A decision by energy giants Total and Chevron to pull out of a gas project in Myanmar has reignited calls for multinationals and banks to stop doing business with the country and for governments to slap more sanctions on its military rulers.

Myanmar’s military overthrew a democratically elected government in February last year. Rights groups say around 1,400 people have since been killed by the military in attacks on ethnic minorities, protestors, the political opposition and journalists.

France’s Total and US-headquartered Chevron announced on January 21 they are ending their involvement in the Yadana offshore gas project, which supplies electricity domestically and in Thailand.

Total said in a statement it was withdrawing from the project because it had been unable to find a way to prevent its payments from flowing to the Myanma Oil and Gas Enterprise (MOGE), the country’s state-owned oil firm.

The military earns revenues from the Yadana field through MOGE’s stake in the venture. In its statement, Total said it had asked the French government to put in place targeted sanctions so that its payments – which are routed through PTTEP, a Thai partner in Yadana – could be placed in escrow accounts. But the company said it could not find “any means for doing so”.

“The situation, in terms of human rights and more generally the rule of law, which have kept worsening in Myanmar since the coup of February 2021, has led us to reassess the situation and no longer allows Total to make a sufficiently positive contribution in the country,” the company said.

Anti-coup campaigners were emboldened by Total’s apparent endorsement of sanctions against MOGE, for which they have long campaigned.

“In order to disrupt the flow of revenue to the Myanmar military junta, it is imperative that sanctions are imposed on Myanma Oil and Gas Enterprise,” Yadanar Maung, a spokesperson for campaign group Justice For Myanmar tells GTR.

“Without sanctions, the military junta, the remaining oil and gas companies working with them and the banks that facilitate payments will be able to continue business unimpeded,” she says.

The US and other jurisdictions had already applied some sanctions on Myanmar in 2017 after the military unleashed a campaign of violence against the mainly Muslim Rohingya people, killing thousands. Many multinational businesses fled the country shortly after last year’s coup.

Maung also called on other energy firms such as PTTEP, Malaysia’s Petronas, Japan’s Eneos and Posco International of South Korea to “take immediate steps to stop all payments to the junta by whatever means possible”.

Paul Donowitz, campaign leader on Myanmar for Global Witness says in a statement responding to the energy companies’ decision that “it is well past time that the US, France and others listen to the voices of civil society in Myanmar and end the lucrative gas payments that are helping fund the brutal military junta”.

A budget document compiled before the 2021 coup forecast that oil and gas revenues would boost government coffers by around US$1.4bn in the 12 months ending in March 2022, according to Myanmar Now.

Documents published by Justice for Myanmar in December show that payments to the junta related to the Yetagun offshore gas field – operated by Petronas – are paid to an account belonging to the state-run Myanma Foreign Trade Bank at a Singapore branch of Malaysian bank CIMB.

“We call on international banks to stop processing payments for the military junta,” Maung tells GTR. “The junta is an illegal body that is committing ongoing war crimes and crimes against humanity with total impunity. Responsible banks must ensure they do not contribute to the junta’s international crimes through their business relationships.”

Non-US banks are already at risk of enforcement action by US authorities if they provide “material support” to a sanctioned entity.

The Foreign Trade Bank, along with some other state-owned banks, has so far escaped US and other sanctions.

Justice for Myanmar has long demanded that governments impose sanctions on the lender, which it says “receives payments through its correspondent accounts in Singapore and elsewhere”.


Timber and banks

The Foreign Trade Bank also processes payments in foreign currencies for Myanmar’s timber exports, another source of export revenue for the junta.

Despite sanctions by the US, EU and UK, state-owned timber company Myanma Timber Enterprise (MTE) is still able to export significant volumes of wood products, according to Forest Trends, a Washington DC-based conservation group.

In an analysis of trade data, Forest Trends found that US companies imported US$20mn-worth of Myanmar timber between February and October last year. Justice for Myanmar said in a report published earlier this month that US imports – mainly of teak – actually peaked in September last year, six months after sanctions were imposed.

The group said that US importers are skirting Washington’s sanctions regime by importing timber through intermediaries, although it argues such a structure may still fall foul of the law.

MTE advises potential importers of its timber on its website that its preferred payment method is a letter of credit provided by Singaporean banks DBS, OCBC and UOB. None of the banks responded to a request for comment from GTR by press time.

The EU also imported US$14mn of Myanmar timber between February and October last year, according to Forest Trends’ analysis. Countries with no sanctions against MTE, such as China, India, Thailand and Australia, imported around US$139mn during the same period, Forest Trends says.

In an email to GTR, Forest Trends’ Art Blundell cautions that while the group’s figures rely on reported trade volumes, the actual levels of trade are likely much higher due to illicit activity such as smuggling and mis-invoicing, which can be difficult to detect.

“The US should up its sanctions regime to include the Myanmar Foreign Trade Bank,” the group says. “Given that the junta collects timber payments in [US dollars], including [the bank] would help overcome leakage to non-sanctioned markets by making it a violation to facilitate this trade with any country.”

Freezing deposits linked to the Foreign Trade Bank and other state-owned financial institutions could choke some US$2bn of cash from flowing to the junta, according to an April 2021 paper by the group Independent Economists for Myanmar.

Sanctions on countries including Myanmar have been criticised for deepening the humanitarian impact on the nations’ populations but failing to erode the power of authoritarian governments.

A cycle of violence in Myanmar between the military and armed resistance groups has displaced hundreds of thousands of people since the coup.

Along with economic malaise and the Covid-19 pandemic, the violence has made the country at risk of economic hardship and food insecurity, the International Rescue Committee said this week.