Investment Ban in Myanmar May Not Have Much Impact, Asian Experts Say
President Clinton’s decision to ban new investment in Myanmar sends a powerful message of disapproval to corporate America and to the Asian nation’s repressive military junta but is not likely to have much impact on that country’s already battered economy, according to Asia experts.
That’s because, except for energy companies, the U.S. presence in the nation formerly known as Burma has been steadily shrinking in recent years, partly in response to growing political instability and international criticism.
Largely because of the investment tied to a $1.2-billion gas pipeline involving Unocal Corp., the United States still ranks among Myanmar’s top investors. But in 1994-95, the U.S. purchased just 1.5% of the country’s exports and accounted for 5.3% of that country’s imports, according to Myanmar government data.
“It’ll have important symbolic value, but on a purely practical business level I don’t think it’ll have much effect,” said Mark Mason, a Myanmar economic expert and associate professor at the Yale School of Management.
Details of the investment ban, formally announced Tuesday by Secretary of State Madeleine Albright, have not been settled. Among the important details to be worked out, the State Department said, are such questions as the effect on foreign-based subsidiaries of U.S. companies.
But corporate officials interpreted the ban on new investment to mean that existing projects such as those by Unocal, Texaco and Atlantic Richfield can proceed.
“We don’t expect any material impact on the Yadana project,” said Barry Lane, a Unocal spokesman. He said Unocal has invested $200 million in Myanmar so far.
But analysts and others said the new investment ban could eventually hurt those U.S. companies when they try to invest further in the energy-rich country. Unocal announced expansion plans earlier this year.
Other business leaders joined Unocal in condemning the action as ill-conceived foreign policy that is harmful to long-term U.S. interests. As proponents of economic engagement, they argue that such sanctions simply penalize U.S. companies by opening up opportunities for foreign competitors to step in.
“Today’s action perpetuates a bad precedent by ceding American leadership while rewarding our foreign competitors,” said Frank Kittredge, president of the National Foreign Trade Council.
The White House action is also certain to displease Myanmar’s neighbors, the Assn. of Southeast Asian Nations, which strongly oppose economic isolationism. They have already stated their intention to bring Myanmar into their fold sometime this summer.
In Myanmar itself, leaders on Tuesday shrugged off the action and reiterated denials of the allegations of human rights abuses. A military leader said his government would not be swayed by sanctions.
“It’s not a problem for us,” Lt. Gen. Khin Nyunt told reporters.
However, Clinton’s decision met with praise from human rights advocates and the growing ranks of congressional critics of Myanmar, whose government has been condemned for allegedly using forced labor, imprisoning and torturing political opponents and harshly repressing ethnic minorities. They voiced hope that other countries in Europe and Asia will follow suit.
Albright said the president’s decision, designed to “deal a further blow to investor confidence in Burma,” was made in response to the “utter lack of political freedom in that country and because its government has failed to cooperate in the war against drugs.”
Myanmar is the world’s largest producer of heroin, according to U.S. officials.
The president was acting under the provisions of a Burma sanctions law passed last year and co-sponsored by Sen. Dianne Feinstein (D-Calif.) and former Maine Sen. William Cohen, now defense secretary.
Myanmar’s ruling State Law and Order Restoration Council wrested control of the country in 1988 and refused to relinquish power after the opposition party, led by Nobel laureate Aung San Suu Kyi, won a free election in 1990.
“Conditions in Burma remain grim and warrant this limited measure,” said Sen. Daniel Patrick Moynihan (D-N.Y.), a vocal Senate champion of a democratic Burma, who praised companies such as Pepsi, Apple, Levi Strauss and Eddie Bauer that have already severed ties with Myanmar.
Sen. Mitch McConnell (R-Ky.), who chairs the Senate appropriations foreign operations subcommittee, said the president did not go far enough. He promised legislation to ban all U.S. investment in Burma, including existing investment.
Staff writer Edwin Chen in Washington also contributed to this report.
