Is Money From Gas Deals fuelling the Myanmar Junta?

Myanmar is one of the poorest countries in the world. The country’s revenue is largely generated from its vast reserves of natural gas and oil. But a recent report by an environmental group EarthRights International (ERI) claims that a large amount of this revenue doesn’t go into the national budget.

The military officials are instead depositing the money secretly in two banks operating in Singapore. Matthew Smith, one of the authors of the report says the money comes from a gas pipeline run by French multinational Total and the US firm Chevron. “Since commercial production on the project began in 2000, the Total-Chevron project has generated approximately 4.8 billion dollars of revenue for the Burmese military regime.”

Currency manipulation

Smith says the junta secured the money by manipulation. He claims the ruling generals used an outdated exchange rate of 6 kyat to the dollar, instead of the current value of nearly 1,000 kyat to the dollar. The findings are based on interviews with hundreds of villagers living in the area of the Total-Chevron gas pipeline and with former expatriate staff of the gas project.

Sean Turnell, an expert on Myanmar’s economy at Macquarie University in Australia University supports the report. “The story is very much consistent for those of us who know the situation. Burma's regime is accumulating a vast amount of money with such projects.”

The US and the EU have tightened sanctions against the junta in recent months following its failure to release political prisoners including Nobel Laureate Aung San Suu Kyi. However the two companies mentioned in the report have been able to escape these sanctions. “All the existing sanctions that prohibit new investments in the country were enacted after Total-Chevron investment began,” says ERI’s Simth. “In effect the Total-Chevron project is not touched by the sanctions.”

Human rights issue

ERI also accuses Total and Chevron of whitewashing severe human rights violations. The group says it has documented cases of abuses by security forces guarding the pipeline including forced labour, violations of rights such as the freedom of movement. It says at the time of writing the report they brought these issues to Total’s notice. The company in turn promised to deal with the problem. But they did not keep their pledges.

Sean Turnell however believes that the junta should be held more accountable for the current situation. “I think the problem is more on the side of Burma rather than on the side of Total and Chevron. The problems of accounting the way in which the regime uses the money, the way they hide it from their own people is very much due to the nature of the regime that currently rules Burma.”

ERI, on the other hand, advocates multilateral pressure on the petroleum sector in Myanmar, which includes leaning on the banks where the money has been deposited.

“As long as the military regime has an easy access to its revenue in Singapore they have little incentive to respond to domestic and international pressure.”

The firm Total has rejected the report while Chevron has insisted that the socio-economic work run by Total and supported by Chevron is playing a crucial role in the improvement to the lives of the people where the project is running.

Author: Disha Uppal
Editor: Grahame Lucas