The Benefits of Doing Business with Burma

Published July 31, 2012
By Krista Hendry
The Fund for Peace Commentary
The recent move by the Obama Administration to suspend unilateral sanctions on Burma (Myanmar) led to a flurry of opinions. Many who oppose the move highlighted the specific request of Burmese Nobel laureate Aung San Suu Kyi for Western governments to not remove sanctions that prevented their companies from working with the state-owned Myanmar Oil and Gas Enterprise (MOGE). At the center of this argument is the notion that Western governments and private enterprise should hold back from diving in to the Burmese extractive sector until the country has adopted internationally accepted measures of transparency and accountability.

The Fund for Peace strongly agrees with that principle. However, in practice, the economies of countries newly opening or emerging from conflict are a vital component to putting the country on a path towards sustainable development and security and, ultimately, to good governance. The investment of responsible companies can be a catalyst for improved security, statebuilding and democratic reforms.

If the Obama Administration had heeded the arguments of Ms. Suu Kyi and her supporters and kept the sanctions on the Burmese extractive sector in place -- thereby preventing U.S. oil and gas companies from investing in that country -- it could have had resulted in unintended negative consequences, as we have seen in other conflict-sensitive places in the world. The truth is when a natural resource exists, it will be extracted. If American companies are prevented from competing to operate or invest in that extraction, then a non-US company will be selected. There is an inherent risk the selected company may not develop policies or programs that will benefit the local communities, ensure that human rights are respected, and promote improved governance.

We welcome the reporting requirements that will further encourage American companies to adopt policies and programs that ensure they can operate responsibly. In conflict-sensitive areas or areas of weak or bad governance, responsible companies, including US companies, have been developing and implementing these voluntarily for many years. For the past 15 years, The Fund for Peace has focused our engagement on the extractive sector – primarily oil, gas and mining – because they can have such an impact on the economy, communities, and even on encouraging improved governance. Extractive companies are participating in many initiatives designed to help them operate responsibly and be good corporate citizens even in high-risk areas.

For example, many American oil and gas companies are active participants in the Voluntary Principles on Security and Human Rights. The Voluntary Principles provide guidance to companies operating in zones of conflict or fragile states so they can ensure that security forces – public or private – protecting the companies’ facilities and premises operate in a way that protects the company’s assets while respecting human rights and fundamental freedoms.

In a country like Burma, having investors who implement the Voluntary Principles operating within the country can be an important element to a vital component of statebuilding: security sector reform. Too often, because of its perceived difficulty and sensitivity, security sector reform is overlooked by the international community. However, the United States has been very successful at supporting security sector reform programs around the world, including training on the use of force and the importance of protecting human rights. Preventing further investment by American companies in Burma could have adversely affected the U.S.’s potential engagement in much-needed security sector reform on the part of the Burmese government.

In relation to fiscal transparency, Burma has recently reached out to another extractive industry initiative designed to help ensure government accountability in relation to revenues from natural resources, the Extractive Industry Transparency Initiative (EITI). This is another example of how the investment of responsible foreign companies into a country can encourage improved practices related to ethics and accountability.

We agree with many of our colleagues within human rights organizations that Burma has a long road ahead to reaching sustainable security and that it is a conflict and high-risk area. For that reason specifically, we feel the U.S. Government was prudent in not keeping sanctions in place that prevented its responsible companies from being able to invest in the country.

For Burma to truly emerge from its long winter of repression and isolation, the nation will need to be lifted out of poverty, for so long an underlying cause of conflict and human rights abuses. Economic development will be sorely needed to put the Burmese people on the path towards true freedom and prosperity