Despite sanctions, diplomatic pressure, corporate withdrawals, and ongoing proceedings before the International Court of Justice concerning allegations of genocide against the Rohingya population, Myanmar’s military government continues to benefit from one of the country’s most important sources of foreign currency revenue. Natural gas exports remain largely insulated from both the country’s civil war and many of the economic measures intended to constrain the government. This outcome highlights a broader challenge for economic statecraft. While sanctions are often presented as tools capable of restricting access to resources and altering state behaviour, their effectiveness depends not only on legal authority, but also on the structure of the economic relationships they seek to disrupt. Myanmar demonstrates that control over externally anchored energy revenues can sustain governmental capacity even where territorial control is fragmenting, and that regional energy dependence can limit the effectiveness of legal and economic pressure designed to disrupt those revenues.
Much of the analysis surrounding civil conflict assumes a close relationship between territorial control and state capacity. Governments derive state capacity from economic activity occurring within territory they effectively control. As territorial control fragments, infrastructure becomes vulnerable, economic activity is disrupted, and revenue collection declines. The conventional expectation is therefore that weakening territorial control produces weakening fiscal capacity. Myanmar’s natural gas sector complicates that assumption Myanmar’s natural gas sector complicates this assumption because its most important source of foreign currency earnings is not closely tied to territorial control at all.
The country’s largest gas projects, including Yadana, Yetagun, Zawtika, and Shwe, are located offshore and connected directly to external markets through dedicated export infrastructure. Their economic value depends less on conditions within Myanmar than on continued demand from Thailand and China. Production occurs offshore, transportation occurs through established pipeline networks, and revenues are generated through long-term commercial arrangements that remain largely detached from the territorial realities of the conflict. Armed groups may challenge government authority across significant portions of the country, but they are less able to affect offshore production facilities or the infrastructure through which natural gas reaches foreign markets. The result is a partial decoupling of territorial authority and fiscal capacity. While the military government faces increasing challenges in exercising control across parts of Myanmar, it continues to retain access to one of the financial resources most important to its survival.
The significance of the gas sector lies not in production, but in the state’s ability to capture the resulting revenue. The Myanmar Oil and Gas Enterprise occupies a central position within the country’s hydrocarbon sector, linking foreign operators, export purchasers, and the state. As long as this financial architecture remains intact, export earnings continue to provide the government with access to foreign currency despite broader economic instability and diplomatic isolation. The critical question is therefore not whether gas continues to be produced, but whether the financial architecture connecting production to government revenue remains intact. To a significant extent, it does.
The persistence of these revenues is notable because they continue to flow despite extensive international efforts to isolate the military government. Since 2021, numerous governments have imposed sanctions on Myanmar-related entities and individuals. International criticism has been extensive, foreign investment has declined, and major energy companies including TotalEnergies and Chevron announced their withdrawal from the country. Yet the revenue stream most directly connected to the government’s access to foreign currency has proven remarkably resilient. The explanation lies less in the availability of legal mechanisms than in the realities of energy security.
Myanmar’s energy revenues persist not because governments lack the legal authority to target them, but because doing so would impose costs on states that continue to rely on the underlying infrastructure. The principal constraint is therefore not legal authority but energy security. Unlike many sectors traditionally targeted by sanctions, natural gas exports are embedded within regional infrastructure networks connecting producers, consumers, pipelines, electricity generation, and long-term commercial arrangements. Governments can often replace sanctioned suppliers of manufactured goods or financial services relatively quickly. Pipeline gas is considerably less flexible. Alternative supplies require infrastructure, new commercial arrangements, and a willingness to absorb the resulting economic and political costs. Measures capable of reducing Myanmar’s export revenues therefore impose costs extending well beyond Myanmar itself.
Thailand illustrates this challenge particularly clearly. Myanmar has historically supplied a significant portion of Thailand’s natural gas, much of it delivered through cross-border pipeline infrastructure developed over decades. Replacing those supplies would require new infrastructure, alternative commercial arrangements, and higher costs, affecting electricity generation, energy prices, and broader economic activity. Governments therefore face a persistent tension between constraining Myanmar’s military government and preserving their own energy security. The China-Myanmar pipeline corridor similarly forms part of Beijing’s broader effort to diversify energy transportation routes and reduce reliance on maritime chokepoints such as the Strait of Malacca. While China possesses a far more diversified energy portfolio than Thailand, it nevertheless retains strategic interests in maintaining infrastructure that provides alternative access to energy imports. The significance of the corridor therefore extends beyond the commercial value of the gas itself. Infrastructure that contributes to supply diversification, strategic flexibility, and energy security acquires a value that is not easily captured through conventional sanctions analysis. Efforts to disrupt those networks consequently encounter considerations that extend beyond Myanmar and beyond the immediate objectives of sanctions policy.
The challenge posed by energy dependence is not unique to Myanmar. Following Russia’s invasion of Ukraine, European governments sought to reduce Moscow’s hydrocarbon exports while simultaneously maintaining reliable and affordable energy supplies. Although sanctions were imposed and diversification efforts accelerated, implementation proved gradual because decades of investment in pipelines and long-term supply arrangements had created mutual dependence. Measures intended to constrain Russia thus also imposed costs on European consumers, industries, and governments. While the scale differs considerably, Myanmar presents the same structural problem on a smaller scale: energy infrastructure serves multiple stakeholders simultaneously, making revenue streams more difficult to disrupt than policymakers often assume. This helps explain the disconnect between the objectives of sanctions policy and its practical effects in Myanmar. Measures intended to constrain the military government’s access to resources have often left largely untouched one of the revenue streams most capable of sustaining that access. This does not mean sanctions have been ineffective, nor does it suggest that policymakers are unaware of the importance of the gas sector. Rather, it reflects the reality that energy infrastructure can create constraints on economic statecraft that are political and economic rather than legal. The same infrastructure that generates revenue for a target state may also generate incentives for other states to preserve the underlying relationship.
Myanmar’s experience offers a broader lesson about the relationship between energy security and economic statecraft. While discussions surrounding sanctions often focus on legal authority and international coordination, Myanmar demonstrates that the effectiveness of economic pressure depends equally on the structure of the underlying energy relationship. Externally anchored energy revenues can sustain state capacity even as territorial control fragments, while infrastructure that creates strategic dependence can also constrain efforts to disrupt those revenues. As governments increasingly rely on economic statecraft to pursue strategic objectives, Myanmar illustrates that the practical limits of sanctions may be determined as much by energy security as by law.
Photo: “Myanmar Army equipment seized by TNLA near Kyaukme” (2023), by PSLF-TNLA News via Wikimedia Commons. Licensed under CC BY 3.0._)
