Myanmar hopes for U.S. sanctions move to boost economy

NAYPYITAW, Myanmar (Reuters) - A further lifting of U.S. sanctions on Myanmar, which could come during a visit by officials to Washington this week, would be crucial to opening its long-isolated economy, a senior Myanmar government official said.

Foreign Minister Wunna Maung Lwin meets U.S. officials on Thursday, stoking expectation the United States might announce a further lifting or suspension of sanctions, including investment restrictions, on the country that is also known as Burma.

It is the first official visit by a Myanmar minister to the United States in decades.

"The sanctions are a big problem," Tint Thwin, deputy director general in Myanmar's Commerce Ministry, told Reuters. "If they are lifted there would be an immediate impact."

"The U.S. government sanctions bar bank transactions in U.S. dollars. That is a major problem for us. If they lift the sanctions, we can easily transfer money, so our private sector can grow, invest and do business and immediately increase our prospects."

The comments illustrate a paradox following the most sweeping reforms in the former British colony since a 1962 coup, when it was known as Burma. Many multinational companies are clamoring to invest following its rapprochement with the United States and Europe, but U.S. sanctions remain big barriers.

Washington's sanctions are the tightest imposed on the former junta by Western powers, banning new investment in the country and imports as well as restricting financial transactions and freezing the assets of financial institutions and top government officials.

Since the measures are covered by five federal laws and four presidential executive orders, removing them is complicated.

However, some have been softened.

"LEVERAGE"

In February, Washington announced a waiver of restrictions so that it could support assessment missions and technical assistance by international financial institutions such as the World Bank. In April, the Treasury authorized financial transactions for a range of non-profit projects.

Secretary of State Hillary Clinton said on April 4 the United States was beginning the process of a targeted easing of its ban on the export of U.S. financial services and investment "as part of a broader effort to help accelerate economic modernization". She gave no time frame.

Patrick Murphy, the State Department's deputy special representative for Myanmar, also said on May 11 that Washington was looking at easing more sanctions and that it was likely to appoint a U.S. ambassador in coming weeks. The restoration of full diplomatic links was announced in January.

U.S. Republican Senator John McCain, who has visited Myanmar twice in the past year, said earlier this week that most U.S. sanctions on Myanmar should be suspended.

But he said it was critical to ensure U.S. investment benefited the private sector and the country's people rather than doing the opposite of entrenching a new oligarchy, which could set back Myanmar's development for decades.

"For this reason, I am not convinced that American companies should be permitted to do business at this time with state-owned firms in Burma that are still dominated by the military," he said in a speech to the Center for Strategic and International Studies. "They should align themselves with Aung San Suu Kyi and the Burmese people."

The case for easing sanctions was bolstered by by-elections in April that were deemed free and fair. Aung San Suu Kyi, the Nobel laureate who led the fight for democracy for more than two decades, was among those elected to parliament.

Suu Kyi told an American audience on Tuesday she was "not against" the suspension of sanctions and preferred that to the outright removal of the punitive measures at this point.

Suspending sanctions was a way of sending a strong message of support for reforms while retaining leverage, she told a Washington meeting via a video link.

(Editing by Alan Raybould and Robert Birsel)

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