On Monday, during a fundraising event in Geneva, the European Union pledged new funds for Rohingya Muslim refugees fleeing violence and persecution in Myanmar’s Rakhine state and crossing the border into Bangladesh.

The EU promised an additional US$35.4 million to assist displaced Rohingya in Bangladeshi camps. This year, Brussels has already channeled $24.8 million into an international aid program for them. These sums will be used to care for 900,000 Rohingya refugees and 300,000 vulnerable local people from Bangladesh’s border region with Myanmar.

From 2007 to 2016, the EU gave Dhaka with $44.9 million worth of humanitarian aid for Rohingya refugees. Since 2010, Brussels has also granted $90.4 million for people in need in Rakhine state. The bloc’s humanitarian intervention focuses on providing water, sanitation, food, shelter, healthcare, education and protection to affected populations.

Rohingya are considered stateless people in Myanmar. Their situation worsened last August, when the Arakan Rohingya Salvation Army (ARSA), an insurgent group suspected of links with radical Islamist outfits active in South and Southeast Asia, attacked national army positions in Rakhine state.

The Myanmar military retaliated against ARSA insurgents, but also targeted Rohingya civilian communities, according to the United Nations and many international humanitarian organizations. Since then, nearly 600,000 Rohingya have sought refuge in Bangladesh.

The European grouping is ready to take additional measures if the situation on the ground does not improve

The EU has urged all parties to stop committing acts of violence. As well, it has called on Naypyidaw to allow complete humanitarian access to Rakhine state and the safe and voluntary repatriation of refugees. In light of what it calls a “disproportionate use of force” by Myanmar’s security forces, the EU Council decided last week to suspend contacts with Myanmar’s senior military officers, including Commander-in-Chief Min Aung Hlaing, and reassess all practical defense cooperation with the Southeast Asian country.

Reimposing trade sanctions

The European grouping is ready to take additional measures if the situation on the ground does not improve. In a resolution adopted last month, the EU Parliament proposed using trade policy as a tool to exert pressure on Myanmar’s leaders. The scaling back of commercial relations will inevitably block negotiations for an investment protection agreement between Brussels and Naypyidaw.

In 2013, the EU lifted economic and financial sanctions on Myanmar after quasi-democratic reforms were put in place by ruling generals, who currently run the country in collaboration with a civilian cabinet controlled by pro-democracy icon and former dissident Aung San Suu Kyi. However, EU leaders have maintained an embargo on weapons and equipment that could be used for internal repression.

Bilateral trade between Myanmar and the EU stood at $1.8 billion in 2016, up from $476.6 million in 2012. According to Naypyidaw’s official statistics cited by the EU Commission, the Union was the fourth-largest foreign investor behind China, Singapore and Hong Kong last year, with investment stocks totaling $4.8 billion.

Furthermore, the EU is an important cooperation-development partner for Myanmar. In 2014, it allocated $811.6 million for the country’s economic and social advancement.

The West’s hesitation

The United States has taken some measures against the Myanmar army, too. On Monday, the US State Department said Washington would withdraw military assistance to Myanmar and that it was exploring the possibility of leveling targeted sanctions.

But despite all their rhetoric to the contrary, both Washington and Brussels have so far been hesitant to reimpose punitive restrictions on the Myanmar government for its treatment of the Rohingya population. While the US government may need Naypyidaw to contain Chinese influence in the region, the European grouping does not want to lose access to a potential market of over 50 million consumers.

Ultimately, Brussels has been betting on Myanmar’s economic growth and political evolution as part of a wider plan to boost trade and investment ties with the 10 members of the Association of Southeast Asian Nations.

In the past, the European bloc has tried to broker a deal between Naypyidaw and the ethnic armed militias challenging the country’s central rule, but the results have been modest. European efforts to end Rohingya suffering are no exception to this.

As a result, also considering the current diplomatic picture, with China and India appearing unwilling to pressure the Myanmar government on the persecution of the Rohingya, the EU will likely opt for a mix of targeted sanctions on individuals and entities and trade and investment overtures. The hope is that such an incremental approach will strengthen Suu Kyi’s power vis-à-vis Naypyidaw’s generals and, accordingly, her ability to manage ethno-religious tensions in the country.