Since New Zealand departed from the Australia-New Zealand-United States security framework (Anzus) in the 1980s, New Zealand foreign policy has played a useful role on the global stage, especially in the Asia-Pacific region. New Zealand’s support of rule-based international order and multiculturalism gives it an excellent identity in the world, evidenced by its role in the UN-led peacekeeping and peacemaking processes in Cambodia and East Timor since the end of cold war.

However, with occasional exceptions like these, New Zealand has played a relatively minor role in term of democracy, peacekeeping and promoting human rights in a region which is still dominated by military and authoritarian regimes. In the Aceh and Sri Lanka tragedies, Finland and Norway have acted as mediators instead of Australia or New Zealand. This country continues to provide development aid to Burma/Myanmar, where a military junta has ruled since 1988.

There are opportunities to be a much more pro-active force for democracy and human rights in our region. New Zealand could campaign in regional forums to reduce the arms race, abolish land-mines, ban child-soldiers and promote denuclearisation in line with the Treaty of Zone of Peace, Freedom and Neutrality (ZOPFAN-1971) and the Asean Treaty on the Southeast Asia Nuclear Weapon-Free Zone (SEANWFZ-1995). Both Asean and New Zealand have a principle of non-nuclear security that they should promulgate in wider forums such as Asean + 3 (with China, Japan and South Korea) and the newly established East Asia Summit.

On May 16, the Burmese military regime announced a deal with Russia to build a nuclear research reactor. As a dialogue partner of Asean, New Zealand has a chance to lobby against a nuclear reactor in a country where no transparency, accountability, free monitoring mechanisms or systemic security procedures exist.

Within the framework of New Zealand’s development aid to Asean, Burmese democracy and human rights advocates also deserve some human resource development and educational assistance, as the struggle of the Burmese democracy movement is based on Gandhism and Non-violence. It is a time for New Zealand to participate in the movement for Burmese democratisation.

Maintaining New Zealand’s reputation for human rights, the seven New Zealand ambassadors to Asean nations should attend seminars, conferences, forums and universities throughout Asean. Setting an ethical and moral responsibility approach towards Asean, New Zealand should make democracy and human rights a condition of overseas development assistance, especially for the children and women of Burma, Laos, Vietnam, Cambodia and Thailand.

There are untapped economic opportunities in Asean for New Zealand, particularly in tourism and education. Most middle-class students in the region cannot afford to study in England or the US because of current security policies arising from George Bush’s war on terrorism, the high cost of living and expensive education fees. Exporting soft-power to Asean would get immeasurable benefits and might cure the current account deficit.

This country should speed up negotiations to form a free trade agreement with Asean as a whole rather than more deals with individual nations such as the two negotiated so far with Singapore and Thailand. In terms of “dual-track diplomacy”, New Zealand can share the value and expertise of ‘All Black Rugby Culture’, a New Zealand identity within the Asean dialogue.

In security, too, New Zealand needs to strategically foster multilateral approaches. To achieve collective security in the region, New Zealand must expand the Five Power Defence Agreement with Malaysia, Singapore, Australia and Britain to all members of Asean. As a result, the New Zealand themes of collective security and international order would play a bigger role in the region. In term of security and terrorism in Asean, there is a low or no threat to New Zealanders because of this country’s intelligent approach to the global war on terrorism.

For another century, New Zealand interest and diplomacy will centre on Asia via Asean. By spearheading development aid with soft-power, democracy and human rights, either Labour or National could further strengthen New Zealand’s reputation in the region without shutting the doors to millions of Asian consumers.

Naing Ko Ko is the secretary of the international campaign deparment of democratic Federation of Trade Unions of Burma, now studying international relations at the University of Auckland.

Naing Ko Ko

ID - 4797846

Critical Security Studies

Dept. of Political Studies, Uni of Auckland , New Zealand

======================================================

Humanitarian intervention undermines the sovereign states system. 

            Humanitarian intervention may undermine the sovereign states system. The debate about humanitarian intervention has dominated students of law, politics and international relations before the UN was born in 1945. Although this essay may indicate ’sovereignty as authority’ (government controls over people and territory), I focus on ’sovereignty as responsibility’ (government respect for a minimum standard of human rights); and argue for a new concept of “Responsibility to Protect[1]” which reflects a ‘ threat to international peace and security’ under chapter VI and VII of the UN Charter.

            Firstly, let me investigate the word “sovereignty”, and then I will explore humanitarian intervention, because sovereignty is an arguable theme and normative term of international relations. No one can deny that this modern world political system and the UN are constructed/formulated around states sovereignty while ignoring the legality, ethnics and morality of governments of the states, and the social contract of rulers and ruled. For example, each sovereignty-state has one vote at the UNGA and not at the UNSC.

            Technically, the first key point of sovereignty has a “twin-dimension”: a. “legitimacy or authority” in the internal/domestic order, b. external independence/non-hegemony from outsiders/foreigners interference in the states’ internal affairs. This assumption is also in line with classical realist/neorealist’ anarchy systems[2]. In the other words, this sovereignty of nation-states– the idea of final and absolute authority in the state– has been a principal, constitutive, feature of the modern world[3]. Moreover, some scholars said that it is better to define sovereignty as authority (the right to rule over a delimited territory and the population residing within it[4]). Such definition accepts that sovereignty has both internal and external dimensions.   

            The second key topic of state-sovereignty is that states need “recognization” from other states as the equal value and standard at the international community. This point is very important for leaders of weak/failed states because it reduces external critics and intervention. Most of failed-states (e.g. Asean’ non-interference) need to invoke the sovereignty to protect state leaders illegitimacy or to hide their lack of moral standard in the international society. Recognition, as a sovereignty-state from other states is an essential matter for every state, e.g. Taiwan , which has a double-digit-growth economy and has a strong military, however, international society/states does not recognize it as a sovereignty-state. As a result, Taiwan has not a seat in the UNGA and some international institutions. The struggles for “sovereignty” of Palestine Authority and Kurd have also highlighted the important of recognition by states or international society.

            Allow me to reexamine a third key point of state “sovereignty as an authority”; a state enjoys political independence from other states. The government has supreme authority to give and enforce the law within its territory. No matter what and ways a government of state has in power, such as government like my native Burma ‘ military junta or Singaporean authoritarian and Brunei ‘ absolute-monarchy, states are juridical equal under international law. In particular, ” No state or group of states has the right to intervene, directly or indirectly, for any reason whatever, in the internal or external affairs of any state[5]“. Thus, each state has a monopoly over the control of the force within its boundaries, and no other actor has a right to interfere with a state’s authority over its territory and people[6].  

            Therefore, for many centuries, this narrow interpretation of “state-sovereignty” is a norm, principle and legality among the nation-states relations with each other. Again, throughout the Cold War era, the mainstream traditional/neorealist focused on sovereignty based on “staticism”, “the idea of superiority[7]“, territorial boundaries of states and either national security or interest. State sovereignty for realists is absolutely God given alienable “authority and rule of rights” for the rulers of states. By contrast, for neo-liberalinstitutionalist/liberalists, sovereignty is “an instrumental value” useful under some conditions, but not a shibboleth or an alienable right. For a Marxist, a state sovereignty is a mechanism for an elite ruling class to oppress proletarian class. 

The Humanitarian Intervention

            States are now widely understood to be instruments at the service of their peoples, and not vice versa. At the same time individual sovereignty—by which I mean the fundamental freedom of each individual, enshrined in the charter of the UN[8].

            While many scholars have debated the ethical and legality definitions related to humanitarian intervention. I will stay away from these global debates of academics and will state on my practical basic understandings. The humanitarian interventions by international (UNSC/NATO/ASEAN/OAU) actions are needed when states fail to protect their own citizens or make an enemy of their own people. When states practice barbarism, tyranny, anarchy, militarism, mass massacre and modern forms of slavery to their citizens, the states have not moral, legal, authority to govern their territory. The international community should not recognize, as a government of these immoral, illegitimate states, which declares war against their own people.

             According to the Commission on Intervention and State Sovereignty, three specific dimensions of nonconsensual coercion are examined – military enforcement, sanctions and embargoes, and international criminal prosecution – before concluding with an overview of the contemporary debate on humanitarian intervention. Therefore, in line with that thinking, I do support the humanitarian intervention as three aspects: a. when state sovereignty tyranny abuses individual sovereignty, b, humanitarian intervention is humanism and c. what/who is controlling humanitarian intervention.   

a. A state sovereignty tyranny abuses individual sovereignty

After the end of cold war, the UN played a more active role to protect humanitarian crisis. The international society and the UN had to intervene (9) countries’ humanitarian crisis from 1991 to 2000[9]. The domestic order, justice system and social contract of all of these states totally failed. There were uncountable violations of human rights, including genocide, mass slaughtering, crimes against humanity, torture and forced labor cases occurred in these countries. The key factors were the collapse of the state institutions and the emergence of widespread disorder while state sponsored mass killing to civilian.

             My questions are that when state sovereignty abuses individual sovereignty, should the state be respected? What makes the state, people or ruler? Confucianism, Buddhism and Islamism suggest sovereignty is for rulers only? Does international society want to accept these criminals as a government of state sovereignty? My suggestion is that international norms, value and diplomacy that are based on Government-to-Government (G-to-G) relations should change to a broader people participatory process of People-to-People (P-to-P). The international diplomats should practice the “Public diplomacy”, which based on individual sovereignty rather than traditional national interest based sovereignty when they deal with failed states. The interest of citizen is much more important than the ivory tower national interest in this modern world.

b. Humanitarian intervention is Humanism

            Again, we begin with the term humanitarian military intervention: some scholars claim how it is possible when using military and force for a humanitarian purpose. Let me borrow from the Robert Cox’s saying that “theories are always for someone for some purposes”.

            There are also twin dimension of humanitarian intervention: a. Humanitarian Intervention (non-force actions) and b. Humanitarian Military Intervention (deploy force). The mission of humanitarian interventions has also providing humanitarian assistance such as distributing medicines, treating patients, rehabilitations, visiting prisons and torture camps, rescuing or saving strangers, reconstructions and roads from Burma to Beirut , from Kosovo to Maldives , from genocide to SARS and tsunami. Thus, interventions should not narrowly focus on the deployment of military. It is an act of humanism, which is saving millions of people from the hands of bad governments and crisis.

             My suggestion is that military intervention should respect international human rights law and norms. The military intervention should also emphasize humanitarian intentions and be recognized by international community. I am not suggesting that the war in Iraq is humanism that highjacks on humanitarian intervention. The humanitarian military intervention should be the last option, not a first choice.  I do agree with Dr. Teson that a positive humanitarian outcome is characterized by whether the intervention has rescued the victims of oppression, and the whether human rights have been subsequently been restored[10]. 

Therefore, it is a time to establish moral obligations based international society that should promote human rights, democracy, peace and humanism.

c. What/who is controlling humanitarian intervention?

            Who is giving the license to intervene? What are the motivations? The answer is the UN Charter, a group of powerful liked-minded states, international law and the hobbesian states themselves. In the reality, whatever scholars are debating about where humanitarian intervention is legal or illegal, under the UN Charter, the UNSC is taking the most important responsibility for the maintenance of international peace and security. The UNSC practices enforcement actions, economic sanctions and collective military intervention. We can see some positive out come from the interventions, such as Cambodia , East Timor, Rwanda and so on.

 Although the UNSC is the sole authority for humanitarian intervention, NATO intervenes unilaterally in Yugoslavia in March 1999. Since, there are both legal and moral responses to the UNSC and the NATO led humanitarian interventions. As for NATO’ rights to act without explicit UN authorization, (NATO-Secretary General) Solana argued that “it (NATO) is a serious organization that takes a decision by consensus among serious countries with democratic governments[11]”. 

Some scholars illustrate the UNSC decision with the Game theory. They maintain that the P-5 is rational, power-seeking actors with complete and perfect information who are involved in a process of negotiation with other members[12]. However, I do believe that the P-5 have self-interest, different political objectives and motivations, deterrent power and the right to veto. Measuring impartial and natural on decisions of P-5 is totally impossible.

Therefore, I would like to argue that in the long run, the UNSC should include more members and should be formed of 25 to 50 members. In the short-term, the P.5 members should not use the veto-power on humanitarian interventions in order to get a more credibility from the international community. The UNSC should practice more democracy and transparency. 

Ends

- Total Word, main essay only (1657) words.

- To be turned it in on May 29, 2007.

Burma: the Politics of Economic Sanctions

Naing Ko Ko[1]

Lecturers:

(1) Prof. Dr. Nakarin, Dean,

(2) Prof. Dr. Virot Ali, Assit-Dean,

Faculty of Politics Science

Thammasat University

Introduction

Ever since the current military regime coup in 1988, Burma (Myanmar, has been ruled by the military junta which is presently known as the State Peace and Development Council-SPDC[2]. Most of Burmese political activists, lobbyists and pressure groups have claimed that the international political intervention to tri-partite dialogue is one of the ways of to liberate the people of Burma. Economic Sanctions Policy- ESP, itself as a tool, is most arguable political issues in not only in Burma but also among in the global political arena including Iran, Haiti, Cuba, North Korea, Libya, Syria and Iraq. Hence, I would like to demonstrate the politics of economic sanctions in Burma political procession by combining and illustrate pros and cons of some views of international policy-technocrats, key foreign policy-makers, and Barkley mafia entire the world.

Origin of Economic Sanctions Policy-ESPs towards Military regime

The root cause of ESP dealt with Burmese regime is a means to protect the restoration of democracy, human rights and civil liberties in Burma. After innocent civilian democracy demanders were brutally killed by the military regime, the US and Western democracies initially expressed “strongly condemn” occasionally. The symbolic imposition of European Council sanctions was adopted on 28 October 1996[3] by the European Parliament. The EU re-amends its sanctions against military junta each year. The EU’s sanctions consists of visa ban to top military generals, arms embargo. The original economic sanctions started from the Clinton administration. On May 20, 1997, in response to the Burmese Government’s large scale repression of and violence against the democratic opposition, President Clinton issued Executive Order No. 13047 declaring a national emergency with respect to Burma. The order, issued under the authority § 570(b) of the Foreign Operations, Export Financing and Related Programs Appropriations Act, 1997 (Public Law 104-208) (the “Act”) and the International Emergency Economic Powers Act (50 U.S.C. 1701-1706) (“IEEPA”), prohibits new investment in Burma by U.S. persons, and their facilitation of new investment in Burma by foreign persons[4].

In August 1997, Canada removed Burma’s Generalized System of Preference- GSP benefits. In addition, in January 2003, Burma was excluded from Canada’s Least Development Country Market Access Initiative[5]

Not only EU, Canada and US government adopted arm embargo and economic sanctions against the military regime but also a super-national organization, the International Labour Organization-ILO had passed a special resolution adopted by the ILO Conference in June 2000, under article 33 of the ILO Constitution. It is the first time in the ILO’s 81-year history that the Conference has had recourse to measures under article 33, a procedure that is designed to be invoked only in the event of a country failing to carry out the recommendations of an ILO Commission of Inquiry, which is itself a procedure reserved for grave and persistent violations of international labour standards[6].

After Daw Aung San Suu Kyi, Noble Peace laureate and members of National League for Democracy were state-sponsored terrorized by the military thugs in Depayin Township, Upper Burma, in 30 May 2004, Bush administration adopted “the Burmese Freedom and Democracy Act- 2003[7]” which immediately prohibits financial transactions with entities of the ruling military junta in Burma and will bar the importation of Burmese products into the United States after 30 days, according to the Office of Foreign Assets Control (OFAC). Japan has frozen all new development assistance to the regime in response to the May 30 attacks. However, Japan gives some aids to military regime case-by-case basics that go to economic reform.

Theories and hypothesis both Pros and Cons

Recently, Prof. Jeffery D. Sachs, and some pundits around the corners of the world spoke out economic sanctions are not sounded. Prof. Sachs stated that sanctions are mainly a symbolic stand for justice. But they are not symbolic in their effects. They are economically destructive and only occasionally politically productive[8]. They demand a smarter foreign policy to deal with those tyranny regimes around the globe instead of still using economic sanctions. Prof. Sachs gave example of Poland model and economic perestroika first and political galsnost. The steady economic development that is derived from increased trade with the regime will eventually lead to political reforms, this happened in other countries like Taiwan and South Korea. It is evidence that after the President Bush signed the BFDA to ban all import and export from Burma and stop remittance with Rangoon regime. The military junta announced the seven-step- roadmap which demanding military dominated political atmosphere that copying Indonesia model. Now, Indonesia model, as a part of “Asia Miracle” itself unraveled after Tum Yang Kum or Asia financial crisis in 1997. Accountability, transparency and political galsnost are more useful than the so-called casino-capitalism and authoritarianism for building modern statecraft in modern century.

Economic Sanctions Policy-ESP has been handled as a strategy in international political horizon before Second World War. Ever since the League of Nations’ economic sanctions against Italy failed to stop the invasion of Abyssinia in 1936, the consensus among pundits has been that applying such pressure doesn’t work. It is rarely noted that the league’s 1936 action might well have worked if oil had been included on the embargo list and if the United States had supported the sanctions[9]. Others scholars point out that a harsher stance by the United Nation Security Council and advocate the continued imposition of sanctions as the only workable means to push military regime towards democratic reforms. Democracy-Globalizers are nudging “trade and aid or carrots and sticks policy” by multilateral economic sanctions pressure, like South Africa in Apartheid regime. Costs and Benefits Analysis, military force may well be more effective in achieving some foreign policy goals, but it is likely to be more costly than economic sanctions. Policymakers understand that the low costs of economic sanctions sometimes make them preferable to more effective tools, such as military force[10].

SE-Asia and neighboring Counties Approaches to ESP

Even though Western democracies passed the economic sanctions policy to wards military junta in Burma, Japan, Malaysia, and Singapore, Thailand, Indonesia, India, China have approached “constructive engagement” with the regime. Their Foreign Direct Investment and aids and grants have been gone to the military regime since Rangoon established FDI law in 1989. Thailand and Singapore are particular bankrolling to the military regime ignoring Western democracies’ ESP on Burma. Especially, present Thai foreign policy towards military regime is more personal business oriented diplomacy rather than dignity diplomacy of previous Chuan administration. Recently, the Bt 600million loan for the Shin Satellite Plc’s controversial broadband project in Burma has already been approved, the president of the Export Import Bank of Thailand (Exim) Sataporn Jinachitra said yesterday[11]. Those kinds of loans and grants have no accountability and transparency. Moreover, those loans and grants are violating the ESP of ILO and EU but also no one can monitor on it to economic growth and efficiency. A popular argument against the use of economic sanctions remains the view that the economic growth and liberalization, partly fostered through Western trade and investment, will ultimately promote democratization[12]. The Rangoon military regime favors examples of economic perestroika without political galsnost. Moreover, Asean’ authoritarian regimes argued that external pressures, including economic sanctions, would not effective in bringing about democratic change. Those Asean and neighboring regimes practice the doctrine of noninterference in the internal affairs of members.

Apart from it, according to the Federation of Trade Unions of Burma, the regime has also manipulated the attempted constructive engagement of international organizations. They have allowed them to observe the situation, but delay the follow up on specific issues, therefore buying time for themselves and gaining positive publicity for allowing the organization into Burma.

How does the military regime use state expenditure?

As Burma is only ones military hegemonic country in Asean. All most all of production and services of country economy are occupied by the army’ run United Myanmar Economic Holding-UMEH and its related cronies and drug-dealers. Domestic and international entrepreneurs want to establish any business in Burma, they must deal with military generals and intelligence. In relation to other economic sectors, the defense expenditure exceeded far greater. The defense expenditure has been increasing steadily from Kt 1.8 billion since 1988/89, reaching Kt 30.9 billion (39 $ million- in FY 97/98)7 in 1997/98, Kt 36 billion in 1998/99. It was 21.18% of state expenditure and 2.36% of GDP in 1988/89, 49.28% of state expenditure and 5.03% of GDP in 1994/95 and 49.9% of state expenditure and 2.24% (7.6%)8 of GDP in 1998/99[13]. As below figure is shown that how military junta has been allocating defense sector among the state expenditures. During the military hegemonic periods since 1988 to up to date, defense sector and military expenditure is more and more than other public sectors. Human Resource Development and literacy is less and less.

Are ESPs creating poverty and starvation in Burma?

The military regime is not only notorious reputation on human rights and political rights but also on worsen mismanagement on public policy and macroeconomic affair. The composition of fiscal and monetary policy by military regime is very poor and structure adjustments are unclear. Military expenditure is about 50 percent while education and health sector expense is leas then 2 percent of state expenditure. Burma was one of the richest countries in SE- Asia and resource rich country itself. The regime is responsible for Burma’s socioeconomic deterioration and increasing poverty. According to Asian Development Outlook 2004-Myanamr, public sector spending on health declined to just 0.3% of GDP in FY2002 from 1% a decade earlier, while spending on education also declined as a share of GDP. It is the actions and policies of the regime that has created the grave socioeconomic situation in Burma. Its purposeful ignorance of funding social and poverty-reduction programs has done far more harm to the general population than sanctions could. The gap between rich and poor continues to expand. Military personnel salaries are higher than public civilian salaries, yet in 2000 they were given a 500% increased in their salaries, and also, army personnel get more ration and subsidies form the taxpayer’s money. Even though the economy has been recording 10% rates of economic growth in recent years, public expenditure in Burma has been steadily falling. According to the official estimate, GDP grew by 10.0% in FY 2002 (ended 31 March 2003). It is over exaggerated and weaknesses in the data make an objective assessment of the economy difficult[14]. Information of data and figure is incomplete, delayed and difficult to reconcile. Public expenditure in 1985-86 was 62% of GDP, but in 1995-99, it fell to 27% of GDP. Nutrition and life expectancy rates are very low 36% of children under 5 years in Burma are moderately to severely underweight. More children have dropped out of school. By the late 1990s, the regime’s expenditure on civilian education equaled only 1.2 % of the country’s Gross National Product - compared to 3.8% for developing countries - and had declined 70% in real terms since 1990[15]. According to the World Bank, the government only spends 28 cents a year per child in public schools. Almost 40% of children never attend school. Almost 75% fail to complete primary education in Burma. 98% of schooling children have never finished basic high school. More displacement in ethnic and central areas since 1988 there has been more than a million Internally Displaced Persons[16].The SPDC’s continued policies of forced relocation and eviction, land confiscation, economic monopolies, and systematic human rights abuses are the major causes of Burma’s massive IDP population.

Impacts of US’ the Burmese Freedom and Democracy Act-2003

It is hard to measure the direct economic impact of the U.S. investment ban because, the regime does not allow monitoring independently by the international agencies and scholars. But, the Treasury Department of US reports that it has blocked $13.3 million worth of transactions since prohibiting the provision of financial services to Burma. Of that amount, $1.7 million has been subsequently licensed by the U.S. By July 30, 2003, U.S. banks maintaining correspondent accounts with Burmese banks had blocked the balances in those accounts, an amount that exceeds $320,000. Other measures put in place against the Burmese junta before 2003 include a ban on new investment in Burma, a ban on arms sales to Burma, limits on humanitarian assistance to Burma, and a “no” vote on any loan or assistance to Burma by international financial institutions. It is the Burmese junta’s dismal economic policies that have led to widespread poverty and the flight of most foreign investors from the country. Likewise, Burma’s dreadful employment situation reflects decades of economic mismanagement by the Burmese government. However, the 2003 U.S. ban on Burmese imports had an impact on at least one sector of the economy: the garment industry. More than 100 garment factories, already in dire economic straits, that had relied on exports to the United States have now closed. There has been an estimated loss of around 50,000 to 60,000 jobs. However, new orders from importers in EU member countries helped remaining factories continue production[17].

On the other hands, some Neorealist and NeoLiberalists argue that the most important economic impact of unilateral economic sanctions is the cumulative weakening of U.S. competitiveness in third-country markets, including those of largest trading partners, like China, Japan and Asean.

Such indirect effects include:

Special advantages created for foreign competitors in both U.S. and third-country markets;

Uncertainty about availability of U.S.-origin goods, services and technology; Unreliability of U.S. firms and their affiliates as suppliers and as business partners;

Retaliation by third country governments and trading partners against U.S. interference in their international market decisions.

Conclusion

Democracy and democratization have become an increasingly importance factor affecting the relationship between military regime and the international community’ economic sanctions policy. The issue of democratization is also shaping interregional relations, including multilateral cooperation within South East Asia. As far as military regime grips on power, ESP is dealt with military ruled Burma. Economic Sanctions Policy with Burma issue will be louder and louder in international symposiums, conferences and among the scholars and pundits. I do believe that ESP on military run Burma is sound and works to deal with military junta. I would like to borrow a phase from Prof. David Baldwin, “no matter how useful or useless sanctions eventually turn out to be in Myanmar, one thing is sure: Putting economic pressure on governments we hope to influence or change will remain a potentially useful addition to the diplomatic tool kit. Presidents understand this even if pundits do not”.

Ends-

[1] ID-455668 -PPE-International Program, International College, Rangsit University, http://www.rsu.ac.th

  [2] The original name of State Law and Order Restoration Council was changed by the State Peace and Development Council in Nov,1997.

[3] The Council adopted Common Position 96/635/CFSP on Burma/Myanmar (1),

[4] EO 13047 Prohibiting New Investment in Burma. Signed: May 20, 1997. Federal Register page and date: 62 FR 28301; May 22, 1997.http://www.archives.gov/federal_register/executive_orders/2003.html[ visited on 15 Aug 2004]

 [5] Obstacles to trade and investment, 2003-Country Economic Report of the Economic Intelligence Union, London, United Kingdom.

[6] International Labour Conference adopts Resolution targeting forced labour in Myanmar (Burma)

Wednesday 14 June 2000 ( ILO/00/27 ) http://www.ilo.org/public/english/bureau/inf/pr/2000/27.htm[ visited on 15 Aug 2004]

[7] EXECUTIVE ORDER, President. G. W. Bush, Blocking Property of the Government of Burma and Prohibiting Certain Transactions, http://www.whitehouse.gov, http://www.usinfo.state.gov

[8] Myanmar: sanctions won’t work By Jeffrey Sachs, The Financial Time 28 Jul 2004, and London, UK. Prof. Sachs is Dean of Earth Institute of Columbia University and advisor to Mr. Kofi Anan, UNSG.

[9] Sanctions have gotten a bum rap - David Baldwin, August 18, Los Angeles Times. David Baldwin, a political science professor at Columbia University, is the author of “Economic Statecraft” (Princeton University, 1985).

 [10] Sanctions have gotten a bum rap - David Baldwin, August 18, Los Angeles Times. David Baldwin, a political science professor at Columbia University, is the author of “Economic Statecraft” (Princeton University, 1985).

[11] Burma loan approved, junta opts for ShinSat by Rungrawee C Pinyorat, Phermsak Lilakul,

issued on Aug 25,2004,The Nation

[12] Southeast Asia’s Democratic Moment by Amitav Acharya, p. 424, Amitav Archarya is associate Professor in the Dept of Political Science, York University, Toronto, Canada.

[13] The country Economic Report-2003 by Sein Htay, Economic and Research Department, The Federation of Trade Unions- Burma. http://www.ftub.org

[14] Asian Development Outlook 2004: Economic Trends and Prospects in Developing Asia: Southeast Asia: Myanmar.

Dated on 3 August, 2004, http://www. adb.org

[15] Than, Mya. Recent Developments in Myanmar: Impact and Implications of ASEAN Membership and Asian Crisis. In M. Pederson, E. Rudland, & R.J. May (Eds) Burma/Myanmar Strong Regime Weak State? 2000

[16] UNICEF (4 Aug 03) At A Glance: Myanmar Statistics

[17] Report on U.S. Trade Sanctions Against Burma, Congressionally mandated report submitted to Congress on April 28, 2004. http://www.state.gov. (visited date: 15, Aug 2004)

The Role of Multinational Corporation and

Foreign Direct Investment in Burma’s Political Economy.

1988-2004

Naing Ko Ko, ID-455668

3rd Year, PPE-International Program, Rangsit University

http://www.rsu.ac.th

Introduction

Since 1988, the Union of Burma has established a “Market- Oriented Economy” after abolished a “Socialist-Planned Economy”. The ruling State Law and Order Restoration Council- SPDC introduced a number of economic reforms to persuade Foreign Direct Investment- FDI and capital flights from Multinational Corporations-MNCs or Multinational Enterprises-MNEs. All MNCs are key agents transforming the Burmese political economy landscape and democratization. The heart of the reasons is that they are highly visible organizations, with great technology power and financial mobility; they inspire both “terror and fear”. In this paper, I would like to illustrate the role of MNCs and FDI in Burma’s political economy, what these organizations are, where they come from and where they go and to access the impact on the Burmese community and society.

In November 1988, The State Law and Order Restoration Council- SLORC promulgated Foreign Investment Law-FIL to attract the FDI[1]. In order to oversee and administer the FIL, the Myanmar Investment Commission- MIC was formed, an initial approving authority for FDI proposals. According to the regime’s FIL, foreign investment can be made in two forms: investment made by a foreigner to the extent of one hundred per cent foreign capitals and joint–venture made between a foreigner and a citizen. The minimum investment amount of foreign capital must be US$ 500,000 for manufacturing and US$ 300,000 for services. Not all FDI is approved under the Foreign Investment Law. Small scale investment, and investment in industries that are not legally monopolized by the state and its various organs, do not seem to need approval under the FIL. Small-scale FDI by Chinese nationals has not needed approval under the regime FIL. According to the IMF some foreign investment recorded in official statistics is not approved under the foreign investment law. The IMF notes that this investment appears in the balance of payments data[2].

In the international political economy and global liberal democratization, MNCs and FDI capital flights help liberate markets, societies and bring democracy liberalization in some economies. Some developing countries, particularly in Asia, have removed restrictions and implemented policies to attract FDI inflows to benefits form the investment and potential spillover effects[3]. In Burma, FDI helps perpetuate the rule of a repressive, tyranny military junta. The MNCs and FDI have brought “the tragedy of common” and “vicious-circle” to the people of Burma instead of technology transfer, job opportunities, efficiency, productive competitiveness and economic growth.

The capital flights of MNCs’ FDI in Burma

The MNCs are economic organizations engaged in productive activities in several countries. Typically, they go overseas because they have “Comparative Advantage[4]”. These benefits may result from avoiding barriers to imports to employing cheaper labor. Burma is loosing leverage in their bargaining relations with MNCs, because of its low standard transportation and communication infrastructure and its notorious military dictatorship political image. It should be noted that the comparative advantage of possessing of scarce natural resources and cheap-labor are no longer advantage. Some neighboring countries, like Singapore, India and Thailand have attracted more high-skill and excellent science and research centers. Those neighboring countries have better political and economic stability and policies managements than the junta does.

Liberal Economists assume them as forces for positive change, spreading good things like “technology transfer” and creating “middle-class theory”. Nationalist Economists assume them as threatening the sovereignty of nation-states. Marxists and Structuralists assume that they are creating a world marked by inequality and dependency[5]. Most major MNC’s FDI have been linked with the Union of Myanmar Economic Holding, UMEH and the Myanmar Economic Cooperation-MEC, the business wings of the military regime, run by the military generals and personnel. The UMEH is the largest monopoly firm with 10 bn kyats(US$ 1.4 billion) in capital[6] and running joint-venture with all most MNC and MNE in Burma, such as timber industry, live stock export, import, oil, gas, gem and mine exploration and production, garment production and export, the manufacturing, tourism industry.

After the regime declared the foreign investment law-FIL in late 1988, the MNCs and FDI started to flow into the Burma, reached US$ 56 million in 1989/90. It grew steadily to US$ 1352.295 million in 1994/95 and the height amount was US$ 2814.245 million, a total of 78 new foreign investments in 1996/97. During the Asian financial crisis, the sharp drop of FDI. The Myanmar Investment Commission reports that American companies invested more in February 1997–$339 million–than they had in the previous eight years combined. Only $21 million was invested in all of 1995 and 1996. Most of the new investment was in the oil and gas sector[7]. In March, 2000, approved amount of FDI was US$7177 million of 327 projects from 25 countries. As of 31, March 2002, Singapore, Thailand, Malaysia, Indonesia and Philippine are investing in Burma and have committed US$ 3911.84 million in 169 projects, realizing 52.15% of total permitted amount of FDI[8]. The current leading MNCs are from Singapore, United Kingdom and Thailand shared 56.89 % of total FDI in February, 2003. See as below Tab.(1) showing that total FDI in 2002.

Foreign Direct Investment of Permitted Enterprises by country.

Source: Statistical yearbook, 2002 CSO, Ministry of National Planning and Economic Development.

Three Asean’s member countries, namely, Singapore, Thailand and Malaysia ratios 46.98 % of FDI are among the five leading investors in Burma. At the end of February 2003, Foreign MNCs have committed a total of 271 foreign investment projects in 11 economic sectors from 25 countries; with the total approval amount of US$ 7500.725 million (actual inflow was around 30% of total approved) and the 10 major foreign investors lined up as Singapore, Britain, Thailand, Malaysia, the United States, France, Indonesia, the Netherlands, Japan, and South Korea. China ranked the 15th with US$ 64.151 million. Since 1990, Asean members countries made commitments of US$ 4.26.bn whereas Western countries only made commitments of US$2.89 bn[9].

According to the International Confederation of Free Trade Unions-ICFTU released MNCs in Burma on, 29 June 2004 in Brussels. It stated that additional 36 companies appear on the ICFTU’s list of multinationals operating in Burma, taking the database total to well over 400 international multinational companies[10].One of the new additions to the list is SWIFT,a financial company based in Belgium and operating worldwide.

Daewoo International Corporation is another company coming under the spotlight for fraternizing with the Burmese regime. Appearing in the ICFTU’s database, the multinational, which has roots in South Korea, plans to operate and explore several new gas fields in Burma. Together with Korea Gas, Daewoo International is in the early stages of setting up a number of major operations in the South- East Asian country. Initial estimates suggest that the size of the Daewoo International gas operations will dwarf the Yadana gas fields where the French company Total and US-based Unocal operate. The commercial exploitation of gas fields in Burma has traditionally been accompanied by appalling human rights violations. Daewoo International operations may unleash a new wave of forced labor.

Austrian Airlines links to Burma, which has resulted in a stream of negative publicity for the Austrian company. Despite this, the airline is unwilling to openly express any intention to permanently halt flights to Burma. Austrian Airlines is the only major foreign carrier from outside the region that still operates regular scheduled flights to the country.

The interest thing is that Burma agriculture sector being the main money making sector of the Burmese economy with the about 36% of the total GDP and about 46 % of foreign exchange earnings and shares 62 % of total labor force. There is no significant participation of MNCs or private investors in agriculture sectors and crop production because MNCs has been attracted by other most short-term profitable economic sectors. There is only 0.46% in agriculture sector out of 7413.781 totals FDI in March, 2002. Most MNCs are exploiting profitable natural resources based sector, such as oil and gas, mining and real estate sector industry. See as below tab. (2)

The Condition of FDI- (approved) - US$/m

Source: Statistical Yearbook- 2002, CSO, Ministry of National Planning and Economic Development.

The Capital Flights of MNCs in Money Market

In Burma’s political economy, MNC’s portfolio investment has a little room, because; the present regime does not want to open up money and financial markets and its practices fixed-exchange system. As the result, the people of Burma obtains black-market of foreign exchange and international transactions. The central bank and composition of monetary and fiscal policy are totally controlled by the regime.

Although private banks and citizen are not allowed to functions or access foreign exchange and international financial markets, the regime has imposed to gain some tax with foreign exchange certificate-FEC or US$. Since 1988, International Financial Institutions-IFI, like, IMF, WB and ADB, have suspended technical aid and financial transactions to the military regime. But, the military regime is using SWIFT, a financial company based in Belgium, and operating worldwide. SWIFT hosts a network which everyday enables high street banks and other financial institutions to make transactions with one another. SWIFT is now playing an important role in propping up the Burmese dictatorship, having recently accepted four Burmese government-owned banks into its network[11].The regime has not only mismanaged in political arena and but also in economic performance. Indeed, portfolio investment flows, which refer to the international movement of money in search of high rates of return in currency and financial markets. That’s why, international speculators, financiers and bankers, financial MNCs, like City Groups, Standard Charter Bank, Lloyd Groups and HSBC Bank are avoiding the Burma’s money and currency markets.

The Capital Flights of MNCs in Oil & Gas Sector

In Burma political economy, FDI in the oil and gas sector accounted for about one third of total FDI. In 1989, the Ministry of Energy of the Burma had invited MNCs for exploration and development in Andaman Sea and Bay of Bengal. At the present, international oil MNCs, including Total/ Unocal, Mitsui, Texaco, Nippon Oil, ARCO of United States, Genting Group and Dataran Isibumi of Malaysia, and other oil MNCs from USA, Hong Kong, and Canada and Australia are now very active in oil and gas exploration.

The Myanmar Oil and Gas Enterprise-MOGE, a wholly owned and functioned by the military regime, has signed a voluminous sales contract of natural gas to PTT of Thailand and the construction of 36 inches diameter pipeline for a distance of 430 km from the filed to the border in is in progress. In 1993, the US MNC Unocal Corporation (UNOCAL) became a partner in a joint venture with the French MNC Total and the MOGE in the Yadana Gas pipeline project. In here, the Unocal/Total has suited by the International Labor Rights Fund in 1996 charged the company with knowingly using forced labor to construct a natural gas pipeline across the Tenasserim region of Burma[12]. There is little question that thousands of Burmese villagers were impressed to perform labor for the benefit of Unocal’s pipeline projects[13]. Chinese MNCs is jointing with the ministry of Electric Power to develop the hydropower projects in Burma.

How the military regime manages the FDI?

Every money transactions and capital flights of MNCs have to deal with the regime fixed- exchange rate system. When a MNCs invests in hard currency like US$ and EU’ Euro in Burma, the regime obtains this hard currency and using these FDI capital flights to buy the military hardware and weapon for defense sector. The military regime has been allocating about 50 per cent of each year budget to the armed forces and defense sector. This does not include significant allocation to the defense sector from off-budget sources and unofficial payments that never appear in the national account. Burmese armed forces is second largest in SE-Asia and is installing know-how military weapons form China, North Korea, India, Ukraine, Serbia, Russia, Slovakia.

According to the SPDC figures, the defense sector expenditure has been increasing steadily from Kt.1.8 billion since 1988/89 to Kt.36 billion in 1998/99. According to Burmese anonymous economist and the FTUB sources, military expenditure is around 60% of total state expenditure in Burma, because, there are two things, one thing is that the junta always spends under the heading of Ministry of defense and other headings such as Ministry of home affair and Ministry of progress and border area and national races and development affairs, etc. And, another thing is the difference of official exchange rate and market exchange rate[14].

The milestone of buying arms and weapons form those countries, in 2002, the SPDC purchased eight MiG-29B-12 super sonic air jet fighter, cost of about US$ 130 million and the construction of a nuclear reactor in Burma form the Russia. In 2003, a team of North Korean technicians was sent to Rangoon to install surface-to-surface missiles on some new Burma Navy vessels and, some informed sources reviled that North Korea was assisting Burma with the construction of a nuclear reactor[15].

Impacts of MNCs on the citizens of Burma

All MNCs’ bargaining advantage is based on two factors: one is their control of scare and crucial economic resources. The second flows from their global mobility, allowing them to transfer resources around the globe[16]. In Burma, low-skilled workers engaged in low-technology production have very little bargaining power because of the availability of such workers. Staffers and workers are easily substituted and fire and hire policy can be made by both MNCs and the military junta. And also, there are no free trade unions, minimum-wag system in Burma. Independence environmental watch, consumer rights groups, corporate crimes and responsibility groups are not allowed to monitor and function in Burma. The minimum monthly salary in the public sector has been about K.1, 000 since 1994, equivalent to US$1.18 at current parallel exchange rate.

Some MNCs doing business in Burma profit directly and indirectly from their investment that commit grave human rights violations, such as forced labor, slave labor and forced relocation. The filed suite against Unocal by the ILRF highlighted the issue of liability for multinational corporations that are linked to the use of forced or slave labor, and contends that corporate complicity in certain types of egregious human rights violations should give rise to civil or criminal liability[17]. The International Labor Conference’s Committee on the Application of Standards, which monitors member states’ compliance with ratified ILO Conventions, was deeply disturbed by the death sentences given to 3 activists from the Federation of Trade Unions- Burma-FTUB. Sentenced to death last November, the 3 had been accused of high treason for reporting incidents of forced labor to the ILO. The ILO has given the military junta until November 2004 to demonstrate real progress on the issue of forced labor. This should include the release of the FTUB prisoners.

Burma continues to have one of the worst human and trade union rights records in the world. In spite of some minor positive steps which have been made in the last few years, partly a result of international pressure, there have been very few changes in the way the Burmese dictators treat their citizens. Improvements have mostly been merely cosmetic and in many cases, were followed by new waves of brutal repression including violence against religious and ethnic minorities, forced relocation, physical assault, child labor, rape and murder. The reality is that cases of these disturbing criminal offences happen on a daily basis. The regime also has a high number of political prisoners in custody. Forced labor, one of the serious and widespread problems in Burma, is still the labor practice of choice routinely used by the Burmese military.

Green activist and environmentalists are not allowed to monitor the impacts of deforestation, oil & gas exploration, mine exploration and production, dam building. Most of MNC’s FDI are dealing with natural recourses. No one exactly knows that how much Burmese monsoon forests are destroyed by MNCs in Burma.

Conclusion

In the theories and hypothesis of the international political economy, International trade including MNC and FDI can be every one better off. Most major MNCs are helping some developing countries political economy. In practice, all MNCs operate in Burma, have business relations with the Burma, have been in direct contact with the officials of the regime and/or promote militarism in the country. All MNC’s formal business relationship in Burma benefits the Burmese military dictatorship, directly or indirectly. Those MNCs do not support the desire of the citizen and needed of the people of the Burma. Therefore, these multinational companies are seen as supporting the military dictators and generals who rule the country against the desire of people of Burma since 1988.

Ends

(July 1, 2006/ Brussels) Mr. Naing Ko Ko of the National Council of the Union of Burma recently finished his month-long internship with the European Parliament in Brussels, Belgium and Strasbourg, France.

A graduate of Rangsit University in Bangkok, Thailand, Naing Ko Ko was born in 1971 at Mon State, southern part of Burma.

As a high school student in the late 80’s, he began participating in democracy and human rights movements. He took part in the Phone Maw Affair; named after a slain student activist. He worked as a leading member of All Burma Federation of Student Unions-ABFSU and a youth organizer for Federation of Trade Unions -Burma inside Burma

In December, 1992, he was arrested by the Military Intelligence Service-MIS and was tortured and interrogated by a military team led by Col. Maung Maung Than. He was later transferred to Yae- Kyi- I or the Central Military Intelligence Service ‘ s interrogation camp in Mingaladon, Rangoon Division where he was mentally and physically tortured by Col Maung Maung Kyaw, son in law of Lt .Gen Tin Oo, former secretary of SPDC, the military junta.

In January, 1993, he was sent by the Special Court of Northern Insein province and sentenced to 7 years imprisonment with hard labor. He spent a year and a half at the notorious Insein Prison as a political prisoner.

“I was put in the military dog cell from February 13 to June 24, 1994 in Inseine, Rangoon prison,” Mr. Naing recalled. “Every prisoner was treated like a dog by the prison authorities.”

He was later transferred to Taung Oo prison and was released on Mar 26, 1998 after 5 years and 8 months.

After his release in 1988, he became a member of All Burma Federation of Student Unions and Federation of Trade Unions-Burma inside Burma.

In 1998, he went to Thai-Burma border to join the democratic movements outside the country. He has been assigned as International Campaign Secretary of Federation of Trade Union-Burma by FTUB.

He had travelled extensively, mainly to Europe, to attend seminars and testify against the military dictatorship in Burma.

“The internship to the European parliament is a valuable experience especially to the people of the Third World,” Mr. Naing commented. “The internship at ALDE contributes to an understanding of the role of liberty, democracy, individuality and responsibility in the global arena.”