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(3) Is Unocal responsible for human rights problems in Myanmar? Why/why not? Has
Unocal dealt with human rights and environmental concerns in Myanmar?
(4) To what extent has the Free Burma Coalition helped and hurt Myanmar?
(5) What advice would you give to the CEO of Unocal regarding the company’s
involvement in Myanmar?
The Burma Pipeline is a case which raises a number of tough issues. It raises issues
about how managers can respond to highly charged situations; about the moral
dilemma of determining what appropriate behavior is for a corporation in a foreign
country; and about the political impact of corporate investment in repressive states.
The Burma case permits us to take a close look at how standards for international
business are created, and by whom. We see how a relatively small group of people,
energized by a common moral cause, are able to create rules for corporate behavior
and to employ sophisticated information technologies to proclaim these rules across
international borders.
UNOCAL’S STRATEGY
o The risks of the project appear further allayed by the deal’s partnership
structure
6)It enables the company to gain access to sizable gas reserves in close proximity
to an underserved and rapidly growing market. Presumably, it also gives Unocal
future access to the Yetagun gas field, with similar geographical characteristics and
potentially even greater reserves.
NEGATIVE ASPECTS
o Insofar as the project entails partnering with MOGE, it puts Unocal into
commercial alliance with the Burmese government
3) It thus positions the company as a recipient for any public outrage or legal
action that might be levied against Burma.
IF YOU WERE JOHN IMLE, WOULD YOU HAVE AGREED TO THIS DEAL IN 1993?
To a large extent, the rough outlines of the ensuing protest were foreseeable in
1993. Aung San Suu Kyi was already under house arrest then, and already a Nobel
laureate. She had already distinguished herself as a figure of international renown,
blessed with a charisma that had won her a high degree of respect. It squashed
popular uprisings in 1988 and nullified the elections of 1990. Uniqueness of
Burma’s position. Because the military is so bluntly repressive; because elections
were so transparently ignored; because Suu Kyi addresses a global constituency;
and because, paradoxically, the country is of limited geopolitical significance, it was
destined even in 1993 to receive more than its fair share of international attention.
Imle should have known that there would be a lot of international attention. By
deciding to invest in Burma, Unocal took a consciously, presumably calculated, risk.
The company and its manager also implicitly made moral choices that some people
deem unacceptable.
WHAT ACCUSATIONS HAVE BEEN MADE ABOUT UNOCAL’S INVOLVEMENT IN THE
YADANA PIPELINE?
o Environmental degradation
Have there been benefits? Yes, clinics and some economic activity – yet Unocal has
also contributed to what is by any measure a particularly harsh and repressive
regime. Burma’s ruling party is desperate for cash and revenue-generating projects;
Unocal has helped to create these. The government has engaged in all sorts of
heinous practices, and Unocal has helped to legitimate them. This does not mean
that Unocal is responsible for the barbarity that has occurred in Burma. But it does
mean that Unocal cannot claim to be purely a neutral party, above politics and
indifferent to it. By investing in Burma, Unocal is affecting the country’s political
situation.
o He has already made the decision to participate in the pipeline project but
Unocal has already been accused of being complacent
o Withdraw?
Withdrawal – Unocal’s involvement with Yardana is simply wrong and the only
proper response is to pull out of Burma. This, after all, is what most American
companies have done. Practical questions: What will happen to Unocal’s future
plans for expansion if it retreats from Burma? Can the company afford to do so?
Can it sell its share in the project? Does Unocal really have the same options as
Pepsi or Disney – these two companies have withdrawn.
Remain aloof from accusations? What kinds of reaction will aloofness engender
among these critics? Are the criticisms likely to get muted over time?
CONCLUSION
o This case underscores the critical and often delicate relationship between
foreign investment and a country’s political environment.
o By investing in Burma, Unocal has thrust itself deeply into Burmese politics &
into the political questions that cloud Burma’s position in the international
arena
4) The pipeline has brought capital, technology and the promise of future revenues
– all of which the gov’t quite desperately needs. Unocal may try to distance itself
from the brutalities committed in Burma, but this basic relationship remains
undeniable.
RECENT DEVELOPMENTS
• California district court ruled that Unocal must face a jury over its
subsidiaries’ role in Burma
• Federal court (rests on the Alien Torts Claim Act – Supreme Court
opened the way for the suit to continue) – Bush tried to prevent the
law from being applied in this case
o April 2005 – Chevron Texaco announced it was acquiring Unocal and will hold
on to the Yadana investments
2b) both cases have assisted in publicizing the plight of the local villagers in Burma
and highlighted the authoritarian repression and general lack of corporate
responsibility surrounding the gas pipeline project.
3) Judge – The Burmese military was given responsibility for security of the project
area, despite its well-documented history of repression and violence. The military
then used the project as justification for rapid militarization of the region and the
subsequent human-rights abuses that led to the case against Unocal.
• Ridel Resources is in a separate joint venture with the Burmese state oil
enterprise
• Ivanhoe Mines – copper mine – also First Dynasty Mines – East Asia Gold –
Palmer Resources
• Canada – cut off aid but refuses to ban investment and trade.
• US has cut off aid & prohibits any new investment (1997)