A lack of letters of credit (L/Cs) may have played a significant role in nudging Myanmar's much-criticised military junta into opening up one of world's least transparent countries.

Over recent months the authorities have made sweeping personnel changes and promised to embark on a "road map" to democracy, moves that appear to have allayed the wrath of Asian leaders who met at the 7-8 October meetings of the leaders of the Association of Southeast Asian Nations (ASEAN) in Bali, Indonesia.

Sanctions catalyst

Perhaps the prime catalyst of recent liberalising changes in the country formerly known as Burma were tough new US sanctions introduced by US President George W Bush.

The sanctions responded to what Washington - and many other governments worldwide - perceived to be draconian measures taken by Myanmar's military junta, including the detention of pro-democracy leader Aung San Suu Kyi and senior leaders of her National League for Democracy party.

Banks' first move

Myanmar responded to the sanctions signed by the US president on 29 July 2003 and previously unheard criticism from regional leaders by appointing on 25 August 2003 a new, and apparently reforming prime minister, Khin Nyunt.

Banks however responded before this date and before the US sanctions became effective on 28 August 2003 by refusing to honour L/Cs issued in dollars.

Dollar shortage

The US sanctions included a ban on Burmese imports to the US, a freeze on the American assets of junta officials, and a visa ban for regime members, their families and close associates.

This combination of measures caused the US dollar to soar and appeared to prompt foreign banks to refuse to accept L/Cs from Burmese financial institutions. Reports emerged that Singapore-based banks including Standard Chartered Bank and HSBC Bank stopped accepting Burmese L/Cs at the beginning of August.

Sources in Burma and Singapore report the banks refused L/Cs from the Myanmar Trade Bank, the Myanmar Investment and Commercial Bank and the Myanmar Economic Bank.

Right direction

US sanctions remain in place but there are signs that the junta's actions over recent weeks are beginning to have some impact. Regional analysts supposed that Myanmar's new leader would have a rough ride at the recent ASEAN summit.

Instead Indonesian President Megawati Sukarnoputri said in Bali that the 10 Asian members believe Myanmar's recent unveiling of its road map to democracy is a step in the right direction.

This article represents the views of the author and not necessarily those of the ICC or any of the other partners in DC-PRO.