US sanctions on Myanmar gems target key junta funding source

The latest US sanctions on Myanmar target an army-controlled gems business rife with corruption and abuses that is one of the junta's key sources of revenue.

It's unclear if the sanctions will do much to close the taps of income and royalties from gems sales. Some estimates say more than half of such transactions are not declared, even though they are the country's second-biggest export after natural gas and oil.

The rights group Justice for Myanmar on Friday urged the US government to expand penalties to include the Myanmar Oil & Gas Enterprise, which handles the country's largest share of exports.

“It is imperative that other countries follow suit in sanctioning the key businesses enabling the Myanmar military's criminal conduct,” said the group's spokesperson, Yadanar Maung.

The most recent report from the Extractive Industries Transparency Initiative for 2016-17 found that gems, pearls and jade accounted for 13 per cent of Myanmar's natural resource revenues, with oil and gas accounting for 87 per cent.

The sanctions announced Thursday freeze any assets held by Myanma Gems Enterprise in the US or in US jurisdictions and bar American citizens from doing business with it.

The company oversees all gemstone activities in Myanmar, also known as Burma, the Treasury Department said in announcing the latest sanctions against the military leaders who seized power in a February 1 coup.

That includes control of permits for mines, collecting royalties and overseas marketing and sales.

The gems trade is important enough that coup leader Senior Gen. Min Aung Hlaing and Myanmar's central bank governor were among the dignitaries who visited the opening of a gems, pearls and jade emporium earlier this month in the capital, Naypyitaw.

The US and other governments have been ramping up sanctions in response to the coup and a deadly crackdown on mass pro-democracy protests. At least 598 protesters and bystanders have been killed by security forces since the coup and violence has spread from major cities to provincial towns.

Earlier, the administration of US President Joe Biden sanctioned Myanmar Ruby Enterprise, Myanmar Imperial Jade Co., and Cancri (Gems and Jewellery) Co. — other military-controlled traders of gems and other precious stones. U.S. sanctions have also targeted two major military-controlled conglomerates that also have stakes in mining and gems businesses.

The Treasury announcement noted that the sanctions were not intended to penalize Myanmar citizens, in particular artisanal miners who depend on gem sales to survive.

The state-controlled newspaper Global New Light of Myanmar reported that 405 out of 450 lots of jade had been sold by April 7 at the gems emporium for 3.5 billion kyats ($2.4 million).

Separately, it said 317 lots of pearls worth 1.43 billion kyats ($1 million) were sold during the first three days of the emporium, which runs from April 1 to 10.

Official statistics on the gems trade in Myanmar, one of the top sources of jade and rubies, are scarce but previous emporiums netted hundreds of millions of dollars in sales. The sales are usually held three times a year.

The U.S. banned imports of jade and other precious stones from 2008 to 2016 following a previous crackdown on pro-democracy protests. The sanctions were relaxed after military leaders began a transition to a quasi-civilian, popularly elected government in 2011.

Some retailers, such as Tiffany & Co. of the US, have shied away from sourcing gems in Myanmar. But many others have not.

Thailand and China, both countries that have not imposed sanctions on Myanmar's junta, are the main markets for its rubies and jade. But gems often pass through many hands before reaching markets in Europe and the US, making tracing their provenance difficult, according to a report by the Natural Resource Governance Institute, an independent research and advocacy institute that monitors resource-rich countries like Myanmar.

The best rubies, known as pigeon's blood for their deep crimson colour, are often sourced in Mogok, a mining region in northern Myanmar. The report said the military controls the mining in both Mogok and in Mong Hsu, another important source of gems, but an unknown share of the gems is smuggled into China, especially through the border town of Ruili, which has a big jade and gems market.

The trade involves perils, especially for those working on the fringes of the big mines. Jade, especially, is mined with heavy equipment that leaves small pieces in tailings that are piled into huge mounds. Such slopes often collapse, burying people who settled near the mounds to scavenge for the scraps.