July 03, 2012

Consensus cracking on US policy toward Myanmar

The rare Washington consensus behind Obama administration policy toward Myanmar is showing signs of cracks as American businesses grow impatient to invest there and human rights groups push back.

Those fissures are becoming evident as the U.S. rolls back its long diplomatic isolation of the military-dominated nation also known as Burma and looks to ease economic sanctions following democratic reforms there.

Sen. Jim Webb, D-Va., last week criticized opposition leader Aung San Suu Kyi, a figure revered by both U.S. political parties and key to bipartisan support for administration policy. During a recent trip to Europe she had cautioned against foreign companies entering business deals with Myanmar's murky state oil and gas enterprise. A prominent Republican, Sen. John McCain of Arizona, echoed her concerns.

Those differences of opinion underscore how the administration's job of maintaining broad-based support for its Myanmar policy is getting trickier. Washington is trying to open up commercial opportunities for American companies in one of Asia's last untapped markets without losing the high ground on human rights that has driven the U.S. agenda for the past two decades.

It's a debate playing out while explosions of communal violence between Buddhists and Muslims in western Myanmar leave scores dead, and its military continues to clash with ethnic rebels in the remote north — reminders that human rights concerns still loom large.

Broadly, the rare political unity that has coalesced on the administration's Myanmar policy endures. Democrats and Republicans alike back the easing of sanctions to encourage further reforms, and the Senate on Friday approved the appointment of Derek Mitchell as the first U.S. ambassador to be based in the country in 22 years. Mitchell has served as a special envoy since August.

But even within the administration itself there are differences of opinion over how to allow U.S. investment without feeding corruption and further entrenching Myanmar's military-linked business elite.

For U.S. corporations, time is of the essence.

European companies already are free to operate in Myanmar, and within two or three months its government will open bidding on 18 onshore oil and gas blocks — an opportunity for Western companies to move in on a lucrative sector where China, India and Thailand currently dominate.

The U.S. Chamber of Commerce, which represents more than 3 million businesses and is a powerful lobbying force in Washington, is urging the administration to get moving. The chamber has voiced disappointment that seven weeks after Secretary of State Hillary Rodham Clinton urged American businesses to invest in Myanmar, the administration has yet to issue the necessary regulations.

Webb, a longtime advocate of engagement with Myanmar, has teamed up with a conservative Republican, Sen. James Inhofe of Oklahoma, to press for a comprehensive lifting of economic sanctions, arguing it would help sustain the country's political reforms. But Webb chided Suu Kyi, questioning whether "an official from any foreign government should be telling us what sectors that we should invest in and not invest in" — a highly unusual note of criticism directed at a figure who spent 15 years under house arrest before she was elected to parliament in April.

On the other hand, McCain has endorsed Suu Kyi's comments, saying her concerns over the lack of accountability and transparency in the Myanmar Oil and Gas Enterprise, known as MOGE, must be addressed before letting U.S. companies invest in that sector. "We must prioritize our democratic principles," McCain said in a statement.

Rights groups charge that the administration is now prioritizing American commercial interests instead.

"Suddenly there are new objectives competing with the old ones that formed the heart of Burma policy for so many years," said Tom Malinowski, director of the Washington office of Human Rights Watch. "This is about helping U.S. companies not miss out on the natural gas blocks to be auctioned off in the next few months."

And judging from U.S. officials' public statements, there has been a marked shift in recent months, notwithstanding the administration's continued statements of concern over ethnic violence, political prisoners and Myanmar's military ties with North Korea.

In early April, when the U.S. announced a "targeted" easing of the investment ban, officials initially spoke of promoting investment in sectors like agriculture, telecommunications and tourism, rather than resource-based industries. But by the time Clinton gave the details six weeks later, she was inviting American businesses to invest across all sectors of the economy, including oil, gas and mining.

That angered activists like Moon Nay Li, coordinator of the Kachin Women's Association Thailand, who says atrocities by the military are continuing in her native Kachin State in northern Myanmar. She launched a petition on the Internet that has gained 125,000 signatories in five weeks, demanding legally binding safeguards to ensure that American businesses don't become complicit in rights abuses.

"Foreign business and extreme violations of human rights are virtually inseparable," she said by email, charging that investment projects often result in land appropriations and forced relocation of villagers.

The Obama administration has said U.S. companies would be expected to conduct due diligence and will still be barred from doing business with firms owned or operated by Myanmar's military. The administration hasn't said whether U.S. oil and gas companies would be allowed to partner with state monopoly MOGE, a necessity for investing in the petroleum sector.

Patrick Cronin at the Center for a New American Security think tank said excluding U.S. businesses, which are subject to rigorous American anti-corruption legislation when they operate abroad, would not help but hurt the course of reform in Myanmar, particularly when companies from Europe, Russia, China, India and other Asian countries are free to invest there.

While companies will resist calls for additional reporting requirements — that might, for example, monitor what they pay to Myanmar's government — Cronin says that could be the trade-off for investing in a country with major human rights problems.