* EU praises reforms, urges release of political prisoners
* EU businesses may gain advantage in Myanmar
* Move may pressure US over sanctions
By Adrian Croft and Justyna Pawlak
BRUSSELS, April 17 The European Union is
expected to lift all sanctions on Myanmar next week, except for
an arms embargo, in recognition of the "remarkable process of
reform" in the country, a document seen by Reuters showed on
The EU agreed a year ago to suspend most of its sanctions
against Myanmar for a year in response to a dramatic series of
reforms, but it is now expected to go further by agreeing "to
lift all sanctions with the exception of the embargo on arms",
the document said.
The step, which was agreed by EU ambassadors on Wednesday,
paving the way for ministerial approval on Monday, will allow
European companies to invest in Myanmar, which has significant
natural resources and borders economic giants China and India.
"The EU is willing to open a new chapter in its relations
with Myanmar, building a lasting partnership," said the document
which contains the draft conclusions of Monday's EU foreign
The move could put pressure on the United States, which
suspended sanctions in May last year and allowed U.S. companies
to invest through a general licence. Some American executives
have urged Washington to go further and lift sanctions entirely
to remove an element of uncertainty over their investments.
"The U.S. will no doubt carefully consider the lifting of
sanctions by the EU and the rationale for that step in
determining the next steps that the U.S. takes in relation to
its Myanmar sanctions," said Marae Ciantar, a Singapore-based
lawyer at Allens, an international law firm.
Ciantar, who advises a multinational telecoms company
seeking to invest in Myanmar, said he expects the lifting of
sanctions to give EU companies an edge over U.S. companies.
"Their risk profile for investing in Myanmar will be lower than
that of U.S. companies," he said.
The EU had frozen the assets of nearly 1,000 companies and
institutions in Myanmar and banned almost 500 people from
entering the EU. It also prohibited military-related technical
help and banned investment in the mining, timber and precious
"LOSS OF LEVERAGE"
The United States and other Western countries have been
easing sanctions on Myanmar to reward a wave of political and
economic reforms put in place since Myanmar's military stepped
aside and a quasi-civilian government was installed in 2011.
Under President Thein Sein's reforms, opposition leader and
Nobel peace prize laureate Aung San Suu Kyi, who spent 15 years
under house arrest, has been allowed back into politics and has
made a number of visits abroad.
Myint Soe, a vice-chairman of Myanmar's Federation of
Chambers of Commerce and Industry and head of the Myanmar
Garment Manufacturers Association, welcomed the EU move.
"An important market will be restored for us."
A succession of foreign leaders, including U.S. President
Barack Obama, have travelled to Myanmar, also known as Burma,
and the country is attracting a surge of interest from overseas
businesses keen to enter one of Asia's last untapped markets.
In February, Danish brewer Carlsberg said it was
returning to Myanmar following the easing of international
sanctions which forced it out of the country in the mid-1990s.
While praising moves towards democracy and government
efforts against corruption, the EU document called on Myanmar to
release unconditionally remaining political prisoners.
It also called on the government to deal with inter-communal
violence and take urgent action to deal with humanitarian risks
facing displaced people in Rakhine State, which was swept by
sectarian violence last year that killed at least 110 people and
left 120,000 homeless.
But with the lifting of sanctions the EU could lose some of
its influence over human rights in Myanmar.
"There will be some loss of leverage of the EU over the
Myanmar government," said Sean Turnell, an expert on Myanmar's
economy at Australia's Macquarie University. "To be honest,
though, I am not sure they had much of this commodity anyway."
Sectarian violence erupted in Myanmar again last month and
43 people were killed. Thousands, mostly Muslims, were driven
from their homes and businesses as bloodshed spread across the
central region of the Buddhist-majority country.