US reverses decision to sanction Chevron over Burma
Updated
The United States has reversed a decision to impose sanctions on energy giant, Chevron, over its operation in military-controlled Burma.
The US House of Representatives passed a package of sanctions to pressure American businesses out of Burma in the wake of the junta's crackdown on pro-democracy protests late last year. But Chevron has successfully argued that the sanctions would make it easier for competitors, such as those from India and China, to take over its interests. Human rights group, EarthRights International, has been campaigning to get Chevron out of Burma, arguing that its presence contributes to widespread abuses including forced labour, rape and killing by the Burmese military.
Presenter: Marco Simons, EarthRights International's legal director
SIMONS: Most likely because members of Congress who were in favour of tougher sanctions recognise that this particular provision would not really hurt the military, whereas other members of Congress who were hesitant and who are friendlier to Chevron may have been threatening to hold up the whole sanctions bill over this one provision, and so most likely it was a compromise that the sanctions bill as a whole would go through but the tax penalty on Chevron would be removed from it.
LAM: And Marco Chevron is part of a multi-billion dollar gas extraction and export operation. What was at stake for the company if the sanctions had been implemented?
SIMONS: Probably in the range of tens of millions of dollars in tax penalties. Essentially what one draft of the legislation would have done is to eliminate Chevron's ability to shield from US taxes the tax that they paid to the Burmese military. But that is a fairly small portion of Chevron's overall take from this and it also pales in comparison to the estimated billion dollar income that the Burmese military regime is receiving on an annual basis from this project.
LAM: And yet Chevron successfully argued that if it pulled out it would pay an estimated 500 million US dollars to the military rulers as a penalty and then someone else would step in and the military would remain unaffected. Do you think they have a point?
SIMONS: Well Chevron has argued many times that they would have to pay some sort of penalty if they pulled out and to my knowledge they've never substantiated that claim. On the other hand I don't think there's any doubt that regardless of whether Chevron stays or goes, that the money will continue to flow to the Burmese military regime. The source of the money is not Chevron, it's the Thai government ultimately because Thailand is buying the gas. So as long as Thailand keeps buying the gas from this project the money will keep flowing to the Burmese military regime unless there's some way through financial sanctions to stop that flow of money. But whether Chevron's a participant in the project or not makes little difference to how much money the military regime pulls in.
LAM: Indeed Chevron also argues that the Yadana pipeline operation supplies much needed energy to the region?
SIMONS: Well that's highly debatable. They use the word region because they recognise that it supplies virtually no energy to Burma. Almost all of the benefits of the project accrue to Thailand and to the generals who rule Burma. None of it goes to the Burmese people who shoulder all of the burdens of this project which include a massive militarisation of this pipeline region which with attendant forced labour and other human rights abuses, as well as the billions of dollars that prop up the military regime itself.
LAM: And finally Marco the tough sanctions were introduced immediately after the protests last September led by the monks, but ten months later they've been watered down. Is it a case of yet again for Burma's people out of sight out of mind?
SIMONS: Well I don't think so, there was a danger that this sanctions bill would never be passed at all, especially after the cyclone generated considerable sympathy and reluctance to impose additional sanctions. On the other hand the fact that this is going through demonstrates that there still is a willingness to keep the pressure on the generals. There's been a compromise worked out which although it doesn't include the Chevron tax penalty, it does include other tough sanctions, and sanctions that very well may have more of an impact on the military regime, such as blocking trade in Burmese gemstones. So it is substantial tightening of the sanctions that have existed up till now and in my view the Chevron provision while it may have been an appropriate penalty against Chevron would not have had much of an impact on the ground in Burma.
