That assessment would raise pressure on the Trump administration to consider new sanctions on a country that had been lauded for its democratic transition.
Tillerson could receive the recommendation as early as this week, said officials familiar with the process. He will then decide whether to adopt the advice of his agency's policy experts and lawyers. At a Senate hearing today, outraged US lawmakers pressed the administration to unequivocally adopt the term.
A declaration of "ethnic cleansing" by the top US diplomat would mark a reversal of fortune in American relations with the country also known as Burma, whose civilian government has been under the leadership of Nobel Peace laureate Aung San Suu Kyi for more than a year.
Patrick Murphy, a senior US diplomat for Southeast Asia, told the hearing: "My bosses have said it appears to be ethnic cleansing. I'm of that view as well." But he added he could not make that call himself until the department finalises its determination.
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"In the meantime, we conclude there have been atrocities, massive displacement, depopulation of villages," he said. "We are pursuing all avenues for accountability."
"If we don't do something to end this cycle of violence with impunity, it will happen again. The next country is going to do it," said Sen Ben Cardin, the Senate Foreign Relations Committee's top Democrat.
He described the crackdown in Rakhine as "genocide," which the UN defines as the intent to destroy, in whole or in part, a national, ethnical, racial or religious group.
The US officials, who weren't authorised to speak publicly on the internal process and requested anonymity, said the State Department won't make a call yet on whether crimes against humanity in Myanmar have occurred. Such a determination would be even more detrimental to Myanmar's military, as it could force the US to push harder for legal accountability.
Calls for a US determination of "ethnic cleansing" have intensified, as the United Nations and leading Western governments have used the term. Six weeks ago, UN human rights chief Zeid Ra'ad al-Hussein said it "seems a textbook example of ethnic cleansing."
French President Emmanuel Macron echoed that opinion, as have leaders of many in the Muslim world.
US officials have been more reticent. Tillerson, who last week said that perpetrators will be held to account for atrocities, has referred to the violence as "characterised by many as ethnic cleansing."
But that's as far as the administration has gone as it prepares for President Donald Trump's first trip to the region next month.
According to the United Nations Office on Genocide Prevention, "ethnic cleansing" isn't recognized as an independent crime under international law, unlike crimes against humanity and genocide.
It surfaced in the context of the 1990s conflict in the former Yugoslavia, when a UN commission defined it as "rendering an area ethnically homogeneous by using force or intimidation to remove persons of given groups from the area." Before the latest exodus, roughly 1 million Rohingya lived in Myanmar.
Sarah Margon, Washington director for Human Rights Watch, said a US "ethnic cleansing" determination "is long overdue," but should only be a first step.
"The real question is what concrete response is there going to be," she said.
Starting in 2012, the Obama administration lifted long- standing sanctions against Myanmar to reward its shift from military rule. The transition culminated in 2015 elections and a civilian government led by Suu Kyi.
US officials who are focused on Asia policy remain leery of punishing Myanmar for fear it could undermine Suu Kyi's efforts and push her country away from the United States and closer to rivals such as China.
The State Department also announced yesterday that all units and officers involved in the operations in Rakhine were ineligible for US assistance, and it has rescinded invitations for senior Myanmar security forces to attend US-sponsored events.