AsiaWeek: Beyond Sanctions

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Investors can help break Myanmar's political gridlock


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Something like the Sullivan Principles, a voluntary code of conduct for 
foreign companies that helped eliminate apartheid in South Africa, could 
be tried in Myanmar 


James Finch, the author, is an American lawyer, a managing partner of 
the Yangon office of Russin & Vecchi




PERHAPS THE ONLY SURPRISE in the U.S. imposition of economic sanctions 
against Myanmar on April 22 was that the boom had not been lowered 
months before. Key policymakers in the Clinton administration, including 
Secretary of State Madeleine Albright, Ambassador to the U.N. Bill 
Richardson and Secretary of Defense William S. Cohen, have long attached 
considerable political and career importance on ending the suffering and 
political stalemate in Myanmar.

What do the sanctions do and hope to achieve? They are contained in the 
Cohen-Feinstein Amendment, a Senate bill signed into law by President 
Clinton as part of the 1997 Appropriations Act. The Amendment makes the 
sanctions conditional on a finding by the President that Aung San Suu 
Kyi has been harmed or that large-scale repression or political violence 
has been committed against the democratic opposition. These conditions 
are so general as to have been triggered any day after the bill became 
law.

The odd thing about the sanctions is that they don't apply to much. The 
only prohibition is on new investment by Americans with the Myanmar 
government or Burmese companies in "the economic development of 
resources located in Myanmar." Excepted are contracts to purchase goods, 
services or technology. The President's executive order muddies the 
waters by attempting to broaden the sanctions. It recognizes the 
exemptions but defines "resources" in a way which could be interpreted 
to include them. The consequences of this sloppy drafting may have to be 
resolved in the courts, as an executive order cannot exceed the reach of 
a law on which it is based. 

In any case, what the sanctions do not do seems more significant than 
what they do. They do not, like some U.S. state and local ordinances 
designed to punish Myanmar, make any attempt to prohibit the activities 
of non-UU.S. state and local ordinances designed to punish Myanmar, make 
any attempt to prohibit the activities of non-U.S. business interests. 
When the legal smoke and dust settle from the executive order it will 
likely be determined that U.S. companies can start or

What happens now? It is unlikely that the U.S. sanctions alone can break 
the political stalemate. Though not prohibited, foreign business is 
reluctant to invest, as it has been for some time. Of course, economic 
limits on the development of a nation of any kind have the disadvantage 
of being disproportionately severe on the lowest rungs of the economic 
strata. While the high-minded arguments continue, the yearly per capita 
income in Myanmar remains low, with all the attendant human suffering.

Can investors in Myanmar help break the political gridlock? Something 
akin to the Sullivan Principles, used to eliminate apartheid in South 
Africa, could be tried in Myanmar. The Sullivan Principles were a 
voluntary code of conduct for foreign companies adopted by some doing 
business in South Africa. These companies were monitored for compliance 
by an independent consultant. The practice provided an alternative for 
foreign companies to quitting the country. They were able to continue 
operating, avoiding the disruption and job loss caused by closure. And 
by complying with the principles they became part of the solution of the 
larger problems of the country.

A program could be devised which would use economic growth to improve 
Myanmar's human rights record. The first step is that both the National 
League for Democracy, in the person of Aung San Suu Kyi, and the State 
Law and Order Restoration Council would have to agree on voluntary 
principles to which foreign companies would adhere. One benefit of thThe 
first step is that both the National League for Democracy,

By 1990s standards, the Sullivan Principles are pretty tame stuff and 
basically are contained in internal standards requiring many companies 
to be "equal opportunity employers." The content of the principles for 
Myanmar would be a matter for negotiation. Some key provisions:

A prohibition on forced or child labor and on any company which uses 
such labor.

A prohibition on dealing with local partners or contractors suspected of 
operating with laundered drug funds.

A ban against engaging in corrupt practices.

Hiring a balance of ethnic groups and not discriminating in hiring 
policies against members of any political affiliation. 

Using a portion of profits generated locally to support NGO projects 
such as combating malnutrition or AIDS prevention.

Meeting the highest standard of environmental practices. 

Compulsory periodic meetings with representatives of both political 
camps to discuss progress on the principles and other matters.

The program should add to the stability of Myanmar. The country's 
several ethnic groups are being held together by the iron hand of the 
military. If this rule is lifted, with the gradual onset of democracy 
there is real danger that the country will degenerate into ethnic 
splintering and bloodletting. Foreign companies, creating jobs and 
economic advancement, offer an attractive alternative to these 
all-too-familiar ills. 




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