EU ready to sanction Myanmar military but keep open trade

A demonstrator takes part in a protest against the military coup in Yangon, Myanmar, February 22, 2021. REUTERS/Stringer

BRUSSELS (Reuters) - The European Union is considering imposing sanctions on Myanmar that could involve targeting businesses owned by the army, EU foreign ministers said on Monday, but the bloc ruled out any curtailing of its trade preferences for the country.

Three weeks after the junta seized power in Myanmar, EU governments want to show support for the daily protests and civil disobedience movement seeking the reversal of the Feb. 1 coup and the release of elected leader Aung San Suu Kyi.

"We are not prepared to stand by and watch," German Foreign Minister Heiko Maas said in Brussels, adding that sanctions could follow if diplomacy failed.

EU foreign ministers released a statement saying they were "ready to adopt restrictive measures", meaning travel bans and asset freezes, and that the bloc was reviewing development cooperation and Myanmar's tariff-free access to the EU.

However, EU foreign policy chief Josep Borrell told a news conference that special trade preferences giving Myanmar tariff-free access to the EU's 450 million consumers would not be withdrawn, to avoid hurting the poorest workers in textiles.

"I am against the possibility of cancelling (trade preferences)," he said, referring to the EU agreement that allows Myanmar to sell goods except weapons tariff-free to the EU.

"We are not going to do that. It would be very damaging to the people, thousands of jobs would be lost, mainly jobs held by women in the textile sector. And it would not harm the military," Borrell said.

EU governments have condemned the coup and EU lawmakers called this month for sanctions. More punitive steps on individuals and on businesses owned by the military are a possibility, Borrell said.

An EU diplomat told Reuters that beyond targeting individuals and asset freezes in European banks, sanctions against conglomerates owned by the military was a possible way forward.

"The Americans have done this already," the diplomat said. "The EU should now think of doing something of the same magnitude to show that this type of parasitic activity is no longer tolerable".

A second EU diplomat confirmed sanctions on businesses owned by the army were a possibility, but that it was too early to have a clear idea what was going to be done.

Although ousted leader Suu Kyi has lost favour with the West because of her defence of the military over allegations of genocide against at Myanmar’s Rohingya population, she has the firm support of the EU, and foreign ministers reiterated calls for her release on Monday.

(Reporting by Robin Emmott in Brussels, Michel Rose in Paris and Sabine Siebold in Berlin, Editing by Timothy Heritage and Hugh Lawson)

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