Natural resource development should in theory leave a country and its people better off.  But what if the multinational enterprises (MNEs) involved in such projects are connected to forced labor, killings, high-level corruption, and authoritarian military rulers.  Surely this leaves the country and its people worse off!  This is the accusation made by EarthRights International (ERI) made in its reports

“Total Impact” and “Getting it Wrong”of the Burmese activities of oil giants Total and Chevron.

EarthRights International’s claims

ERI’s accusation runs like this.  France-based Total and US-based Chevron are currently partnered with the Burmese military regime in a remote corner of southern Burma on one of the world’s most controversial development projects, the Yadana Gas Project.  This large scale project transports natural gas from the Andaman Sea across Burma’s Tenasserim region to Thailand, where it generates electricity for the Bangkok metropolitan area.  The gas is transported through an overland pipeline that passes through the dense jungle and rugged terrain of a secluded and environmentally sensitive ethnic area in southeast Burma.

From the project’s beginning, the Burmese Army has provided security for the companies and the pipeline and has committed widespread and systematic human rights abuses against local people.  Abuses include: extra-judicial killings, torture and other forms of ill-treatment; widespread and systematic forced labour; and violations of the rights to freedom of movement and property.  ERI alleges that Total has traditionally denied its connections with the Burmese Army in its project area.

In addition, the Yadana Project has been a significant factor in keeping the Burmese military regime financially solvent.  Rather than contribute to Burma’s development, the project has generated $5 billion dollars in revenues for the Burmese government, thereby contributing to high-level corruption.  The revenue is not accounted for in Burma’s national budget and is allegedly stored in two offshore banks in Singapore.  The project also has adverse environmental impacts.

The companies are promoting their “socio-economic” program and claim that it provides economic, educational and health benefits to every person in the pipeline corridor.  While many of the companies’ socio-economic efforts might be desirable in theory, local villagers argue that these programs have not worked the way the companies claim. In any event, these programs do not exonerate the companies from accountability for complicity in human rights violations and do not erase the deeper national impacts connected to the revenue stream from the Yadana Project to the Burmese Government.

In short, ERI accuse the companies of complicity with in the behaviour of the Burmese Army, and criticize their involvement in the project on both ethical and legal grounds.  Further, ERI claims that Total and Chevron’s project has been a leading external contributor to the Burmese military regime’s political intransigence.

Total’s response

Total has published its response to ERI’s allegations, and claims to set the record straight.  According to Total, ERI’s report is based on blurred geographic distinctions.  Total refutes allegations of forced labour in the pipeline area, and of violations of the right to life and security of persons in the pipeline area.  Total claims that freedom of movement in the pipeline area is not restricted, and that property rights are widely respected in the pipeline area.  According to Total, ERI’s allegations concerning the socio-economic program are based on erroneous information and constitute deliberate denigration claim.

Total believes that a responsible MNE can make a positive contribution to the economic and social development of a country experiencing severe internal turmoil.  They strive to implement their projects in compliance with applicable local and international legislation and their own Code of Conduct, the latter being based on three main principles, namely, ethical working practices, mutual understanding with communities in the vicinity of the project, and improving the well-being of local residents.

Total claims that, through this project, it has made a long-term commitment to drive economic, social and community development in Myanmar through: employment of over 800 Myanmar nationals; training local employees; and through its socio-economic program which includes public health, education, microcredit, HIV/AIDS treatment, support to orphanages etc.

What our governments believe

The political relationship between the United States and Burma worsened after the 1988 military coup and violent suppression of pro-democracy demonstrations. Subsequent regime repression, including the brutal crackdown on peaceful protestors in September 2007, further strained the relationship.  The United States has imposed broad sanctions against Burma under several different authorities. In 2003, President George W. Bush imposed new sanctions against Burma including a ban on imports of products of Burma, a ban on the export of financial services to Burma, and an asset freeze against the SPDC and three designated Burmese foreign trade financial institutions.

Congress has renewed this annually, most recently in July 2009.  In addition, since May 1997, the U.S. Government has prohibited new investment in Burma by U.S. individuals or entities (the Yadana Gas Project was launched with a Memorandum of Understanding signed in 1992).  A number of U.S. companies exited the Burma market even prior to the imposition of sanctions due to a worsening business climate and mounting criticism from human rights groups, consumers, and shareholders.

In February 2009 Secretary of State Hillary Clinton announced that the administration would begin a comprehensive review of U.S. Burma policy. The first senior-level meeting between the United States and Burma under the administration’s new policy took place in September 2009. In November 2009, East Asian and Pacific Affairs Assistant Secretary Kurt Campbell traveled to Burma for meetings with government officials, leaders of the democratic opposition including Aung San Suu Kyi, and ethnic minority leaders.

The EU has adopted a softer approach, its sanctions being an arms embargo, cessation of trade preferences, and suspension of all aid with the exception of humanitarian aid.  In contrast, Asian corporations (especially from China and India) have generally remained willing to continue investing in the country and to initiate new investments, particularly in natural resource extraction.

Do US sanctions work?

Many like the Cato Institute argue that these unilateral trade and investment sanctions against Burma are a failure on all fronts.  Sanctions have harmed US business interests, and done nothing to help the living conditions or human rights of the Burmese people.  Burmese citizens have missed out on the many benefits of increased US investment, like technology, better working conditions, and Western ideas.  Further, these sanctions have alienated allies in the region and strengthened the hand of China.

So should Total and Chevron Leave Burma?

There is no easy answer to this question.  Even if sanctions do not work, it is difficult to sympathize with investment that strengthens the hand of corrupt and immoral regimes like the Burmese generals.

References:

Earth Rights International

http://www.earthrights.org/campaigns/eri-releases-french-burmese-translations-total-impact-getting-it-wrong

Total in Myamar – Update 2009

http://birmanie.total.com/en/publications/Total%20_in_Myanmar_update.pdf

U.S. SANCTIONS AGAINST BURMA: A Failure on All Fronts, by Leon T. Hadar

http://www.cato.org/pubs/trade/tpa-001.html

Background Note: Burma.  US State Department

http://www.state.gov/r/pa/ei/bgn/35910.htm

OECD Guidelines for Multinational Enterprises

http://www.oecd.org/dataoecd/56/36/1922428.pdf