Consensus Cracking in US on Burma Policy

By Matthew Pennington 3 July 2012

WASHINGTON—The rare Washington consensus behind the Obama administration’s policy toward Burma is showing signs of cracks as US businesses grow impatient to invest there and human rights groups push back.

The US is rolling back its long diplomatic isolation of the military-dominated nation, also known as Myanmar, and is looking to ease economic sanctions following democratic reforms there. It’s trying to open up commercial opportunities for US companies in one of Asia’s last untapped markets without losing the high ground on human rights that has driven the US agenda for the past two decades.

In an unusual move, a Democratic senator last week criticized opposition leader Aung San Suu Kyi, a figure revered by both US political parties and key to bipartisan support for administration policy. During a recent trip to Europe, she cautioned against foreign companies entering business deals with Burma’s opaque state and gas enterprise. A prominent Republican echoed her concerns.

Those differences underscore how the administration’s job of keeping broad-based support for its Burma policy is getting more tricky.

The debate is playing out while explosions of communal violence between Buddhists and Muslims in western Burma leave scores dead, and the country’s military continues to clash with ethnic rebels in the remote north—reminders that human rights concerns still loom large.

Broadly, the rare political unity that has coalesced on the administration’s Burma policy endures. Both Democrats and Republicans back the easing of sanctions to encourage further reforms, and the Senate on Friday approved the appointment of Derek Mitchell as the first US ambassador to be based in the country in 22 years. Mitchell has served as a special envoy since last August.

But even within the administration, there are differences of opinion on how to allow US investment without feeding corruption and further entrenching Burma’s military-linked business elite.

For US corporations, time is of the essence. European companies are already free to operate in Burma, and within two or three months its government will open bidding on 18 onshore oil and gas blocks—an opportunity for Western firms to move in on a lucrative sector where China, India and Thailand currently dominate.

The US Chamber of Commerce, which represents more than 3 million businesses and is a powerful lobbying force in Washington, is urging the administration to get going. The chamber has expressed disappointment that seven weeks after Secretary of State Hillary Rodham Clinton urged US businesses to invest in Burma, the administration has yet to issue the necessary regulations.

Democratic Sen. Jim Webb is a longtime advocate of engagement with Burma and has teamed up with a conservative Republican to press for a comprehensive lifting of economic sanctions. He chided Suu Kyi last week, asking whether “an official from any foreign government should be telling us what sectors that we should invest in and not invest in.” It was highly unusual criticism directed at a Nobel Peace Prize winner who spent 15 years under house arrest before she was elected to parliament in April.

On the other hand, Republican Sen. John McCain has endorsed Suu Kyi’s comments, saying her concerns over the lack of accountability and transparency in the Myanmar Oil and Gas Enterprise, or MOGE, must be addressed before letting US companies invest in that sector. “We must prioritize our democratic principles,” McCain said in a statement.

Rights groups say the administration is now prioritizing US commercial interests instead.

“Suddenly there are new objectives competing with the old ones that formed the heart of Burma policy for so many years,” said Tom Malinowski, director of the Washington office of Human Rights Watch. “This is about helping US companies not miss out on the natural gas blocks to be auctioned off in the next few months.”

And judging from US officials’ public statements, there has been a marked shift in recent months, despite the administration’s continued statements of concern over ethnic violence, political prisoners and Burma’s military ties with North Korea.

In early April, when the US announced a “targeted” easing of the investment ban, officials initially spoke of promoting investment in sectors like agriculture, telecommunications and tourism, rather than resource-based industries. But by the time Clinton gave the details six weeks later, she was inviting American businesses to invest across all sectors of the economy, including oil, gas and mining.

That angered activists like Moon Nay Li, coordinator of the Kachin Women’s Association Thailand, who says atrocities by the military are continuing in her native Kachin State in northern Burma. She launched a petition on the Internet that has gained 125,000 signatories in five weeks, demanding legally binding safeguards to ensure that US businesses don’t become complicit in rights abuses.

“Foreign business and extreme violations of human rights are virtually inseparable,” she said by email, charging that investment projects often result in land appropriations and forced relocation of villagers.

The Obama administration has said US companies would be expected to conduct due diligence and will still be barred from doing business with firms owned or operated by Burma’s military. The administration hasn’t said whether US oil and gas companies would be allowed to partner with state monopoly MOGE, a necessity for investing in the petroleum sector.

Patrick Cronin at the Center for a New American Security think tank said excluding US businesses, which are subject to rigorous US anti-corruption legislation when they operate abroad, would not help but hurt the course of reform in Burma, particularly when companies from Europe, Russia, China, India and other Asian countries are free to invest there.

While companies will resist calls for additional reporting requirements—that might, for example, monitor what they pay to Burma’s government—Cronin said that could be the trade-off for investing in a country with major human rights problems.