Back on the blacklist . . .
The Financial Action Task Force (FATF) is placing Myanmar on its blacklist for failing to rein in illicit trade and other financial crimes, activities that have increased since the country’s military overthrew its elected government in February 2021. The Paris-headquartered FATF, comprising 39 member countries and regional organizations, monitors economies for vulnerability to money laundering and terrorist financing. The only two other countries on its blacklist are Iran and North Korea. While the FATF’s decision will not automatically trigger new sanctions, it will impose reporting requirements that will slow down the flow of money into the country, possibly disincentivizing current and potential investors.
Piling on the pain . . .
The FATF announcement comes when Myanmar’s economy is already struggling due to the lingering effects of the COVID-19 pandemic and the imposition of Western sanctions. To lessen the bite from the sanctions, the military government has strengthened its relationship with Moscow, including by purchasing Russian oil at lowered prices to make up for fuel shortages. And while it has always eyed Beijing with some wariness, the China-Myanmar Economic Corridor, a Belt and Road project linking China’s southwest to the Indian Ocean, is still on track. Nevertheless, it’s not clear that these partnerships will be enough; the World Bank estimates that the economy will grow only three per cent this year, hardly a strong rebound after shrinking 18 per cent last year.
While the FATF tried to insulate humanitarian assistance from the effects of Myanmar’s blacklisting, observers worry that the country’s citizens will still feel the effects. The reporting requirements will also apply to NGOs, including those delivering much-needed aid, and individuals who receive remittances from abroad. The FATF announcement could also accelerate the exodus of foreign companies, including garment factories whose closure would lead to a spike in unemployment. But there may be other security-based or reputational reasons why these companies would be re-considering keeping their business in Myanmar. This week, a military air raid killed 80 people in the country’s north, not only Kachin separatists but also artists and other civilians, prompting the UN to decry the “catastrophic toll” of the military’s actions.
- The Diplomat: International financial watchdog adds Myanmar to blacklist
- The New York Times: Shunned by the West, Russia and Myanmar form a partnership of unequals
- Nikkei Asia: China carves path to Indian Ocean with Myanmar rail network