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Page last updated at 22:51 GMT, Wednesday, 26 September 2007 23:51 UK

How much British money goes into Burma?

By Paul Mason
Business Correspondent, BBC Newsnight

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How much British investment is going into Burma? And is the government doing enough to stop it?

It is an issue over which democracy campaigners have clashed with the British government.

On Tuesday's Newsnight, foreign secretary David Miliband rejected their claim that Britain is the "second biggest investor" there, citing recent major disinvestment by UK firms.

Now the Foreign Office has clarified the position further.

"These economic figures, like most data produced by the regime, are bogus and misleading," said a statement.

"We believe the figure they quote for the UK is cumulative, and includes planned investments dating back many decades by companies such as Premier Oil and British American Tobacco who have since withdrawn under UK Government pressure."

"It also includes investments that were agreed but which never occurred."

"In 2005, the DTI recorded UK foreign direct investment flows into Burma as negligible (i.e. not more than 500,000)."

Different approaches

That, say campaigners, is only half the story.

The EU sanctions are pathetic: it's as if they've been designed to miss the mark
Mark Farmaner, Burma Campaign UK

Burma is a country rich in gas, hardwood and with a growing tourism industry.

Revenue from exports and tourism are a major source of cash to the military regime.

The regime itself systematically uses forced labour in the extraction industries, to an extent described by the International Labour Organisation as a "crime against humanity".

Yet the USA and Europe have adopted radically different approaches to putting economic pressure on the Junta.

In 1997 the USA banned all new investment. In 2003 it banned most Burmese imports and dollar transactions.

The EU's sanctions have been more targeted. In 1996 it banned arms sales and expelled military attaches; it froze the assets of individuals within the junta. It withdrew preferential trade status and subsequently cut off all non-humanitarian aid.

Democracy campaigners are scathing about the results.

"The EU sanctions are pathetic: it's as if they've been designed to miss the mark," said Mark Farmaner, acting director of the Burma Campaign UK.

"You have an asset freeze, which only freezes the assets of people on the visa ban list who are not allowed to come into Europe anyway."

A Total refinery in France
France's Total is a major investor in Burma
"You have no significant trade sanctions at all; there is a limited investment ban for some named state-owned enterprises including a pineapple company, tailors shops and others."

"The timber and gas sections where the regime earns most of its revenue were exempt... so it's had no impact at all."

Still active

Crucial to the EU stance on Burma is the position of France. The French oil giant Total is a major investor in Burma through its gas pipeline project in Yadana, which is a joint venture with the junta.

Total has been embroiled in a series of court cases over forced labour and other human rights abuses.

Under Jacques Chirac, the French government told a US court that suing the company would "conflict with French national interest".

The Sarkozy government takes a more critical line with Total, but had not, in the past called for disinvestment.

Then, in an interview on Wednesday's Newsnight, French foreign minister Bernard Kouchner suggested that he would eventually like to see Total disinvesting.

Britain is a strong critic of the junta, but many British companies still trade with Burma.

Campaigners say the government has blocked their attempts to get information on which British companies are doing the most business with the regime.

It's a political message without teeth
Mike Packer, Timbmet

Many on the Burma Campaign's so called "dirty list", include travel companies and importers of teak wood.

Over the past three years, British imports from Burma have fallen from 62m to 26m, mainly because of falling clothing imports.

But in some categories such as seafood, footwear and handbags, trade is up.

Some British companies that trade with Burma have expressed frustration at the lack of clarity in the government's stance.

Timbmet, a British wood company, which did 3m of business with Burma last year, says it is now pulling out.

"I sat down with a team at the Foreign Office about two years ago. They've consistently rolled over the existing EU sanctions," said Mike Packer, responsible business director at the firm.

"The key signal from UK government is that it's a verbal message and they don't seem to be putting in place tough sanctions behind that."

"It's a political message without teeth. So far as we are concerned... there's been no approach to timber importers to say the Government doesn't support trade with Burma."

New sanctions?

When it comes to the volume of direct investment, campaigners say the figures are clouded by the position of British dependencies, traditional venues for offshore "front" companies for larger entities.

This year, two companies based in the British Virgin Islands were reported as making gas deals with Burma: Singaporean-owned MPRL E&P and Malaysian-owned Rimbunan Petrogas.

The UK government asked the Virgin Islands authorities to investigate the deals.

The Labour Party is the only party in the UK that does not support a unilateral investment ban... we cannot for the life of us understand why
Burma Campaign

They told me today they'd found "no evidence of direct investment from the islands to Burma by these companies", and no evidence of any investments breaking the EU rules.

The Burma Campaign tonight said: "The government are playing games with words. There are foreign companies with offices in British territory that are investing in Burma."

"Whether the bank account was in Virgin Islands or another country is irrelevant, the fact is that we are still involved in investment in Burma and it's the simplest thing for British government to do to ban that investment."

"The Labour Party is the only party in the UK that does not support a unilateral investment ban... we cannot for the life of us understand why."

The UK government says it wants stronger sanctions on Burma and it wants the EU to enact them.

It expects to discuss these in the back channels at this week's UN meeting.

Tonight, the Foreign Office said it was not in a position to say exactly what new sanctions the UK is proposing.

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