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    EU Expected to End Myanmar Sanctions


    By SHIBANI MAHTANI

    European Union foreign ministers were
    expected permanently to end sanctions against Myanmar on Monday, recognizing
    the country’s transition from military dictatorship to a civilian rule that has
    released thousands of political prisoners, improved freedom of expression and
    made efforts to maintain peace with armed ethnic minority groups.

    Though the EU planned to leave an arms
    embargo in place for one more year, ending other sanctions would highlight
    strengthening international support for the long-isolated Southeast Asian
    nation, despite allegations from human-rights groups that authorities are
    failing to stem abuses against minorities, particularly Rohingya Muslims who
    have been driven from their homes by tens of thousands of extremists from the
    Buddhist majority.

    EU ministers were expected unanimously to
    endorse the removal of sanctions late Monday at a meeting in Luxembourg. The
    arms embargo would be reviewed after another year. Ambassadors from EU member
    states had indicated over the past week that a year-old suspension of sanctions
    would be made permanent.

    European leaders had warned last year that
    the suspended sanctions could be reimposed at any time, and they pressed for
    vigilance over the pace of change, as encouraged by opposition leader Aung San Suu Kyi.

    Removal of sanctions, analysts say, should
    encourage investment by European companies who have spent the past year
    researching opportunities in what has been Asia’s most talked-about frontier
    market.

    The U.S. has lifted the bulk of its sanctions
    in stages over the past year, permitting its companies to invest and allowing
    imports from Myanmar. Still, the Treasury Department forbids U.S. citizens from
    business dealings with 100 or so Myanmar citizens termed as “Specially
    Designated Nationals” and considered cronies of the former military
    regime. Companies with operations in the U.S. risk running afoul of U.S. sanctions against
    these individuals.

    Fully removing EU sanctions would show how
    quickly momentum has built toward rewarding President Thein Sein‘s nominally civilian government,
    with much of the West hesitant to undermine the sweeping political and economic
    reforms he has undertaken, despite the serious eruption of ethnic violence and
    the failure of authorities to stem it.

    On Monday, Washington, D.C.-based Human
    Rights Watch alleged the government was complicit in “coordinated
    attacks” on Muslim neighborhoods and villages in Rakhine state, in
    southwestern Myanmar, where more than 100 ethnic Rohingya Muslims have been
    killed and an estimated 125,000 displaced by mob violence over the past year.
    Much of Myanmar’s Buddhist majority regards the Rohingyas as noncitizens.
    Thousands of Rohingyas have fled the country in rickety boats in recent years,
    with many drowning.

    Human Rights Watch has labeled the violence
    as a campaign of ethnic cleansing and accused the government of not doing
    enough to prosecute perpetrators, giving Buddhist extremists incentive to
    attack Muslims elsewhere, such in central Myanmar, where clashes in March killed at least 43 people and
    displaced thousands. Myanmar’s government spokesman didn’t immediately reply to
    requests for comment.

    Officials from the United Nations have warned
    of a possible humanitarian crisis when expected monsoon rains hit Rakhine state
    in May, possibly causing widespread flooding in crowded refugee camps. Tensions
    remain high in the region. Only 4% of Myanmar’s estimated 60 million people are
    Muslims, but tensions have been highest in areas where they are more numerous,
    such as Rakhine, where they make up about one-quarter of the population.

    For European investors, practical concerns,
    including infrastructural hurdles and an untested legal environment, may weigh
    more strongly when choosing whether to enter Myanmar’s nascent market despite
    the lifting of sanctions.

    European business leaders cautioned that an
    immediate influx of investment is unlikely as companies continue to watch for
    political stability, with elections due in 2015, along with improvements in
    infrastructure.

    “We won’t see changes from one day to
    the other, but we consider it the very important first step to be made,”
    said Sofia Bournou, an adviser in the international affairs department of
    Business Europe, which is a coalition of industry federations from throughout
    the continent. “EU companies will be happy to invest once the situation is
    clear.”

    Nomita Nair, a partner at the international
    law firm Berwin Leighton Paisner with significant Myanmar experience, said the
    current human-rights situation is only one reason businesses might choose to
    wait before making significant investments, citing “practical operational
    issues and the ease of doing business” which still remain trickier than in
    other emerging markets.

    The EU has been trying to calibrate its
    response to Myanmar’s unfolding changes, announcing a €150 million aid and development
    package last year. The bloc also opened an office in Yangon, Myanmar’s
    commercial capital, last April, and Thein Sein recently visited Brussels, where
    he encouraged EU leaders to lift all sanctions. EU officials have also proposed
    allowing Myanmar goods duty-free and quota-free access to the European market.