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Breaking: US Government Eases Sanctions on Burma

By EarthRights International  •  July 11, 2012

ERI concerned about risks for human rights, environment

ERI is greatly concerned by today’s announcement that the U.S. will issue General Licenses authorizing U.S. companies to do business in Burma without abiding by international best practices on human rights, environmental performance, and financial transparency.  The construction of foreign-owned oil and gas pipelines continues to contribute to conflict and human rights abuses in ethnic minority areas such as Shan State, and companies investing in infrastructure development cause community suffering through forced displacement and environmental destruction throughout Burma.  Daw Aung San Suu Kyi has pleaded with Western governments to ensure that their companies’ investments in Burma support the reform process.

We acknowledge the administration’s measures to promote responsible investment through mandatory disclosures and prohibitions on doing business with the military.  We are, however, concerned that these will not prevent U.S. investment from contributing to – and being complicit in – serious abuses.

An Ongoing Legacy of Abuse Connected with Foreign Investment

This decision is especially troubling given the government’s recent intervention in support of Royal Dutch Petroleum in the Kiobel case at the Supreme Court, in which it argued for a rule that could prevent victims of human rights violations from obtaining justice for corporate abuses in Burma.  Foreign investment has supported the Burmese regime for two decades and has facilitated gross human rights violations by military forces.  ERI’s landmark Doe v. Unocal lawsuit, one of the first in which victims of human rights abuses were able to sue corporations in U.S. courts, involved forced labor, arbitrary killings, and torture associated with the operations of a U.S. oil company in Burma.

Despite the ongoing political and legal reforms that have ended official military rule, the Burmese military has not reformed or changed its practices, and violence against non-combatants remains common in the ethnic states.  Recent incidents of land confiscation and militarized violence surrounding portions of the Shwe Gas Pipeline show that the link between investment, conflict, and human rights violations persists.  The U.S. government is thus promoting business activities with a high risk of human rights impacts at the same time that it seeks to shut down judicial remedies for victims of human rights abuse.  ERI is particularly concerned about the impacts of renewed Western investment in Burma in sectors that are historically linked to abuses, like the extractive industry, and in conflict zones, where the government tends to ramp up military activity in order to secure areas for foreign business activity.

Positive Measures to Promote Responsible Investment Behavior

ERI is encouraged that U.S. companies will be required to meet certain conditions in order to do business in Burma.  Most importantly, they will not be allowed to invest in military-owned businesses or make payments to the military.  This may help to avert some of the worst abuses, which often arise out of the cooperation of foreign businesses with notoriously violent military units.  It could also help to prevent investment from enriching some military-linked businessmen who control much of Burma’s economy.

Companies with significant investments in Burma will be required to report publicly on their security arrangements and their policies and procedures to prevent negative human rights, labor rights, and environmental impacts.  They also must explain the measures they take to ensure fair treatment of people who are displaced by large-scale land acquisition.  This is intended to address the problem of land-grabbing associated with development; in Burma, communities’ lands are often confiscated in favor of private investors without adequate consultation, compensation, or resettlement plans.

Finally, these companies will report the taxes, royalties, and other payments they make to the Burmese government.  In Burma, one of the most corrupt countries in the world, most government expenditures have been off-budget and untraceable, leading to the highest levels of military spending and the lowest levels of social spending (as a percentage of total expenditures) of any country in the region.  This requirement, which echoes the calls of Publish What You Pay and other groups seeking transparency in government revenues, is meant to enable communities to hold their government to account for its management of public funds.

Inadequate Measures to Prevent Investment from Undermining Reform and Contributing to Human Rights Abuses

While these measures are good first steps, they are likely insufficient to prevent U.S. investment from contributing to human rights violations or to reverse the incentives that lead to corporate complicity in such abuses.  First, companies are granted full discretion to designate any required information as a business secret and to hide it in a confidential annex rather than disclosing it to the public.  This hinders public scrutiny and accountability for responsible investment practices and instead places the onus on the U.S. government.  Second, companies need not publicly disclose the results of their human rights, environmental, and labor rights assessments, depriving affected communities of crucial information.

Moreover the administration has declined to restrict investments involving MOGE, the state-owned oil and gas company, as called for by Daw Aung San Suu Kyi and Burmese civil society groups like Arakan Oil Watch.  MOGE is notoriously poorly managed, and its revenues have been a prime target for corruption and diversion to fund military activities.  And as the state partner in all oil and natural gas projects, MOGE cooperates directly with the Burmese military on security arrangements that have frequently led to widespread human rights abuses.

Conclusion and Recommendations

EarthRights International believes that investors should not enter Burma unless they can practice transparency, avoid contributing to human rights and environmental abuses, and refrain from supporting the Burmese military.  Consistently with the U.N. Guiding Principles on Business and Human Rights, they have an obligation to provide accessible and effective grievance mechanisms and should be subject to robust legal accountability for the impacts of their activities.  In the extractives sector in particular, U.S. companies should not invest or partner with MOGE until they have reasonable assurances that their activities will not contribute directly or indirectly to corruption and to serious negative impacts on communities.

We therefore call on the U.S. Government to:

  • Thoroughly investigate and enforce compliance with the conditions of the General Licenses
  • Work with Europe and other allies to require best practices in the extractives industry, including in partnerships with MOGE
  • Promote full public disclosure, rather than allowing companies to hide important information behind claims of business confidentiality
  • Engage with companies to mitigate human rights, social, and environmental risks, based on information both in the public disclosures and the confidential annex

We call on U.S. companies investing in Burma to:

  • Comply with international best practice on human rights, environmental, and social performance and land acquisition, such as the OECD Guidelines for Multinational Enterprises, the Voluntary Principles for Security and Human Rights, and the IFC Performance Standards
  • Disclose publicly all information required by the General Licenses, rather than hiding behind claims of business confidentiality
  • Abide by international transparency standards, such as those called for by the Publish What You Pay coalition
  • Engage in good faith with the U.S. government, civil society organizations, and communities to disclose project impacts and mitigate negative consequences
  • Avoid entering into partnerships with MOGE unless and until sufficient guarantees can be given of transparent fiscal management and respect for human rights
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This post is in: Business and Human Rights, Environmental and Economic Justice, Press Release

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