U.S.-BURMA: Clinton Imposes Investment Ban

By Jim Lobe Reprint | | Print |

Jim Lobe

WASHINGTON, Apr 22 1997 (IPS) - Bowing to growing grassroots and Congressional pressure, President Bill Clinton Tuesday ordered a ban on new investment by U.S. companies in Burma.

In announcing the ban, Secretary of State Madeleine Albright said Washington will press other governments to take similar action to persuade the military government to initiate a dialogue with its democratic opposition, which is led by Nobel Peace Laureate Aung San Suu Kyi, and ethnic minorities.

“It will send a message to the military,” said Albright, “that it will not attract the investment it clearly craves, unless it begins a genuine dialogue with its own people.”

Although the precise terms of the ban have not yet been disclosed, officials said it will not affect existing contracts.

That comes as something of a relief to Unocal Corp., the California-based oil and gas company which holds a 28-percent stake in a 1.2-billion-dollar project to build and operate a natural gas pipeline from the Yadana off-shore field through Burma to Thailand.

“We do not expect that the directive will have a material effect on our current involvement in the Yadana project,” Unocal spokesman Barry Lane told IPS. He added, however, that the company was “very disappointed” with Clinton’s decision.

“Historically, unilateral sanctions have proven to be ineffective,” he said. “Economic engagement, not isolation, is the best way to promote positive change in countries such as Myanmar,” he added, referring to the name given to Burma by the military regime, the State Law and Order Restoration Council (SLORC).

Two other U.S. oil companies could be affected, however. Texaco, which signed a memorandum of understanding last October to supply Burmese gas to Thailand, may find it more difficult to proceed. And the Atlantic-Richfield Company (ARCO), which recently discovered new gas deposits, may also be set back.

Spokesmen from those two companies said they were waiting to see the wording of the order before commenting. “Texaco will abide by U.S. law,” said Yorick Fonseca, a company spokesman.

While the United States ranks only fourth in terms of total investment in Burma, two-thirds of all foreign investment going to Burma is earmarked for the oil and gas sector.

Tuesday’s action was taken pursuant to a law approved by Congress last July which requires Clinton to impose a ban on new U.S. investment on Burma if he finds that SLORC has harmed Suu Kyi or engaged in “large-scale repression” of its democratic opposition. The same law also gives Clinton the power — which he invoked last October — to deny visas to SLORC members, their families, and key supporters.

Amnesty International has since reported that the SLORC made some 2,000 political arrests last year, making 1996 “the most repressive (year) since 1988” when hundreds of people were killed during and after a military coup d’etat.

The State Department, which in its annual human rights report on Burma conceded that the SLORC’s “rolling repression” of the opposition had worsened during 1996, concluded in an internal review last December that the conditions for triggering the ban had been met.

But it took the administration almost four full months to reach a final decision, largely because of an intense lobbying campaign mounted by Unocal as well as general opposition to unilateral sanctions in the Commerce Department and the U.S. Trade Representative’s office.

Last week, however, Senator Mitch McConnell, the chairman of the powerful Foreign Operations Subcommittee, said he would soon introduce new legislation that would impose an immediate ban with or without Clinton’s approval.

His remarks followed by just two days an explicit warning which Albright inserted into a major policy address at the U.S. Naval Academy. “Burmese leaders are on notice,” she said, “that, unless the clouds of repression are lifted, they will face investment sanctions under U.S. law.” The administration acted only eight days later.

Pressure on the administration was not confined to Congress, however. Grassroots campaigns aimed at getting local and state jurisdictions to enact “selective purchasing” laws against companies doing business in Burma have mushroomed over the last two years.

Modeled on the U.S. anti-apartheid campaign of the early 1980s, these laws — which have been adopted by San Francisco and about a dozen other towns and cities, as well as the state of Massachusetts — forbid local governments from doing business with such companies. Connecticut, New York City, and at least a dozen other cities are expected to adopt similar measures in the coming weeks and months.

Such measures — as well as negative publicity about the junta’s use of forced labour — had already prompted a virtual exodus of U.S. companies from Burma over the last two years. PepsiCo, Levi Strauss and Co., Eddie Bauer, Motorola, Hewlett- Packard, Walt Disney, and Eastman Kodak are just some of the U.S. firms which have stopped doing business in the Southeast Asian nation.

Activists here believe Clinton’s decision is unlikely to slow the sanctions campaign. “I think this will actually spur more local action,” says Mike Jendrzejczyk, Washington director for Human Rights Watch/Asia.

According to Simon Billenness, a veteran sanctions campaigner at Franklin Research and Development Corp. in Boston, Clinton’s decision may also put more pressure on the European Union (EU) to adopt a similar measure.

Unlike its opposition to U.S. sanctions against Cuba, Iran, and Libya, the EU has generally been supportive of Washington’s moves against the SLORC. When Clinton banned visas for the SLORC and its supporters, the EU followed suit, and, in February, Brussels cancelled most of Burma’s trade preferences.

“The pattern has been that both sides have inched forward with sanctions,” Billenness says. “One of the big questions now is what will the EU do?”

By contrast, U.S. officials do not believe they will get similar support from Burma’s Asian neighbours, including Japan which has lobbied hard against U.S. sanctions.

Despite repeated appeals from Washington to isolate the SLORC, the Association for Southeast Asian Nations (ASEAN) is considered likely to invite Burma to join later this year. Echoing Unocal’s arguments, ASEAN says economic engagement is the best way to promote reform in Burma.