The Politics of Building a Gas Pipeline

The Politics of Building a Gas Pipeline
By J J KIM Tuesday, September 8, 2009

While the Western world continues to debate whether economic sanctions can make change in Burma, the sale of gas to China from the offshore Shwe gas fields in Arakan State threatens to raise the junta’s revenue from foreign investment to new heights and strengthen business ties throughout Asia.

Furthermore, the parallel gas and oil pipelines, which are reportedly starting construction this month from Arakan State to Yunnan Province, China, via Magwe Division, Mandalay Division and Shan State, have been criticised by human rights groups as a major contributing factor to the recent conflict in northern Shan State.

According to a report titled “Corridor of Power” released by the Shwe Gas Movement (SGM), the pipeline will make the junta at least US $29 billion over the next 30 years. Much of this is expected to be spent on military expansion, despite the current famine in Arakan State and poverty across the country.
Source: Shwe Gas Movement

Moreover, the report claims, construction of the pipelines, which are being built primarily by the China National Petroleum Company (CNPC), is likely to lead to human rights abuse across the country and a “re-ignition of fighting between the regime and ceasefire armies stationed along the pipeline.”



According to Khur Hseng from Shan Sapawa, who has been researching the impact of the pipeline in Shan State since 2007, these fears were confirmed during the armed confrontation between the military government and the ethnic Kokang Myanmar National Democratic Alliance Army (MNDAA) in late August. The fighting took place just 50 km from the proposed pipeline route, killing 200 people and leading to a mass exodus of up to 30,000 civilians to China.

“The main objective of the SPDC is to clear all opposing forces from the area for development projects, including the Shwe Gas pipeline,” said Khur Hseng. “They are trying to clear the people who will be against the plans and control the area so the true information about the project can’t get out. China needs this as well because they limit their media too.”

According to Wong Aung, the international coordinator of SGM, despite reports from the Chinese media about the project’s commencement, in fact the risk of local opposition and conflict is too great for the project to make much progress this year.

“It is impossible to start now; maybe just some foundations in Arakan State or Magwe. Before they start they will have to clear out all political, ethnic and conflict issues on the border. They will have to deploy propagation in so many places along the pipeline first, to ensure security.”

The sale of gas and oil is currently the junta’s biggest earner, bringing in almost US $3.5 billion annually. According to the report, from 2013 onwards the Shwe Gas Project, which is headed by the South Korean company Daewoo International, will bring in close to another US $1 billion.

This has raised concerns among pro-democracy campaigners and analysts, who say the deal will entrench military rule in the country by financing the regime and strengthening their political clout in the region.

Wong Aung said “It will harm the democratic process if the regime continues to receive the revenue from this sector… . The regime is receiving that money and creating conflicts in the ethnic areas. Basically, institutional investors and companies who are supporting the regime's projects are damaging the stability of the region.”

According to Larry Jagan, a long-term observer of Sino-Burmese relations, “One of China's main concerns is natural resources, so any major project is important to them from an economic point of view.”

This is of particular significance with the pipeline agreement as it offers China an alternative trade route for oil and gas from Africa and the Middle East too. Until now, such imports have had to pass through the US-Navy controlled Malacca Strait taking seven days longer than they would through Burma.

“One thing that is apparent [from the recent conflict in northern Shan State] is that Burma holds the cards. The opposition thinks that China could influence Burma if they want to, but these projects give Burma the upper hand”

“Although economically important to China, Burma is also strategically crucial to China as it is its staunchest ally in Southeast Asia [and] opposed to US interests in the region.”

“There is no doubt that Chinese investment and Burma’s trade with the rest of Asia reduces the impact of Western sanctions,” Larry said.

Experience from past gas and oil developments in Burma have led SGM to believe that the pipelines will cause “forced labour, forced relocation, land confiscation and a host of abuses by soldiers deployed in the area.” According to SGM's report, there are currently an estimated 13,200 soldiers stationed along the pipeline route, mostly in areas that haven’t seen significant armed conflict for decades.

According to Naing Win of Kyauk Phyu Township in Arakan State, where the pipeline will begin, “Most people depend on fishing for survival, but they are prohibited by the navy to fish within 10km of the gas fields. The Navy often steal their fish and gas and oil and [harass] them outrageously.” Because of this, local people find it difficult to survive and provide an education for their children.

Another major concern is the threat of forced relocation of civilian families to make way for the pipeline and other related infrastructure. Stretching around 1,000 km in Burma, the pipeline will cut through many densely populated areas. According to Khur Hseng, “Thousands of people will be forced to leave their homes in Shan State alone.” Recent projects in the region, such as the Tasang Dam, have forced hundreds of thousand of men, women and children into the jungle and to other countries to start a new life.

As the report highlights, while the regime’s profits from the export of electricity and fossil fuels become increasingly lucrative, civilian energy needs are persistently neglected. The national per capita energy consumption currently amounts to less than 5 percent of that in Thailand or China. Arakan State, the source of the gas, is not connected to the national grid and over 90 percent of the population still use candles for light and firewood for cooking.

While the junta continues to make war in ethnic regions and display no regard for civilian needs, many campaigners feel that change can only come when all foreign companies and financial institutions halt investment in such projects. Despite sanctions and Western rhetoric, both CNPC and Petrochina, who will distribute the gas in China, have received significant financial backing from the West in recent years, from banks such as Morgan Stanley, Deutsche Bank and Goldman Sachs.

According to Wong Aung “The USA and EU need to re-impose stronger sanctions and consider a practical way to get a positive outcome because the regime has so many channels to oppose the sanctions compared with 10 years ago. While locally registered companies continue to gain financial backing from the USA and EU, sanctions are becoming just a notion for these governments.”

“I would like to raise this issue among foreign governments, companies and the various institutional investors involved in this project: they should support the democratic process for Burma,” he said.

JJ Kim is a freelance writer based in Thailand.
Copyright © 2008 Irrawaddy Publishing Group | www.irrawaddy. org
http://www.irrawadd y.org/article. php?art_id= 16740