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Feeling the Heat : Unocal Defends Myanmar Gas Pipeline Deal


Unocal Corp. is no stranger to the volatile mix of foreign dictators, political unrest and developing economies.

Over the past three decades, the Southern California energy giant has weathered a military crackdown in Indonesia after an aborted Communist rebellion in 1965, the overthrow of Philippine strongman Ferdinand Marcos in 1986 and a succession of peaceful, and not so peaceful, coups in Thailand.

Through it all, Unocal kept drilling for oil and natural gas, filling its corporate coffers and providing jobs and energy for countries now being enthusiastically courted by other multinationals interested in a piece of Southeast Asia's rapidly expanding energy market.

Now Unocal--undeterred by the prospect of a consumer boycott, shareholder protests and scathing editorials--is heading straight into another center-stage controversy. The Los Angeles-based company signed a contract this month giving it a prominent role in a $1-billion natural gas pipeline across Myanmar (formerly Burma) that critics say will enrich a brutal military regime, displace ethnic groups and destroy one of the country's largest remaining tropical rain forests.

When Unocal President John F. Imle Jr. looks at a map, he sees a giant infrastructure project promising healthy returns for his shareholders and a better life for Myanmar's 43 million people.

His critics see a pact with the devil--one that will boost the finances and image of Myanmar's State Law and Order Restoration Council (SLORC), whose leaders are accused of slaughtering thousands of pro-democracy demonstrators in 1988 and waging a war of terror against their political opponents and rebel ethnic minority groups ever since.


Indeed, these critics argue that as repressive regimes go, Myanmar is beyond the pale. Even such pro-development voices as the Wall Street Journal have counseled against investments, such as the pipeline, that would directly generate royalties for the government.

"Burma is different," said Simon Billenness, a senior analyst with Franklin Research and Development Corp. of Boston, which invests in "socially responsible" firms. "We're not asking these companies to give up their operations anywhere else in the world; we have no problems with their presence in Azerbaijan, China or Thailand. . . . But this project is clearly benefiting (Myanmar's leaders) by providing millions of dollars in hard currency."

Critics cite reports from refugees who claim the government is displacing villagers along the pipeline route and using forced labor to prepare for the project--a claim denied by Unocal.

Imle, himself a veteran of oil and gas exploration on three continents, said in an interview last week that Unocal officials visit the area regularly and are confident that no human rights abuses are being committed by the government or others in connection with the pipeline project.

"These issues we're talking about are discussed privately in Myanmar with the government people with whom we've met," he said. "In my view, the government is sensitive to these issues."

Central to Unocal's conflict is a question that also bedevils the Clinton Administration as it redefines its foreign policy in a post-Cold War environment: Is the economic carrot or stick the most effective way to promote human rights, environmental preservation and democracy overseas?

Since last spring, when President Clinton granted most-favored-nation trade status for China over objections of human rights activists, the White House has advocated the separation of human rights and economic issues.

In response to the criticism, the President promised to push for a voluntary code of conduct for U.S. companies operating overseas. But sources in Washington said that effort has lost steam, hampered by a lack of support from corporate leaders and human rights groups.


While Unocal and other U.S. companies applaud the Clinton Administration's policy of "constructive engagement" abroad, domestic groups such as Human Rights Watch/Asia, the Rainforest Action Network and the Burma Forum accuse the government of caving in to corporate interests. They argue that the only way to bring the world's most egregious human rights violators into line is by hitting them where it hurts, in their pocketbooks.

Earlier this month, AFL-CIO President Lane Kirkland wrote Secretary of State Warren Christopher urging that the U.S. government implement a full trade and investment embargo against Myanmar and that it block any international aid destined for that country.

But the consequences of wielding the big stick can be far-reaching, even against a tiny country that barely registers in U.S. trade figures.

U.S. allies in the region are boosting investments in Myanmar and opposing economic sanctions that would further isolate the military government. And U.S. drug enforcement officials want closer ties with Myanmar's military leaders to stem a flood of high-grade heroin from the region into the United States.

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