Introduction
Mr. Chairman, I am John Imle, President of Unocal Corporation. Unocal is a global diversified energy corporation headquartered in Los Angeles, California.

We appreciate the opportunity to testify today.

Our interest in this hearing stems from our involvement in a partnership to develop the Yadana natural gas field offshore Myanmar -- formerly known by its colonial name, Burma -- and from our long history in developing countries in Asia.

Unocal's Position on S. 1511
Unocal opposes the passage of S. 1511. We believe the approach outlined in S. 1511 is counterproductive to its intent. Rather than isolating Myanmar, the expanding use of unilateral steps will further isolate the United States from many of its allies in Asia and Europe -- all of whom are aggressively developing closer relationships with Myanmar.

Why is Unocal in Myanmar?
By the very nature of our business, energy companies must go to the resource. Unlike oil, natural gas cannot be transported over great distances. A natural gas development project must have all related production and transportation facilities located within a reasonable distance to a hard currency energy market with sufficient demand for that gas.

Thus, geology and geography -- not geopolitics -- are our dictates. Other industries have the luxury of locating wherever it is the most convenient, expedient or cheapest. No international energy resource company has that luxury.

These factors also play a key role in determining how we develop the Yadana field. A world-class energy resource located 43 miles offshore Myanmar, the field has reserves of more than 5 trillion cubic feet of natural gas.

Unocal joined this project in 1993 and has a 28.26 percent interest. The lead partner and project operator is Paris-based Total, which won the bid for the field in 1992 and which holds a 31.24 percent share. The other partners in the Yadana project are Thailand's PTTEP, which holds a 25.5% share, and MOGE, Myanmar's oil and gas company, which holds a 15 percent interest.

Much of the gas will be transported approximately 416 miles by pipeline from the offshore Yadana field to Thailand where it will fuel an electricity generating plant to be constructed at Ratchaburi, southwest of Bangkok. Demand for electricity in Thailand is soaring and expected to double over the next 15 years. Thailand has a strong economy and sufficient resources to purchase the gas. The Yadana project also makes feasible power and fertilizer plants to be built near the capitol city of Yangon, as well as a possible second electricity generating plant in southern Myanmar.

Let me make one point very clear: this project will go forward with or without the active involvement of Unocal or any other American company. It involves the development of a known, abundant natural gas field, using off-the-shelf technology, and serving a market with rapidly expanding demand. There are no technological or economic hurdles to developing the Yadana field.

If this legislation is enacted and we are forced out, the current partnership will either purchase our share or another foreign partner will be recruited immediately. I also want to add that as a direct result of discussions about bans on U.S. private investment in Myanmar, I have been approached by a leading Asian corporation about possibly purchasing Unocal's share in this project.

Our position is that it would be irresponsible -- for us, our stockholders, our employees and, for that matter, the people of Myanmar -- for Unocal to divest our interest. Here's why: the project is being conducted in an ethical and responsible manner, it is a key part of our Southeast Asia business strategy, and it will bring numerous infrastructure development and socio-economic benefits to Myanmar and Thailand.

Who benefits from our presence?
The people of Myanmar will receive the main benefits of our involvement in the Yadana project. In a very poor nation desperately short of energy supplies, the project will make feasible electricity and fertilizer plants currently under evaluation for construction near Yangon. Myanmar's agricultural sector must now import -- at a significant cost -- most of the fertilizers used in its agricultural production. This dependency will be lessened with the proposed construction of a 1750-metric-ton-per-day fertilizer plant near the capital city.

Of importance are the socio-economic development benefits the project is bringing to the 20,000 villagers living in the vicinity of the 39-mile-long pipeline route. They will directly benefit from the project in two important ways:

  The project offers immediate employment opportunities for all ethnic communities in this region. Our employment practices ensure that the wage scales for these jobs are superior to prevailing local average wage scales and that employees are provided a safe and healthful work environment.

  The partners are underwriting a wide range of socio-economic development programs that are developing a private sector in the region and significantly improving local standards of living. We're building new or renovating existing schools, hospitals and health centers. And we've launched a major malaria research and prevention program under the direction of the Pasteur Institute.

These investments -- as well as all costs -- in the project are shared pro rata by the partners. Capital costs for the project -- which extends only up to the Thai border -- are estimated at $1 billion. No significant income is expected to be generated until the year 2000, and it will be another three years --the year 2003-- before the partners expect to recover their original investments.

The full project as well as its socio-economic development programs are described in detail in the report and photographs attached to my testimony. I ask consent, Mr. Chairman, that these documents be made part of the hearing record.

The people of Thailand will also benefit from this project. The clean-burning natural gas transported to Ratchaburi will generate up to 2,800 megawatts of electricity. This represents almost 10 percent of Thailand's increased energy demand.

How can substantive, long-lasting change be achieved?
Based on Unocal's 30-year history of doing business in Thailand, the Philippines and Indonesia, we believe that long-term and consistent engagement in Myanmar will bring about change similar to that which occurred in those countries.

U.S. corporations can and should play a role in helping shape the economic development of Myanmar by setting a leadership example. We can achieve this by following specific business practices and codes of conduct and ensuring that our operations comply fully with those standards.

Unocal is a publicly held corporation, accountable to our Board and our stockholders. Our written code of conduct for doing business internationally expresses clearly our commitment to treating everyone working on any of our projects with fairness and respect. We have established a comprehensive system of safeguards and compliance practices to ensure that every aspect of the Yadana project complies fully with our code of conduct.

Unocal's code of conduct and Yadana project-specific codes and policies are included in the appendix of the report submitted with my written remarks.

We can promote constructive and positive change by demonstrating that strict attention to health and safety standards, environmental compliance and responsible labor practices are good for this project, good for attracting capital for future projects, and good for the long-term development of Myanmar.

Since joining the project in 1993, we have conducted six in-depth, first-hand field evaluations, most recently in January 1996. I have been there several times as well. In addition to these on-the-ground reviews, ongoing map research and aerial photography confirm that the Yadana project is complying fully with our corporate code of conduct. Our Board of Directors regularly reviews the progress of the Yadana project and annually reports on compliance issues to our shareholders.

S. 1511 would eliminate any positive presence that U.S. corporations might have in Myanmar. Section 4(b)(1) would ban U.S. private investment in Myanmar, requiring U.S. companies to disengage. We strongly oppose this section, and believe it will be counter-productive to promoting substantive, long-term change and encouraging economic progress in Myanmar.

The additional unilateral steps outlined in S.1511 will render the United States irrelevant in Myanmar's development and marginal in Southeast Asia. None of Myanmar's major trading partners in Asia or in Europe is considering a similar course of action, and none is likely to follow the U.S. lead. In fact, the seven nations of ASEAN in July, 1995 took the first formal step in forging even closer relationships with Myanmar by its signing ASEAN's Treaty of Amity and Cooperation.

A number of provisions outlined in S. 1511 will put the United States in direct confrontation with our friends and allies in the region. I am not a foreign policy expert, Mr. Chairman. However, having recently visited a number of Southeast Asia countries, I've heard a constant and growing concern about the current direction of U.S. policy toward Myanmar. Our friends in these countries seriously believe that the current U.S. policy of isolation and non-engagement will be intensified, and may, in fact, weaken U.S. - ASEAN relations as ASEAN cross-border trade and engagement with Myanmar increases.

The nations of Southeast Asia adopted a policy of constructive engagement for a number of reasons. There is concern about Chinese economic dominance in the region. Division and confrontation pose serious and significant dangers, especially for neighbors sharing common borders. These nations know that the politics of confrontation have created more problems than it has solved. They are unlikely to change their policy of engagement. The ASEAN nations are keenly aware that isolating Myanmar holds a very real danger of forcing Myanmar squarely into the camp of its northern neighbor.

I, too, am concerned about the official U.S. policy of isolation and non-engagement.

Since September, 1988, the United States has unilaterally suspended all economic assistance to Myanmar and withdrawn GSP privileges. The decertification of Myanmar as a narcotics cooperating country in 1989 has, by law, required the U.S. Executive Directors at all multinational financial institutions such as the World Bank and the Asian Development Bank to vote against projects in Myanmar. Neither Eximbank nor OPIC have programs in Myanmar. And, since 1991, the U.S. diplomatic presence in Myanmar has been downgraded from Ambassador to the consular level.

Mr. Chairman, I am fully aware of the challenges facing Myanmar, but none of these unilateral steps has forced the changes in Myanmar that this bill would demand. Nor, I submit, would the further steps in S. 1511. Instead, the bill would further marginalize U.S. influence. The only people hurt by S. 1511 will be the ordinary citizens of Myanmar who otherwise might benefit from the humanitarian projects and technical assistance previously carried out by U.S. bilateral assistance agencies.

Steps outlined in S. 1511 cannot have any measurable positive impact because we have minimal economic and political leverage. U.S. investment in Myanmar is less than 10% of all foreign investment and can -- and will -- be easily replaced. By codifying current sanctions, Congress will leave this Administration -- and any future administration -- with no flexibility to respond to or encourage changes in Myanmar.

The only result of S. 1511 will be to isolate ourselves, not the government of Myanmar. S. 1511 will make it more difficult for the U.S. to be an active player in Asia during the next century. The United States runs the very real risk of becoming irrelevant.

A review of U.S. actions shows clearly that the U.S. has not implemented a policy that even remotely resembles constructive engagement. If we continue traveling down the path of unilateral sanctions, we will be unable to lead by example not only in Myanmar but throughout the region. We will diminish our ability to influence constructively the future of Southeast Asia and cede the opportunity to participate in the formative stages of Myanmar's development. We also will have compromised, hypocritically in my assessment, our commitment to improving the lives of others.

We are proud of the Yadana project because it does what current government policy fails to do: improve the lives of others. It is an outstanding model of responsible economic development that can make a difference to the people of Myanmar and Thailand. For the first time in many villagers' lives, our project brings hope and the chance of a better way of life.

As Myanmar opens up its economy to the West, it is time for us to lead by example. It is not the time to slam the door shut. To those who ask how we can we remain in Myanmar, we respond, "How can we ever justify leaving?"

Thank you.

  Return to Top

Home |  About Us |  Resources |  Press Releases |  Federal Activity & Legislation
State & Local Activity |  NFTC Lawsuit |  Contact Us |  Site Index