APPENDIX 3
Memorandum submitted by The Burma Campaign
UK
THE CASE FOR INVESTMENT SANCTIONS AGAINST
BURMA
EXECUTIVE SUMMARY
Burma is ruled by a military dictatorship notorious
for the appalling widespread and systematic human rights abuses
it perpetrates. Foreign investment has, and continues, to strengthen
the regime. Over the last decade the regime has encouraged foreign
investment, resulting in it and a small elite becoming richer,
while the Burmese people have become poorer and human rights abuses
have escalated. Investment harms the people of Burma by strengthening
the regime and assists the regime by providing resources that
perpetuate its power.
Wherever possible sources of revenue for the
regime should be cut while dialogue between the military, Aung
San Suu Kyi and the ethnic nationalities should be encouraged.
The problem of Burma
— Two million men, women and children
are in forced labour.
— One and half million people are internally
displaced.
— There are around 1,500 political
prisoners.
— Thousands of refugees have fled to
Thailand, China, India and Bangladesh.
— Burma is the world's largest producer
of illegal opium.
— Burma has one of the largest armies
in Asia but has no external enemies.
— A democratically elected government
has been denied power by a military dictatorship.
The problem of investment
— A regime that was weak and bankrupt
in 1988 has used foreign investment through the 1990s to double
the size of its military.
— Investment has allowed the regime
to postpone economic reform which has resulted in the further
impoverishment of the Burmese people.
— In spite of foreign investment social
indicators have remained poor and in many cases have deteriorated
including indicators for malnutrition and maternal and infant
morality.
— Much of the investment has to be
channelled through the regime, often through joint-ventures.
Why sanctions?
— The regime is in desperate need of
foreign currency—investment sanctions will help to cut off
one source of revenue.
— The economy is the military's Achilles
heel—further deterioration in this area will force them
to seriously consider political and economic reform.
— Unlike other cases, sanctions on
Burma will have negligible effect on the general population which
has in fact been harmed rather than helped by foreign investment.
— Though many companies have withdrawn
from Burma for ethical reasons there are many that have not. Sanctions
need to be in place to prevent investment rather than depending
on the uncertain ethics of investors.
— The elected leaders of the country,
led by Aung San Suu Kyi, have called for international economic
sanctions against the regime.
Recommendations
The Labour Government should:
— Honour its pre-election support for
Aung San Suu Kyi in her call for economic sanctions against the
regime.
— Use article 73g.2 of the Treaty of
Rome to impose unilateral investment sanctions against Burma's
military regime.
— Work with other EU states, particularly
the Netherlands and Denmark in gathering a collective of EU states
which impose sanctions unilaterally on Burma.
THE PROBLEM
OF BURMA
Most authoritative international organisations
working in the field of human rights and social development paint
an appalling picture of increasing human misery in Burma.
The International Labour Organisation (ILO),
an agency of the United Nations, released the findings of an inquiry
in August which accuses Burma's ruling military of "widespread
and systematic" use of forced labour. The report charges
that "any person who violates the prohibition of recourse
to forced labour under the (ILO) Convention is guilty of an international
crime that is also, if committed in a widespread or systematic
manner, a crime against humanity". The Inquiry has evidence
of "threats to the life and security and extrajudicial
punishment of those unwilling, slow or unable to comply with a
demand for forced labour; such punishment or reprisals range from
money demands, to physical abuse, beatings, torture, rape and
murder". It also has evidence that "forced labour
in Myanmar (Burma) is widely performed by women, children and
elderly persons as well as persons otherwise unfit for work".
In 1998 the UN General Assembly resolution on
Burma raised serious concern over the: "continuing violations
of basic human rights, including extra-judicial, summary or arbitrary
executions, death in custody, torture, arbitrary and politically
motivated arrests and detention, absence of due process of law,
including trial of detainees in secrecy without proper legal representation,
severe restrictions on freedom of opinion, expression, movement,
assembly and association, forced relocation, forced labour by
children as well as adults, including portering for the military,
abuse of women and children by government agents and oppression
of ethnic and religious minorities".
THE INTERNATIONAL
RESPONSE SO
FAR
Since 1988 the international community's approach
to Burma has been schizophrenic; Western countries have made limited
attempts to isolate the regime—politically rather than economically—while
Asian governments have made significant attempts to engage the
regime—economically rather than politically. This has resulted
in the ruling military feeling relatively little pressure to reform.
The United States (US) has been the only major
country to isolate the regime economically. "Constructive
engagement"—a policy based on the belief that the development
of political and economic relations will lead to democratisation
in Burma has been played out to the largest extent. However its
predicted results have simply not come to fruition. The political,
economic and social situation in Burma today is as critical as
at any time during the last ten years with one possible exception—the
lull in Burma's civil war resulting from cease-fire agreements.
THE POLITICAL-ECONOMY
OF ECONOMIC
ENGAGEMENT
Since 1988 the regime has welcomed foreign investment
in order to re-establish governmental control of the budget and
balance of payments. The windfall of income generated through
the sale of natural resources, and signatory bonuses from oil
exploration companies enabled the regime to defer essential economic
liberalisation and to massively expand the military. Foreign capital
bred a "new class" within Burma exclusively tied to
the top generals. A substantial proportion of newly found wealth
was then channelled into unproductive investments such as real
estate.
The model is as follows:
— Foreign firms are forced into joint
ventures with either state enterprises or companies set up by
the regime's associates. Revenue from these ventures enable the
regime to neglect and postpone essential economic reforms.
— In order to stabilise urban food
prices and sustain revenue from the regime's rice export monopoly,
it continues to squeeze the rice sector and maintain price controls.
The price of rice is an important factor in monitoring political
risk in Burma.
— The overvalued exchange rate is defended
partly for reasons of keeping social order while also rewarding
certain business agents tied to the state.
— Spending on political monuments and
propaganda is required to boost the regime's legitimacy. Resource
allocation is based on political prerogatives instead of social
needs and symbolic, rather than substantive development is favoured.
For example, school constructions are given priority over teacher-training;
youth sports festivals are held whilst universities remain closed,
and electoral power is distributed to tourist facilities whilst
supply to manufacturing industries is limited.
One of the most worrying consequences of investment
in Burma is the way it has enabled the regime to expand the army.
In 1988 there were 180,000 personnel, there are now 400,000 and
by the year 2000 the regime hopes to have half a million military
personnel. By 1993, military spending from the state budget had
reached the peak level of 42 per cent and has never really diminished
since then. A country of only 47 million people has one of the
largest armies in Asia, and yet it has no external enemies.
Military expansion and politically motivated
expenditure has been carried out at the expense of Burma's people.
The high proportion of the state budget spent on the military
has resulted in shrinking allocation to education and health.
A resource rich country now has a population suffering from widespread
malnutrition, high under-five and maternal mortality, and a burgeoning
education deficit.
WHY SANCTIONS
NOW?
There is a rare window of opportunity as a political
and economic forces coalesce to place strain on the regime. For
the first time in a decade the regime may have to question what
is ultimately in its own interest—a peaceful transition
to democracy with some guarantee of personal safety for current
leaders, or an economy spiralling out of control and mass civil
unrest? As Daw Aung San Suu Kyi has put it, the choice for them
is one of "dialogue or utter devastation".
It is crucial that this opportunity be used
to apply further European pressure on the regime, complemented
by a diplomatic initiative from Asia:
— The regime's current leadership is
different from that which ruled the country 1962-1988. In 1988
the current leadership had to deal with the aftermath of 26 years
of isolationism and consequent bankruptcy and political turmoil.
For the same reasons it now realises that a return to isolationism
is not viable for the maintenance of power. The Burmese economy
is increasingly vulnerable; with massive foreign debt, depleted
foreign currency reserves, soaring inflation and negligible export
revenue—the regime knows that crisis is looming.
— The financial crisis in South East
and East Asia has led to a major reduction in Foreign Direct Investment
from regional neighbours. They are no longer able to fill the
investment gap left by companies and countries who choose not
to do business with the regime.
— An increasing number of foreign investors
have decided to withdraw from Burma for ethical reasons or because
of consumer boycotts. These include Texaco, Amoco, Motorola, Ericsson,
Pepsico, Heineken, Carlsberg, C&A, Levi Strauss, Liz Claiborne,
Burton, River Island, British Home Stores and many others.
— US sanctions introduced in 1997 banning
new US investment in Burma are starting to have an effect; deterring
new investors as well as affecting the business climate for existing
investors.
— Twenty one US states, cities and
counties have enacted laws which mean they will not conduct business
with companies operating in Burma. US and non-US companies risk
losing lucrative contracts unless they withdraw from Burma.
THE ROLE
AND EFFECT
OF SANCTIONS
Sanctions are but one crucial weapon within
the international community's armoury. It is not suggested that
they be used in isolation. Their purpose is also as much political
as economic. Once applied, ASEAN should use European and current
US sanctions as a powerful ingredient for a new and invigorated
diplomatic initiative on Burma. That initiative should be as quiet
as needs dictate—but the volume of the message should not
lessen its force.
ASEAN can show its willingness to protect the
regime from Western economic pressure if the regime starts to
offer reform in return. They will only be able to do this effectively
if ultimately they threaten a withdrawal of diplomatic support
should the regime remain intransigent.
THE MANDATE
FOR SANCTIONS
Aung San Suu Kyi, as leader of the victorious
Party of the 1990 elections has called on the international community
to impose full economic sanctions on Burma. She praised the United
States for standing by its convictions and imposing economic sanctions
on Burma in 1997, saying "It is good to know there are
people in this world who are serious about what they say".
She has also said "We now endorse the
idea of international sanctions because we have come to the conclusion
that investments in Burma have not in anyway helped the people
in general nor, has it helped the course of democracy . . . There
are few people who have benefited from these investments. In fact,
it has only made the privileged elite even wealthier. So we do
not think that sanctions will hurt the people and that is why
we support the idea of sanctions." On 6 April this year
she made yet another call saying "As it is, what we have
suffered over the last year is far more than we have suffered
over the last six or seven years. So we would like the international
community to be aware of the fact that the human rights situation
in Burma has deteriorated very badly indeed . . . What we need
now is more than just mere words. We need concrete action because
our people are suffering not just from an onslaught of words but
from the deprivation of basic justice in our country."
All major ethnic nationalities and the vast
majority of smaller ethnic groups are represented by the National
Council of the Union of Burma (NCUB). The NCUB has determined
to "work for the reduction of international aid and assistance
to the SLORC (former name of the ruling junta)" (27 May 1996).
At a meeting held at Karen National Union headquarters last
year representatives of all the major groups also requested "that
all foreign investment be withdrawn from Burma and that there
be no new investment until (positive political) change occurs".
RECOMMENDATIONS
The Labour Government should:
— Honour its pre-election support for
Aung San Suu Kyi in her call for economic sanctions against the
regime.
— Use article 73g.2 of the Treaty of
Rome to impose unilateral investment sanctions against Burma's
military regime.
— Work with other EU states, particularly
the Netherlands and Denmark in gathering a collective of EU states
which impose sanctions unilaterally on Burma.
The Burma Campaign UK
19 March 1999
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