Source: Journal of Commerce April 23, 1997 NEWS; Pg. 1A Contact: Editor Kevin L. Harden: RIGHTS, DRUG ISSUES SPARK BAN ON MYANMAR; US PROHIBITS INVESTMENT, CITING CONCERN OVER ILLEGAL NARCOTICS TRADE BY TIM SHORROCK Copyright (c) 1997, Journal of Commerce, Inc. The ban on new investments in Myanmar is the result of mounting public and congressional pressures over human rights and U.S. concern that the Myanmarese government is turning a blind eye to the export of illegal drugs, U.S. officials said. The ban was announced Tuesday by the Clinton administration. At the same time, the decision's bipartisan support reflects a deep split within the U.S. business community about how best to deal with the military dominated government and the wisdom of applying unilateral sanctions against countries like Myanmar, formerly known as Burma. Over the past year, major U.S. oil companies such as Unocal Corp. of San Francisco have joined U.S. exporters and importers in lobbying hard against sanctions. Many of them reacted angrily to the decision. ""These sanctions are going to do nothing to speed up change in Burma, but they are going to speed up the departure of U.S. companies,'' said Barry Lane, a spokesman for Unocal Corp. The El Segundo, Calif., company is the largest single investor in Myanmar and holds a 28 percent share in the $1 billion Yadana natural gas project, one of the largest infrastructure projects in the country. U.S. investment in Myanmar represents 8 percent of that country's total foreign investment, and twoway trade with the United States is only 3 percent of Myanmar's total trade. According to the Commerce Department, U.S. companies had $25 million invested in Myanmar at the end of 1995, a big drop from 1992, when the total was $55 million. MANY COMPANIES RETREATED But those numbers will drop even more in 1996. Over the last year, more than a dozen major U.S. corporations have pulled out of Myanmar or ended business relationships there in response to local laws in Massachusetts and California penalizing companies that do business in Myanmar. These include Apple Computer, EastmanKodak, HewlettPackard, Liz Claiborne Inc., the Disney Corp. and Pepsico, according to Simon Billenness, a senior analyst with Franklin Research and Development Corp. Franklin is a Boston company that helps investors put their money in countries that respect human rights. At a briefing Tuesday, Secretary of State Madeleine Albright said the Clinton administration is imposing sanctions because of the ""utter lack of political freedom'' in Myanmar and that country's failure ""to cooperate in the war against drugs. '' A senior U.S. official said there is a widespread feeling within the government that the State Law and Order Restoration Council the Burmese military junta known as Slorc has been allowing large quantities of heroin to flow into the world market. HUGE DRUG PRODUCTION AREA The drugs come from areas in northern Myanmar controlled by indigenous tribes and Chinese war lords. ""There's no question this is a huge production area,'' the official said. In her remarks, Ms. Albright made it clear the sanctions are designed to hurt the overall business climate in Myanmar and make it difficult for European or Japanese companies to expand at the expense of U.S. competitors. Citing concerns about Myanmar coming from shareholders of U.S. companies, Ms. Albright said the ban will ""deal a further blow to investor confidence in Burma . . . The investment climate in Burma under the Slorc is not exactly welcoming to business of any kind.'' ""Those comments are artfully designed to spook business,'' said Mr. Billenness. He said Japanese and European interest in Myanmar will be limited because the United States will likely veto multilateral loans that finance the country's huge infrastructure projects. That is exactly the problem, said a spokesman for Caterpillar Inc., the Peoria, Ill., construction equipment maker. This week, Donald V. Fites, Caterpillar's chief executive, warned that as the United States is contemplating sanctions, ""our biggest competitor, Komatsu of Japan, is making important new investments.'' SECRETARY OF STATE PRAISED On Capitol Hill, Sen. Mitch McConnell, RKy., praised Ms. Albright for pushing for sanctions within the administration. ""I think she won,'' he said. But Mr. McConnell said he would press on with a bill that would affect existing investment in Myanmar, saying the new policy ""doesn't go far enough. '' ""What a monumental burden for the government to place on the free enterprise system,'' said Charles D. Dean Jr., the owner of Dean Hardwoods Inc., a Wilmington, N.C., company that is one of the largest importers of teakwood from Myanmar. ""It's an absolutely counterproductive effort.'' Mr. Dean said his company's investments in Myanmar would not be affected by the ban, but argued that U.S. exporters could lose out to their competitors. Many Burmese companies use ""ultramodern'' machinery from Germany, Italy and other countries, he said.