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financial times article on oil inve

Subject: financial times article on oil investments

Wednesday, Jan 24,1996

Burma's narrow southern peninsula, once a virtual no man's
land, has become a battleground.  The construction of a
$1bn (662m sterling pound) 409km pipeline to transport
offshore natural gas across the peninsula to Thailand, by
an international consortium led by Total of France and
Unocal of the US, has brought deaths in the jungle and
denudations in the west.

Last March five Total workers were killed and 11 injured
by ethnic Karen rebels extracting revenge for the
uncompensated expulsion of villagers along the pipeline
route.  Just last month security forces guarding the
pipeline area came under attack again, resulting in at
least one death.

The systematic use of forced labour by Burmese military
units charged with protecting the pipeline and its
employees, and the project's acute strategic importance to
the Burmese military junta, have made the pipeline a
target of western human rights activists initiating
consumer boycotts of companies doing business in Burma.
The forced labour surrounding the project is being
trumpeted loudly by proponents of a recently intro-duced
US bill that would outlaw further US investment in Burma.

By all accounts, workers on the pipeline itself are being
paid, and paid well by Burmese standards, although
kickbacks by workers to the local military officers who
have some power over who gets hired have been widely
reported. Workers in military camps being set up to secure
the pipeline area are not so lucky.

"Last May the township military authorities ordered us to
go to Heinze Island.  Two hundred of us were there for two
weeks, clearing grounds, constructing a helicopter pad,
building bamboo barracks and a wooden guest house.  We
were not paid.... and when we left, more workers were
forced to go to replace us.  They were not paid either,"
says Mr. Ohn Thaw, a villager from Kanbauk who is now a
construction worker in Bangkok after escaping from Burma
late last year. Previously uninhabited, the island in
question is important for both construction and operation
of the pipeline.  It is located in the shipping lane
through which Total will transport material and equip-ment
to build the pipeline, and near the point where it emerges
from the Andaman Sea on to Burmese soil.

Mr. Ohn Thaw and other Burmese refugees say that as well
as getting no wages, they were forced to pay for the
petrol used in the boat which took them to the island and
were ordered to take their own food.

"As soon as we got there, the military confiscated our
food and then rationed it out to us.  It wasn't enough,
only two tins of rice per day; we usually eat three," says
Mr. Ohn Thaw, who adds that villagers in Kanbauk who
refused to go were either fined 3,000 kyat  (about a
month's wages) or arrested an sent to zones of conflict to
act as porters for the military.

Total and Unocal say no operation under their control uses
forced labour.  Yet the security situation in the area is
precarious and one Total executive involved in the project
acknowledges that "unless the area is pacified, the
pipeline won't last" the duration of the 30-year gas
purchase agreement signed with the Petroleum Authority of

Mr.John Imle, president of Unocal, said last year that "if
you threaten the pipeline, there's going to be more
military.  If forced lab-our goes hand in glove with the
military, yes, there will be more forced labor. For every
threat to the pipeline there will be a reaction.

That reaction is apparent to Mr. Ohn Thaw.  Forced labour
sifts in the area around his village "used to be once a
year," he says. "Now it's three times a year and the time
(spent working) is double or triple what it used to be."

Citing these allegations among other things, this month US
senators introduced legislation that would ban US
investment in Burma - which, depending on its legal
interpretation, could force Unocal to pull out of the
project - until an elected government has taken power in
Burma and international labour standards are being adhered

US campaigning groups, playing up instances of forced
labour, have, meanwhile, succeeded in several American
cities in enacting selective purchase legislation
prohibiting local government purchases from companies
investing in Burma.  This year they will seek to push this
campaign to the state level, which could deny Unocal
millions of dollars in state government contracts.

These groups are also introducing shareholder resolutions
aimed at prohibiting companies from carrying out
operations there.

In some cases this pressure has been effective.  In 1994
Hong Kong-based Victoria Garment Manufacturing Company,
which has four factories in Burma, exported $32m worth of
textiles to US customers such as Macy's Eddie Bauer and
Liz Claiborne.  Under threat of picketing in front of
stores and disruption of annual meetings, these companies
stopped buying clothes made in Burma.  Victoria Garment's
US exports fell to around $10m in 1996 and this year the
company expects it will be forced to sack half its 3,300
workers in Burma.

While such redundancies mainly hurt workers, disruption of
the pipeline would be disastrous for the military regime.

Huge reserves of natural gas exist in the Andaman Sea, and
both Texaco and Arco are poised to begin production if
Total and Unocal can show that delivering the gas to
energy-hungry Thailand is feasible.

Burmese officials have indicated that the hard currency
they will earn from selling the gas may eventually allow
them to devalue the kyat, the most important obstacle to
permanent reviving the struggling Burmese economy.

On top of the revenue, some of the gas will be transported
by another pipeline to Rangoon, where it will generate
electricity and be used to produce fertiliser, things the
Burmese government desperately needs.  "The pipeline is a
key to so many projects," says Mr. Set Maung, economic
adviser to the Burmese generals.

Total and Unocal have been at pains publicly to distance
themselves from the Burmese junta.  But as the pipeline
progress, the relationship is deepening, as the companies
recognise that the military is the only real administrative
authority in he country, according to a Total executive.

Signs of this collaboration turn up in the oddest places.
At Ban I Thong, where the pipeline will cross into
Thailand, Burmese government troops have taken up strategic
positions on a ridge which is nominally in Thailand.  In
the shirt pocket of a young private, who has tied a bunch
of bananas to his belt laden with hand grenades, is a ball-
point pen sporting the logo of Total.