UN expert praises Thai plans to stem banking for Myanmar’s arms trade

Bangkok — The United Nations’ special rapporteur on human rights in Myanmar, Tom Andrews, has told VOA he welcomes Thailand’s plans for a task force to help Thai banks vet business with Myanmar’s military regime for possible arms deals.

Thailand announced the task force last week, nearly a month after a report by Andrews exposed the lead role Thailand’s banks have taken in financing arms purchases for the military regime that ousted Myanmar’s elected government in 2021. The civil war that has followed has claimed thousands of civilian lives.

“It’s a real step in the right direction” and a sign “that Thailand is really taking this seriously and efforts are being made to stop these weapons transfers,” he said in a Saturday interview. 

His report, Banking on the Death Trade: How Banks and Governments Enable the Military Junta in Myanmar, says international sanctions have helped slash the regime’s purchase of weapons through the global financial system by one-third from the 2022 to 2023 fiscal years, which runs April to March, to some $253 million.

The report says those sanctions have also driven most of the regime’s arms-related banking away from Singapore, which clamped down on its banks’ weapons business with Myanmar last year, to Thailand. While the regime’s weapons financing through Singapore over the past fiscal year tumbled from $260 million to $40 million, it says, those through Thailand doubled to $120 million, the most of any country.

Andrews said he hopes the task force will help Thailand follow Singapore’s lead in slashing its arms-related banking with Myanmar’s military regime, which the U.N. and others have accused of war crimes in its bid to put down a growing armed and civil resistance.

“The action that we saw from Singapore was extremely important. And now the process that Thailand is engaged in … is part of an important momentum that I’m hopeful will cut off the means by which the junta can continue to commit these gross human rights violations,” he said.

“We know that as the junta continues to suffer losses, it is responding by intensifying its attacks on innocent people,” he added. “So, it is very important that any and all efforts to stop this be conducted with a great sense of urgency, and I’m hopeful that this task force will convene and act quickly and urgently to address this crisis.”

‘The human rights agenda’

A spokesman for the Myanmar regime could not be reached for comment. The military has previously denied targeting civilians and claims to be taking proportionate action against “terrorists” to restore peace and order.

In its announcement last week, Thailand said its Anti-Money Laundering Office and the Bank of Thailand, the country’s central bank, would be setting up the task force to help commercial lenders investigate transactions that may be linked to weapons purchases for Myanmar’s regime and avoid the taint of any human rights abuses.

In the wake of Andrews’ report, representatives of the Thai banks it named told a meeting of the national security committee of Thailand's House of Representatives that they lacked the capacity to probe all their transactions with Myanmar for possible weapons deals.

The Thai government has not said when the task force would convene or exactly what types of transactions with Myanmar would be off-limits from now on.

A spokesman for the foreign affairs ministry, which announced the task force, said officials will be holding more talks with Andrews before deciding whether and how to urge the banks to change their behavior.

The government has not come out against facilitating any and all arms deals with Myanmar’s military regime, the spokesman, Nikorndej Balankura, told VOA last week.

“But Thailand attaches great importance to the human rights agenda, and of course we do not support the use of violence. So, if we know for sure that the transactions that took place [are] to purchase weapons, our stance would be definitely not to support that,” he said.

Thailand’s goals of kickstarting a sluggish economy, developing its financial sector and repairing its international reputation since emerging from years of military rule itself will give the new task force a strong incentive to stamp out the country’s role in Myanmar’s arms deals. That’s according to Sean Turnell, an economist and senior fellow at Australia’s Lowy Institute with a focus on Myanmar and Southeast Asia, who spoke with VOA.

Thailand may choose to tread more softly than Singapore and avoid telling its banks to cut the Myanmar junta’s lenders off outright, Turnell said.

“But one could imagine a regulator suggesting quietly to a bank that they regulate that, you know, maybe it’s not such a good idea to be doing business with them,” he added.

Looking for alternatives

Turnell also served as an economic adviser to the civilian government ousted by Myanmar’s military and now advises the National Unity Government, a shadow government vying to kick out the junta. He said Myanmar’s military regime will try to find other countries to help finance its arms purchases should Thailand shut it out, the way it turned to Thailand after Singapore clamped down.

“Definitely there will be other takers; they’ll find their way through the cracks. But every time you have to do that you lose some of your ability to do that sort of financing,” he said.

With each move, he said, the regime will have to turn to less globally connected and reputable banks that will charge higher fees, possibly even bribes and kickbacks, for their services.

“As soon as you start leaving major financial centers and major international banks, it just becomes more and more difficult to get these sorts of transactions going,” Turnell said.

Getting shut out of one country after another could also push Myanmar’s military regime into settling more and more of its arms purchases informally, for instance with cash and barter trades that come with their own costs and limitations, Turnell added.

“I’m not sure how many countries are going to want to barter jet fuel for beans and pulses,” said Jared Bissinger, an economist and visiting fellow in the Myanmar program at Singapore’s Institute of Southeast Asian Studies, in an interview with VOA.

With the exception of only natural gas, dried beans have been Myanmar’s main export in recent years, according to World Integrated Trade Solution, a trade data aggregator developed by the World Bank.

“I’d imagine they will continue seeking out ways to make transactions via banks and intermediaries in a range of countries that are less cooperative with enforcement of sanctions,” Bissinger said.

“But this takes time, effort, and money. So, there is certainly some value in the disruptions and resource denials that sanctions cause. Sanctions are a bit of a game of whack-a-mole,” he said, where a problem is solved in one place only to reemerge someplace else.

"But it still hurts the mole when it gets whacked,” he added.