22 April 1997
Houston Chronicle Interactive
By William E. Clayton Jr. and David Ivanovich

Oil companies say they will be losers

Economic sanctions against Burma announced Tuesday by the White House led to immediate protests by oil companies, which questioned whether such moves can lead to positive change.

President Clinton announced a ban Tuesday on new investment by U.S. firms in Burma because of that Asian country's "constant and continuing pattern of severe repression" of opposition figures.

Oil companies, which have been among the biggest investors in Burma, have been increasingly organized in opposition to such unilateral moves by the United States.

"I think the U.S. government will be hard-pressed to state with confidence that this unilateral action will have any impact on the authorities in Myanmar or influence them positively to do things that the United States would like them to do," said Arthur Downey, vice president of government affairs for the Houston-based oil-field service company Baker Hughes.

Oil companies doing business there, particularly Unocal and Texaco, have been roundly criticized by human rights groups.

The sanctions announced Tuesday would have no effect on existing investments, the White House and State Department said. Burns estimated U.S. investment in Burma totaled about $240 million, mostly in the oil and gas sectors.

Clinton said the Burmese regime has tried to silence the followers of democracy activist Aung San Suu Kyi and "has arrested and detained large numbers of students and opposition supporters, sentenced dozens to long-term imprisonment, and prevented the expression of political views by the democratic opposition."

"Under this brutal military regime, Burma remains the world's leading producer of opium and heroin, and tolerates drug trafficking and traffickers in defiance of the views of the international community," Clinton said.

"Regrettably, the Burmese government shows no signs of moderating its insecure and we believe ultimately doomed authoritarian policies," Secretary of State Madeleine Albright told reporters at the State Department."

Relations between the Burmese government and the United States will "improve only as there is progress on democratization and respect for human rights," the president said.

When Clinton signed a bill giving him the power to impose sanctions last September that set up authority for the sanctions, he said he hoped the threat was enough to force changes in Burma.

Since then, however, "The conduct of the military dictatorship in Burma ... has been quite reprehensible," State Department spokesman Nicholas Burns said.

The sanctions do not take effect immediately, but Burns said he didn't believe that would matter.

"I cannot imagine that any credible company would seek to fly out in the dark of night and slip in under a curtain that is rapidly descending," Burns said. "I think the game is up for Burma. Burma is a bad place for business."

Since the military regime took over in 1988, the United States has not sent direct aid to Burma and has blocked aid from some other countries.

Last week, the U.N. Human Rights Commission expressed concern about the Burmese regime's repression of opponents, including executions and torture.

At least two senators, New York Democrat Daniel Patrick Moynihan and Kentucky Republican Mitch McConnell, said the United States should be even tougher on Burma.

The ban announced Tuesday is only "a step in the right direction," McConnell said. He plans to propose legislation to force a broader ban on investments by U.S. companies in Burma.

Washington-based USA Engage, a newly formed coalition of U.S. companies, trade groups and think tanks opposed to unilateral sanctions, called the decision "a failure of American foreign policy."

"Unilateral sanctions rarely work and are often counterproductive because they isolate a country from American influence," Frank Kittredge, vice chairman of the group, said in a prepared statement.

One of the most prominent investors in Burma has been Unocal Corp. Based in El Segundo, Calif., the company is helping to develop the offshore Yadana gas field in the Andaman sea and build a $1.2 billion, 254-mile natural gas pipeline to transport the gas to Thailand.

The Yadana field is believed to contain 5.7 trillion cubic feet of gas. Production from that field is to begin next year, rising to 525 million cubic feet of gas a day during the first phase and possibly 650 cubic feet a day later on in the country also known as Myanmar.

"Responsible foreign investment is the most effective way to promote long-term economic and social development in countries throughout the region," Unocal officials said. "We are concerned that the administration's action may impede, rather than advance, these developments in Myanmar."

Since the Yadana project is well under way, Unocal officials said they did not believe the new sanctions policy will affect it. However, it could hinder Unocal's agreement to explore for oil and gas in a 4,275-square-mile block nearby.

White Plains, N.Y.-based Texaco is the operator of the Yetagun Field, located about 125 miles off the coast. That field is believed to hold 1.1 trillion cubic feet of gas, although Texaco and its partners have not yet decided whether Yetagun would be commercially viable.

"Texaco believes that unilaterally imposed sanctions on any country are ineffective, and if they are to be imposed, they should be implemented through international organizations such as the U.N.," Texaco spokesman Yorick Fonseca said. "Otherwise, U.S. firms are unfairly penalized by what turns out to be an unproductive embargo and placed at a competitive disadvantage to foreign-based companies which are not restricted by sanctions."

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

.