Burma: Targeted sanctions meeded on petro industry

Human Rights Watch said that until the Security Council imposes sanctions, members of the Association of Southeast Asian Nations (Asean), China, India, the European Union, the United States and other countries that have economic ties to Burma should act to suspend any further development of Burma's oil and gas sector. To encourage an end to ongoing repression, Human Rights Watch also called for targeted financial sanctions on companies owned and controlled by the Burmese military or whose revenues substantially benefit the military.

"Burma's generals act as if they are immune from worldwide condemnation because they're still getting cash from foreign-financed oil and gas projects," said Arvind Ganesan, director of the Business and Human Rights Program at Human Rights Watch. "It's time to cut them off."

In a detailed new compilation of information on foreign investment in oil and gas released today, Human Rights Watch identified 27 companies based in 13 countries as having investment interests in Burma's oil and gas fields. Thirteen of those companies are wholly or partially owned by foreign governments, and these state-controlled companies are invested in 20 of the 30 projects currently underway.

Human Rights Watch also made available detailed maps showing the location of the oil and gas fields (http://hrw.org/campaigns/burma/drilling).

The Burmese military government relies heavily on the oil and gas sector to sustain itself in power. Lucrative revenues from gas sales allow it to ignore demands to return to civilian rule and improve the country's human rights record. The oil and gas sector is one of the few sectors in the badly managed economy to experience growth in recent years. Funds from this sector help underwrite the military without bringing benefits to ordinary people.

Human Rights Watch urged the UN Security Council to pass a resolution to ban all new investment in Burma's oil and gas sector and prohibit financial transactions with entities owned or controlled by the Burmese military, or whose revenues are largely used to finance military activities. These entities include the Burmese government's Myanmar Oil and Gas Enterprise (MOGE), a state company under the Ministry of Energy whose earnings benefit the military.

In the absence of Security Council-imposed sanctions, Human Rights Watch called on governments to take unilateral and multilateral action to freeze bank accounts belonging to military-controlled companies and to block their financial transactions. In addition, it urged governments to require companies headquartered in their jurisdictions that have business ties to Burma to publicly and fully disclose all payments made to the Burmese military, directly or through the entities it controls, and where those payments are made.

Human Rights Watch pushed for robust banking sanctions as the centerpiece of an effort to cut off funds that are used to finance repression by Burma's military. Banking sanctions complement targeted sanctions on investment and trade because they have the potential to severely constrain the junta's ability to access income, no matter the origin of the payments. If applied effectively by key financial powers - notably the United States and the European Union - strict financial sanctions could block the junta from using much of the international financial system.

Gas revenues in Burma in 2006 were up US$1 billion from the prior year, in part due to higher prices globally. Revenues are likely to have further increased in 2007 as world prices have surged. Future gas revenues are anticipated to increase further once gas production from a massive offshore gas project known as the Shwe project goes online, projected for 2010. A South Korean-led consortium discovered the gas in the Shwe fields and is preparing to produce it for export. Several buyers vied for the rights to buy the Shwe gas, with India and China among the most serious bidders.

In mid-2007, a Burmese official confirmed that China was slated to import the Shwe gas, though details of a deal have not been finalized. Human Rights Watch has called for a suspension of plans to build an overland pipeline to transport that gas to China, given serious human rights concerns. Indian officials expressed disappointment that India's bid, which also would have included paying for an overland pipeline, had been passed over.

"Burma's generals have used the promise of oil and gas supplies to buy the silence of energy-hungry countries, including China and India," said Ganesan. "Those governments should be told their international standing will suffer if they do business as usual with Burma."

Burma's military government, the State Peace and Development Council (SPDC) earned approximately $2.16 billion in 2006 from gas sales to Thailand, which accounted for half of all exports that year, and constituted the single largest source of revenue to the SPDC.//Human Rights Watch.

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According to Human Rights Watch's research, outside investors in Burma's oil and gas industry include companies from:

·        Australia

·        British Virgin Islands

·        China

·        France

·        India

·        Japan

·        Malaysia

·        Netherlands

·        Russian Federation

·        Singapore

·        South Korea

·        Thailand

·        United States