Reformers Disappointed, As Obama Includes Burma's State-Owned Oil Industry in Sanction-Easing Announcement

By Patrick Goodenough | July 12, 2012 | 4:59 AM EDT

Burmese pro-democracy opposition leader Aung San Suu Kyi meets Secretary of State Hillary Clinton at Suu Kyi’s Yangon home on December 2, 2011. (AP Photo/Saul Loeb, Pool)

( – In an announcement that pleased the U.S. business community and Burma’s military-linked leaders but unsettled reformers in Burma, President Obama announced on Wednesday he was “easing restrictions to allow U.S. companies to responsibly do business in Burma,” including allowing partnerships with its state-owned oil company.

Including the energy monopoly in sectors now open to the first new U.S. investment in nearly 15 years flies in the face of appeals by opposition leader Aung San Suu Kyi and others, who say the Myanmar Oil and Gas Enterprise (MOGE) lacks transparency and accountability.

A leading U.S.-based Burmese activist linked Wednesday’s announcement to corporate interests, the desire to counterbalance China in the region – and November’s presidential election.

“I am sure [President] Obama will be appreciated by the Burmese generals, cronies and U.S. corporations, but not by the people of Burma,” Aung Din, executive director of the U.S. Campaign for Burma (USCB) and a former political prisoner, told

Obama said allowing U.S. firms to do business with Burma was a “strong signal of our support for reform” carried out by the Burmese government.

It was a follow up to Secretary of State Hillary Clinton’s announcement last April of a series of steps aimed at recognizing and encouraging reforms in the resource-rich Southeast Asian country also known as Myanmar, including “beginning the process of a targeted easing of our ban on the export of U.S. financial services and investment.”

The reference to “targeted easing” was intended to allay concerns that the doors would be thrown wide open. In a background briefing the same day a senior administration official said the U.S. would identify “the areas and the sectors that we think are most likely to make an immediate impact on the livelihood of the people in the country, and we also will highlight areas that we believe, frankly, are impeding the process of reform.”

Speaking alongside her visiting Burmese counterpart in Washington in May, Clinton urged American businesses to “invest in Burma and do it responsibly.”

U.S. energy firms are eager to access Burma’s oil and gas sector, currently dominated by China, India and Thailand. European firms have been free to operate since late April. Foreign companies wishing to invest in the sector must partner with the state-owned energy monopoly, MOGE.

Asked at the time whether Burma’s oil and gas sector should be included in the investment opening, Clinton replied, “Our presumption is that our companies will be able to deal in every sector of the economy with any business. That is a rebuttable presumption in the event that there is a company whose reputation, whose practices, are not in keeping with our stated policies of corporate responsibility or other matters that rise to our attention.”

‘Overly influenced by the Burmese military’

In a speech in Geneva last month, Suu Kyi urged foreign governments not to allow firms to invest in the oil and gas sector until MOGE improved fiscal transparency and accountability.

Hours later Sen. John McCain (R-Ariz.) said in a statement that he shared Suu Kyi’s “concerns that MOGE’s operations lack transparency, that it remains overly influenced by the Burmese military, and that the large amounts of foreign investment flowing into MOGE are not yet sufficiently accountable to the Burmese parliament and people.”

While he was not opposed in principle to U.S. investment in Burma’s energy sector, McCain said, “I urge the administration to refrain from issuing waivers at this time for new U.S. investment in Burma’s oil and gas industry until Aung San Suu Kyi’s concerns with MOGE are sufficiently addressed. I also urge the administration to push our European allies to do the same.”

Last week McCain and Sen. Joe Lieberman (I-Conn.) in a letter to Clinton reiterated that stance.

But Sen. Jim Webb (D-Va.), an early advocate of “pragmatic engagement” with the former ruling military junta, was critical of Suu Kyi’s comments in Geneva.

Presiding over a June 27 Senate Foreign Relations Committee hearing on the nomination of the first U.S. ambassador to Burma in 22 years, Webb asked whether “an official from any foreign government should be telling us what sectors that we should invest in and not invest in.”

Earlier Webb, who chairs the committee’s East Asian and Pacific affairs subcommittee, teamed up with the subcommittee’s ranking member, Oklahoma Sen. James Inhofe, calling in a letter to Clinton for a lifting of sanctions and arguing that retaining restrictions on individual sectors like petroleum would be “a strategic mistake.”

A fact sheet released by the State Department Wednesday to accompany Obama’s statement made it clear that MOGE is not off-limits: The only reference was a requirement that individuals or companies entering agreements with MOGE, over and above standard reporting requirements, “must notify the State Department within 60 days of their new investment.”

The fact sheet also stressed that the administration was not authorizing new investment with the Defense Ministry, military or armed groups or entities owned by them.

Americans may also not deal with any Specially Designated Nationals (SDNs) listed by the U.S. Treasury Department, or with any entities in which an SDN holds 50 percent or more ownership.


“By allowing deals with Burma’s state-owned oil company, the U.S. looks like it caved to industry pressure and undercut Aung San Suu Kyi and others in Burma who are promoting government accountability,” Human Rights Watch business and human rights director Arvind Ganesan said Wednesday.

Created in 1963 and 100 percent state-owned, MOGE is responsible for oil and natural gas exploration and production, and pipeline transmission of gas. Critics say it remains strongly influenced by the military, which continues to dominate Burma’s government.

The USCB’s Aung Din said Obama was rewarding a government led by President Thein Sein, a retired military general and junta member, the military’s proxy Union Solidarity and Development Party, and the armed forces led by former junta member Deputy Senior General Min Aung Hlaing, successor to former junta head Senior General Than Shwe.

All of those individuals and entities, he said, “have committed human rights violations against the people of Burma for many decades and were under targeted sanctions imposed by President Bush.”

“Now, Obama opens the door for U.S. business community to do business in Burma in every sector, including extractive industry where business-related human rights abuses are ongoing and widespread,” he said.

“Apparently, U.S. policy on Burma today is very much influenced by U.S. business corporations, U.S. interest to counter balance China in the Asia and the Pacific region, and the upcoming November election.”

The U.S.-ASEAN Business Council, which advocates for U.S. companies doing business with the 10 members of the Association of Southeast Asian Nations, was supportive of Wednesday’s decision.

“The administration made the right decision not to carve out certain sectors,” spokesman Anthony Nelson said in response to queries about the energy sector inclusion.

“Businesses are interconnected, and keeping one sector out but not another would prevent complete engagement,” he said. “The SDN list is the best tool to ensure future U.S. investment in Myanmar doesn’t enrich those responsible for suffering and encourages inclusive growth.”

Patrick Goodenough
Patrick Goodenough
Spencer Journalism Fellow