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ITUC

Rep

oRT

ITUC,

IntrnatinalTrad

Unin

Cnfdratin

January2008

ITUC

Rep

oRT

ITUC,

IntrnatinalTrad

Unin

Cnfdratin

Aril2008

Rich pickings:

how trade and

investment kee

the Burmese

junta alive andkicking


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The International Trade Union Conederation (ITUC) represents 168 million work-

ers, 40 percent o whom are women, in 155 countries and territories and has 311

national aliates.

The ITUC is a conederation o national trade union centres, each o which links

together the trade unions o that particular country. Membership is open to all

democratic, independent and representative national trade union centres.

The ITUCs primary mission is the promotion and deence o workers rights and in-terests through international cooperation between trade unions, global campaigning

and advocacy within the major global institutions. Its main areas o activity include

trade union and human rights, the economy, society and the workplace, equality and

non-discrimination as well as international solidarity. The ITUC adheres to the princi-

ples o trade union democracy and independence, as set out in its Constitution.

_ITUC

5 Boulevard du Roi Albert II, Bte 1

1210 Brussels

Belgium

Phone: +32 (0)2 224 0211

Fax: +32 (0)2 201 5815

E-mail: mailto:[email protected]

www.ituc-csi.org


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Rich Pickings:how trade andinvestmentkeep theBurmese junta

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Rich Pickings:how trade and investment

keeps the Burmese junta alive andkicking

Table o contents

Introduction 7

The economic and social situation in Burma 9

What the Burmese people see o development 10

Burma and Thailand compared: the development 13and welare that could have been

New riches consolidate the power o the junta 15

Foreign interests strengthen 17

Thailand 18China 19India 22

Democracy and reedom in Burma through 24new sticks and carrots

Intensied, more sophisticated sanctions 25are the only solution

The way orward 28

End notes 30


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I dont think we have ound evidence that sanctions have harmedthe Burmese people. () Sanctions have a role to play becausethey are a strong political message. But also because they are aneconomic message.1

Aung San Suu Kyi

I maintain my belie that no one or no government should waitto take action; the journey begins with one step. Businesses andgovernments have a choice i they want to do business with theoppressive regime in Burma, or not. Business with the regimeputs weapons in the hands o those who massacred thousands in1988; are responsible or creating more than a million internallydisplaced people who cannot nd shelter and security in their own

country; those who systematically rape women. Individuals andgovernments must take a stand against tyranny and those whoprotect and und it.2

Desmond Tutu


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7

Introduction

In September 2007, the Burmese people mobilised their largest social and po-litical uprising since 1988. Thousands o monks and ordinary people marchedto protest grinding poverty and the countrys repressive military dictatorship.The resulting crackdown by the regime was news all over the world: it is be-lieved that at least 110 people were killed and thousands were hurt by rubberbullets, tear gas, bamboo clubs and rubber batons.

And yet, through it all, business as usual especially oreign business as usual continued in most o the country. The generals responsible or the violence

continued lling their pockets with the help o oreign investors. Even as thereports came in o deaths in custody, torture, disappearances, ill-treatment anddenial o ood, water and medical treatment to those in detention, big businessand a handul o governments China, India and Thailand in particular keptpouring in the oreign investment that uels the regime.

For the last two decades, the majority o people in Burma3 have become poorerwhile the ruling generals, and a ew people close to them, have creamed osubstantial amounts o money or themselves. This is set to continue as thegenerals nd new sources o wealth, including newly protable oil and gas

reserves, but continue to show little evidence that they care whether the civil-ian population is scraping a living. Burma used to be known as a country withan underutilised economic potential and consequently a military dictatorshipperennially on the brink o bankruptcy. Yet today it is increasingly recognisedas a petro-dollar dictatorship. The result may be even more repression o thecountrys democracy movement, its ethnic nationalities and the population ingeneral.

When Burma is in the news, the topics are democracy, human rights andgeopolitics. Only seldom do accounts o the economic and social situation in

the country appear in the mainstream media. But the issues are linked anddeserve ar greater attention. It is Burmas resource-based, export-oriented,state-capitalist economy that keeps its rulers in power. Repression and lack odemocracy mean Burmas people can only express discontent through protestsand uprising. But much o the source o their discontent is poverty. The previ-ous uprising in 1988, which led to the militarys massacre o 3,000 people,was triggered by the devaluation o the countrys currency, the kyat, and sub-sequent ood shortages. The events in September 2007, known as the saronrevolution because o the mass participation o saron-robed Buddhist monks,started as a direct protest over the governments doubling o uel prices, whichincreased transport costs and hence the prices o staple oods.

This report will look at the linkages between the political and the socio-eco-nomic situations in the country. It will endeavour to show how Burmas rulersare reaping the economys prots while its population is suering ever-greaterpoverty. It will uncover how Burmas neighbours are pursuing an increasing


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number o their economic and political interests through shameless coopera-tion with and support or the military regime. And nally it will call or urthersanctions on the military junta and or disinvestment rom the country. It wouldbe best i neighbouring countries changed their policies towards the unelectedrulers o Burma, severing their economic relations too, but as there is little signthat they will do so, this analysis calls or nancial sanctions to be imposed byother parts o the world.


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Burma is a country with considerable natural resources, including minerals,precious stones, timber, oil and natural gas. Under British rule until 1948,agriculture fourished and the country became one o the worlds leading riceexporters. Its economic prospects at independence looked bright. Indeed,George Orwell, the British writer who served as a civil servant in Burma inthe 1920s, predicted that o all the countries in the British Empire, none wasmore likely to prosper on achieving independence than Burma. At the time itwas still the largest exporter o rice in the world and known as the rice bowlo Asia. Under democratic government until 1962, the country made slow butsteady economic progress comparable to that o other developing countries.The rst military coup changed that. Since then economic development hasbeen limited, and Burma has allen urther and urther behind the developmento the other countries in the region.

In 1988, at the time o the crackdown on the popular uprising, which includedmassacres o thousands o civilians, the country was literally bankrupt as

a result o the Burmese military juntas seclusion, xenophobia and generaleconomic mismanagement. Ater the 1988 crackdown, in response bothto bankruptcy and to the perceived threat o a strengthened democracymovement, the regime reversed three decades o economic isolationism andor the rst time welcomed oreign investment. Multinational corporations,particularly oil and gas companies, promptly answered the regimes call andstarted investing heavily. The government collected most o this money andspent it on rebuilding its military capabilities and on re-establishing its controlo the country.

For the past twenty years, oreign investment has been fowing in rst romEurope and the US, then in recent years rom China, India, Malaysia, Singapore,South Korea, Thailand and other countries in the region. Oil and gas as well asother extractive industries are the main targets or such investment. So ar ithas mainly strengthened the militarys capacity to repress the Burmese peopleand to line the pockets o the generals and their riends. This is because mostinvestment is Burma is carried out through joint ventures with the military orsimply directed through companies owned and operated by the military.

Ironically, the junta claims to be socialist. But it has developed its own orm o

state capitalism, which ensures the generals prosperity and power. In practice,the economy is controlled through several industrial conglomerates, the mainones being the Union o Myanmar Economic Holdings (UMEH), the MyanmarEconomic Corporation (MEC), and the Myanmar Oil and Gas Enterprise (MOGE).The MEC channels revenue rom private enterprises into deence spending.The UMEH provides opportunities or secondary incomes or military personnel

The economic and social

situation in Burma

Once the secondlargest rice exportorin the world, Burmaseconomy started goingbackwards ater the

rst coup.

The junta has deve-loped its own ormo state capitalism,controling the economythrough military jointventure.


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and their amilies. The MOGE acts as the local joint-venture company ororeign investment in oil and gas and is quickly becoming the regimes maincash cow.

Even the tourism that takes place within the country benets the military juntarather than private companies and ordinary people, as tourists tend to stay athotels that the military either operate or are partners in. When tourist planesarrive at the airport, only tour companies connected to the junta can enter theterminal to meet tourists. Civilian companies like ours are not allowed to enter.So in this way they get the meat and they get bone, said Nilar, a 28-year-oldguide working or a small tourism rm in Rangoon, when interviewed or theITUC in the all o 2007.4 Furthermore, a large part o the inrastructure usedor tourism has been built by the use o orced labour, as documented in ILO

reports. The juntas tight grip on this part o the economy as well made AungSan Suu Kyi note back in 1995 that We think it is too early or either touristsor investment or aid to come pouring into Burma. In 2002, she reiterated thiscall or a boycott: Our policy with regard to tourism has not changed, which isto say that we have not yet come to the point where we encourage people tocome to Burma as tourists.5

Over the last couple o years, discoveries o both onshore and oshore naturalgas elds within Burmas borders have made this resource the countrys mainexport. Production and prots have skyrocketed and are expected to continue

to do so in the uture as global uel prices rise. There are, however, no signsthat the people living where the discoveries have been made are benetingeither directly or indirectly rom the new projects. Indeed, the increasedattention o the state towards these communities may simply mean increasedrepression. Many o the problems in the Burmese economy stem rom theact that investment in the oil and gas sector, and other extractive industries,does not generate much employment nor ensure substantial transer o skillsor technology to local people. This means that the vast majority o the revenuerom these new activities goes to the generals and their cronies and that thebenets to the Burmas people are very limited.

In act the generals virtually treat the countrys economy as their own household,almost interpreting economy according to its Greek root, oikonomia, whichmeant household management. According to Sean Turnell o MacquarieUniversity in Sydney, Australia, an economist and expert on Burma, Burmasstate is almost wholly predatory, and is not so much parasitic o its host as all-consuming. I in other countries ruling regimes behave occasionally as Maosoin skimming a cut rom prosperous business, then Burma is akin to a looter destroying what it can neither create nor understand.6

What the Burmese people see o development

Today, poverty in Burma is pervasive and severe. And with the recent rise inthe price o key commodities in the country the trigger or the Septemberdemonstrations survival at any level o decency is becoming more and moredicult. The United Nations Development Programme recently conducted a

"The junta gets themeat and civilians getthe bones": touristguide

The vast majority o oiland gas revenue goesto military.


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it is away rom the potentially protesting masses and also rom the regimesoddball, imagined threat o an American invasion by sea. Even though much oit is thought to have been built using orced labour, the construction o the cityis estimated to have cost US $300 million. The new capital has been blamedor diverting already unpredictable electricity supplies away rom Rangoon, thecountrys economic centre, and rom many o the rest o the mere ve percento the population estimated to have access to electricity.

While the junta spends virtually nothing on the welare o the Burmese people, itseems to have plenty to spend on key supporters and those keeping it in power.In April 2006, the government announced massive pay increases o between500 and 1,200 percent or about one million civil servants and military ocers.Such pay rises not only add to the growing inequalities in Burma but also add

to the infationary pressure in the country. This means the prices o ood andother basic commodities rise, and people outside the charmed circle o corecivil servants and the army not only become poorer relative to the wealthierclasses, but also in absolute terms.13

It is not only the juntas sel-interested policies that hurt the Burmese people. Sodoes its apparent lack o a coherent approach to development, and the generalmismanagement o the country. Though agriculture still accounts or over halo Burmas GDP and more than 80 percent o employment, the governmentdoes nothing to nurture this sector. Farmers, or example, are unable to borrow

money rom commercial banks but must instead obtain unds rom the state-owned Myanmar Agricultural Development Bank (MADB). This bank, however,provides less than ten percent o the credit needed by the armers it lends to,and many more do not even qualiy or access to the MADB.14 Furthermore,government policies have made agricultural inputs so expensive that armersare using less and less ertiliser, which means yields are dropping. This hasmade many amilies abandon agriculture, become landless, and migratethrough the country in search o paid employment.15

The mismanagement has become so bad that in October 2007, thirteen

humanitarian NGOs released a statement noting that current social andeconomic policies have led to conditions which have pushed many belowsubsistence levels, continuously weakening existing coping mechanisms olocal communities, and that low public expenditure in the health and educationsectors leave people with little to no access to basic aordable services in manyparts o the country.16 The World Food Programme estimates that ve millionpeople in the country lack enough ood and are on the borderline o amine.One in three children under ve are suering rom malnutrition, and less thanhal o the countrys children are able to complete their primary education.17Furthermore, ten percent o children are classied as wasted, meaning thatthey are acutely malnourished. As doctors at the health clinics dealing withsome o these children put it: The skin peels easily. The eyes look drowsy.Theres muscle wasting you cant see the muscle, just bone and skin. Evenhigh-tech medical imaging cannot detect what should be normal layers omuscle under the skin, say the doctors. We do ultrasounds and the transducergoes straight to the organs.18

The military spentUS$300 million to builditsel a new capital city.

Agricultural yields are

alling.

10% o the childrenare malnourished: "youcant see muscles, justbone and skin".


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The Burmese government spends 0.5 percent o its GDP on health and 0.9percent on education, ar less than any other government in the region. Bycomparison, Cambodia and Laos, among the poorest countries in Asia, spend3.5 and 3.3 percent respectively. On the other hand, Burmas deence budget,at 40% o GDP, is over 28 times higher than health and education combined.Even what the government spends on education and healthcare reinorces thecountrys gross social inequities: the military run schools and hospitals are thebest in the country, while civilian hospitals are poorly unded and unable torespond to rampant HIV/AIDS, malaria and tuberculosis. I the generals earthat local treatment is below the standard they and their amilies need, they fyto Singapore to be treated in some o Asias most expensive private hospitals.

Burma and Thailand compared: the development and welare

that could have been

A comparison o the social and economic state in Burma and Thailand illustratesthe high price that the Burmese have paid or living under the rule o successivemilitary dictatorships. It shows what Burma could have achieved and puts inperspective the poor level o development o its people, their health and well-being, that the countrys junta has brought about. This comparison, simpleas it is, makes sense because it shows how the Burma that was consideredone o the most promising economies in Asia when it gained independencehas been mismanaged ever since; how its military government has missed

all opportunities to improve things; and how, when oreign investment hasentered the country, the people have seen none o the progress it could haveproduced.

Burma, as has been noted, was once known as the rice bowl o Asia and editsel and other parts o the British Empire. Today it cannot even eed itsel:ten percent o its population show signs o severe malnutrition. Thailand, bycontrast, has emerged as the worlds leading rice exporter. And while Thailandalso exports ruit and poultry around the world, Burmese armers can oten noteven get their crops to the local market because o poor road and transportsystems.

The availability o communication acilities the main inrastructuralcomponent o a modern economy as well as a key tool in the development ovibrant civil societies is also a good indicator o the wide gap between thelevel o development in Burma and that in Thailand. For every 1,000 people inBurma, there are eight telephone land-lines, compared to 107 in Thailand; twomobile phone subscribers, compared to 430 in Thailand; and one internet user,compared to 109 in Thailand.19

These may be considered luxuries, even technologies the military junta maydiscourage because it sees them as a threat. But Thailand is also way ahead oBurma in basic matters o survival. In Burma, 10 children out o 100 die beorethey reach the age o 5, the worst record in Asia. In Thailand the gure is 2 outo 100. Similarly, in Burma, a woman has a 1 in 75 risk o dying while giving

Plenty o money or themilitary - but not orhospitals or schools.

Inant mortality is vetimes as high as inThailand.


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birth. In Thailand the risk is only 1 in 900. Indeed, Burmas health system wasranked as the second worst in the world in 2000, in the only global comparisonever carried out by World Health Organisation (WHO) out o 191 countriesonly Sierra Leone ranked lower. Thailands was considered the 47th best.20

While millions o people on the Burmese side o the Burma-Thai border suerrom chronic malnourishment, those living on the other side are now so well edthat obesity among children o wealthier amilies has reached the headlines.The malnourishment o Burmese children means that 32 percent o them aresignicantly below the expected height or their age. The same is true or only13 percent o Thai children. While the situation in Thailand is ar rom perect,at the end o the day, the dierence between living in Burma and Thailand canbe expressed in the average years one can expect to live. In Burma it is 61. In

Thailand it is 7121

.

All in all, under the rule o the military junta, agricultural productivity hasplummeted and poverty has soared, and with it ill-health. To top it o, corruptionhas grown so much that Burma is now the second most corrupt country in theworld, according to the pressure group Transparency International. In spite oincreasing trade and investment within the last ew years, the social situation isas bad as ever. It is probably matched in Asia only by North Korea and elsewhereonly by some o the poorest countries in Arica.

Second worst healthsystem in the world.

Second most corruptcountry in the world.


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In spite o the pervasive poverty and lack o development in Burma, the country,as noted already, is rich in resources and already generates substantial incomerom the sale o timber, gems, hydropower, oil and gas. With the developmento more hydropower projects and the recent discoveries o new gas elds,the military junta is sitting on even higher levels o potential income. Burmasneighbours are increasingly helping them collect this income, which in turn isstrengthening the junta. For every bit o oreign currency that enters Burma,

a substantial part goes into the modern, sophisticated weaponry and militarypersonnel that keep the Burmese people in check. The ollowing will detailwhere the generals get most o their income and why it is likely to rise.

For decades Burma has had a prolierating logging industry, both legal andillegal. This business has not only had devastating environmental consequencesbut to a large extent has also been based on orced labour and has caused thedisplacement o local communities. The logging industry is controlled by theMyanmar Timber Enterprise (MTE), which is staed primarily by retired militaryocers and has ull jurisdiction over orest conservation and exploitation.

Logging, primarily the sale o teak, has traditionally accounted or around20 percent o Burmas exports.22 In the scal year 2006-2007, the MTE hadexports worth US $519 million and was ranked the countrys second largestexporter, ater the Myanmar Oil and Gas Enterprise (MOGE).23 Similarly, theextraction o gems, particularly jade, has brought a steady stream o revenueto the junta. Myanmar Economic Holdings reportedly receives 60 percent othe income rom the sale o gems by companies it leases out to, bringing inaround US $200 million in revenue a year24.

However, the generals main income comes rom natural gas, production owhich started in 1974. In 1975, gas production reached 4,575 million cubiceet, rising to some 40,000 million cubic eet in 1990 and to 58,575 millioncubic eet in 1996/97.25 In 1990 two years ater the government opened upto oreign investment the rst overseas companies bought oshore naturalgas concessions. These were Britains Premier Oil and Frances Total.

In the early 1990s, the junta invited oreign bids or urther oshore explorationin eighteen concession blocks, thirteen in the Gul o Martaban and ve othe coast o Arakan state. Multinationals such as Unocal, Texaco, Total and

Premier Oil were among the successul bidders. Two major oshore gas elds,Yadana and Yetagun, were discovered in the Gul o Martaban. Production romthe Yadana eld started in 1998 while production rom Yetagun commencedin 2000. The discovery o a new gas eld o the coast o the Arakan wasannounced in 2004. The Shwe gas eld, named ater the countrys currentleader, SPDC chair General Than Shwe, has been divided into several blocks,

New riches consolidate the

power o the junta

Huge economic poten-tial being squandered.

Millitary takes 60% othe revenue rom thegem trade.


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o which the A-1 and A-3 blocks are currently under development.26

According to the Japan Oil, Gas and Metals National Corporation, an independentadministrative body, at the end o 2006 Burmas national gas reserves wereestimated to be about 538 million cubic metres, making it the third-largestreserve in Southeast Asia, just ater Indonesia and Malaysia.27 The Shwe gaseld alone is estimated to be able to bring in between US $600 and $850million per year or the military junta, or up to US $20 billion over the lietime othe project. All oshore deposits are expected to yield rom US $37 to US $52billion in the coming years.28

Many o these hundreds o millions are already rolling in. In the scal year2006-2007, Burmese exports o gas stood at US $2.16 billion and accounted

or 43 percent o Burmas total exports, according to statistics released by theBurmese Customs Department. This was twice as much as in the previousscal year, 2005-2006, albeit this was primarily due to an increase in gasprices, not to a rise in the total amount o natural gas exported, according tothe countrys Energy Ministry.29 Thailand is by ar the biggest buyer o Burmasnatural gas.

At least 27 companies rom 13 countries help extract the gas and get it to theend user. Including oshore havens, they come rom 13 countries, accordingto the pressure group Human Rights Watch: Australia, the British Virgin Islands,

China, France, India, Japan, Malaysia, the Netherlands, Russia, Singapore,South Korea, Thailand and the United States. A production-sharing contractbetween these oreign companies and the Myanmar Oil and Gas Enterprise(MOGE) species how much the company has to pay the government o Burmain ees and taxes. Such contracts also give the government the right to becomea partner in the project ater a period o time i it wishes. This typically meansthat oreign companies spend money up ront to explore or oil and gas as wellas to produce end products such as petroleum, and the junta gets a cut o thesales once initial costs are recovered. Many o the oreign companies involvedare wholly or partially owned by governments, including the governments o

China, India, Japan, Malaysia, Russia, South Korea and Thailand.30

This high level o activity, a result o the regions growing energy needs, makesnatural gas the sector that attracts the most oreign direct investment to Burma.Oil and gas investment reached a record high o US $471.8 million in the scalyear 2006-07, accounting or more than 61 percent o total oreign investment,according to newly-released government statistics.31 And the interest in makingnew deals with the junta continues to be strong: between September 2006and September 2007 ten new deals, covering 14 blocks, were signed. As aresult o such investment, proceeds rom the oil and gas sector are expectedto increase.

Hydropower is another area that will bring substantial income to Burmasmilitary regime in the uture but one which also might threaten the livelihoodso the national minority, ethnic communities in the Karen, Karenni, Mon andShan States, where such projects are most likely. The interest in hydroelectric

Junta controls $ billionsin oil and gas inome.


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power primarily comes rom China, Thailand and other ASEAN countries.However, it is not only individual nations that are investing in Burma. The AsianDevelopment Bank is promoting a US $4.6 billion regional electricity scheme,to be powered in part by the Tasang Dam on the Salween River in Burma. Theplan is or twelve hydropower projects in Burma as well as in China and Laos touel the so-called Mekong Power Grid and generate electricity or consumersin Thailand and Vietnam.32

In the scal year 2006-07, US $281.2 million in oreign investment went intothe power sector, which accounted or 36.8 percent o oreign investment.According to Burmas Ministry o National Planning and Development, all theoreign investment in this sector came rom China. All in all, the oil, gas andpower sectors accounted or more than 98 percent o all oreign investment in

the last scal year.33

Foreign interests strengthen

Overseas players have been central to the development o the Burmeseeconomy and to the economic lieline o the countrys military regime. Asnoted, the junta was bankrupt when it opened up to outside actors in 1988 buthas since literally gone rom rags to riches. The global labour movement hasmonitored what oreign companies have links to Burma and thereby directly orindirectly support the generals repression o the Burmese people, its use o

orced labour, its denial o reedom o association and abuse o other humanrights. By October 2007, the labour movement had 427 companies in itsdatabase, which were all once again and or the ninth time in seven years directly requested to sever their links with the Burmese military regime.34 Somecompanies do act on such requests. Most state that they are acting legallyunder the law o their home country, and that they will not retreat unless legalsanctions relating to their sector are imposed on Burma.

Fortunately, the United States, the European Union and Australia have imposedsanctions on Burma and strengthened them on several occasions over the

last ve years. Already in 1997, the US prohibited new investment in Burmaby US persons and US persons acilitation o new investment in Burma byoreign persons. And in 2003, the US banned most Burmese imports. Generallyspeaking, US citizens and companies are also banned rom delivering nancialservices in Burma.35 The EU has enacted an arms embargo and a ban on non-humanitarian aid to Burma. It has also ended so-called GSP trade privilegesto the country and issued a visa ban or senior regime ocials and theiramilies as well as rozen assets held in Europe by people on the visa banlist. Moreover, in 2004, the EU introduced a limited investment ban on Burma,which banned European companies rom investing in a small number o relatively insignicant state-owned enterprises o which none were in thecentral timber, mining, oil and gas sectors. In October and November 2007,ater the crackdown, the EU also enacted an export ban on equipment to thesectors o logs and timber and mining o metals, minerals, and precious stonesas well as an import ban o products rom these sectors and an investment banin these sectors.36 In the time ater the brutal repression o the protests known

Most oreign invest-ment is in oil, gas andelectricity generation.

Hundreds o oreigncompanies doing busi-

ness with Burma.

Some sanctions are inplace.


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by the monks participation, Canada and Australia also strengthened sanctions,the ormer by banning all imports and exports to and rom Burma except orhumanitarian goods.37

So ar, though, these countries have let out the sectors and areas where theeect would be the greatest the US in relation to existing investment in oil andgas, and the EU in terms o all investment in oil and gas and the nancial sector.It is paramount that the US and the EU include those sectors in the uture. In thescal year 2006-07, or example, companies rom the United Kingdom werethe largest oreign investors in Burmas oil and gas sector, with investmentsworth US $240.68 million.38

Yet, while more and more governments, especially in the wake o the brutal

crackdown on Burmese protesters in September 2007, do impose sanctionson Burma, the countrys neighbours and other economic powers in the regionseem ever more eager to do business with the regime. Singapore, Russia andSouth Korea were some o the largest investors in the oil and gas sector in thelast scal year, while at US $281 billion, China was the main oreign investorin the power sector.39 And when it comes to trade, investment, economiccooperation and political infuence taken together, three immediate neighboursstand out as the main backers o the military junta, and hence as the holders othe keys to the reedom o the Burmese people: Thailand, China and India.

Thailand

Thailand is Burmas main trading partner, accounting or 48.8 percent o itsexports and 22.1 percent o its imports in the scal year 2006-2007.40 In thisperiod, Burmas exports to Thailand stood at US $2.409 billion.41 That is theresult o consecutive rises in exports rom Burma to Thailand, as only a coupleo years earlier in 2004 they totalled US $1.2 billion, which was in turn up 40percent rom 2003.42

Thailand is indeed a close ally that not only consumes most o Burmas naturalgas but also actively encourages Burmese trade: in 2005 Thailand grantedBurma tax exemptions or 390 dierent products ater having lowered thetaxes, in accordance with ASEAN rules, on 460 other products in 2004.43

Burma and Thailand have also been expanding the number o trading pointsalong their 1,800 km common border and the level o activity at these points.This trade is presently valued at US $248 million. Currently Burma is engagedin building a new border trade zone in Myawaddy, across rom the Thai bordertown o Maesot, a hub or the illegal timber and gem trade. Myawaddy stands

to become the second largest border trade zone in Burma ater the Muse zone,which stands next to another notorious border town, Ruili in Chinas Yunnanprovince.44

Nevertheless, Thailands main economic interests in Burma are in energy.Thailand is the single largest customer o Burmas most developed natural

China, India andThailand are the big-gest players.

Business with Thailandis booming.


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gas elds. According to Total, the French oil company present in Burma, theYadana and Yetagun gas projects currently account or more than 20 percento Thailands energy needs.45

Thailand not only buys gas, but it has also taken a strong part in gas elddevelopment. The Yadana project was developed by a consortium o Total,Unocal, PTT-EP o Thailand and Burmas own MOGE, and is now operated byTotal. The gas rom the Yadana eld is transported via a 346 km underwaterpipeline and a 63 km onshore pipeline to the border between Burma andThailand at Ban I Thong. At the border, it connects to a pipeline built byThailand, which carries the gas to its destination near Bangkok, providinguel to the Rathcaburi and Wang Noi power plants. The Yetagun gas eld wasdeveloped by a joint venture o Texaco, Premier Oil and Nippon Oil. Following

Texacos withdrawal in 1997 and Premier Oils in 2002, Yetagun is todayoperated by Malaysias Petronas in partnership with MOGE, Nippon Oil andThailands PTT-EP. The gas is transported by a 210 km underwater pipelineand 67 km onshore pipeline, linking up with the Yadana pipeline on Thai soil.46It is estimated that Burma earns around US $160 million a month in salesrevenue rom its natural gas supplies to Thailand.

Furthermore, Thailand has a strong interest in the development o hydropowerin Burma. In 2005, the two countries signed an agreement to build ournew dams on the Salween River and one on the Tenasserim River. 47 And in

2006, they introduced a joint venture hydropower project, Tar-hsan, a 7,110megawatt venture being constructed on Burmas Thanlwin River in the easternShan state.48

With this interest in Burmas energy sources, both ossil and hydro, Thailandscombined investment in Burma since 1988 is reported to stand at US $7.3billion. Thai investment in Burma represents more than 53 percent o Burmastotal oreign investment since the country opened up to such activities.49But Thailands interest in investing in Burma does not end there. Under aneconomic cooperation strategy agreed in November 2003 at a summit o

Cambodia, Laos, Burma and Thailand in the Burmese city o Bagan, Thailandis planning to substantially increase and diversiy its investment in Burma.

The act is that Thailands interests in Burma, legitimate as they may seemrom a Thai perspective, are to a very large extent what is keeping the Burmesejunta economically afoat. Through its business links, Thailand is the generalsmain nancial sponsor. The income that Burma gets rom exporting naturalgas to Thailand is claimed to be at least twice as much as Burma could haveearned rom trade with the US and the EU had they not applied sanctions,50putting any potential impact o such sanctions in stark perspective.

China

Burma reers to China as its Paukphaw, a Burmese word or siblings.China is the only country this word is used or, refecting the historically

It is estimated thatBurma receives aroudUS $ 160 million permonth rom natural gassupplies to Thailand.

US $ 7.3 billion in Thaiinvestment since 1988.


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close relationship between the two countries.51 Besides being a political ally,China is a major supplier o consumer goods to Burma, in particular throughborder trade. The country also engages in large-scale economic cooperationin the areas o inrastructure and state-owned economic enterprises. Andlike Thailand, it has special interests in Burmas energy and power. As will bedescribed below, China also has substantial geo-political interests in havingaccess to and through Burma.

China presently accounts or 5.2 percent o Burmas exports and 35.1 percento its imports.52 Since the 1990s, Burmas Chinese imports have grown morerapidly than its exports. While exports to China increased just 1.3-old, rom US$133.7 million in 1988 to US $169.4 million in 2003, its imports rom Chinarose by a actor o 7.1, rom US $136.2 million in 1988 to US $967.2 million

in 2003. This meant that Burma had a huge trade decit o US $797.7 millionwith China in 2003, a decit that due to surpluses elsewhere was 4.4 timeslarger than the countrys total trade decit that year. As China has developedeconomically and industrially, Burma has become much more dependent onChinese imports, with the share o Chinese goods in the countrys total importsrising rom about one-th in the latter hal o the 1990s to about one-thirdtoday.53

However, this relationship may change in the uture. As the Chinese economycontinues its rapid growth, Chinas quest or energy sources abroad is

intensiying, and Burmas oil and gas reserves as well as the potential orhydropower on its rivers have drawn Chinas attention. China now is heavilyinvolved in both sectors. Moreover, Burma may be crucial to the security andprice o Chinas vital oil supplies rom Arica and the Middle East.From October 2004 to January 2005, the China National Oshore OilCorporation (CNOOC) signed six contracts on production sharing with theMOGE. The China Petroleum and Chemical Corporation (SINOPEC) and itssubsidiary Dian Quiangui Petroleum Exploration also work on Burmas inland oiland gas elds. Moreover, the China National Petroleum Corporation (CNPC) and

its subsidiary Chinnery Assets has won contracts to upgrade our old oileldsin central Burma. These companies are now at various stages o explorationand have made nancial commitments o US $163 million. This is still relativelysmall compared to the total amount o oreign investment in Burmas oil andgas sector o at least US $2,635 million.54 It is nevertheless only recently thatChinese companies started investing in Burma, and their investment paceis expected to increase. Out o a total o 26 Chinese oreign investments inBurma, 16 projects were made in scal years 2004-2005 or 2005-2006,representing nearly 70 percent o total Chinese investment. Most were in theenergy and mining sectors.55

The largest and most signicant business deal between Burma and Chinarelates to the Shwe gas eld and was only ocially announced in August 2007.At that time an ocial rom Burmas Energy Ministry noted that Burma haddecided to sell the gas rom A-1 and A-3 to China and [that] details are undernegotiation. Once we reach an agreement, we will go ahead. He added that

China: a political allyand a major tradingpartner.

Chinese investment isgrowing.


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i everything goes well, the gas rom these oshore blocks will be sold toChina through a pipeline.56 The comments were the rst conrmation romthe military junta o this deal, which had been suspected or a while.

In April 2007 dierent media had already reported that Burma had signeda memorandum o understanding with the PetroChina company to exportShwe gas via a 2,380 km inland pipeline, the construction o which was worthUS $1.04 billion. The gas will travel rom western Burmas Arakan state andthrough central Burma to its destination o Kunming, the capital o ChinasYunnan province. Besides the price o the gas and the taxes and ees that maybe collected on it, or 30 years China will provide the Burmese regime with anannual transit ee o US $150 million as compensation or the pipelines 990km stretch in Burma.

According to assessments made by the US-based international certicationagency GCA, the A-1 and A-3 elds o the Arakan coast, which China hasgained access to, contain reserves o 5.7 to 10 trillion cubic eet o gas. O theexpected production o 600 million standard cubic eet o gas a day rom thetwo blocks, Burma has decided to export 560 million standard cubic eet toChina.57 The gas should start fowing in 2009, and the military regime will thenhave another steady and substantial source o oreign income.

China also sees Burma as an important potential source or hydroelectric

power. It is known that the Burmese junta has signed contracts with twoChinese companies, CITIC Technology and Sino Hydro Corporation, to build anew hydroelectric acility, the 790-megawatt Yeywa hydropower plant on theDukhtawaddy River near Mandalay.58 This means hydropower development isalso set to become an important source o income as well as political backingrom China or Burmas generals.

Chinas interests in Burma are, however, not only related to the countrysresources. China is also interested in Burmas geographic access to theIndian Ocean, through the Bay o Bengal and the Andaman Sea. There are

economic as well as military and security reasons or this. Around 80 percento the oil that China consumes is transported through the narrow and shallowMalacca Strait between the west coast o Malaysia and the Indonesian islando Sumatra. The strait is already plagued by piracy, and regional conficts orterror attacks could seal it o, making it much more dicult and expensiveto get oil to China. So i China is able to transport some o the oil it buys inArica and the Middle East through Burma, it may be able both to save ontransportation costs and to increase its security o supply.

Furthermore, access to the Burmese coast is seen as a way or Yunnanprovince, now one o Chinas least developed and poorest regions, toaccelerate its development., as such access will make it easier or the regionto take part in global trade. Finally, Chinas military is keen on getting directaccess to the Indian Ocean, as this will give it more fexibility in pursuingthe countrys geopolitical interests. For all these reasons, China is not onlyengaged in establishing a pipeline between Yunnans capital Kunming and the

Burma is an impor-tant source o, anda conduit or, energysupplier to China.


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Burmese coast, but also in connecting them through the construction o a roadand a railway.

According to local reports, China is presently building a large seaport on PadaeIsland in Arakan State. The island is about 5 km rom Kyauk Phyu city, and onthe Bay o Bengal. This port would have a depth o 20 metres and be capableo accommodating the largest reight and container vessels and would acilitatetransit trade to the Indian Ocean and beyond. Kyauk Phyu is located alongthe land route connecting southwestern Chinas Kunming city to the Arakancapital o Sittwe.59 Since early 2007, Asia World, a privately-owned Burmeserm with strong business interests in Singapore, Malaysia, and China andwhich is owned by one o the Burmese cronies and drug dealers closelylinked to the military has been involved in the early stages o the sea ports

construction.60

While Chinas political infuence and interests in Burma have been high orsome time, they seem set to increase. And while Chinas economic interestsso ar have been relatively meagre, they too will develop together with Burmasgrowth in oil, gas and hydropower. This means China holds one o the mainkeys, i not the main one, to changes in Burma. The question is whether Chinawill pressure Burma to institute democratic changes that China itsel is reluctantto accept. I not, the wait or changes in Burma may be long.

India

Although it shares with Burma a history as part o the British Empire, India tooka relatively cool stance on Burma until the 1990s. Since then, relations betweenthe two countries have become closer. Today they cooperate in the promotion otrade and investment as well as in more geopolitical areas. India regards Burmaas an economic bridge to the rest o Southeast Asia, and this has infuenced itstrading priorities. Burma or its part has an interest in Indias growing economyand the potential or counterbalancing Chinas political and Thailands nancialinfuence on the country with Indias capacity in both areas.

India has now become Burmas second largest export market, accounting or12.7 percent o Burmese exports. India is also the seventh most importantsource or Burmas imports. In the scal year 2006-07, the two countriesbilateral trade reached US $650 million, up rom US $557.68 million in2005-06 and US $341.40 million in 2004-05.61 Both India and Burma arecommitted to increase this trade.

The two countries are also part o BIMSTEC, the Bay o Bengal Initiative or

Multi-Sectoral Technical and Economic Cooperation, which is a regional bodycomprising Burma, Bangladesh, India, Sri Lanka and Thailand.62 The BIMSTECnations are working towards concluding a ree trade agreement amongthemselves. India, obviously the main player in the co-operation, has alreadyconcluded ree trade agreements with Sri Lanka in 1998 and Thailand in 2004,but has yet to nalise its agreements with Bangladesh and Burma.

China reportedly buil-ding a large sea-port inArakan State - with thehelp o a drug-lord withmilitary links.

Indias trade withBurma increasing everyyear.


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India and Burma are also considering a series o initiatives or expansion oborder trade between the two countries. India is engaged in several river andland-based projects in Burma, including port reconstruction in the town oSettwe, the Kaladan Multi-Modal Transport project and the Tamu-Kalewa-Kalemyo road project.63 And India has approved a proposed agreement withBurma or the avoidance o double taxation and the prevention o income taxevasion or citizens doing business in both countries. Once the agreementcomes into eect it is intended to stimulate the fow o investment, technologyand labour rom India to Burma and vice-versa and generally boost economiccooperation between the two countries.64

India is already one o Burmas largest investors, active primarily in Burmas oiland gas sector but also in agriculture, sheries, pearl cultivation, inrastructure,

mining and tourism. The most signicant investment is Indias involvement inthe massive Shwe gas project, which is supposed to include a gas pipelinerunning to India. Indian companies Oil and Natural Gas Company Videsh,and the Gas Authority o India - are partners in the development o the Shweeld, which is led by South Koreas Daewoo. In act it was initially plannedthat the gas rom the A-1 Block o the Shwe eld would all go to India via aplanned pipeline through Burmas Arakan and Chin states, across Bangladeshto Kolkata (ormerly Calcutta) in India.65

But this project ell victim to diplomatic stalemate, as India elt Bangladesh

demanded too many concessions rom India or having the pipeline run throughits territory. In December 2005, while India and Bangladesh deliberated on asolution, Burma seized the opportunity to sign a memorandum o understandingwith PetroChina or the sale o gas rom the A-1 block to China. The Burmesegenerals seem very much aware o the political as well as the nancialadvantages they can reap rom the Shwe gas eld.

India is nevertheless still very much engaged in the exploration o Burmasoil and natural gas and continues to cooperate with the military junta onthis issue. Burma has assured India that it contains enough natural gas or

both Indian and Chinese markets. India is expected to become a market orBurmese natural gas, via a pipeline that either runs through or circumventsBangladesh.66 Indias commitment to Burma was made clear when its oilminister, Murli Deora, few into Rangoon in late September 2007 to sign a US$150 million oil deal with the military junta, even as world attention ocused onthe generals brutal crackdown on the pro-democracy uprising.67

Indias investments arediversied.

New Indian oil deal si-gned during Septembercrackdown.


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All this makes it clear that money is pouring into the coers o the Burmesegenerals. In spite o this, the Burmese people ace the most severe povertythey have experienced in decades. None o the oreign money appears to betrickling down to anyone but the junta and their closest allies. Hence, urtheroreign investment in oil, gas, hydropower or any other sectors will not promote

Burmas evolution into a modern democracy that provides or its people nor,clearly, will it equip Burmas people to overthrow their government. Instead itwill strengthen the current regime.Foreign investment and trade with Burma has already enabled the junta toexpand the armed orces dramatically. In 1988 there were less than 200,000military personnel. Today there are more than 400,000, a gure expected togrow to hal a million. Military spending fuctuated between a third and a halo the regimes budget during the 1990s and is today estimated to comprise atleast 40 percent. Today, there is a clear link between income rom the sale o

Burmas gas and the regimes purchases o arms used to repress its population.Hence, since 2002 when the junta started receiving its rst revenues rom theYadana pipeline, it has been on an accelerated shopping spree or new weaponsand military equipment. In the year that Total paid a US $15 million signatorybonus to MOGE, the regime purchased 24 Soviet-era helicopters rom the Polishcompany PZL, prompting one Polish diplomat to note that the Burmese paidus with Total money.68 Similarly, in 2001 Janes Deence Weekly reported thatthe military had bought 10 MiG 29 jet ghters rom Russia and that the moneycame rom Thai gas purchases. The down-payment or the ghters came in thesame week as the state-owned Petroleum Authority o Thailand paid Burma US$100 million in royalties or gas.69 It seems inevitable that more money or thegenerals will mean more spending on advanced military and police equipmentand personnel, not on much-needed investment in health, education and therural economy that most Burmese depend on.

Burmas neighbours are getting ever more involved in its aairs, directly andindirectly supporting the present unelected, dictatorial government. Even whenthese countries proess to care or democracy and human rights, the hunger orenergy caused by their booming economic growth means they turn a blind eye

to repression and human rights abuses in Burma. And in countries where theserights and values are already repressed, as in China, there is even less scopeor critical engagement with or pressure on the Burmese junta.

I things continue as they are now, nothing will change. I the current growthin trade and investment, and political co-operation along with it, keep to their

Democracy and reedom in

Burma through new sticksand carrots

Military directlyconsumes 40% o thenational budget.

Gas prots goingdirectly to buysophisticated militaryhardware.


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current patterns, a new day or the Burmese people will remain distant. Instead,the Burmese generals will acquire even more power and a greater ability toreinorce it by suppressing democracy and reedom in the country.

Intensifed, more sophisticated sanctions are the only

solution

Nearly twenty years o constructive engagement with the regime, selectivesanctions by some countries, and a string o envoys and resolutions rom theUN have ailed to bring about a single democratic reorm in Burma. Thosearguing against sanctions have ignored the uncompromising nature o thejunta, the connection between the militarys economic base and its politicalsupport, and the leverage that sanctions would provide or the democracy

movement in its negotiations with the generals. Those who oppose sanctionsare eectively saying Burmas rulers should be allowed to continue to reapnancial benets rom oreign trade and investment. But it is becoming clearerthat such benets only eed the juntas power base while bringing no benetsto the ordinary Burmese people.

Rigorous, sophisticated and targeted sanctions, applied by all major players inthe Burmese economy, are the only way to deal with the generals and orcethem to change. Some will nd such sanctions harsh and might genuinelyear that they will hurt the Burmese people by crippling the economy and

creating more unemployment. But while these ears may be warranted in somecircumstance, sanctions could be very eective and appropriate in Burma. Farrom being a blunt and indiscriminate tool as some ear, sanctions on Burmacould be capable o exerting considerable pressure on the military regime tomake the changes needed to benet the Burmese people.

This is because the juntas support base consists o regional commanders,high and middle ranking military ocers and the amilies and businessassociates o the military establishment a constituency that together with theSPDC itsel and the highest ranking generals owns and controls most o theormal economy, which thrives on access to oreign investment and markets.Reducing the regimes ability to keep this constituency satised should breedpolitical pressure or reorm within the military establishment. The democracymovement in the country and the representatives who won 82 percent o theseats in the countrys last parliamentary elections in 1990 continue to call orsanctions. The junta says they must withdraw this demand as the prerequisiteor dialogue with the leader o the pro-democracy movement, Aung San SuuKyi, and her colleagues. This is proo that sanctions do hurt the regime and thatthe generals ear them and their consequences.

Furthermore, sanctions would aect the Burmese people to only a very limitedextent. Most Burmese are subsistence armers or work at other activities in theso-called inormal economy, which has almost nothing to do with either oreigninvestment or markets. The impact o sanctions that are targeted at the ormaleconomy, particularly oil, gas and other orms o energy, would thereore be

Rigorous, sophisticatedand targetted sanctionsneeded, to stop thefow o money to the

military.

Junta insists that Bur-mas elected leadersdrop call or sanctions.


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minimal or the vast majority o Burmas people. The average Burmese doesnot send money abroad, cannot aord to travel, has no assets in oshorebank accounts, and does not seek to raise unds in overseas capital markets.Thereore the Burmese will not be hit by sanctions that target such activities.Neither can it be reasonably held that oreign investment provides seriousbenets to the local populations. The French oil and gas multinational Total issaid to employ a mere 270 national sta on the site o its Yadana pipeline. Thecompany also boasts regularly about its socio-economic development projectsin the region, which it claims benets up to 45,000 people, i.e., less than 0.1%o Burmas total population o 48 million!

Finally, opponents o sanctions may argue that allowing unettered increasesin oreign trade and investment in Burma will oster a new middle-class that

will claim democracy and reedom. While there are precedents or suchdevelopments elsewhere, this seems a alse hope in Burma. A commercialmiddle-class does not exist in Burma, and history shows that such a thing isvery unlikely to emerge rom a dictatorship economy that is based on naturalresources and extractive industries. Burmas economic elite and anyoneassociated with it were notable or their absence rom the demonstrations oSeptember 2007. Foreign business in Burma benets only a small oligarchicminority. And oligarchs, as history has shown again and again, usually prove tobe very poor democrats.

Burmas democracy movement continues to call or sanctions on the country.And so does a still increasing part o the Burmese people. Hari, a 27-year-oldcommercial trader who in ear o reprisals asked not to be indentied urther,told the ITUC, I would like to request the world to use economic sanctions andevery means possible until human rights are restored in Burma.70 This is anappeal that Maung Maung, general secretary o Burmas Federation o TradeUnions (FTUB), oten meets: We have been asked by the people in the countryto have sanctions on the regime, especially on the industries, the ventures, thatcreate money directly or the regime and its cronies. What we have been told bypeople rom the very ground level, the actory workers, the people on the work

foor, is Look, just shut it down. Maybe well all go hungry or a month. But itsbetter to change the system now than to go suering or ever like this.71

Yet sanctions are not only discussed in relation to their eect and whether theyare morally right or wrong. The legality o sanctions is also used as a cloak tocontinue business as usual or even, in good aith, presented as an obstacleby those otherwise in avour o sanctions. Hence many people, policy-makers,government ocials and ministers among them, contend that sanctionscontradict WTO rules and could lead to trade disputes on behal o Burma,which is a WTO member, with the consequence that sanctions would be oundan illegitimate trading practice. This is however not the case. The negativearguments concerning WTO rules are unounded and sanctions against Burmaare wholly easible without ear o ill-eect. There are several reasons that is,legal premises to this.

The outset or the legality o sanctions with regards to WTO rules is the

No sign at all thatoreign business linksbenet anyone excepthe military and theirclose riends.

Burmas democratictrade union ederationFTUB supports call or

sanctions.


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investigative work done by the UNs International Labour Organisation and thesubsequent resolutions passed by its decision making bodies. In 1996 the ILOestablished a special Commission o Inquiry on the systematic use o orcedlabour (in relation to ILO Convention 29 on Forced or Compulsory Labour), whichdelivered its report on the issue in 1998. It concluded that there is abundantevidence beore the Commission showing the pervasive use o orced labourimposed on the civilian population throughout Myanmar by the authoritiesand the military or portering, the construction, maintenance and servicingo military camps, other work in support o the military, work on agriculture,logging and other production projects undertaken by the authorities or themilitary, sometimes or the prot o private individuals, the construction andmaintenance o roads, railways and bridges, other inrastructure work and arange o other tasks, none o which comes under any o the exceptions listed in

Article 2(2) o the Convention.72

In 2000, the International Labour Conerence,which is the highest decision making body o the ILO, recommend[ed] to theOrganisations constituents as a whole governments, employers and workers that they: (i) review, in the light o the conclusions o the Commission oInquiry, the relations that they may have with [Burma] and take appropriatemeasures to ensure that [Burma] cannot take advantage o such relations toperpetuate or extend the system o orced or compulsory labour () and tocontribute as ar as possible to the implementation o its recommendations;and (ii) report back in due course and at appropriate intervals to the GoverningBody.73 The terms o this resolution were urther recalled and strengthened by

the International Labour Conerence in June 2006.

In WTO rules there is ample space to allow or such concerns to prevail over thoseo basic market access. The GATT article XX (a) reers to measures necessaryto protect public morals as an acceptable justication o restrictions o trade the choice to reuse to undertake trade with a country that uses orced labourand in general has an oppressive, authoritarian regime that grossly undermineshuman rights, would denitely be an expression o the public morals o thecountry taking such measures. The GATT article XX (b) reers to the legitimacyo measures necessary to protect human, animal or plant lie or health it

leaves the possibility o being used to protect human health in the exportingcountry, in the case o Burma by preventing the expansion o exports producedto the detriment o the health o the workers concerned, inficted upon civilianssubjected to orced labour, including deprivation o health care, ood, waterand rest. The GATT article XX (c) explicitly provides or measures relating tothe products o prison labour. Though the interpretation o prison labour hasnever been claried in GATT jurisprudence, there is a strong argument thatthis provision could be interpreted as oering a justication or trade measuresagainst orced labour. The GATT article XXI (c) allows countries to introducetrade restrictions i that is in pursuance o its obligations under the UnitedNations Charter or the maintenance o international peace and security. Theseprovisions should equally apply to decisions taken by a specialised agency othe United Nations, in this case the ILO, and would mean that sanctions couldbe justied as a means to eliminate the source o international tension andinsecurity that Burmas junta is responsible or creating.74

International LabourOrganisation points topervasive use o orcedlabour.

WTO rules do allow orsanctions on Burma.


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In a speech on WTO law in relation to the international legal order, WTODirector General Pascal Lamy also emphasised that the WTOs legal panelswould authorise sanctions i they were compatible with decisions by otherinternational bodies. Ater outlining the many parts and aspects o WTO lawhe concluded: I hope it is now clear that WTO Members trade restrictionsimposed to implement non-trade considerations will be able to prevail overWTO market access obligations so long as they are not protectionist. In otherwords, the WTO provisions themselves recognize the existence o non-WTOnorms and other legal orders and attempts to limit the scope o applicationo its own provisions, thereby nourishing sustainable coherence within theinternational legal order. He urther noted that in relation to other internationalorganisations, the norms that they produce have a certain authority increating a presumption o WTO compatibility when such international standards

are respected. Thereore, the WTO encourages Members to negotiate normsin other international ora which they will then implement coherently in thecontext o the WTO, beore he once again emphasised his conclusion: TheWTO does, thereore, take into account other norms o international law. Absentprotectionism, a WTO restriction based on non-WTO norms, will trump WTOnorms on market access.75

The way orward

The United States and recently, to some extent, Australia, Canada and the EU,

have tried to have some impact on the economic interests o the Burmeseregime and its constituency by imposing limited sanctions on trade andinvestment. But their eect has been undercut by the inaction o governmentsin Asia, particularly Burmas closest neighbours. There is not and has neverbeen any legal obstacle to Asian companies doing business with Burma. Andthe measures adopted by the US, the EU and Australia have been weak, withno measures that would seriously threaten the Burmese military regime. Forexample they have not targeted the generals key income rom oil and gas, andthey have not been ully implemented with regard to nancial transactions atleast not by the EU.

Instead, a United Nations Security Council decision should prohibit all countriesrom making any new investment in Burmas oil and gas elds. And countriesshould block company payments that help sustain Burmas brutal military rule,in practice by blocking dealings with any o the state-owned companies suchas the Union o Myanmar Economic Holdings (UMEH), the Myanmar EconomicCorporation (MEC), and the Myanmar Oil and Gas Enterprise (MOGE). Basicallyall investment in and trade with Burma should be suspended until a regimechange takes place in the country. This would also mean that oreign companiesshould temporarily divest their assets in Burma.

However, even the EU and the US, who do have certain sanctions on Burma,have lacked the will to take such measures. This makes it all the more unrealisticto suppose that Thailand, China and India, never mind other investors such asSingapore, South Korea, Malaysia and Russia, will take meaningul action. Sowhile trade sanctions including a ban on oil and gas import rom Burma remain

Existing economicpressure on the juntaundermined by neigh-bouring countries.

Financial deals andpayment to juntacompanies should beblocked.

Money pipeline to themilitary leaders shouldbe cut o.


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essential, they need to be complemented by nancial measures. But there isanother way. As most international nancial transactions pass through Westernclearance banks, the EU and the US have the potential to jointly block virtuallyall international transactions by or to the Burmese leaders. This would halt theiraccess to oreign currency and hence diminish the importance o their controlover oil, gas and other natural resources.

The way to do this is to impose targeted nancial sanctions on companiesowned and controlled by the Burmese military, or whose revenues substantiallybenet the military; by reezing bank accounts belonging to military-controlledcompanies; and by imposing additional sanctions to block their nancialtransactions. The US and Australia have already partly imposed such sanctions.And they have indeed had an eect: banks in Singapore have rozen accounts

belonging to Tay Za, a prominent crony o the Burmese regime, with the resultthat one o his key holdings, Air Bagan, has had to suspend fights betweenBurma and Singapore.

But i the EU does not join the US and Australia in banking and nancialsanctions, Burmese transactions will just shit to Euro accounts. And even ithe EU comes along, there is still a risk that Singapore and Hong Kong dollarswill become the escape valve or the juntas dealings. Thereore, banks inSingapore and Hong Kong must also be included in imposing sanctions asthey have been in similar measures aimed at curbing military development in

North Korea.

Pressure is also being put on companies through shareholder action in supporto disinvestment rom Burma prompted through the Global Unions Committeeon Workers Capital. These actions alone are putting heavy pressure on thejunta, but comprehensive global sanctions as described above must also beput in place. The international trade union movements campaign on Burmaincludes action to convince oreign companies not to have business links withBurma. A public data base lists more than 400 companies believed to havesuch links (see: www://ituc-csi.org/spip.php?rubrique177). Several companies

have responded positively to the ITUCs call or them to end their links, butothers have not.

The bottom line is that as long as Burmas neighbours ail to take thenecessary measures, banking and nancial sanctions by the EU, the US andother countries are the most practical and most eective economic measuresavailable to orce desperately needed change in Burma.

Banking and nancialsanctions are needed.


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(1) Companies Supporting the Regime in Burma, The Dirty List, The Burma Campaign UK(2) The European Union and Burma: The Case or Targeted Sanctions, The Burma Campaign UK, March2004(3) This document will call the country Burma throughout. Myanmar, an attempt to render the writtenBurmese version o the countrys name more closely in English, was imposed in 1989 by the militarydictatorship, and though recognised by the UN, is not recognised by most English-speaking countries orby the Burmese democracy movement. It will be used here in the ocial names o organisations set upby the ruling junta.(4) ITUC Burma Rough Assembly Shot-list, Parachute Pictures(5) Tourism, The Burma Campaign UK(6) Burmas Despair: The Economic Follies and Fundamentals Behind the Saron Revolution, SeanTurnell, Burma Economic Watch, October 2007

(7) These statistics were given by the UNDP to an ITUC-FIDH mission to Burma in October 2007.See Preliminary Key Findings o Joint ITUC-FIDH Mission on Burma, http://www.ituc-csi.org/spip.php?article1520. Similar gures are quoted by unnamed UN ocials in Burmas Economy: The JuntasAchilles heel, Larry Jagan, , Mizzima News, 6 August 2007(8) Statement o the United Nations Country Team in Myanmar, 24 October 2007, Yangon - Ater releas-ing this statement the UNs top resident diplomat Charles Petrie was kicked out o the country by themilitary junta.(9) Statement o the United Nations Country Team in Myanmar, 24 October 2007, Yangon(10) Larry Jagan, Burmas Economy: The Juntas Achilles heel, Mizzima News, 6 August 2007(11) ITUC Burma Rough Assembly Shot-list, Parachute Pictures(12)ITUC Burma Rough Assembly Shot-list, Parachute Pictures(13) Because o the state and nature o Burmas government it is very dicult to get access to the mostbasic social and economic indicators o the country. For example, the standard indicator or economicinequality, the Gini coecient, is unknown when it comes to Burma. It is or this reason that this part othe brieng uses other indicators and accounts to show the increasing economic inequality in the country(14) Burmas Despair: The Economic Follies and Fundamentals Behind the Saron Revolution, SeanTurnell, Burma Economic Watch, October 2007(15) Larry Jagan, Burmas Economy: The Juntas Achilles heel, Mizzima News, 6 August 2007(16) Statement signed by Action Contre la Faim, Aide Medicale Internationale, Asian Harm ReductionNetwork, CESVI, Deutsche Welthungerhile/German Agro Action, Enants du Monde Droits de l'Hommes,International HIV/AIDS Alliance, Malteser International, Medecins du Monde, Norwegian People's Aid,Population Services International, Save the Children, Terre des Hommes Italia - http://www.npaid.org/?module=Articles;action=Article.publicShow;ID=5470(17) Statement o the United Nations Country Team in Myanmar, 24 October 2007, Yangon(18) Between Myanmar and Thailand, a modest waterway and a gaping divide, Thomas Fuller, Interna-tional Herald Tribune, October 24, 2007(19) Key Issues Economy, ALTSEAN BURMA http://www.altsean.org/Key%20Issues/KeyIssuesEconomy.

htm(20) WHO World health Report 2000 http://www.who.int/whr/2000/en/annex01_en.pd(21) Between Myanmar and Thailand, a modest waterway and a gaping divide, Thomas Fuller, Interna-tional Herald Tribune, October 24, 2007(22) Timber Trade and Wood Flow-Study: Myanmar, Tuukka Castrn, Poverty Reduction & EnvironmentalManagement in Remote Greater Mekong Subregion (GMS) Watersheds Project, 1999(23) The Shwe Gas Bulletin, Volume 2, Issue 11, July-August 2007(24)Key Issues Economy, ALTSEAN BURMA http://www.altsean.org/Key%20Issues/KeyIssuesEconomy.htm(25) Burma: The State o Myanmar, David I. Steinberg, Washington, DC: Georgetown University Press,2001(26) Burma and Its Neighbours: The Geopolitics o Gas', shild Kols & Stein Tnnesson, Australia PolicyForum, August 2006

(27) Gas reserves prop up economy, Daily Yomiuri Online, 29 September 2007(28) Oil Investments Fueling Myanmar's Brutal Crackdown On Pro-Democracy Movement, JessicaPupovac, AHN, 2 October 2007(29) The Shwe Gas Bulletin, Volume 2, Issue 11, July-August 2007(30) Burma: Foreign Oil and Gas Investors Shore Up Junta, Human Rights Watch, http://hrw.org/campaigns/burma/drilling/(31) Foreign investment in Myanmar dominated by oil and gas, power sectors, Associated Press, 26November 2007

End notes


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31

(32) Burma and Its Neighbours: The Geopolitics o Gas, shild Kols & Stein Tnnesson, Australia PolicyForum, August 2006(33) Foreign investment in Myanmar dominated by oil and gas, power sectors, Associated Press, 26November 2007(34) For the list o companies in the Global Unions database see http://www.global-unions.org/burma

(35) An overview o the Burmese Sanctions Regulations, Title 31 Part 537 o the U.S. Code o FederalRegulations, U.S. Department o the Treasury, Washington D.C., US(36) 2831st Council meeting, General Aairs and External Relations, European Union,Brussels, 19-20 November 2007(37) Ottawa imposes new sanctions on Myanmar, Globe and Mail, 14 November 2007(38) Foreign investment in Myanmar dominated by oil and gas, power sectors, Associated Press, 26November 2007(39) Foreign investment in Myanmar dominated by oil and gas, power sectors, Associated Press, 26November 2007(40) The World Factbook, CIA, https://www.cia.gov/library/publications/the-world-actbook/geos/bm.html(41) Myanmar to open 2nd largest border trade zone, Xinhua, 24 September 2007(42) Thai-Myanmar trade set to rise 20 per cent, The Myanmar Times, 1 August 2005(43) Thai-Myanmar trade set to rise 20 per cent, The Myanmar Times, 1 August 2005

(44) Thai investment, trade play key role in Myanmar's economic development, Xinhua, 3 June 2007(45) Letter rom TOTAL to the ITUC. Other sources (Kols and Tnnesson) estimate that the Yadana eldalone provides Thailand with 15-20 percent o its energy needs.(46) Burma and Its Neighbours: The Geopolitics o Gas, shild Kols & Stein Tnnesson, Australia PolicyForum, August 2006(47) Burma and Its Neighbours: The Geopolitics o Gas, shild Kols & Stein Tnnesson, Australia PolicyForum, August 2006(48) Thai investment, trade play key role in Myanmar's economic development, Xinhua, 3 June 2007(49) Thai investment, trade play key role in Myanmar's economic development, Xinhua, 3 June 2007(50) Burma and Its Neighbours: The Geopolitics o Gas, shild Kols & Stein Tnnesson, Australia PolicyForum, August 2006(51) Myanmar's Economic Relations with China: Can China Support the Myanmar Economy?, ToshihiroKudo, Institute o Developing Economies, July 2006

(52) The World Factbook, CIA, https://www.cia.gov/library/publications/the-world-actbook/geos/bm.html(53) Myanmar's Economic Relations with China: Can China Support the Myanmar Economy?, ToshihiroKudo, Institute o Developing Economies, July 2006(54) Myanmar's Economic Relations with China: Can China Support the Myanmar Economy?, ToshihiroKudo, Institute o Developing Economies, July 2006(55) Myanmar's Economic Relations with China: Can China Support the Myanmar Economy?, ToshihiroKudo, Institute o Developing Economies, July 2006(56) The Shwe Gas Bulletin, Volume 2, Issue 12, September 2007(57) The Shwe Gas Bulletin, Volume 2, Issue 12, September 2007(58) Burma and Its Neighbours: The Geopolitics o Gas, shild Kols & Stein Tnnesson, Australia PolicyForum, August 2006(59) The Shwe Gas Bulletin, Volume 2, Issue 11, July-August 2007(60) The Shwe Gas Bulletin, Volume 2, Issue 11, July-August 2007 Founded as a small business in theearly 1990s, Asia World has grown into one o Burmas largest and most protable business conglomer-

ates, with interests ranging rom transportation to construction and retailing. It is owned and managedby Steven Law and his ather, Lo Hsing-han, who is suspected o holding strong ties to the illegal drugsbusiness. The company currently operates Rangoon port and has built roads linking northern Burmawith Chinas Yunnan Province. Asia World also played a major role as a developer in the military juntasnew capital in Naypyidaw. Both Steven Law also known as Tun Myint Naing and his ather havebeen accused by the US o involvement in drug tracking. Law, who has a Singaporean wie with strongbusiness and political links within the city-state, was reused a visa to visit the US in the 1990s, despitehaving studied there in his youth.(61) India-Myanmar Trade Relations, Syed Ali Mujtaba, Global Politician, 23 July 2007(62) http://www.bimstec.org/(63) Burma-India relations: A betrayal o democracy and human rights, the Burma Campaign UK, March2007(64) India-Myanmar Trade Relations, Syed Ali Mujtaba, Global Politician, 23 July 2007

(65) Burma-India relations: A betrayal o democracy and human rights, the Burma Campaign UK, March2007(66) In early 2006, Brussels-based consulting rm Suz Tractebel was hired to conduct a easibility studyor overland pipeline routes to Northeast India, circumventing Bangladeshi territory. ('Burma and ItsNeighbours: The Geopolitics o Gas', shild Kols & Stein Tnnesson, Australia Policy Forum, August2006)(67) Oil Investments Fueling Myanmar's Brutal Crackdown On Pro-Democracy Movement, JessicaPupovac, AHN, 2 October 2007


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(68) Capitalizing on Confict, EarthRights International. 2003(69) Supply and Command - Natural gas in Western Burma set to entrench military rule, A report romthe Shwe Gas Movement, July 2006(70) ITUC Burma Rough Assembly Shot-list, Parachute Pictures(71) ITUC Burma Rough Assembly Shot-list, Parachute Pictures

(72) Forced labour in Myanmar (Burma), Report o the Commission o Inquiry appointed under article 26o the Constitution o the International Labour Organization to examine the observance by Myanmar o theForced Labour Convention, 1930 (No. 29), Geneva, July 1998(73) Resolution adopted by the International Labour Conerence in June 2000(74) The General Agreement on Taris and Trade (GATT), www.wto.org(75) The Place and Role o the WTO (WTO Law) in the International Legal Order, Address beore theEuropean Society o International Law, Pascal Lamy, 19 May 2006, Sorbonne, Paris http://www.wto.org/english/news_e/sppl_e/sppl26_e.htm

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