YANGON, Myanmar – The image was meant to convey growing friendship between the United States and Myanmar, currently the world’s hottest frontier market.

Flanked by small national flags, Win Aung, the president of Myanmar’s main business association, and U.S. Assistant Secretary of State Jose Fernandez shook hands in Yangon on Feb. 25 and agreed to deepen business ties between their countries.

The awkward part? The United States still dubs Win Aung a “crony” who allegedly used his close ties to Myanmar’s old military rulers to build one of the country’s biggest business conglomerates. He remains on a blacklist of entities U.S. citizens and companies are banned from doing business with.

The handshake illustrates the complex and sometimes contradictory path the U.S. is forging as it tries to encourage new business ties with Myanmar while retaining moral sway over powerful economic, political and military interests it has long censured. Many praise the ethical stance taken by U.S. policymakers and hope that the entry of U.S. companies will help forge a more transparent, less corrupt corporate culture. But some question the effectiveness of Washington’s chosen tools and their effect on the ability of U.S. investors to compete in what has quickly become a hot market.

Unlike the European Union and Australia, which lifted their travel and financial sanctions against Myanmar, the United States has taken what U.S. officials call a “calibrated” approach to retain leverage in case Myanmar’s political and economic reforms get derailed. While Washington has suspended most restrictions, the U.S. still maintains its list of targeted sanctions, bans some people from traveling to the U.S. and blocks imports of specific products.

Fernandez was in Myanmar as part of a U.S. business delegation, the first since President Obama’s historic November visit. The delegation was organized by the U.S. Chamber of Commerce and hosted by Win Aung’s group, the Union of Myanmar Federation of Chambers of Commerce & Industry. More than 50 representatives of U.S. companies – including Chevron, General Motors, Target Corp., ConocoPhillips, Caterpillar, General Electric International, Honeywell and eBay – were scheduled to spend last week meeting with leading businesspeople and government officials in Myanmar.

Win Aung, who also heads the Dagon Group of Companies, with interests in timber, rubber, energy and construction, urged the United States to remove all its sanctions against Myanmar, also known as Burma.

U.S. companies have welcomed the easing of sanctions, but many say the fact that sanctions have been suspended, rather than eliminated, discourages long-term investment and say the welter of remaining regulations is a drain on time and resources.

“You can’t do a lot of direct investment if there’s the specter of it being taken away tomorrow,” said Darren Brooks, senior corporate counsel for Caterpillar Asia. “It’s a little bit of a minefield. We’re trying to tiptoe around it and do things correctly.”

“American corporations are very late in every business sector,” said businessman Aung Aung, whose oil and gas and hotel companies have alliances with Korean, Indian and Russian partners. “Asian countries, like India and especially China, have already dominated the market. It’s difficult for American companies to compete.”

The U.S. ranked 13th in foreign investment in Myanmar as of Jan. 31, according to Myanmar’s Directorate of Investment and Company Administration. The U.S. accounted for just 0.6 percent of approvals by dollar volume – less than the Netherlands, France and Vietnam. China ranked No. 1 with a 33.9 percent share.