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The local population invariably pays the price for financial punishment of the regime. So better for the world to directly support communities instead. The decision by Australia in February last year to impose sanctions on 16 members of Myanmar’s ruling junta, as well as two military holding companies, received rare praise from a wide range of Myanmar resistance groups, international activists, and trade unions who had long been dissatisfied with Australia’s Myanmar policy. A year later, in February this year, when two Myanmar government banks and three private companies supplying jet fuel to the military were added to the sanctions list, there were almost standing applause. This is symptomatic of a world where many activists see sanctions on the military regime as the primary measure of “good policy”. Unfortunately, the obsession with sanctions draws attention away from other important issues, notably the nature and quality of international aid to the Myanmar people. Don’t get me wrong. There are strong normative reasons for imposing sanctions on Myanmar’s military rulers. Sanctions signal support for international law and lend weight to the broader policy of ostracising the military regime, which is deeply illegitimate and guilty of mass atrocities. They also provide a measure of symbolic support for the resistance, which has called for sanctions to support their cause. With so many people believing that sanctions are simply the right thing to do, not imposing them also have significant reputational costs for Australia. But as a strategic tool, sanctions are overrated. No Myanmar general is going to be shamed by Western criticism into changing their behaviour or induced by a travel ban to surrender their power and privileges as the resistance demands. In theory, by targeting the flows of arms and finance to the regime, sanctions may weaken the junta’s military capabilities and help tip the balance of power on the battlefield. But the main sources of military revenue are simply out of reach. As the de facto government of the rump state of Myanmar, the junta has inherited the state’s money printing press, as well as its sovereign borrowing rights, and the ability to set foreign exchange rates. Moreover, it is skimming hundreds of millions of dollars annually off the drugs trade and other illicit economic activity through a combination of protection payments and official “whitewashing” of private profits of unknown origin. Sure, sanctions bite. But any pain the military regime feels will invariably be transferred to other groups. Indeed, given the military’s control of key levers of the economy, the term “targeted sanctions” employed by governments such as Australia’s is really a misnomer. Whatever the generals lose in one area, they can take somewhere else. Anyone who thinks sanctions are the solution should take a closer look at daily life in Myanmar. While the population is suffering from run-amok inflation and shortages of vital goods such as medicine, there are no indications that the junta has had to reduce its arms spending. On the contrary, the number of air strikes on resistance forces and local communities continues to rise month by month. But if sanctions aren’t the solution, what is? To answer that question, we need to take step back and look at what is happening on the ground in Myanmar. With the military suffering defeat after defeat on the battlefield and gradually retreating from large parts of the country, resistance groups have started building parallel state structures and providing public services in “liberated areas” outside of central state control. Across Myanmar, new political authorities are claiming jurisdiction to govern significant territories and populations. They are establishing new government institutions; pronouncing better laws and policies; and providing security, health, and education for millions of people. While much of this is still rudimentary, they are effectively building mini states. At the grassroots level, thousands of community-based organisations are delivering humanitarian assistance to conflict-affected populations, while local communities are building their own roads and schools, and hiring their own teachers and nurses. This fragmentation of authority may seem confusing – and even threatening – to many outsiders who see it as a symptom of state failure. But it can also be viewed as the basis for a new kind of state, better suited to unifying and serving Myanmar’s diverse ethnic communities who have suffered greatly from decades of overcentralisation and continuous civil war. When asked, senior Australian government officials invariably say their primary goal in Myanmar is to help its long-suffering population. And many of their critics presumably would agree. By supporting these emerging local governance structures, Australia could help the resistance by increasing its relevance to the daily struggles of local people. It could also help vulnerable communities by expanding humanitarian assistance and basic social services. And it could help the country by supporting longer-term institution-building and establishing the basis for a new federal democratic union. All of this would help the Myanmar people in ways that sanctions never will.