January, 2001: Cover Story

By Greg Rushford

Published in the Rushford Report

Unocal’s and Total’s Yadana pileline has brought jobs to Burma. But a federal judge has found that the American and French oil companies also benefited from forced labor.

The questions on what to do about Burma are easy. It’s the answers that are hard.

Broad questions like: Would increased private investment bring real benefits to ordinary citizens of this isolated, poor Southeast Asian country? Would this rising prosperity eventually convince Burma’s repressive military leaders to clean up their act, following the South Korean and Taiwanese models? Or is the smell coming out of Burma — AKA Myanmar, a deceptively mean place where authorities employ torture, forced labor, and restrictions on speech and assembly to control their countrymen — simply too malodorous for decent people to tolerate? Should there be increasingly tough sanctions aimed at curbing all investment in Burma until the government comes around to acceptable international standards of behavior?

And more pointed questions like: What about western oil companies like America’s Unocal and France’s Total? Unocal and Total have developed, in partnership with the Burmese government, the Yadana natural gas pipeline. Should Unocal and Total be praised for the measurable benefits they have brought over the past five years to Burmese citizens, in terms of paying jobs, schools, roads, and medical care? Or should the multinationals be condemned because there is also disturbing evidence — which the companies unconvincingly deny — that they have benefited from their close relationship with Burma’s military? Unocal’s website boasts that a U.S. federal judge has found that there are “no facts” to suggest that Unocal ever used forced labor on the Yadana pipeline, or exercised control over the Burmese military. But the website doesn’t tell you what the judge also said: “Unocal knew that forced labor was being utilized and that the Joint Venturers benefited from the practice.”

Burma, like Cuba, is one of those little countries that is important more than it otherwise would be because it has been caught up in larger foreign-policy issues. In short, Burma is a textbook illustration of the old debate over the merits of engagement versus sanctions. The questions are far from academic — and very frustrating.

Last month, diplomats from the European Union held contentious meetings with ministers from the Association of Southeast Asian Nations in Vientiane, Laos. The Europeans were blunt in insisting that Asean must pressure Burma much harder to clean up its appalling human-rights act. The Asians — which brought Burma into Asean three years ago in the hopes that moral suasion would work — mainly argued for more patience. Thailand — facing rising tensions from 100,000 refugees from Burma’s civil disorders who are crammed into overcrowded refugee camps — expressed concerns that Burmese leaders have gone beyond tolerable bounds. But other Asean countries like Malaysia and Vietnam (predictably) argued that how Burma treats its own citizens is an internal Burmese matter. The EU has some mild sanctions on Burma; for instance, members of the junta are prohibited from going to Europe. But the Europeans have not taken steps with bigger teeth, such as slapping on restrictions on new investment in Burma.

Meanwhile, the International Labor Organization — which, commendably, has been trying for decades to make Burma honor its obligations as a signatory of the Forced Labour Convention of 1930 — is on the warpath. The ILO is pressing ahead with an action unprecedented in the United Nation’s agency’s 80-year history: persuading 174 member nations to take “appropriate measures” to sanction Burma and bring its rulers to heel. ILO Director General Juan Somavia has asked governments and international organizations to get tough, perhaps even to the point of severing ties with Burma if the forced labor doesn’t stop. Probably, at the end of the day, most ILO members will not do anything so drastic. Still, this is a political snowball that Burmese leaders ignore at their peril.

In the United States, the private sector continues to feel heat, as federal sanctions prohibit any new investments in Burma. The pressure isn’t just coming from Uncle Sam. Earlier this year the U.S Supreme Court struck down a Massachusetts 1996 law that slapped procurement restrictions on companies that do business in Burma. Yet the Massachusetts lawmakers haven’t given up. State legislator Byron Rushing, author of the previous unconstitutional boycott law, is pressing a bill to force the state’s $36 billion pension fund to divest itself of holdings in companies with Burma ties. Similar moves have been undertaken in Los Angeles and Minneapolis.

Activists also intend to keep up the pressure on Unocal’s participation in the Yadana pipeline (which runs through Burma from the Yadana natural gas field offshore in the Andaman Sea, and into Thailand). The International Labor Rights Fund sued Unocal in the U.S. District Court for the Central District of California on behalf of 15 Burmese citizens who were victimized by the military in connection with the pipeline construction. U.S. District Judge Ronald Lew threw out the case in September on grounds there was no evidence that Unocal participated in or controlled the human-rights violations. But the Labor Rights fund, a D.C.-based non-profit that advocates “fair trade” as a tool to combat abusive child labor and sweatshops, has appealed to the Ninth U.S. Circuit Court of Appeals. Terry Collingsworth, the fund’s general counsel, vows to hold Unocal responsible for acts of its Burmese partners.

The assumption that ties together these various pressures is that they will work — or at least that they are worth trying if only because something must be done.

Burma is a sad place where one in three children under the age of five are malnourished, where half of all children have gotten little or no education since the government shut down the schools, where human rights are a cruel joke. The modern-day Pharaohs who control Burma have used their citizens for forced labor — slavery is a better word — to build roads, helipads, government-owned hotels, and even to refurbish pagodas.

But people who know Burma very well are skeptical that the sanctions — and the prospect of more sanctions — will produce results that can be measured in terms of a better life for actual Burmese people.

“The leverage you have got is very limited,” says David Steinberg, director of Asian Studies at Georgetown University and one of the nation’s leading Burma watchers. “I don’t get nice, neat answers.” Steinberg points out that most people bring to the debate over Burma rigid short-term policy prescriptions. It is not popular to advocate what is probably the most realistic prescription for would-be Burma reformers: a nuanced mix of hard and soft policies — including foreign investment and humanitarian aid as well as the threat of sanctions — that will take years, perhaps decades, to produce genuine results.

There are several reasons for the lack of leverage.

Perhaps the most important is that the men with guns who run Burma’s State Peace and Development Council pay more attention to maintaining their own power than “peace and development.” The SPDC’s answer to being trounced in 1990 parliamentary elections by the pro-democracy National League for Democracy was to shut the opposition down. Opposition leader Aung San Suu Kyi — who has been awarded the Nobel Peace Prize for her stubborn courage — has spent the past ten years been held virtually incommunicado. Last month, President Bill Clinton awarded Suu Kyi the Presidential Medal of Freedom, our nation’s highest civilian honor. (Also last month as this was going to press, the Burmese government made noises that perhaps Suu Kyi’s house arrest would be lifted.)

Last year, Burma’s government took “no steps to improve its dire human rights record,” Human Rights Watch reports. The SPDC is, in the apt words of Australian Ambassador Trevor Wilson, “determined to remain in power at all cost, allowing only marginal reforms in the economy and society.”

Asiaweek correspondent Roger Milton, who has visited the country frequently, has written: “The bottom line is that few people, even the most rabid anti-regimers, believe economic sanctions will precipitate change.” In his travels around the countryside, Milton has found in the Burmese people a depressing “fatalistic” acceptance of their lot in life in a country where time has stood still for some four decades.

One reason why Burma is relatively impervious to international sanctions is that this is an isolated little country that hasn’t yet plugged itself into globalism. The World Bank does not have a lending relationship with Burma, but there isn’t much economic activity to support anyway. Japan has suspended foreign aid, which might not help little people but doesn’t really hurt the junta. (Burma’s strongmen might like foreign aid and investment, but they have plenty of access to real money anytime they want it. Remember, this is the land of poppies and the Golden Triangle.)

The ILO and European governments are urging mainly moral suasion. The United States has banned more corporate investment. Yet something is missing: diplomacy. Burma isn’t all that attractive to future American investors anyway. The diplomats at the U.S. Department of State don’t feel compelled to practice their craft on Burma, officials of which are not allowed to come to the United States. American diplomacy is all sticks, no carrots.

Life in Rangoon goes on. Burma has even gotten into the spirit of the sanctions business, having recently closed its borders to imports from Thailand. Seems that Burma’s military leaders were infuriated last year when Thai authorities released a gang of armed dissidents who had stormed the Burmese embassy in Bangkok.

In sum, there is little momentum for a coordinated international approach to bar all trade and investment with Burma — sanctions to bring Burma to its knees. Nobody is talking about sanctions with military teeth. And if someone did, China would surely exercise its veto in the United Nations Security Council.

Meanwhile, Burma’s leaders don’t have much to be concerned about in their own neighborhood. All Asean countries except Thailand, which abstained, voted against the ILO resolution to take all “appropriate measures” to press Burma to stop employing forced labor.
John Brandon, who is assistant director of the Asia Foundation in Washington, explains that Burma’s leaders don’t have much to worry about from their neighbors in Asean. Burma also has long enjoyed a good relationship with China and Pakistan. And now India — naturally inclined to balance any Chinese or Pakistani influences — is moving closer to Burma with deals sharing intelligence and investment.

“From India’s perspective, the trade road to Southeast Asia goes through Burma,” Brandon notes. “My feeling is as long as the regime feels that it is lambasted by the West — but can continue to conduct trade and attract investment from India, Asean, and from China, with humanitarian assistance from Japan — even in this era of globalization Burma will be content to just having an economy that is regional in scope.”

There is one last potential inducement to Burma: encouraging more foreign investment. Here at least are real facts (drawn from documents unearthed in the California litigation) with which to measure the pros and cons. Consider a thumbnail history of the controversial Yadana pipeline project involving Unocal, Total, and the Burmese government.

Back in 1992, when Unocal’s consultants looked at the prospect of developing the Yadana field, they knew the nature of the Burmese military. The company’s consultants reported that “the government habitually makes use of forced labour to construct roads,” and that the local community “is already terrorized.”

When Unocal and Total formed their joint venture with the Burmese government, the two Western companies made it clear that they will “insist upon western style construction practices including fair labor rates and the use of an internationally recognized contractor,” according to a Unocal 1994 report. The two companies agreed that it would be “unacceptable” to allow the government use impressed labor to contribute to the project.

The problem was the Burmese military was needed to provide security for the pipeline. The security concerns were real. In 1995, a pipeline survey team of five Burmese nationals, four of whom were Total/Unocal employees, were murdered. (Unocal disputes that the murdered surveyors were its employees). A May, 1995 State Department cable from the Embassy in Rangoon discussed “the close working relationship between Total/Unocal and the Burmese Military.” A letter to Unocal from a Total official in February, 1996 privately acknowledged more than the companies were telling the press: “About forced labour used by the troops assigned to provide security on our pipeline project, let us admit between Unocal and Total that we might be in a grey zone.”

According to Judge Lew, that grey zone darkened, as villagers continued to suffer violence — forced labor, torture, rape, and murder — at the hands of Unocal’s and Total’s Burmese partners. “Here, Plaintiffs present evidence demonstrating that before joining the Project, Unocal knew that the military had a record of committing human rights abuses; that the Project hired the military to provide security for the Project, a military that forced villagers to work and entire villages to relocate for the benefit of the Project; that the military, while forcing villagers to work and relocate, committed numerous acts of violence; and that Unocal knew or should have known that the military did commit, was committing, and would continue to commit these tortious acts.”

Unocal’s website admits only that “it is quite possible that human rights abuses have occurred in Myanmar” (far from the Yadana pipeline).

Unocal spokesman Barry Lane says only — after considerable back-and-forth — that “it is likely, based on evidence that we have seen,” that Judge Lew’s factual findings that linked abuses to Yadana were on the mark. “We can’t state in the absolute that we have direct knowledge of those actions,” Lane adds, saying that Unocal’s knowledge of any abuses came from Total officials. “We were not there on the ground,” Lane declares. Asked how Unocal “benefited” from the forced labor, Lane responded that it “depends upon what you mean by ‘benefited.’”

A Total spokesman in Paris, Michel Delaborde, did not respond to a voice-mail message and a fax asking what abuses Total officials had reported to Unocal.
But while the American and French oil companies may not be Mother Teresa, there is another side to their story. Arguably, this side is more important.

Unocal and Total have brought real benefits to Burma. You can measure them in terms of jobs, schools, farms, electricity, a hospital, etc. that link the 13 communities along the pipeline.

Unocal has built or renovated 16 schools that employ some 177 teachers who are educating more than 7,000 students. When Burma’s junta closed all the schools in the country from kindergarten through university, Unocal’s schools remained open. The benefits from the Yadana pipeline will continue for the next three decades.

The critics dismiss the above as little more than public-relations gimmicks. Perhaps they have a point. It takes more than one pipeline to build a country.

But there is a larger point. Companies like Unocal bring tangible benefits to real Burmese people. Sanctions haven’t produced comparable benefits.

Yet everyone is talking about piling more sanctions on top of existing sanctions — the object of which is to prevent more companies from coming into the country and bringing more tangible benefits. Nobody is saying what a shame it is that 50 more companies like Unocal and Total aren’t likely to invest in Burma anytime soon.

The logic on sanctions makes sense — if you like answers to complex questions served up easy.

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