Total in Burma: How the Campaign Day could lead to Connivance with the Junta

(By Derek Tonkin, former British Ambassador)

It is a great pity that Total ever got involved in Burma. They did so in 1992, like Premier Oil, at a time when Western Governments were encouraging Western companies to invest, in the hope that a Western industrial and commercial presence in the country would get the Burmese economy on its feet again after some 30 years of self-imposed isolation and political repression. Both Western Governments and Western companies were to be sadly disappointed. 

When oil and gas companies invest in a project, they know they could be in for a long haul. Governments may decide, as Western Governments did, that the continuing lack of civil and political liberties in Burma and the flagrant and continuing breaches of human rights have made it impossible for them to continue to encourage Western involvement. Oil and gas companies, however, cannot withdraw from their investments as rapidly as Governments can change their policies.  The political environment in a country may improve, or worsen. Companies owe it to their shareholders not to cut and run. If Governments want them to withdraw, they should pass legislation requiring this, and offer compensation in the national interest. 

The natural gas sector is one requiring the massive investment of resources, initially for exploration. It is a high risk business. Companies stand to lose, indeed expect to lose much capital invested in disappointing exploration. But the indications in both Yadana (Total-UNOCAL-MOGE) and Yetagun (Premier Oil-Petronas-Nippon Oil-Thai PTT EP) were promising and production is now profitable. Altogether, some US$ 1 billion may be derived by the Burmese junta from gas exports in 2006, or about one third of total export earnings. 

For those who favour tough sanctions against Burma, the fact that a Western company like Total is cooperating with the military regime to provide such substantial income from gas exports is regarded as totally unacceptable. Arguments that Total pays its employees well, provides social, health and educational support programmes not only for villagers along the pipeline, but also in other communities and sectors, and encourages a worker-management relationship which could be a model for trade unionism in Burma, are dismissed as irrelevant. Quite simply, it is argued, Total ought not to be in Burma at all. They should get out. End of argument. 

I would agree wholeheartedly with this approach, but for one thing. If Total do get out of Burma, it would unfortunately make things not better, but worse. Total will sell out to the highest bidder. The most likely buyer would be from the dynamic and energy-hungry economies of China or India. Japan, South Korea, Thailand and Malaysia could also be interested. The State oil and gas company Myanma Oil and Gas Enterprise ["MOGE"] could have first option to take over Total's interests. These interests no longer include the fixed production assets. These already belong to MOGE.  

Those who argue that Total should get out of Burma are being less than honest with themselves if they gloss over the likely consequences. These are that gas production will be unaffected: there will be no interruption in the flow of gas to Thailand (and soon elsewhere) and of US Dollars into the Burmese State Treasury. Earnings may well increase as the Asian technicians who replace Total technicians are likely to be paid less, thus boosting profits. The last major Western investment in Burma will pass into Asian hands, but effectively nothing will have changed, only that the 1% of the Burmese people who benefited from Total's presence will no longer do so. Asian countries, opposed as they already are to economic sanctions, will be even less inclined to apply financial pressures. Their commercial interests in Burma are now simply too substantial. 

It is argued that Total's departure might somehow make the French Government more disposed to support sanctions against Burma. From my personal experience of French policies over the last 40 years, I would say that this is plain wishful thinking. Whether Total stays or goes will make little or no difference to the French Government. France has over the years consistently shown a dislike for sanctions anywhere in the world. Yet in the case of  Iran's nuclear ambitions, despite Total's continuing presence in Iran ever since the 1950s, France has joined the US, UK and Germany in seeking tough measures. France is also as supportive of Daw Aung San Suu Kyi as any Western country, and worked with the US and the UK to secure an informal Security Council meeting on Burma in December. Their view of Burma, I fear, is that, unlike Iran, they regard it as a "minor problem", to quote a French Foreign Ministry official at the time of the ASEM confrontation in October 2004. It is not, in the French view, a problem to be resolved by sanctions, whether Total stays or goes. France is leading the pack to sell arms to China. France is not about to queer their pitch in China by changing their sanctions policy in neighbouring Burma. 

I readily acknowledge that we are facing something of a dilemma. I agree that Total ought not to be in Burma. But I regard it as even less satisfactory that China's CNOOC or the junta's MOGE should take over. Indeed, if you are hostile to Total's presence and want to see them out of Burma, that must mean that you are less hostile to CNOOC or MOGE taking over. You cannot look the other way and pretend that there will not be consequences from a Total withdrawal, and it is pretty clear what these will be. So what justification is there for conniving at a Chinese or junta take-over of Total's interests? 

This is in any case not what the people of Burma want. They are concerned about the growing Chinese presence in their country. The thought of MOGE taking over Total's assets is surely a scenario which none of us would wish to contemplate. A Total withdrawal would achieve some short term publicity, but the financial and political pundits would expose ruthlessly the futile and counterproductive results of Total's departure. Asian dominance over the exploitation of Burma's natural resources would be confirmed. The West would be left out in the cold, not only financially and economically, but politically as well. 

At the end of the day, the interests of the Burmese people are better served by seeing Total stay in Burma, but keeping them under constant public scrutiny, their operations in Burma subject to frequent visits by independent groups and their responsibilities to the local community highlighted on every possible occasion.  

Derek Tonkin

British Ambassador to Thailand 1986-89

d.tonkin@btinternet.com