Clear Path for US, France, EU to Block Gas Revenue Payments to Junta
The French company TotalEnergies has signaled support for targeted sanctions on Myanmar’s natural gas revenues to block the country’s abusive military junta from profiting from hundreds of millions of dollars in payments, Human Rights Watch said today.
TotalEnergies acknowledged the shift in a response to a letter from Human Rights Watch urging the company to support sanctions to stop gas payments to Myanmar military-controlled entities. TotalEnergies has operated the Yadana gas project in Myanmar since the 1990s, which pays revenues to the junta-controlled Myanmar Oil and Gas Enterprise (MOGE).
“The fact that both TotalEnergies and human rights groups now support sanctions on Myanmar’s gas revenues leaves the US and European Union without any excuses to delay action,” said John Sifton, Asia advocacy director at Human Rights Watch. “These governments should immediately impose measures vitally needed to target funds that pay for the junta’s abusive rule.”
In a January 18, 2022 letter to Human Rights Watch, the TotalEnergies CEO, Patrick Pouyanné, said the company had spoken with French and US authorities concerning the implementation of targeted sanctions on gas revenue flows and said that it “will not only comply with any sanction decision from the European or American authorities but also supports the implementation of such targeted sanctions.”
TotalEnergies also formally asked the French Ministry of Foreign Affairs to put in place sanctions that would create “a legal framework to respond to calls requesting us to stop the financial flows” to MOGE.
Since overthrowing the democratically elected government on February 1, 2021, Myanmar’s military has carried out nationwide crackdowns on anti-junta protesters, activists, journalists, and the political opposition, killing more than 1,400 people and amounting to crimes against humanity. Renewed attacks on ethnic minority areas have resulted in numerous war crimes. TotalEnergies has faced growing calls over the past year to suspend payments to the junta from Myanmar civil society and labor organizations, as well as pressure from institutional investors.
Since the coup, the US, Canada, United Kingdom, and EU member states have imposed targeted economic sanctions on junta leaders and several conglomerates and companies owned or controlled by the Myanmar military, but not on MOGE or payments it receives. The French government of President Emmanuel Macron has not supported such measures. The administration of US President Joe Biden has been unwilling to impose sanctions on gas payments unilaterally without the support of France and other EU nations.
The US and France should now reach a common position on imposing such sanctions, Human Rights Watch said.
Natural gas projects in Myanmar generate over US $1 billion in foreign revenue for the junta annually, its single largest source of foreign currency revenue. The money is transmitted in US dollars to MOGE or other military-controlled bank accounts in foreign countries, in the form of fees, taxes, royalties, and dividends from the export of natural gas, most of which travels by pipeline to Thailand or China.
The largest gas revenues paid are made via the majority Thai state-owned PTT, which purchases approximately 80 percent of Myanmar’s exported natural gas from joint ventures owned with TotalEnergies, Chevron, and MOGE. PTT separately owns stakes in joint ventures with the South Korean company POSCO, which transports and sells gas to China. Human Rights Watch has previously written to all of these companies and their shareholders, urging them to support sanctions on gas revenue.
“TotalEnergies’ support for sanctions should be an example to other energy companies operating in Myanmar, as well as to the Thai government, the single biggest buyer of Myanmar gas,” Sifton said. “Board members and institutional investors in other companies should push them to follow TotalEnergies’ decision.”
One critique of sanctions is that they might shut down gas operations completely, harming the general population. However, targeted sanctions on revenue and tax payments would not disrupt operations, just the flow of funds to the junta. The EU and US are in a key position to impose sanctions since payments for gas operations are made in US dollars and involve multinational banks that fall under the jurisdiction of EU and US law. Sanctions by those authorities can stop payments made by banks in Thailand, Singapore, South Korea, and other locations because foreign banks must comply with EU and US authorities when they ultimately require EU and US banks to process, or “settle,” Euro or dollar transactions.
“With TotalEnergies’ announcement, governments now have no reason to oppose or avoid tough measures that show support to the millions of people in Myanmar who want justice and accountability,” Sifton said. “Junta leaders are only going to turn away from their brutality and oppression if the economic costs of their abuses are too great for them to bear.”
(c) 2022, Human Rights Watch