BURMA-FINANCE: Oil Company Digs In Heels Despite Rangoon’s Record

By Farhan Haq Reprint | | Print |

NEW YORK, Feb 5 1997 (IPS) - A California-based petroleum company is vowing to maintain and expand its operations in Burma, despite U.S. criticism of the ruling military regime there.

The California-based Unocal Corporation, already the largest U.S. investor in Burma, has announced its plans to explore and develop offshore gas fields, even as other companies — most recently Pepsi — have said they will sever ties with Rangoon.

In deciding to expand its activities in Burma, Unocal is taking a chance on the ruling State Law and Order Restoration Council (SLORC), which is widely criticised for its 1990 crackdown on Burma’s democratic movement and for allegations of drug dealing and forced labour.

The U.S. State Department last week charged the SLORC with escalating a campaign of “rolling repression” last year, and added that human rights violations in the country increased in 1996. Other groups, including Human Rights Watch/Asia, have charged Rangoon with using forced labour to build infrastructure in its bid to woo foreign investors.

Last Oct. 3, 15 ethnic Karen Burmese citizens filed a lawsuit against Unocal, claiming the company should share responsibility for rights violations in Burma, including the alleged forced labour of some 500,000 Burmese.

Unocal is adamant that its own relations with the SLORC are untainted by such allegations. David Garcia, senior public relations representative for Unocal, told IPS that the company’s main project — a gas pipeline to be constructed at Yadana jointly by the Burmese government, Unocal, and the French company Total — is “an above-board project”.

“There have been no human rights violations with regard to the (Yadana) project,” Garcia said. “There’s been a lot of misinformation.”

He said that Unocal has provided access to the area to international journalists, to demonstrate that the site is free of forced labour or other violations. Unocal is confident of the record of labour conditions in all the areas where it does business, he said.

That may be beside the point, countered Mike Jendrzejczyk, Washington director for Human Rights Watch/Asia. “Any foreign investment in Burma right now will benefit from the use of forced labour to build infrastructure, such as hotels and roads,” he argued.

As a result, the rights group is asking all foreign investors to shun Burma as long as current human rights conditions prevail.

The U.S. government, although sharply critical of Burma’s record, has distanced itself from making any evaluation of whether U.S. companies should stay away from Rangoon as a rule.

“We don’t encourage American investment in Burma,” State Department spokesman Nicholas Burns said Monday in response to Unocal’s announcement of expanded gas exploration. “We don’t actively discourage an American company from going in, but we don’t encourage it, either…It’s Unocal’s decision if it wants to go in.”

“Clearly they decided they are going to take the risk,” Jendrzejczyk said of Unocal. For many companies, he noted, political repression in Burma has presented a complex dilemma: Either they go in, and face poor public relations and political uncertainty, or stay out and see Japanese and other companies rake in potentially lucrative deals.

Many companies have had second thoughts in recent weeks as public pressure has mounted against companies dealing with Burma. Several U.S. cities, including Madison, Wisconsin, and Berkeley, California, have enforced “selective purchasing laws” which forbid city contracts to firms dealing with Rangoon, while a student divestment movement — comparable to the one against U.S. investments in South Africa a decade ago — has surged.

That pressure last week prompted Pepsi to join such companies as Levi-Strauss, Reebok and Macy’s in leaving Burma. As Sein Win, a leader in exile of the National League for Democracy headed by Aung San Suu Kyi, put it before the announcement, “PepsiCo very much takes care of its image. It wanted to press the drink’s image as ‘the taste of a young generation’, so when the young generation participates in boycotts, it hurts that effort.”

Public-relations concerns have boosted the campaign to penalise or curtail foreign investment in Burma, Sein Win told IPS. “The movement is gaining,” he argued, noting awareness of human rights in Burma has expanded dramatically over the past year.

Left behind in Burma are several oil and gas companies, including Unocal, Total and the U.S.-based Texaco and Atlantic- Richfield Company (ARCO). But the price of staying has included an increase in criticism directed at them, including charges that their practises are helping the military junta stave off the growing clamour for democracy in Burma.

“The (Yadana) pipeline, when completed, will be the SLORC’s single largest source of foreign currency,” financier George Soros said last month. “Nothing would hurt the SLORC more than the oil companies’ suspending operations on the Yadana pipeline under the pressure of public opinion from Europe and the United States. The oil companies bear a grave moral responsibility.”

Aung San Suu Kyi, a Nobel laureate and believed winner of 1990 elections which the SLORC refused to honour, also has put moral pressure on the oil and gas companies.

“Profits from business enterprises will merely go towards enriching a small, already very privileged elite,” she said in a taped statement from her house in Rangoon last September. “Companies such as Unocal and Pepsi, ARCO and Texaco serve only to prolong the agony of my country by encouraging the present military regime to persevere in its intransigence.”