Moral Dilemmas: Is the Juice Worth the Squeeze?

Last week I made a presentation to some staff at CSIS on moral dilemmas in the trade area. It was a discussion, not a lecture, so no “right” answers were provided. Indeed, there may not be any, although there is never a shortage of opinions. So, in this column I will reprise some of that discussion, also without providing answers, although my own views may come through. We discussed two issues—Myanmar sanctions and the Covid vaccine waiver issue—but I have discussed the latter previously, so I will only tackle the first one this week.

In the wake of the military coup in Myanmar, the U.S. government has imposed sanctions on various parties on nine different occasions. Some of the parties were individuals, usually those in or associated with the military, including leaders’ children; some were government agencies; and some were businesses, again, usually those with links to the military. It is not uncommon in developing countries for government officials, including military leaders, to play substantial roles in the civilian economy through ownership of companies, and Myanmar is no exception. Two holding companies, Myanma Economic Holdings Public Company Limited and Myanmar Economic Corporation Limited, are military owned and control sizable chunks of the nation’s economy. The sanctions imposed generally involved freezing of assets, prohibiting transactions with the sanctioned parties, or placing them on the Department of Commerce’s Entity List, which means exports to them require a license.

Two of the questions we discussed last week were (1) what is the objective of the sanctions? and (2) will they likely lead to changes in the Myanmar government’s behavior? While there was no unanimity on any question, most people believed that our actions would not persuade the government to change course, and many thought that the primary purpose of the sanctions was to signal our disapproval, a goal which is achieved immediately by the mere fact of taking the action.

If sanctions are taken against individuals, their impact is usually limited to those persons. The dilemma is that when sanctions are taken against a company, they impact not only the owners, who are the targets, but also the employees, whose jobs become collateral damage if the company is harmed. In this case, Myanmar could lose $5.5 billion in foreign investment. A study in May by 10 foreign chambers of commerce showed that 13 percent of surveyed companies had closed down in the country and one-third reported at least a 75 percent reduction in their activity. When the European Union considered similar sanctions several years ago, a study projected that as many as 450,000 apparel workers could lose their jobs over the four years following the imposition of sanctions.

It is not easy to measure collateral damage in a country where data is often neither public nor reliable and where so many people are in the informal economy, but it seems clear that if the U.S. sanctions impact the targeted companies, poor workers will lose their jobs and become poorer, and development in the country will be significantly set back.

The “moral” question for the U.S. government is whether the benefit of sending the signal exceeds the cost of innocent workers losing their livelihoods. If the administration believes that sanctions will cause the Myanmar government to change course, it is easier to justify, and one can argue that is what happened the last time we imposed sanctions on the military government, although it took years to see the result. Our discussion group thought that was unlikely this time around, but a significant number supported the sanctions anyway.

I confess that when I was lobbying on these issues in the past, that always drove me crazy. We would go up to Capitol Hill and explain in some detail why a proposed congressional sanction would not achieve its objective, and the answer would be, “We know that, but we have to do something.” I was always tempted to respond with, “You don’t have to do something stupid,” but I always bit my tongue.

That, unfortunately, has also become part of the dilemma. It is not just, is the juice worth the squeeze? It is also, what if there is no juice? What if we are taking an action that we know will not achieve its objective even while it hurts thousands of poor people? Our collective conscience will not let us ignore outrageous and evil behavior by another government, but in our outrage it is often easy to forget that our sanctions may not work, but they will have consequences.

As I said in the beginning, there is rarely a “right” answer in these cases, but there can be a “right” analytical path to follow. Put aside the moral outrage; decide what your goals are; assess the likelihood that sanctions will achieve them; assess the inevitable collateral damage; and then dispassionately determine whether the potential benefit exceeds the cost—whether the juice is worth the squeeze. If the answer to that is “no,” be prepared to move into politically incorrect territory and condemnation from activists. At that point, just keep in mind all those people whose lives you are not making worse.

William Reinsch holds the Scholl Chair in International Business at the Center for Strategic and International Studies in Washington, D.C. 

Commentary is produced by the Center for Strategic and International Studies (CSIS), a private, tax-exempt institution focusing on international public policy issues. Its research is nonpartisan and nonproprietary. CSIS does not take specific policy positions. Accordingly, all views, positions, and conclusions expressed in this publication should be understood to be solely those of the author(s). 

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