Myanmar Investment: Right or Wrong?

AP Photo: Members of the Burmese community and the Burma Campaign UK group protest in body bags covered in fake blood outside the offices of French company Total Oil in central London in this May, 12, 2006 file photo.

Thursday November 29, 1:41 pm ET
By Thomas Hogue, AP Business Writer

Myanmar Crackdown Rekindles Ethical Debate Over Doing Business With Repressive Regimes

BANGKOK, Thailand (AP) -- The recent crackdown on pro-democracy protesters in Myanmar has rekindled a decades-old debate: Is it morally right to do business in countries with repressive regimes?

Some foreign businesses, including French jeweler Cartier, cut ties with the country after the suppression of the protests in September and October. But others remain, arguing that they help the people of the impoverished country by creating jobs.

France's Total SA contends that cutting off Myanmar, also known as Burma, hurts ordinary people more than it harms the military regime and could hinder moves toward democracy. Total and Chevron Corp., which are partners in a natural gas field off Myanmar's coast, also provide health and social programs for local communities.

"We feel the country would have evolved much more if more responsible companies had remained," said Jean-Francois Lassalle, Total's vice president of public affairs for exploration and production. "Development of human rights goes along with the development of the economy."

More broadly, the arguments form part of a larger debate over whether economic sanctions work.

South Korea has invested in some business ventures in North Korea in an attempt to encourage the communist state to abandon its nuclear weapons programs and open its economy. But Iran has been hit by limited United Nations sanctions for defying demands to freeze uranium enrichment.

In the past, companies and governments wrestled with whether they should do business with apartheid-era South Africa. The effectiveness of that boycott -- which some corporations ignored -- is still disputed.

"This is not a slam dunk kind of debate," said W. Michael Hoffman, the executive director of the Center for Business Ethics at Bentley College in Waltham, Massachusetts.

The United States has banned new investment in Myanmar since 1997, and the European Union has had less stringent restrictions since the mid-1990s. But both allow pre-existing investments to continue, including Total's natural gas operation in the offshore Yadana field. Chevron has a 28 percent stake in the project, which it inherited when it took over Unocal Corp. in 2005.

The approximately $2 billion in gas sold every year to Thailand from the Yadana field and from another field operated by Malaysia's Petronas provides the bulk of Myanmar's foreign exchange earnings.

"Only a few people are benefiting from these investments ... the majority of people are not," said Soe Aung, spokesman for the National Council for the Union of Burma, an umbrella organization based in Thailand for exile groups.

An estimated 90 percent of Myanmar's 54 million people lives on about $1 a day.

But some argue that Western sanctions harden the regime against negotiations for a democratic opening and that they strengthen the influence of China -- which shows little interest in democratic reform -- in Myanmar affairs.

Chevron and Total provide free healthcare to 50,000 people along the Yadana pipeline, where local infant mortality rates are a sixth of the national rate and enrollment in school has doubled due to the creation of 44 schools in 23 villages, Chevron said.

Activist groups call this propaganda.

"Every time we focus on a company doing business in Burma, they throw some money at a local foundation ... and throw some pictures up on their Web site of smiling, happy people," said Mark Farmaner, acting director of the Burma Campaign UK.

"They don't put up pictures of the MIG jets that the generals bought with their first oil and gas paychecks," he said.

Total and former partner Unocal Corp. were accused of cooperating with the military in human rights violations during construction of a pipeline across Myanmar to Thailand in the 1990s. Both companies denied the accusations, though Unocal settled a related lawsuit in the U.S. in 2005.

The top U.N. official in Myanmar says some companies do help ordinary people.

"They (Total) are providing fairly significant support to communities near the pipelines, and probably more support than we do in our support in other parts of the country," said Charles Petrie, the humanitarian coordinator for the U.N. in Myanmar.

Petrie said he sometimes asks the head of Total in Myanmar to raise human rights issues with the government "because I feel the government is going to be less likely to close the door on Total than on us."

Authorities in Myanmar plan to expel Petrie by Dec. 5 for criticizing the regime for not meeting the needs of its people.

Burma Campaign UK has a "Dirty List" of more than 100 companies it says provide income to the government while doing business in Myanmar, including timber and gem companies, and hotel and tour operators. Even the British guidebook company Lonely Planet has been listed for encouraging tourism to Myanmar.

"We want to hit the regime in the pocket," Farmaner said.

Adidas AG, Levi Strauss & Co. and underwear manufacturer Triumph International are among those that have pulled out of Myanmar or won't buy products there.

"The way we view this is as safeguarding our reputation," said William Anderson, head of social and environmental affairs in the Asia Pacific region for Adidas.

Jewelers of America, which represents more than 11,000 stores in the U.S., has also called for the U.S. Congress to include Myanmar gemstones in the list of items barred from import until the release of all political prisoners and an end to human rights abuses.

The U.S. and EU are now considering beefing up their sanctions primarily to close loopholes that allow American and European businesses to deal in gems and timber from Myanmar.

But for sanctions to be effective, Myanmar's Asian trading partners such as China, Thailand and India would need to be involved, said Leon de Riedmatten, a Bangkok-based representative of Switzerland's Centre for Humanitarian Dialogue. Companies like Total should do more to pressure the regime on human rights, he said.

"We should not ask these companies to withdraw. We should just ask them to use the leverage they have," de Riedmatten said.

Total says that goes too far.

"We are an investor, not a political entity," said Lassalle.