Financial Transparency Coalition

flickr / ezioman

Hopes of democratic improvements and economic stability in Burma are being threatened by American oil companies who are quickly rushing in to capitalize on Burma’s newly-open market.  With the agreement of Thein Sein, the president of Burma, the U.S. has recently guided Burma towards a more open society in hopes of leading to sustainable economic and governmental structures — all foreign components to the unstable Burmese nation.

Burma also happens to be resource rich.  This has brought about the inevitable swarm of U.S. resource companies to Burma’s doorstep, all hoping to stake their claim on the reserves.  Using sanctions as the primary means of helping Burma, the U.S. is endangering their effectiveness as discussions ensue about modulating them to allow extractive companies the right to sign contracts for mineral rights in Burma.  The Washington Post’s Editorial Board describes how this would be a big mistake:

Administration officials are debating whether to allow U.S. oil companies to do business with Burma’s state-owned energy company. U.S. companies reportedly have been lobbying hard. But opening this area of investment would contradict the spirit of the policy that Secretary of State Hillary Rodham Clinton announced a couple of months ago. It would contradict the explicit advice, articulated at no small risk to her internal position, of democracy leader Aung San Suu Kyi. Why would President Obama want to undercut her at this delicate moment?

Burma’s willingness to change and participate in good governmental practices should not be squandered.  Their government has been notoriously isolationist, corrupt, and oppressive, so this push for change is monumental.

Aung San Suu Kyi, a Burmese government opposition politician and activist, has been working with President Thein Sein to develop common grounds on which they can promote reform.  For Aung San Suu Kyi, “The government needs to apply internationally recognized standards. . . on fiscal transparency” during this national shift.  Allowing oil companies mineral rights in Burma without key transparency protections being in place would be a step in the opposite direction.

Dodd-Frank Section 1504 can help accomplish many of the transparency goals that Aung San Suu Kyi is calling for.  This section of the Dodd-Frank financial reform bill would require oil, gas, and mining companies to disclose all payments to governments in each jurisdiction in which they operate.  At this point in Burma, anything less of this could get out of hand.  Their unstable government has not yet achieved the capability legislatively to ensure that exploitation and financial opacity do not exist.  Again from the Washington Post article,

Finding the right pace to ease sanctions can be tricky. Thein Sein and his faction need to demonstrate, both to hard-line opponents and to the public, that democratic progress will bring benefits. On the other hand, reformers are helped if they also can argue that further reforms are needed to win further concessions. Burma’s judges and media still are controlled, hundreds of political prisoners have yet to be released, violence continues against ethnic minorities and fewer than one in 10 parliamentarians were chosen through free elections.

The U.S. needs to realize that oil companies would be pulling out the rug on Burma’s chance to grow past its history of turmoil and poverty.  Opening the floodgates entrance into Burma’s fragile economy  without the necessary protections in place is premature and irresponsible.

Until Aung San Suu Kyi, President Thein Sein, and the rest of Burma can reach consensus on their country’s goals and establish transparency safeguards, Burma should wait to start emptying their oil reserves. Its not going anywhere. The Burmese people need to make sure that their natural resource wealth is put toward developing their nascent economy, not siphoned off to corrupt elites.

Image:  Some rights reserved by ezioman