Guest contributor
Igor Blažević
This interview with economist and Myanmar expert Sean Turnell was conducted to explore the main insights and recommendations from Turnell’s report, “The Military, Money, and Myanmar: Breaking the Nexus,” commissioned and published by the Special Advisory Council for Myanmar (SAC-M). It is now available in Burmese.
Turnell, a former economic advisor to Myanmar’s civilian National League for Democracy (NLD) government and one of the most respected international voices on the country’s economy, offers a stark and detailed assessment of how the military junta continues to finance its war of terror.
Despite Myanmar’s deepening economic collapse, the regime maintains access to critical foreign exchange through natural gas exports, forced conversion of remittances, exploitation of the private sector, and control of the banking system.
In this wide-ranging conversation, Turnell outlines:
- How the junta generates revenue through coercive means;
- Why foreign currency access is its most vulnerable point—and the best opportunity for disruption;
- The urgent need for coordinated sanctions on the Central Bank, state and private banks;
- Why odious debt matters and how it can deter foreign financing of the junta;
- How resistance forces and international actors can target the junta’s financial choke points;
- The geopolitical risks of Myanmar becoming dependent on China, and the strategic reasons why the global community should act now.
Turnell stresses that this is a matter of disrupting the junta’s ability to wage war. As he puts it: “It’s no longer about trying to change the junta’s mind. It’s about reducing its ability to fight.”
This interview conducted by Igor Blažević provides not only a sobering diagnosis but also a strategic roadmap for how the international community, financial institutions, and Myanmar’s resistance actors can respond effectively.
Understanding the junta’s source of funds
IB: What are the key sources of income—especially foreign exchange—for the junta at this moment? Despite losing control over significant economic assets, the junta seems far from bankrupt. They continue to escalate the war effort, purchase weapons (including aircraft, helicopters, and drones), and maintain patronage networks. How are they financing all of this?
ST: Let me first say, domestically, the junta can finance itself in all the ways that an organization controlling the state can. That includes taxation and the earnings of state-owned enterprises locally. It also includes control of the Central Bank, which means that if there are no other sources, they can simply print kyat (banknotes).
But you’re right, Igor, to emphasize foreign currency—because the regime needs foreign currency to buy weapons, particularly air-delivered munitions that they cannot produce in Myanmar. So foreign exchange is absolutely key.
Where does the [junta] get that foreign exchange? First, the traditional source for the Myanmar junta has been state-owned enterprise earnings, particularly through energy exports—especially natural gas. There are also other state-owned enterprises that export teak and various other natural resources.
But these days, the major source through which the junta gets foreign exchange is by exploiting the private sector—forcing exporters, such as farmers, to convert their foreign currency earnings into kyat and hand the foreign currency over to the [junta].
Now there’s an even bigger source: the exploitation of private individuals. This primarily comes from Burmese people living and working abroad who remit funds back to Myanmar. This is now the largest single source of foreign exchange for the junta.
Again, it happens through forced conversion of overseas remittances into kyat. That’s now the primary way the junta gets the foreign exchange it needs.
If really pushed into a corner—when all else fails and no other sources are available—a regime like Myanmar’s junta can simply seize physical resources. When desperate, regimes like this will and do steal directly from the people they rule.
IB: Myanmar’s economy continues to deteriorate under military rule. The junta is extracting whatever resources they can to finance the war of terror against the population. Do you foresee a point at which they can no longer extract enough to sustain themselves—go bankrupt? Or is there always something more they can squeeze from the system?
ST: At some point, a regime like Myanmar’s will kill the goose, and I think we are very close to that now. Myanmar’s GDP—its overall economic activity—is now only 50 percent of what it should have been had the coup not taken place.
As the regime has extracted more and more resources and printed increasing amounts of money, economic output has gradually declined. The junta’s share of that shrinking output has increased, but the overall pie is shrinking. They are killing the goose while grabbing more of what remains.
Since the coup, the regime has increasingly relied on printing money as other revenue sources have dried up. That has led to a falling kyat, and at some point, this will reach a breaking point where the monetary economy becomes irreparable.
At that stage, the regime will resort solely to physical extraction of resources. They can continue doing that destructively for a while, but by then, the economy will be completely dysfunctional.
IB: Since late 2024 and early this year, we’ve seen a shift in Myanmar’s neighbors’ approach. Previously, they were largely sitting and waiting, pretending to be involved while doing very little. But recently, they seem to be actively helping the junta survive—not win, but survive as the central government of Myanmar. We see this diplomatically. But does that mean they’re also providing additional financial or economic support?
ST: Unfortunately, yes. In a misguided attempt to pursue stability, some neighboring countries are seeking to accommodate the regime. That’s one motivation.
Another, and worse, motivation is exploitation—taking advantage of Myanmar’s weakened position. A weak, isolated country becomes ripe for “deals.” Unfortunately, countries like China are using Myanmar’s vulnerability as an opportunity for economic and strategic exploitation.
How can the junta’s access to funds be limited?
IB: Let’s now turn to what can be done to constrain the junta’s access to funds and foreign exchange, which are used to finance its war of terror. In your report The Military and Money – Breaking the Nexus, published with the Special Advisory Council for Myanmar (SAC-M), you highlighted several key measures: closing loopholes around Myanma Oil & Gas Enterprise (MOGE), sanctioning the Myanma Economic Bank (MEB), the Central Bank, and private banks, and introducing secondary sanctions. Should efforts focus on specific, high-impact measures now, or advocate for the full package?
ST: The regime has a desperate need for foreign exchange. China and Russia will not accept Myanmar kyat as payment for ammunition. So the junta’s access to foreign currency is the most critical choke point. And this choke point is a package: the Central Bank, state-owned banks, private banks—all the channels through which foreign currency reaches the regime.
Until now, we’ve seen piecemeal sanctions on specific banks or enterprises. We need to shift our mindset. Sanctions shouldn’t just be about punishing or incentivizing better behavior. They should be about disrupting the junta’s ability to finance war.
So yes, I now see it as a package. It’s no longer about trying to change the junta’s mind. It’s about reducing its ability to fight.
IB: If we aim to achieve financial pressure through sanctioning Myanmar’s banking system, this can’t be done without the United States. With Donald Trump in the White House, is there an opportunity—or is U.S. foreign policy now too unpredictable?
ST: Donald Trump is both a plus and a minus. It would be harder to get him to implement the kind of targeted sanctions we’ve seen so far. But there’s an opportunity too: only someone like Trump might make a sweeping decision to impose full-scale sanctions like the ones I’m talking about. Ironically, he might be more likely to do that than someone like former President Biden, who preferred an incremental approach.
IB: Another big recommendation in your report was to unlock Myanmar Central Bank assets that are frozen in the U.S. and make them available to the National Unity Government (NUG). Around the same time, there was global discussion on using frozen Russian assets to support Ukraine. Should we now focus more on sanctions, or shift toward unblocking these frozen assets?
ST: We should do both—but place priority on the choke points first, and pursue the frozen assets in the background.
Let’s say we convince Trump to pursue a choke point strategy. We then have a stronger case to add: “You can help the forces of freedom in Myanmar, and you don’t have to spend a single dollar of U.S. government funds. Myanmar has its own money. It’s just about unblocking it and giving it to people who are your natural allies, anyway.”
So yes, start with the choke points. But definitely pursue the frozen assets too.
IB: Regarding anti-money laundering: has the fight been won, or is continued investigative reporting and advocacy with the Financial Action Task Force (FATF) still necessary? For our audience, could you briefly explain what FATF is, what actions it has taken against Myanmar, and what the practical impact has been?
ST: The Financial Action Task Force, or FATF, is the global body that polices money laundering. Myanmar has been placed on its blacklist. The only other countries on that list are Iran, North Korea, and Venezuela. So that’s a significant step—it means international banks must be extremely cautious when dealing with Myanmar.
But there’s more FATF can do. So far, unlike with Iran or North Korea, FATF has not imposed countermeasures on Myanmar. We can campaign for this.
We can constantly push the idea that the Myanmar junta is a criminal organization that actively encourages and uses financial crime, and FATF should have applied countermeasures to it. FATF countermeasures would pressure other countries to adopt financial sanctions, even if they haven’t yet done so. FATF is a global tool, and we need to use it fully.
IB: If we succeed in getting all Myanmar state and private banks sanctioned, would that prevent people from sending money to family members in Myanmar?
ST: It’s a good question. Yes, some people would be affected. But most people, especially those not connected to the military, already avoid Myanmar’s official banking system. They use informal systems, like [the informal money transfer system] hundi, to send money. So yes, there would be some impact—but less than expected.
Debt, gas, and Myanmar’s strategic resources
IB: You’ve also advocated for a campaign around “odious debt.” Could you explain what that is, and how a campaign could be structured? Who should be targeted, and what should the message be?
ST: Odious debt is the idea that people should not have to repay the debts of tyrants who ruled over them. A dictator may borrow money and use it to oppress their own people. When they fall, why should the victims be stuck paying those debts?
This concept has a long history. Myanmar is a clear case. As the junta issues bonds or borrows from places like China and Russia, we must make it absolutely clear that these debts will never be repaid after the regime falls.
This message is about justice, but also about deterrence. If we say upfront: “These debts are illegitimate and will be canceled,” then potential lenders may think twice.
The message should be: “Stop lending to the junta. Stop buying Myanmar bonds because they will be worthless. You won’t get your money back.”
IB: Has the NUG already declared the junta’s bonds as odious debt?
ST: Yes, the NUG has declared that bonds issued by the [State Administrative Council] will not be honored in a post-junta Myanmar. But we could take this further—extend it to private banks and other financial instruments linked to the junta.
IB: Natural gas exports to Thailand continue to earn money for the junta. Can Thailand be persuaded to stop making payments?
ST: Gas used to be the junta’s biggest source of income. Not anymore. The gas fields are producing less and less, and investment in the sector has collapsed since the coup. Still, we should keep persuading Thailand—remind them they’re buying energy from an unreliable, collapsing, and criminal regime that is generating refugees and instability. Even if gas is declining, it’s still worth the advocacy effort.
IB: The Central Bank of Myanmar recently announced plans to issue a digital currency. What could be the consequences of that?
ST: I’m extremely skeptical. This is just a stunt—a way to look modern and progressive. No one trusts the physical kyat, let alone a digital one. The infrastructure doesn’t exist, and with power outages and no credibility, the whole idea is just absurd.
IB: The junta is trying to join the Eurasian Economic Union (EAEU). If they succeed, what impact would that have on the revolution, and what benefits might the junta gain by joining that bloc?
ST: I’m extremely skeptical about any meaningful benefits from joining the EAEU. These organizations have very little to offer Myanmar, and Myanmar, in turn, has little to offer them—whatever it does sell is usually at bargain-basement prices.
The countries likely to partner with Myanmar in these frameworks are not economic heavyweights. So, from a trade and investment perspective, it’s unlikely to be a game changer. There’s not much of a story here, frankly.
IB: The junta has been earning significant foreign exchange through natural gas and energy exports. Resistance forces are trying to disrupt this but face pressure from neighboring countries. Is there anything more that can be done to stop it from earning that revenue?
ST: That’s an important question. Gas exports are becoming a decreasing share of Myanmar’s foreign earnings, partly due to underinvestment. The junta cannot guarantee the supply through these pipelines, as the pipelines themselves are very vulnerable. But what’s more important is controlling the financial pipelines—the flow of money. If resistance forces and international actors can disrupt the money pipelines, the physical source of that money becomes less relevant. The key lies in controlling financial choke points, especially through banking channels.
IB: Myanmar has significant rare earth resources, and China is monopolizing their extraction. Could we advocate for the U.S. to take an interest in rare earths in Myanmar and get more involved than it has so far?
ST: This is an important point. About 40 percent of the rare earths processed in China actually come from Myanmar. On a recent trip to the U.S., I spoke to people—even within the Trump administration—and there was serious interest in this issue.
This is a strategic point we need to keep highlighting: Myanmar’s importance to the international community. We can’t allow it to fall completely into China’s hands or remain under junta control. The rare earth angle is one of the strongest arguments we have for increased global attention.
IB: Can a future federal democratic government nullify the contracts and MOUs signed by the junta? What would the consequences be?
ST: Yes—based on a long history of international precedents, such contracts can and should be nullified. By sending this message, we are also undermining the junta now.
IB: Is there an estimate of how much foreign currency the Central Bank of Myanmar still has in reserves? Are they getting any foreign currency from China or Russia?
ST: It’s difficult to know the exact figure, but estimates suggest they have around $2 billion USD in foreign reserves—a very small amount by international standards.
As for China and Russia, those are places where the junta spends money rather than earns it, especially for purchasing weapons. While there is some earning from China, much of that occurs through the underground economy. So overall, China and Russia are not major sources of foreign exchange inflows.
IB: Is there anything we haven’t discussed yet that should be emphasized to the international community—especially under the current geopolitical situation?
ST: It all comes down to highlighting Myanmar’s geopolitical importance. We must keep pressing the point that Myanmar cannot be allowed to become a complete dependency of China. This matters to Europe and to the United States.
We shouldn’t overdo it, but stressing that geopolitical aspect is critical, because there are very serious players in America and Europe who will respond to geopolitical arguments—even if they don’t care much about human rights arguments.
Also, Myanmar still has powerful friends—particularly in the U.S. Congress and in European parliaments—regardless of who holds executive power, whether it’s Trump or anyone else.
The key is persistence. Myanmar doesn’t get the media or policy attention it deserves, partly because so much is happening globally. But the liberation struggle of the people of Myanmar remains a compelling and urgent story, and we have to keep reminding the world of that.
IB: The junta is claiming to implement the Myanmar Economic Plan (MEP), which you advised on. Is it the same plan? What’s your view?
ST: It’s bizarre. I’ve seen the document. They’ve slightly changed the title from the one we used in 2020, adding the word “comprehensive.” Otherwise, the document is a total fantasy. It’s a fairy tale, not a real economic policy. No one is convinced.
IB: PTTEP from Thailand is still helping the junta continue earning foreign exchange. Is there any way to apply pressure on such enterprises?
ST: Yes, international advocacy can and should target these companies. PTTEP’s continued cooperation helps the junta sustain its financial base. Pressure campaigns, public awareness, and coordinated sanctions can all play a role in limiting these companies’ involvement.
IB: Will the kyat continue to depreciate? Will it be a slow or rapid process?
ST: Myanmar’s inflation rate is currently around 30 percent. A conservative World Bank estimate projects it will remain at least 25 percent next year. That means the purchasing power of the kyat will be down by 25 percent in a year’s time.
Based on simple economic theory, the kyat will devalue roughly in line with that. With trading partners’ inflation rates much lower, we can expect the kyat to depreciate by about 20 percent in the coming year. If it’s at around 4,500 kyat per U.S. dollar now, it could go to 5,000 or even 5,400 next year.
IB: What’s your advice for how revolutionary forces should present themselves internationally, especially with so many actors and factions?
ST: It’s essential to maintain a balanced, unified voice. The key message should be that there is a credible, democratic alternative to the junta—one that is capable of guaranteeing stability.
Consistency and coordination are key. Emphasize unity. Don’t stop highlighting democratic values. Emphasize strategic geopolitical importance—those are the messages the world understands. And be persistent.
Igor Blazevic is a lecturer at the Educational Initiatives Myanmar and Senior Advisor at the Prague Civil Society Centre.
Sean Turnell is the former economic advisor to Aung San Suu Kyi and the National League for Democracy (NLD) government before it was ousted in a 2021 military coup.
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