Exclusive: Ahead of Suu Kyi visit, Obama weighs Myanmar sanctions relief - sources

[September 03, 2016]  By Patricia Zengerle, Matt Spetalnick, David Brunnstrom and Antoni Slodkowski

WASHINGTON/YANGON (Reuters) - The United States is considering further easing or lifting sanctions against Myanmar around the time of a White House visit this month by the country's new leader, Aung San Suu Kyi, U.S. officials told Reuters.

President Barack Obama is expected to decide on the extent of the sanctions relief after consultations between Suu Kyi and his administration to gauge how far she wants Washington to go in loosening the screws on Myanmar's still-powerful military.

Obama will attend a Group of 20 leaders' summit this weekend in China followed by an East Asia summit in Laos, where Suu Kyi may also be present. She will visit Washington on Sept. 14-15 for meetings with Obama, Vice President Joe Biden, members of the U.S. Congress and business leaders.

Suu Kyi, a Nobel Peace Prize laureate and democracy icon, helped persuade the West to impose sanctions during her years as a jailed opposition leader. She is now trying to strike a balance between showing her people the economic rewards of a democratic transition while keeping pressure on the country's generals for further reforms.

Obama's historic opening to Myanmar followed by its peaceful transition to an elected civilian-led government is seen as one of his foreign policy achievements. But with less than five months left in office, his administration remains wary of giving up leverage for removing the vestiges of military rule.

Suu Kyi's Washington visit would be her first since her National League for Democracy (NLD) party swept into power after November 2015 elections.

Ben Rhodes, Obama's deputy national security adviser, met this week with congressional staffers and told them the president was considering reducing sanctions or removing them altogether, several U.S. officials said.

The U.S. officials spoke to Reuters this week on condition of anonymity.

The White House declined comment.

Washington is eager to expand relations with Myanmar to help counteract China's rise in Asia and let U.S. businesses take advantage of the opening of one of the world's last "frontier markets" - fast-growing but less developed emerging economies.

MILITARY-RUN ENTERPRISES

Most of the remaining U.S. measures restrict business with military-run enterprises, including bans on imports of Myanmar's jade and gemstones, and with black-listed individuals.

Obama has already eased some sanctions on Myanmar, formerly known as Burma, several times. This included the removal in May of state-owned banks from the U.S. blacklist and of measures against seven key state-owned timber and mining firms. But many restrictions were renewed for another year.

President Barack Obama delivers remarks to the Pacific Islands Conference of Leaders at the East West Center in Honolulu, Hawaii, U.S. August 31, 2016. REUTERS/Jonathan Ernst

"We're looking at things related to trade, investment and commerce, and trying to see what can be done to improve the investment environment in Myanmar," a U.S. government source said of the changes being weighed.

These could include adding Myanmar to the Generalized System of Preferences program, which provides duty-free treatment for goods from many poor and developing countries, the sources said.

A key question is how far Suu Kyi wants Washington to go in relaxing pressure on the military, which has a strong hand in politics through a military-drafted constitution as well as an economic powerbase.

"If our bosses are in the room with Aung San Suu Kyi and she says 'I want you to lift all the sanctions,' it is hard to imagine them saying no," a congressional source said, when asked whether members of Congress would go along with lifting U.S. sanctions.

Suu Kyi is barred from the presidency by the constitution drafted by the former junta because her two sons are British citizens. She holds the title of foreign minister, but is Myanmar's de facto government leader.

She and the NLD have been criticized for not doing enough to help Myanmar's oppressed Rohingya Muslim minority.

Some backers of removing sanctions argue that easing Myanmar's international isolation could help improve human rights by boosting the economy.

However, Human Rights Watch called on Friday for the U.S. government to keep sanctions in place to deter the military from derailing democratic reforms.

(Reporting by Matt Spetalnick, editing by G Crosse)

[© 2016 Thomson Reuters. All rights reserved.]

Copyright 2016 Reuters. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.