Thein Sein, background center, and Obama, right, at the 2011 US-ASEAN Summit in Bali.
(Photo: Washington Post)

Last month the Obama administration eased financial and investment sanctions on Myanmar, praising it’s government for freeing hundreds of political prisoners and finally allowing the political opposition to take part in elections. While the easing of sanctions demonstrates valuable support for further political reforms in Myanmar, the US investment policy does not effectively address the current human rights situation, and is likely to undermine US commitments to international human rights obligations.

The US move is officially a response to a series of political reforms over the past few months that have been spearheaded by Myanmar’s new President, Thein Sein. The reforms, the latest of which involved the lifting of press censorship, are part of Thein Sein’s pledge to open up the country to financial investment in order to aid its ailing economy. The US investment policy, otherwise known as a “framework for responsible investment”, allows US firms to invest in all sectors of the Burmese economy, with the exception of direct partnerships with the military and individuals on the US sanctions list. In an attempt to hold corporations accountable, the US State Department requires firms that invest more than $500,000 to file annual reports outlining their impact on human rights, workers rights, corruption, and the environment.

However, these criteria fall short of the American government’s human rights rhetoric. Prominent human rights advocates, such as Human Rights Watch (HRW) and Burmese pro-democracy activist, Aung San Suu Kyi, have criticised the US move as premature and questioned why there are no human rights conditions attached to investment deals. Furthermore, the reporting procedures are not binding and no consequences follow inadequate reporting or involvement in human rights violations. These failings are especially significant in light of recent human rights atrocities that have been exposed in Myanmar, such as sectarian violence in the West that have led to government-sanctioned massacres of the minority group of Rohingya Muslims and continues to displace thousands.

According to HRW, other issues that complicate the business climate in Myanmar include the weak rule of law, the poor regulation and enforcement of labour and environmental standards, as well as the lack of an independent judiciary. Moreover, Burmese legislation requires US firms to partner with local businesses, thereby exposing them to further complicity in human rights abuses. This becomes especially significant in the resource-rich country’s oil and gas industry, which has traditionally been the main revenue source for the military junta.

The Myanmar Oil and Gas Enterprise (MOGE) is one such company. Despite protests from human rights and environment activists, the US has allowed firms to deal with the oil giant, provided only that they report so to the US State department within 60 days. There are still no clear guidelines for that relationship, or for the responsibilities of US firms regarding the human rights impact of their business undertakings. Moreover, MOGE has traditionally been the top financer of the military, and previous investigations into the company have revealed a record of corruption and human rights abuses in regions where resources have been extracted. This trend has not turned and, arguably, the firm is still fit for international sanctions, as it “lacks both accountability and transparency at present”. However, as is often the case with oil profits, business wins at the expense of human rights.

An appropriate framework to apply to the “responsible investment” project is the United Nations Guiding Principles on Business and Human Rights, adopted by the Human Rights Council in 2011 and supported by many governmental and non-governmental organisations. The guidelines implement the UN’s “protect, respect, and remedy” framework for corporate responsibility, and calls on states and businesses alike to take into account human rights when concluding investment deals. Within this framework, the US would be responsible for enforcing human rights law complicity by businesses within its jurisdiction. US firms must then comply with the human rights framework set up by the Universal Declaration of Human Rights.

These guidelines were strongly supported by the European Union (EU) during its development, an ironic fact, given that human rights rhetoric has been largely absent from the EU’s ongoing investments in Myanmar. In an Open Letter to the EU, Mary Robinson and John Ruggie of the Institute for Human Rights and Business have urged EU member states to incorporate the UN Guidelines in their investment deals in Myanmar, and fulfill their international legal obligations in respect to human rights. Indeed, a cynical observer would perhaps draw links between the lifting of EU sanctions and the subsequent rush to lift US sanctions, in light of the potentially lucrative deals available with Myanmar’s energy sector. All cast in the language of democratic reform and human rights, of course.

As already remarked by other analysts, the current business environment in Myanmar is not conducive to “responsible” investment. The US policy fails to effectively address the Burmese human rights situation and the climate of big business corruption that continues to further the interests of the economic and political elite. If the US and the EU are serious about supporting democratic reforms and contributing to the human rights agenda, they should engage with the UN Guidelines and hold corporations accountable for their impact on Burmese peoples fundamental rights. Transparency and accountability will be crucial in supporting political reforms in Myanmar. Anything short of this will risk significantly undermining the long fought battle for democracy on behalf of Burmese political opposition and activists.