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Curses or riches: What can oil, gas and mining offer Myanmar?

Source: Global Witness - Wed, 12 Mar 2014 08:22 GMT
Author: Juman Kubba
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Ko Min, 26, manually extracts oil from one of three 300-foot deep wells he works on in the Minhla township of the Magwe district, Myanmar, on Oct. 27, 2013. Everyday Ko Min makes around $30 extracting crude oil from three small wells after he bought rights to use them for close to $1,000 from a farmer who owns the land. In Myanmar, an impoverished country rich with natural resources, people from poor communities find ways to supplement their income by exploiting such resources, often using primitive and dangerous methods. REUTERS/Damir Sagolj
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When it comes to natural resources, Burma, or Myanmar as it is now known, has long been one of the world’s foremost brands. Think Burmese teak, rubies and jade, not to mention Burmah Oil and the country’s fabulously valuable offshore gas fields. The miserable irony, of course, is that Myanmar’s people have seen little benefit from these riches.

Blighted by half a century of secretive military dictatorship, Myanmar is perennially ranked among the world’s most corrupt, with its economy defined by nepotism, cronyism and the sucking sound of stolen wealth disappearing into private bank accounts overseas. Natural asset sales generate substantial revenues, yet a quarter of the population lives in extreme poverty, and 35 percent of children under 5 are stunted as a result of long-term malnutrition.

Over the past two years, however, President Thein Sein’s government has embarked on wide-ranging reforms, raising hopes that things are finally changing for the better. These shifts have paved the way for a diplomatic reorientation away from China and North Korea, towards the west. World leaders including U.S. President Barack Obama and UK Prime Minister David Cameron have responded with landmark visits to Myanmar and, across the board, western countries are lifting sanctions and pumping aid money into the country. 

One reform pledge that has attracted international support is Myanmar’s announcement that it will open up its famously opaque natural resources by implementing a global transparency standard, the Extractive Industries Transparency Initiative (EITI). Last year, the U.S. announced a Partnership with Myanmar on Extractives, which focuses on supporting EITI in Myanmar, and the UK, Australia and the World Bank are providing direct support for the initiative. The country is now preparing to submit its application for EITI candidacy.

EITI is based on a simple idea. Citizens should be able to see the money generated from their country’s natural resources and to hold their governments to account for the way it is used. Last year, the remit of EITI was revised to address concerns that it did not deal with some of the most common vehicles for corruption. Publication of contracts and of the individuals who own and control companies that bid for natural resource concessions is now recommended, and detailed reporting is required so that money can be tracked from individual projects through to the government.

Whether or not Myanmar joins EITI, measures like these are desperately needed. As well as revealing who really benefits from the country’s resource wealth, they would help citizens check that important environmental, social and human rights safeguards are included in contracts from the outset, and that companies abide by them. Greater transparency could also help protect more responsible foreign investors from being undercut by less scrupulous competitors.

The situation is urgent: Myanmar is now auctioning off some of its most valuable national assets. The government is poised to award major offshore petroleum blocks and recently concluded a string of deals for onshore concessions. The end of sanctions is expected to accelerate the exploitation of the country’s land, forests and minerals, not least in fragile regions where conflicts between the government and ethnic armed groups remain unresolved. Full transparency is essential if such developments are to benefit rather than harm Myanmar’s people.

Myanmar’s leaders are eager for recognition as bona fide reformers, but for many of the country’s citizens, the jury is still out. Ensuring that the country’s enviable natural wealth is managed openly, accountably and for the benefit of all Myanmar’s citizens would go some way towards convincing the doubters. Rigorous application of the principles that the new EITI standard enshrines offers one of the best means of doing this.

Juman Kubba is an oil, gas and mining specialist at Global Witness, a London-based non-governmental organisation. Global Witness is an alternate member of the Extractive Industries Transparency Initiative (EITI) board.

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