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The Rising Cost of Labor ("Newsweek

The Rising Cost of Labor

How foreign pressure may break the regime?s habit of forcing
peasants to work for little or no pay

By Brook Larmer

                May 21 issue ?

The small Burmese peasant with the red-stained teeth and the fearful eyes 
hardly seems capable of unnerving one of the world?s most repressive 
military regimes. Maung is not a terrorist, a guerrilla or even a 
dissident. He is something that, in this era of globalization, can be even 
more troublesome: he is a plaintiff in a United States court case. And his 
target is none other than the American energy giant Unocal, one of Burma?s 
biggest foreign investors.

CHEWING ON A WAD of betel nut near his hideout in  rural Thailand, Maung 
(not his real name) recalls the abuses that accompanied the arrival of the 
Yadana gas pipeline, a $1 billion project financed in part by Unocal. The 
trouble began in the early 1990s, he says, when an Army battalion assigned 
to protect the pipeline corridor set up base near his village in southern 
Burma. Soldiers slept in his home, stole his food and forced him to act as 
their mule, carrying  backbreaking loads through the jungle for nothing but 
a bowl of uncooked rice. One day in 1994, a white man in a sleek pickup 
truck came to ask for the village?s cooperation on the pipeline project. 
The military began forcing Maung, and all the other villagers, to work even 
harder, lugging supplies, building a railroad and -- on one  occasion -- 
learing the pipeline route itself. In two years, he says, he got paid only 
twice, for a total of about $3.  "If  there were no pipeline, my life 
wouldn?t have turned out like this", says Maung, who fled Burma in 1996. 
"My village would not have suffered",

And if the pipeline had not been backed by American   money, the world 
might not have cared. But as a plaintiff in the high-profile case against 
Unocal, Maung is shining a light on the most disturbing and dimly 
understood human-rights issue bedeviling Burma -- forced labor.

A decade ago, when the military was gunning down protesters, nullifying an 
opposition election victory and jailing the saintly Aung San Suu Kyi, both 
the regime and its opponents had more   urgent problems to worry about. But 
the generals, panicked  by an economic plunge mostly of their own doing, 
are slowly trying to reintroduce Burma into the world. And they are finding 
people like Maung -- and the energetic community of international activists 
behind him -- blocking the way.

The roots of forced labor in Burma are very deep, stretching back to
the 13th-century Kingdom of Pagan. But the feudal practice has intensified 
under the current military rulers, who see themselves
as 21st-century heirs to the kings. The problem is compounded by a rapidly 
expanding military: the Army has doubled in size  over the past decade to 
more than 400,000 soldiers, whom the government last year admitted it could 
no longer afford to feed. An estimated   800,000 people in Burma 
(population: 52 million) are forced to work without pay, building roads, 
bridges, pagodas, even golf courses. The worst abuses take place in the 
fractious border regions, where ragtag Army units are forced to fend for 
themselves, with little or no supervision.

Local battalions use villagers to carry supplies, clear roads,  grow crops, 
build railroads or construct their military bases.

"Forced labor has become a drug for these local  commanders," says one 
foreign-aid worker in Burma. "They can?t survive without 

At the same time, the international outrage over such practices is only 
deepening Burma?s debilitating isolation. In 1997, citing its frustrations 
with forced-labor and other  human-rights abuses, Washington imposed 
sanctions that prohibit American companies from making new investments in 
Burma. The European Union has expanded its trade restrictions on the 
country. Last fall the United Nations?   International Labor Organization 
passed a resolution asking  all member countries to review their 
relationships with  Burma to ensure that they did nothing to perpetuate its 
system of forced labor.

Because of a combination of sanctions and arbitrary economic policies in 
Burma, most American corporations that did business in the country -- 
Motorola, Texaco, PepsiCo, among others -- pulled out their investments 
several years ago. Those companies that stayed -- like
Unocal, and its partner, Halliburton, an oil-services supply company run, 
until last year, by current U.S. Vice President Richard Cheney -- argue 
that as with China, engaging the regime will ultimately be more productive 
than shunning it.

Cheney, who has defended his company?s operations as  being "fully in 
compliance with U.S. policy," has lobbied against Burma sanctions for the 
free-trade group USA Engage; Unocal has invested $300 million in the 
country  since 1993. "We do not defend this regime, we do not
defend human-rights abuses," says Mike Thatcher, a  spokesman for 
California-based Unocal. "But this is a place that has shut itself off from 
the world for decades. The best way to bring the country into the world 
community is by engaging it, not by isolating it and making it an economic 
basket case."

But Maung?s case shows just how difficult it is for any company to stay 
clean when working with Rangoon. With the guidance of human-rights lawyers, 
the poor Burmese peasant and 14 other plaintiffs filed a case against 
Unocal in 1996. They do not accuse Unocal or French joint-venture partner 
Total of using forced labor directly. (Maung even recalls carrying supplies 
for a military battalion one day when a Total employee, clearly unsettled 
by the practice, secretly slipped him 150 kyat, about one dollar at the time.)

But the plaintiffs argue that Unocal knew Burmese soldiers were abusing 
their rights and still relied on them to provide security for the pipeline 
area. Indeed, according to case documents, Unocal?s own consultants told 
the company about such abuses both before and during the construction of 
the Yadana pipeline. Says Earthrights International lawyer Jed Greer: "If 
you hire the mafia to provide protection for you, who?s responsible if they 
do something  bad? You are."

So far the court has sided with Unocal, largely because the company never 
signed a written contract with the Burmese military. Says Thatcher: "We 
can?t be held accountable for the military any more than Starbucks in 
Seattle is responsible for the actions of the police protecting its store 
from protesters." In his summary judgment last year, U.S. district court 
Judge Ronald S.W. Lew said that  the company "knew that forced labor was 
utilized" and  "benefited from the practice." But he declined to bring the 
case to trial because, he said, Unocal didn?t "control" the security forces 
or "conspire" with them to commit the abuses. The plaintiffs? lawyers have 
already filed an appeal in both state and district courts, and the 
landmark                         case -- after five years and millions of 
dollars -- looks to drag on for several more years.

Any other companies that seek to do business in Burma 
will                                                  likely face similar 
obstacles. A group of refugees from 
the                                                   Southern Shan 
States  recently arrived in Thailand with fresh but
typical tales of horror. One middle-aged Shan woman says she was
forced to move, with the rest of her village, to a new site next to an Army 
base.  When her cousin went back to retrieve their cows last year, soldiers 
caught him, beat him to death and took the cows. Before she escaped earlier 
this year, the military forced her to work most days growing crops, 
clearing roads or building fences at the base.

"The soldiers treat us like animals," she says. "But we have to work. We 
have no choice"

The Burmese generals are themselves left with few  viable choices. Although 
the regime likes to fume about not giving in to external pressure, leaders 
well know that the moribund economy cannot grow without outside investment.

That, observers think, has provided the greatest impetus to the recent, 
highly secret dialogue between the government  and opposition leader Suu 
Kyi. "These talks," says one former government official in Rangoon, "are 
the generals? own sort of forced labor." And a chore the international 
community would do well to encourage.