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July 25, 2012
Concerns Voiced over Easing Burma Investment
    by Robert Kropp

An executive order lifting ban on investment in Burma allows US companies to enter the country's energy sector, raising concerns over lack of transparency and ties to the military.


Earlier this month, President Obama issued an executive order lifting the ban on investment in Burma that had been in place since the military takeover of the government almost 30 years ago. Noting steps toward reform undertaken since Thein Sein became President in 2011, Obama said, "Responsible investment will help facilitate broad-based economic development, and help bring Burma out of isolation and into the international community."

But by extending investment to US energy companies, Obama broke with Nobel Peace Prize recipient Aung San Suu Kyi, the activist who after decades of detention by the military junta won a seat in Burma's legislature in April. She has expressed concerns about US companies engaging with the Myanmar Oil and Gas Enterprise (MOGE), citing a lack of accountability as well as continuing ties with Burma's military.

In his statement on the easing of sanctions, Obama acknowledged concerns "about the lack of transparency in Burma's investment environment and the military's role in the economy."

According to the Democra tic Voice of Burma, "US firms must adhere to strict reporting guidelines to encourage greater responsibility and transparency and those entering into investment agreements with MOGE must notify the State Department within 60 days."

Burma's Minister of Industry insisted that the country was prepared to implement the Extractive Industries Transparency Initiative (EITI), an international coalition that calls for improved governance in resource-rich countries through disclosure of company payments and government revenues from oil, gas, and mining.

But limitations to the effectiveness of EITI in countries such as Burma can be found in the involvement of Chevron in the Yadana Gas Project, which has been described by EarthRights International as "one of the world’s most controversial natural gas development projects."

"It has been marred by serious and widespread human rights abuses committed by pipeline security forces on behalf of the companies, including forced labor, land confiscation, forced relocation, rape, torture, murder," EarthRights International stated.

Chevron describes itself as the "longest-serving board member" of EITI, but it has been anything but transparent about its operations in Burma. According to Simon Billenness, a member of the Committee on Socially Responsible Investing of the Unitarian Universalist Association, "Chevron has been fighting tooth and nail against revenue transparency, particularly on a project basis. The company has said it is contractually obligated not to disclose their payments to the regime. EarthRights International actually got a copy of the contract, and there's no provision of that kind. Then Chevron said there is a second contract, which itself is confidential."

Chevron has argued that "the implementation of EITI is a government-led initiative," and states that it has raised the issue of revenue transparency with Total, the French oil company which, as the lead operator of the pipeline project, "has a more direct relationship with the government."

But the degree to which Chevron's payments to the Burmese government has only served to enrich the country's military and its cronies was described by Billenness. "The payments that Chevron makes to the military regime are booked under the regime's exchange rate of six kyat to a dollar, when in reality in the marketplace it's several hundred to a dollar," he said. "What that means is that it helps the regime launder the money. The regime can channel over 95% of those payments wherever they want."

At this year's annual general meeting, a shareowner proposal requesting that Chevron disclose its criteria for investment in high-risk countries such as Burma received the support of more than 25% of the shares cast.

Nevertheless, Chevron and other members of the US-Asean Business Council wasted little time in traveling to Burma just day's after Obama announced the easing of sanctions.

"This historic mission is the culmination of years of effort by the Myanmar government, with the support of Asean, the US government, and international business, to move toward economic and political reforms," said Alexander Feldman, president of the US-Asean Business Council. Myanmar is the name for Burma promoted by the military since 1989; despite Feldman's use of the name, the US government does not recognize it.

Other companies from the oil and gas sector that joined the delegation to Burma were ExxonMobil and Halliburton.

In a statement, four human rights groups—Freedom House, Physicians for Human Rights, the US Campaign for Burma, and United to End Genocide—expressed "grave concern regarding the US government's decision to allow investments into businesses connected to the Burmese regime that are corrupt and help to fuel human rights violations."

Arguing that "investment in many of the most attractive sectors of the Burmese economy is likely to worsen the human rights situation while directly benefitting individuals and entities responsible for rights abuses," the rights groups stated, "What little progress has been accomplished in Burma…is being undermined by failures in US decision-making."

Last week, the Senate Finance Committee voted to maintain a ban on imports from Burma for three years. Chairman Max Baucus said that reauthorizing the sanctions was designed to "maintain pressure on the Burmese government to undertake reforms."

 

 
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