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.