addition, he played a significant role in leading the coup on February 1, 2021.
The MEHL and MEC are designated under Executive Order (E.O.) 14014, “Blocking Property With Respect to the Situation in Burma,” due to being owned and/or controlled by the military in Burma, which is responsible for the overthrow of the democratic government as well as the repression of the Burmese people. Under E.O. 14014, any and all property/property interests of the MEHL and MEC that are in the US or in the possession/control of US persons are blocked and must be reported to OFAC. This includes any entities that are at least 50% owned, directly or indirectly, by one or more blocked persons. Unless an exception is authorized by the OFAC, these regulations prohibit all transactions by/to/for US persons or within, including transiting, the US that involve any property/property interests of any blocked/designated persons. These prohibitions include any goods and/or services, as well as funds, that benefit any designated/blocked person(s).
OFAC is issuing four general licenses under these designations listed below:
- General License 1, “Official Business of the United States Government”
- General License 2, “Official Activities of Certain Other International Entities”
- General License 3, “Certain Transactions in Support of Nongovernmental Organizations’ Activities”
- General License 4, “Authorizing the Wind Down of Transactions Involving Myanmar Economic Corporation and Myanmar Economic Holdings Limited.”