International Sanctions May Ruin Myanmar’s Opportunity For Change: Joseph Stiglitz

March 14, 2012Myanmarby Joseph E. Stiglitz

International Sanctions May Ruin Myanmar’s Opportunity For Change: Joseph Stigli

Political change in Myanmar has been numbingly slow for a half-century, but a new leadership is trying to embrace rapid transition from within. However, the country is now being held back by the international sanctions that were imposed before its leaders turned away from authoritarianism and isolation.

YANGON – Here in Myanmar (Burma), where political change has been numbingly slow for a half-century, a new leadership is trying to embrace rapid transition from within. The government has freed political prisoners, held elections (with more on the way), begun economic reform, and is intensively courting foreign investment.

Understandably, the international community, which has long punished Myanmar’s authoritarian regime with sanctions, remains cautious. Reforms are being introduced so fast that even renowned experts on the country are uncertain about what to make of them.

But it is clear to me that this moment in Myanmar’s history represents a real opportunity for permanent change – an opportunity that the international community must not miss. It is time for the world to move the agenda for Myanmar forward, not just by offering assistance, but by removing the sanctions that have now become an impediment to the country’s transformation.

So far, that transformation, initiated following legislative elections in November 2010, has been breathtaking. With the military, which had held exclusive power from 1962, retaining some 25 percent of the seats, there were fears that the election would be a façade. But the government that emerged has turned out to reflect fundamental concerns of Myanmar’s citizens far better than was anticipated.

Under the leadership of the new president, Thein Sein, the authorities have responded to calls for a political and economic opening. Progress has been made on peace agreements with ethnic-minority insurgents – conflicts rooted in the divide-and-rule strategy of colonialism, which the country’s post-independence rulers maintained for more than six decades. The Nobel laureate Daw Aung San Suu Kyi was not only released from house arrest, but is now campaigning hard for a parliamentary seat in April’s by-elections.

On the economic front, unprecedented transparency has been introduced into the budgetary process. Expenditures on health care and education have been doubled, albeit from a low base. Licensing restrictions in a number of key areas have been loosened. The government has even committed itself to moving towards unifying its complicated exchange-rate system.

Related: Myanmar Economy

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Related: Myanmar Economic Forecast

The spirit of hope in the country is palpable, though some older people, who saw earlier moments of apparent relaxation of authoritarian rule come and go, remain cautious. Perhaps that is why some in the international community are similarly hesitant about easing Myanmar’s isolation. But most Burmese sense that if changes are managed well, the country will have embarked on an irreversible course.

In February, I participated in seminars in Yangon (Rangoon) and the recently constructed capital, Naypyidaw, organized by one of the country’s leading economists, U Myint. The events were momentous, owing both to large and actively engaged audiences (more than a thousand in Yangon), and to the thoughtful and moving presentations by two world-famous Burmese economists who had left the country in the 1960’s and were back for their first visit in more than four decades.

My Columbia University colleague Ronald Findlay pointed out that one of them, 91-year-old Hla Myint, who had held a professorship at the London School of Economics, was the father of the most successful development strategy ever devised, that of an open economy and export-led growth. That blueprint has been used throughout Asia in recent decades, most notably in China. Now, perhaps, it has finally come home.

I delivered a lecture in Myanmar in December 2009. At that time, one had to be careful, given the government’s sensitivities, even about how one framed the country’s problems – its poverty, lack of rural productivity, and unskilled workforce. Now caution has been replaced by a sense of urgency in dealing with these and other challenges, and by awareness of the need for technical and other forms of assistance. (Relative to its population and income, Myanmar is one of the world’s smallest recipients of international assistance.)

There is much debate about what explains the rapidity of Myanmar’s current pace of change. Perhaps its leaders recognized that the country, once the world’s largest rice exporter, was falling far behind its neighbours. Perhaps they heard the message of the Arab Spring, or simply understood that, with more than three million Burmese living abroad, it was impossible to isolate the country from the rest of the world or prevent ideas from seeping in from its neighbours. Whatever the reason, change is occurring, and the opportunity that it represents is undeniable.

But many of the international sanctions, whatever their role in the past, now seem counterproductive. Financial sanctions, for instance, discourage the development of a modern and transparent financial system, integrated with the rest of the world. The resulting cash-based economy is an invitation to corruption.

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Likewise, restrictions that prevent socially responsible companies based in advanced industrial countries from doing business in Myanmar have left the field open to less scrupulous firms. We should welcome Myanmar’s desire for guidance and advice from multilateral institutions and the United Nations Development Program; instead, we continue to limit the role that these institutions can play in the country’s transition.

Whenever we withhold assistance or impose sanctions, we need to think carefully about who bears the burden in bringing about the changes that we seek. Opening up trade in agriculture and textiles – and even providing preferences of the kind that are offered to other poor countries – would likely benefit directly the poor farmers who make up 70 percent of the population, as well as create new jobs. The wealthy and powerful can circumvent financial sanctions, though at a cost; ordinary citizens cannot so easily escape the impact of international-pariah status.

We have seen the Arab Spring blossom haltingly in a few countries; in others, it is still uncertain whether it will bear fruit. Myanmar’s transition is in some ways quieter, without the fanfare of Twitter and Facebook, but it is no less real – and no less deserving of support.

By Joseph E. Stiglitz

Copyright: Project-Syndicate, 2012

Joseph Eugene Stiglitz is a professor at Columbia University and the recipient of the Nobel Memorial Prize in Economic Sciences in 2001 and the John Bates Clark Medal in 1979. Stiglitz has authored numerous books including Freefall: America, Free Markets, and the Sinking of the World Economy (2010), Globalisation and its Discontents (2002) and Making Globalisation Work (2006). Learn more about Joseph E. Stiglitz and his work at

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