Donors respond to the Myanmar coup by redirecting funds

Demonstrators at a protest against the military coup in Yangon, Myanmar. Photo by: Aung Kyaw Htet / SOPA Images / Sipa USA

Strong words from leaders globally, including U.S. President Joe Biden, have had no effect on the military coup in Myanmar. The country’s democratically elected leader, Aung San Suu Kyi, along with other top politicians remain in detention. Public protests continue, but the military junta remains in control. The next phase of action in the form of economic sanctions is beginning — and development assistance programs will be the first to be impacted.

New Zealand fired the first shots on Feb. 9. “New Zealand is suspending all high-level political and military contact with Myanmar,” Prime Minister Jacinda Ardern announced in a press conference. “[Foreign] Minister [Nanaia] Mahuta has also directed that New Zealand’s aid program to Myanmar should not include projects that are delivered with or benefit the military Government.” Travel bans on Myanmar’s military leaders and calls for a special session on Myanmar at the United Nations Human Rights Council were also part of the announced actions.

However, the impact on New Zealand’s aid program is expected to be minimal. A spokesperson for the New Zealand Ministry of Foreign Affairs and Trade explained that COVID-19 has seen programs “pivoted to provide support to those whose lives and livelihoods have been impacted by the COVID-19 pandemic.” Aid program activities are currently focused on livelihoods, peacebuilding and reconciliation, and human development outcomes.

“If some countries use strategies that deprive aid to the military but other countries do not, it creates escape routes …”

— Jonathan Liljeblad, senior lecturer, Australian National University College of Law

“None of our current aid funding is provided to or through either the Myanmar government or military,” a spokesperson said. But an audit is being undertaken to confirm this.

“The Prime Minister and the Minister of Foreign Affairs have directed us to ensure that our aid programs do not inadvertently support the military regime. We are currently reviewing all of our activities to ensure that remains the case. There have been no decisions taken to cancel activities at this time.”

Two days following New Zealand’s announcement, the U.S. followed with action of its own — in line with legislative responses to coups. Gloria Steele, acting administrator of the U.S. Agency for International Development, announced in a statement that the agency would be “immediately redirecting $42.4 million of assistance away from work that would have benefited the Government of Burma.” This money will instead go to activities that support and strengthen civil society within the country. This will be a core focus of the $69 million bilateral program, along with maintaining and improving health, food security, independent media, and promotion of peace and reconciliation.

The U.S. Treasury also announced a new sanctions regime on 10 individuals and three entities responsible for or supporting the coup — Myanmar Ruby Enterprise, Myanmar Imperial Jade Co., and Cancri Co. These named individuals and companies will be blocked from accessing any property and interests based in the United States, putting pressure on their ability to fund the coup.

Jonathan Liljeblad, a senior lecturer at the Australian National University College of Law, told Devex that a strategy that “weakens the military and strengthens civil society is an improvement on the past pattern of sanctions,” but warned that the U.S. and New Zealand needed to be conscious of military control on wider Myanmar society.

“The military will be able to control access, meaning they can control which foreign aid actors are able to enter the country. They can also subject civilian aid recipients to increased scrutiny, harassment, or restrictions. As a result, the strategies of foreign aid will have to be fashioned to protect not just the aid agendas but also the civil society recipients.”

More sanctions to come

Expectations are that other countries will follow. “I would be surprised if there weren't moves soon from other Western donor agencies to also cease direct funding to the new military government,” Tamas Wells, a research fellow at the University of Melbourne’s School of Social and Political Sciences, explained to Devex. “We will likely go back to the scenario from 10 years ago with multi-donor trust funds, and a lot of funding going to international and local NGOs rather than the government.”

But to date, there has been no other action from key donors including Japan and Australia. On Feb. 3 in a press conference held by Japan’s Press Secretary Yoshida Tomoyuki, the expected U.S. sanctions were raised without any clear direction that Japanese sanctions would also follow.

“... we have requested the Myanmar military side to restore the process of democratization,” Tomoyuki said. “We will ascertain the developments of all aspects of this. We believe that how the Government of Japan can respond beyond that is an issue we should consider.” But he also said that the “bilateral pipeline to Myanmar” would still be a consideration if sanctions were put in place.

In Australia, a long-controversial defense cooperation program directly funding the Myanmar military remains part of Australia’s development assistance program, according to a recently released Myanmar COVID-19 development response plan. Programs supporting “core state institutions in Myanmar” including the parliament and civil service are also part of development assistance. A spokesperson for Australia’s Department of Defence told Devex it was “reviewing its policies.”

“This includes our modest defense cooperation that funds training in English language and the appropriate use of the military under international humanitarian law,” they said. “This is a rapidly evolving situation and complex situation and Defence will carefully consider all relevant issues before any decisions are taken.”

Requests from Devex to Australia’s Department of Foreign Affairs and Trade for comment on impacts to the wider Australia aid program were not responded to prior to publication.

For Wells, an organization to watch is the World Bank.” They pushed hard to enter the country during the transition but they will be under a lot of pressure to pull out their government connected funding now,” he said.

In delaying or not imposing economic sanctions, Liljeblad warned that the Myanmar military will maintain its control. “Strategies are only good if they are done as a unified front,” he said. “They cannot be unilateral. If some countries use strategies that deprive aid to the military but other countries do not, it creates escape routes whereby the military can avoid pressure.”

Even with sanctions imposed, Wells warned that they may not have the desired impact. “Many would argue that widespread Western economic sanctions were broadly unsuccessful in bringing about any change from the military government in the 1990s and 2000s. The country is more globally interconnected now, so sanctions might have more bite now. But military leaders in Myanmar have shown that they are resilient in the face of international sanctions.”

Where the impacts are likely to be felt, he said, is in domestic civil disobedience and from non-military power brokers who will be unhappy if the economy collapses — the redirection of funds to a civil society free from military oversight will be important in creating domestic pressure.

About the author

  • Lisa Cornish

    Lisa Cornish is a Senior Reporter based in Canberra, where she focuses on the Australian aid community. Lisa formerly worked with News Corp Australia as a data journalist for the national network and was published throughout Australia in major metropolitan and regional newspapers, including the Daily Telegraph in Melbourne, Herald Sun in Melbourne, Courier-Mail in Brisbane, and online through Lisa additionally consults with Australian government providing data analytics, reporting and visualization services. Lisa was awarded the 2014 Journalist of the Year by the New South Wales Institute of Surveyors.