Myanmar Project Fueling International Controversy

It is Saturday morning and a crowd of children is giggling over the televised antics of Tom and Jerry, courtesy of the foreign energy companies that have promised this impoverished fishing village a fast track to the 21st century.

But France’s Total and El Segundo, Calif.-based Unocal have brought not only Hollywood cartoons, a new schoolhouse, a medical clinic and a shrimp farm to this isolated outpost, a weathered collection of wooden buildings on stilts on the thin sliver of Myanmar that hugs Thailand.

They have also attracted the international scorn of critics opposed to a $1-billion energy project that could bring political legitimacy and, eventually, badly needed foreign currency to Myanmar’s brutal military regime.

Daminseik is one of 13 remote villages located near the path of a partially completed Total-Unocal natural gas pipeline--which is cutting a slash of controversy across 416 miles of ocean, sparsely populated jungle and rugged mountains from the Andaman Sea to the center of Thailand.

The Yadana project (named after the Burmese word for treasure) is the focus of an escalating battle over whether economic engagement or isolation is the best way to tame the aging generals who seized control of this Southeast Asian country, previously known as Burma, in a bloody coup in 1988.

The outcome is important not just for Myanmar and the energy companies but also as a possible model for other companies seeking to develop new markets in regions where unstable, and often authoritarian, governments are the rule rather than the exception.

Total, the French energy giant that is the project’s lead operator, and Unocal are partners with Thailand’s state-owned PTT Exploration and Production Public Co. and Myanmar’s state-owned Myanma Oil and Gas Enterprise.

The members of the pipeline consortium argue, as natural-resource companies always have, that they must steer clear of politics to survive, because their success lies in following the wealth, regardless of who controls the land above it.

“What you’re asking us to determine is the legitimacy of a government,” said David Garcia, a Unocal spokesman. “That is not our job. That is the job of professional diplomats.”

Unocal is particularly eager to stay in the good graces of Asia’s ruling elite because it recently announced plans to sell its West Coast oil reserves, refineries and “76”-brand service stations and bet its future on the other side of the Pacific.

Texaco Inc. also recently announced plans to participate in an international consortium developing a gas field off the coast of Myanmar.

Ethics Questions

But many factors--a global shift from military to economic diplomacy, changing public attitudes about corporate ethics at home and abroad, increased environmentalism, and communications links that have spotlighted remote regions of the world--have combined to raise the ethics bar for U.S. companies operating overseas.

The Clinton administration is under pressure to take tougher action against Myanmar’s ruling State Law and Order Restoration Council, known as SLORC, following this month’s attack by rock-wielding hoodlums on a car carrying Nobel Peace Prize winner Aung San Suu Kyi.

Last weekend, the U.S. State Department issued a warning to Myanmar’s rulers, who were accused of orchestrating the attack, that they face severe repercussions if the popular opposition leader is harmed.

Earlier this year, Congress passed a law directing the president to impose stiff penalties, including a ban on new U.S. investment in Myanmar, if the human rights situation here worsens. It is not clear whether Unocal would be affected because opinions differ as to whether “new investment” includes additional money for ongoing projects or simply new projects.

Unocal and its foreign partners are trying to make their case in the public debate. This month they took the unusual step of inviting a small group of foreign journalists to visit the heavily guarded Yadana project and “see for themselves” that accusations of forced relocation of villagers, environmental degradation and conscripted labor are untrue.

In the companies’ view, the choice is clear. Economic development and political openness go hand in hand: The Yadana pipeline will not only provide profits for them but also help boost Myanmar’s struggling economy.

The Yadana pipeline, Myanmar’s largest foreign investment project, will carry natural gas from a rich offshore field across the country and into Thailand, which is buying most of the energy. Nearly a quarter of the production, however, has been promised to energy-starved Myanmar for a fertilizer plant and power facility.

“My company is a firm believer that constructive engagement is the more correct way to bring a country along to economic growth and put it on the road to democracy,” said Carol Scott, a Unocal spokeswoman.

Decades of self-imposed isolation by Myanmar’s socialist leaders left this resource-rich country out of the Asian economic miracle. Despite recent efforts to introduce capitalism to the masses, the country still feels as if the clock stopped in the 1950s.

Compared with other bustling Asian cities, the streets of the capital, Yangon--formerly Rangoon--are not jammed with foreign cars and motorbikes. One eye-pleasing benefit of delayed development is the preservation of the British colonial architecture, the lush greenery and the absence of skyscrapers, even in Yangon.

But after a few days in this repressive country--where the state-controlled New Light of Myanmar newspaper exhorts its readers to “crush all internal and external destructive elements as the common enemy”--it becomes clear that only a piece of this story can be found in the companies’ statistics and a guided tour.

Ambitious Program

Herve Madeo, the charismatic French engineer who is president of Total Myanmar Exploration and Production, has less than six months to finish laying 2,700 steel pipes across mountainous terrain. After that, torrential rains will turn this remote countryside into an impenetrable mass of sodden underbrush and water.

The price of failure, small or large, is costly. A one-day delay in construction costs more than $100,000. If the consortium doesn’t have the pipeline up and running by 1998, it must pay a penalty fee to Thailand.

But Madeo, who came here from Indonesia in 1992 to oversee the Yadana project, is used to that sort of pressure. But as social worker and community planner, he is in uncharted, and uncomfortable, territory.

In a poor country made even poorer by the government’s decision to spend more money on arms and less on education, this businessman finds himself in charge of an ambitious development program that includes helping villagers find new ways of making money and improving their health.

The Total-led consortium has built or renovated eight schools, established one shrimp farm and more than 100 pig, cattle, goat and poultry farms, installed electricity in four villages and hired 12 full-time doctors.

“We have changed from one era to the next,” he said. “In the past, oil companies worked in a country, just doing business, and we did not care about the people. Now that is changing.”

By blurring the lines between “us” and “them,” the pipeline’s foreign owners hope to build a sense of community and lessen the resentment and fear that accompany any kind of massive change.

“If we want to integrate this project into the community, this must be their pipeline,” Madeo said.

Improving Lives

This effort has apparently begun to take root. U Hele, a 55-year-old fisherman from Daminseik, said his life has improved since the foreign companies came to town.

“We have a new school, a new clinic and a doctor,” he said under the watchful eyes of oil company and government officials. “Our village has improved.”

But well-meaning efforts also have gone awry. When Total first set up its base camp here, Madeo instructed the kitchen to buy all its products locally in an effort to support the farmers. He stopped after discovering that his company’s large purchases of eggs and vegetables were driving up the local price of food astronomically.

Similar considerations had to be made in setting wages and determining compensation packages for people whose homes or farmland were in the pipeline path. Too much would lead to inflation and exaggerate the gap between the haves and have-nots. Too little would fuel resentment and prompt charges of exploitation.

So far, the company has agreed to pay $1 million to reimburse villagers for 525 acres of land. When it hires locals to work on the project, it pays 200 kyat a day, or about $2 at the official exchange rate.

“If we give too much, we will destabilize this area,” Madeo said.

Total and its partners need the community’s support, particularly in light of the territorial conflicts and ethnic rivalries that have plagued this former British colony before and after it gained its independence in 1948.

Support of Natives

That message was brought home last March, when a group of armed men ambushed a pipeline convoy carrying fuel, employees and some SLORC soldiers who had been guarding the company’s equipment. Five Total employees, all locals, were killed; 11 others were wounded. No one has been arrested in the attack, although it could have been unhappy villagers or any of several dozen insurgent groups.

Total’s base camp is now surrounded by a double perimeter fence topped with rolls of barbed wire. Unarmed company guards man the gate and patrol the facility.

Total plots the whereabouts of all employees in the pipeline region on a computer, using regular radio contact to track their movements. Travel outside the base camp is done in armored vehicles and a helicopter.

The Yadana project’s greatest vulnerability, and the area where its operators face the most passionate criticism, is its security pact with a military force that has been accused of widespread abuse by groups that include Human Rights Watch/Asia and the U.S. State Department.

Myanmar’s troops are young, underpaid and untrained, a recipe for disaster in a remote region where there is little risk of getting caught.

The Myanmar armed forces are responsible for securing the pipeline but have not done any work on the project or been paid “one cent” by the pipeline operators, according to Madeo. But company officials concede privately that they are not directly responsible for, and therefore cannot control, the soldiers.

Madeo says that in the few instances where Total has learned of forced labor--such as when the military “borrowed” a villager’s bullock cart--he has compensated the aggrieved.

But the Total executive says he is certain the military has not committed widespread abuse in the pipeline region--including forced labor--since the contract was signed in 1992.

“There are a lot of people out there--I don’t know why--who are telling lies,” he said. “It is a campaign of disinformation.”

Allegations of Abuse

The picture is far different to the east in Kanchanaburi, Thailand, a place best known as the home of the infamous Bridge over the River Kwai. That bridge, now a major tourist attraction, was part of the “Death Railway to Burma” that claimed the lives of thousands of Allied POWs during its construction in World War II.

It is here that Katharine Redford, 28, and Tyler Giannini, 26, have established one of the main conduits to the so-called campaign of disinformation.

In 1995, these University of Virginia Law School graduates formed EarthRights International to provide legal help to indigenous people battling major development projects such as dams and pipelines.

Their first target was the Yadana pipeline, which is opposed by the National Coalition Government of the Union of Burma, the opposition government in exile, as well as the leaders of the Karen and Mon ethnic minorities.

Until these American lawyers entered the scene, most of the reports of abuses in the pipeline area were anecdotal. Documenting the reports was difficult because strangers, particularly foreigners, could not enter the heavily guarded region without arousing suspicion.

EarthRights’ secret weapon is a young Karen man, Ka Hsaw Wa, a student activist who fled Yangon after Myanmar’s military leaders launched its crackdown on the pro-democracy movement.

Ka Hsaw Wa’s six years in the jungle made him an ideal spy. The boyish-looking 26-year-old was able to locate seven or eight people in the pipeline region who were willing to secretly record testimony from the villagers and pass the tapes and photos across the border.

Redford has trained Ka Hsaw Wa and his sources to gather evidence that will hold up in court, emphasizing the importance of recording the minutest details and judging credibility and motive.

They acknowledge that they cannot prove some of the most egregious allegations, including the claim that the nearby Ye-Tavoy railroad line is being built to benefit the pipeline project. The U.S. State Department and others have reported “large-scale” use of forced labor on that railroad. Total and Unocal deny that the pipeline project has any connection to the railroad.

But Ka Hsaw Wa and his crew have gathered compelling testimony from more than 100 villagers detailing numerous abuses by the troops guarding the pipeline. They include villagers allegedly being forced to clear land for the pipeline, provide supplies for the troops or serve as porters.

One young girl, interviewed in a refugee camp in Thailand, told Ka Hsaw Wa that soldiers forced her and other villagers to clear land for the pipeline. She said two galawa, the Karen word for foreigner--presumably pipeline employees--watched them work for two days and then paid them for it.

The following day, after the foreigners had left the area, the soldiers allegedly forced the villagers to work one more day for free.

Three men from the village of Endayaza told Ka Hsaw Wa that a government soldier came to their homes earlier this year and demanded a “voluntary donation” of 500 kyat per family. Fearful of retaliation, they paid up.

Much of this testimony has been included in lawsuits filed earlier this year in U.S. District Court in Los Angeles against the Total-Unocal consortium and the government of Myanmar, alleging widespread violations of international human rights treaties and U.S. law. The goal is to stop the Yadana project and to gain some compensation for those who have allegedly lost their homes or their livelihood.

This is not simply anti-development politics at work, according to the founders of EarthRights International, which receives funding from international financier George Soros and other environmental and human rights groups.

They say they believe the Yadana project could succeed--bringing prosperity to its operators and Myanmar’s people--if its partner were a democratic government.

Until such a time, they echo the plea of opposition leader Suu Kyi--whose party won an election in 1990 but was not allowed to take power--that foreign companies register their vote for democracy by withdrawing from Myanmar.

“As long as they [Total] deal with SLORC, there is no way they can do this better,” Ka Hsaw Wa said. “The company should know what kind of partner it has.”