US embassy cable - 03RANGOON832

C O N F I D E N T I A L SECTION 01 OF 02 RANGOON 000832 
 
SIPDIS 
 
STATE FOR EAP/BCLTV, EB/ESC, EB/TPP 
COMMERCE FOR ITA JEAN KELLY 
TREASURY FOR OASIA JEFF NEIL 
USPACOM FOR FPA 
 
E.O. 12958: DECL: 07/08/2013 
TAGS: ETRD, EIND, EPET, BM 
SUBJECT: U.S. INVESTOR, GARMENT WORKERS FEAR NEW BURMA 
SANCTIONS 
 
REF: A. RANGOON 769 
 
     B. RANGOON 574 
 
Classified By: COM CARMEN MARTINEZ FOR REASONS 1.5 (B,D) 
 
1. (SBU) Summary: The input on pending U.S. sanctions on 
Burma continues to roll in.  In the last several days we've 
heard the fears and concerns of the largest U.S. investor in 
Burma, Unocal, and also from 28,000 garment workers.  End 
summary. 
 
Unocal Sees Unintended Consequences 
 
2. (SBU) The Chief of Mission met with a local Unocal 
representative on June 25 to hear the largest U.S. investor 
in Burma's concerns over the intended, and possible 
unintended, consequences of the proposed new Burma sanctions. 
 Unocal was most concerned that the remittance and travel 
bans, if applied without any exceptions for pre-existing 
business operations, could lead to an untenable operating 
situation for the energy company.  The Unocal rep hinted that 
these sanctions could force the company to reconsider its 
investment stake in Burma if it were not grandfathered. 
 
3. (C) The unintended negative consequences of a Unocal 
divestment would be at least three-fold.  First, the company 
would have to sell out to another energy firm -- many of 
whom, including China's national oil company, are snooping 
around looking to farm into an existing development -- paying 
a 40 percent Burmese capital gains tax on the sale directly 
into the regime's coffers.  Though the Unocal official could 
not offhand tell us how much the gains would likely be, or in 
what form the payment would be made, he made it clear that 
this would be pure profit for the Burmese government. 
Second, of the likely new investors, except for current 
partner Total, none would put up the amount of money 
currently spent by Unocal for social and economic development 
in its pipeline zone (see Ref B).  Third, there is the 
prospect of Chinese influence over a large portion of 
Thailand's natural gas imports if the Chinese national oil 
company took over Unocal's position. 
 
4. (SBU) Perhaps a bit prematurely, the Unocal official also 
told us the firm's concerns about sanctions not yet under 
consideration.  He said any expansion of a trade ban to 
include U.S. exports to Burma would be extremely damaging to 
Unocal's platform and pipeline operations.  Several key parts 
are imported from the United States, and not easily 
substituted.  If one of these parts went down, and importing 
a replacement was illegal, the pipeline, which carries 
significant volumes of natural gas to Thailand, might have to 
slow or stop its operations temporarily.  The result of this, 
the rep explained, would be "the lights going out in parts of 
Bangkok." 
 
Garment Workers Speak Out 
 
5. (SBU) We were visited on July 3rd by a delegation from the 
Burmese Garment Manufacturers Association (GMA) and the Union 
of Myanmar Federation of Chambers of Commerce and Industry 
(UMFCCI).  The delegation presented a letter to President 
Bush urging him to veto the proposed import ban legislation 
(faxed to EAP/BCLTV).  Attached to this letter were two large 
boxes filled with petitions, signed by 28,000 garment workers 
from factories in the Rangoon area.  Apparently the GMA went 
to its members and asked them to explain to their workers the 
likely impact of import ban legislation on their livelihood. 
After this the petitions were made available for signature. 
The delegation assured us that this was done on a totally 
voluntary basis, with no coercion.  Though there's no way to 
verify this, there's no reason to believe that any force 
would be needed to get the signatures. 
 
6. (SBU) We agreed to forward the letter to Washington and 
keep the GMA apprised of the progress of the legislation. 
However, we also urged the GMA and UMFCCI to use their 
lobbying and organizing ability to bring the message to the 
SPDC that only political change could turn the tide for their 
factories and workers.  The delegation laughed and said 
simply, "Not possible." 
Martinez