Posted on 06/17/2002 3:40:54 PM PDT by Enemy Of The State
Myanmar sanctions in the dock
By Alan Boyd
SYDNEY - Energy multinational Unocal Corp will go in the dock in September over charges that it contributed to human-rights abuses during the installation of a gas pipeline between Myanmar and Thailand.
A Los Angeles court rejected a motion by Unocal that sought to dismiss a lawsuit brought by a coalition of labor unions, environmentalists and human-rights groups.
It is the first time a US company has ever been put on trial for its alleged actions in another country. But it is unlikely there will be a flood of other applications against foreign investors in Myanmar. For one thing, few overseas firms are still active in the repressive state. For another, doubts over the jurisdiction of US courts will make it difficult to get a conviction.
The action is one of a series of legal challenges that have been mounted against Unocal, the biggest US company still operating in Myanmar since Washington imposed sanctions on commercial contacts in 1996-97. All have alleged that Unocal knew the military junta controlling Myanmar had used slave labor and forcibly relocated residents when the pipeline was built to pump gas from the Yadana oilfield in the Andaman Sea.
Completed in 1998 at a cost of US$1.3 billion, the project is jointly owned by Unocal, Total SA of France, PTT Exploration and Production of Thailand and Myanmar Oil and Gas Enterprise, the state energy subsidiary.
A US federal court declined to accept a lawsuit lodged by Myanmar exiles in early 2000 because it had no jurisdiction, but the court found they probably had a case for referral to a state hearing.In its summation, the federal court concluded that "the evidence does suggest that Unocal knew that forced labor was being utilized and that the joint venturers benefited from the practice".
Los Angeles Superior Court concurred, ordering that jury selection start in late September on the action brought by the International Labor Rights Fund, a US-based lobbying group on workers' rights.
Unocal has not denied that atrocities might have been committed during the pipeline construction. In 2000 it acknowledged that "it is quite possible that human-rights abuses have occurred in Myanmar". However, the firm contends that it cannot be held responsible for the actions of its partners, noting that independent studies had found no evidence Unocal had itself acted improperly.
While the 2000 federal hearing found there might be a case for proceeding to trial, it pointedly noted that the plaintiffs had not been able to prove Unocal had conspired with the junta to violate human rights.
Most expect the next hearing to be equally inconclusive; rather, it appears that the real issue will be the veracity of US economic sanctions, especially in the light of recent improvements in the treatment of opposition members in Myanmar.
Washington first imposed a partial embargo on US investment in Myanmar in July 1996, after the systematic harassment and detention of opposition figures led by Aung San Suu Kyi. Incoming investment could be prohibited if it were determined that "the government of Burma (Myanmar) has physically harmed, rearrested for political acts, or exiled Daw Aung San Suu Kyi or has committed large-scale repression of or violence against the democratic oppression".
When political conditions continued to deteriorate, the US administration of president Bill Clinton declared a state of emergency with respect to Myanmar in May 1997 that brought a blanket ban on new investment by US individuals or companies.This was defined as a contract with either the public or private sectors in Myanmar for the development of natural, agricultural, commercial, financial, industrial or human resources, including shareholdings through third parties.
Unocal was already active in Myanmar before the sanctions were approved, and thus cannot be legally forced to withdraw. Nevertheless, its case has revived a bitter debate over the efficacy of sanctions.
There is little doubt that selective procurement policies adopted by some US states as a result of the federal actions have influenced investment decisions.Apple Computers, Eastman Kodak and Hewlett-Packard all pulled out after the state of Massachusetts forbade its government to deal with firms that were doing business in Myanmar.
Others to depart as an indirect result of the sanctions have included clothing manufacturer Levi Strauss and refreshments group Pepsi-Cola, which faced market boycotts at home. Motorola left in 1996, Texaco left in 1997 and Compaq Computers in 1998, along with Liz Claiborne, Amoco, Reebok and Walt Disney.
European firms have also felt the heat since the European Union enacted its own sanctions in 1997. Heineken pulled out in 1996, and Ericsson, Seagrams, Carlsberg, and Phillips Electronics were all gone by the end of 1998, as was the Canadian petroleum firm Petro-Canada.
Total is still there, as are Procter & Gamble, Marubeni, Northern Telecom, Premier Oil, Caterpillar, Fujitsu, ABN Amro and Sony. And Unocal, which has the firm backing of its major shareholders to fight the pending lawsuit.
A victory for Unocal would bolster efforts by conservative US and European pressure groups to have the sanctions rescinded now that Aung San Suu Kyi has been freed from nearly 20 months of house arrest by the junta, along with scores of her supporters.The opposing argument is that US firms will lose out to their Asian rivals as Myanmar modernizes and becomes a full economic partner of its neighbors in the Association of Southeast Asian Nations.
Certainly there are hundreds of Japanese, Singaporean, Thai and Malaysian firms that have not been swayed by the Western embargoes, and that also usually operate with the full support of their governments. Japan announced an increase in its official aid to Myanmar within days of Suu Kyi's release, with the intention of "supporting democratization and nation-building processes" that were expected to be expedited by the easing political tensions.
US firms are still the fourth-biggest body of investors in Myanmar, with 19 projects in the oil and gas industries alone, and committed capital of about $600 million.
Many of the companies that pulled out were already facing market downturns at home or in Southeast Asia. Textile sales plummeted in the US during 1997-98, as did Asian electronics demand.Yet some individual firms have been hurt badly by the sanctions: Pepsi-Cola controlled 80 percent of the soft-drinks market, in a sizable population base of 45 million, before it was forced out.
According to Unocal, US business has lost $15 billion to $19 billion in export opportunities and 200,000 domestic jobs because of sanctions, which have been applied to 35 countries since the mid-1990s for a range of perceived lapses.
There is another reason the political lobbyists will be out in force in September. The verdict could have a bearing on Washington's handling of the investment windfall that is expected to follow the demise of the Taliban in Afghanistan. Unocal opened negotiations with the hardline regime on the construction of an overland pipeline for Middle East gas in the late 1990s, and is training Afghan workers in the US state of Nebraska.
Washington's decision to attack Afghanistan after the terrorism attacks in the United States late last year is believed to have been partly motivated by a desire to clear political obstacles blocking the pipeline. Significantly, the US sanctions against Afghanistan apply only to dealings with the Taliban, and not the coalition leadership that took power this year, leaving the way open for Unocal to return.
But it is a safe bet that the George W Bush administration will closely watch developments with the Myanmar lawsuit, whatever the outcome.
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