Bad Business for Burma

The Burmese pro-democracy leader Daw Aung San Suu Kyi recently urged Western nations to maintain economic sanctions against Myanmar, where the world’s longest-running military dictatorship is tightening its repressive ways: Over 2,000 prisoners of conscience languish behind bars in squalid conditions, while arbitrary arrests and detentions, extrajudicial killings, torture and other abuses continue to be widespread and systematic, particularly in ethnic areas.

Nevertheless, Mrs. Aung San Suu Kyi’s message is not without controversy. It comes just weeks before the European Union will revisit its hotly debated sanctions policy, and a few disquieted Western policymakers, corporate executives and think tanks are advocating for economic engagement with the reclusive generals and their cronies. Sanctions policy is not only antiquated, ineffective, and hurtful to the Burmese people, they argue, it also gives the upper hand to China, which is sending companies to Burma with abandon, especially for big-ticket energy projects tapping natural gas reserves.

Beijing has at least 16 oil and gas companies invested in 21 onshore and offshore projects in Burma, far more than any other country. Until now, there’s been very little information available about these projects, the largest of which are dual gas and oil pipelines under construction from western Burma to the Chinese border, led by the state-controlled China National Petroleum Corporation and Korea’s Daewoo International.

Passing rugged mountains, dense jungles, arid plains, important rivers and a number of contested territories and population densities in Burma, the 500-mile-long pipelines will enable Beijing to bypass the vulnerable Strait of Malacca and supply gas and oil directly to landlocked Yunnan Province.

Leaked documents and clandestine interviews with affected populations along the project route in Burma confirm that the Burmese military is responsible for guarding the pipelines and related infrastructure, and for committing serious human rights violations in connection to the projects.

The most common violation so far is land confiscation and forced or coerced evictions. Families have been stripped of their means of subsistence — their land — with little or no compensation, making them instantly more vulnerable to the trappings of poverty and abuse in the militarized state.

“I don’t have enough rice for my family,” said one farmer who lost the land his family cultivated for generations. “I worry for my family.”

Violent abuses are also happening. “They blindfolded me and put me in a car,” an Arakanese man reported, referring to Burma’s Military Intelligence, “I’m not sure where they drove.” This man was tortured brutally for four days in a windowless room before standing trial on trumped-up charges with no defense lawyer.

Not that legal representation would have mattered. In proceedings that he says lasted five minutes, a Burmese judge sentenced him to six months in the notorious Insein Prison, where he survived appalling conditions before going into hiding. His crime: leading two community-level training sessions to raise awareness about the pipelines.

Unsurprisingly, in a multitude of interviews, not one villager expressed support for the pipelines.

Perhaps of greatest concern for Burma’s development is that the projects will generate billions of dollars annually through gas sales, taxes, fees, royalties and production bonuses. If the past is any judge, those revenues will accrue to the military rulers and serve to widen the gap between the haves and the have-nots. Burma already ranks as the world’s second most corrupt country, beating only Somalia, according to Transparency International, which publishes a widely cited corruption perception index.

Barring targeted action from the international community, revenues from these pipelines will likely remain outside the national budget and tucked away in offshore bank accounts held in trust for the military rulers and their closed network of political and economic elite. Despite billions of dollars in export gas sales already coming in, new schools and hospitals are few and far between in resource-rich Burma, but luxury homes and expensive cars for the ruling elite and their families abound.

As sanctions policies are revisited, Western oil and mining companies shouldn’t assume they have the answers for Burma’s development or that they can do better than China. No matter how well intentioned a company may be, no matter how responsible, constructing new energy projects in Burma’s contested ethnic territories with the backing of the Burmese Army is bound to be violent, and enormous revenue flows into military coffers will do more to perpetuate authoritarianism than to promote positive change, regardless of where those revenues come from.

Barring meaningful political changes, new energy projects in today’s Burma are simply not good business — for China, the West, or the people of Burma, regardless of any sanctions policy.

By Matthew F. Smith, a senior consultant with EarthRights International, which represented Burmese plaintiffs in Doe v. Unocal Corporation.

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