Select Committee on International Development Appendices to the Minutes of Evidence


Memorandum submitted by The Burma Campaign UK



  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    —  Though many companies have withdrawn from Burma for ethical reasons there are many that have not.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.


  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.


  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".


  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.


  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.


  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.


  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.


  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".


  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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