TOTAL/PetroFina "Big Move" (r)

[xlo39@xxxxxxxxxxxxxx]

Hi Kevin,

Thanks for your comments. I mainly wrote in reply to the assertion of 
dawn star that 'companies would much rather do business with dictators 
than with democratic governments'. I think this statement is false. As 
you state below, what companies want almost above anything else is 
stability which will enable them to undertake long-term planning. That is 
why I emphasized established democracies to prove dawn star's statement 
false. In some cases, strong dictatorships can be more stable than 
fledgling democracies. In this I agree with you. However, even the 
strongest dictatorship always comes to an end. Thus I think my claim that 
the greatest stability is provided by established democracies is valid. I 
don't think you will disagree with me there.

I will now reply to your specific points raised below.

Kevin Rudiger wrote:
> 
> Neil,
> with all due respect, I think you contradict your own argument.      Your
> second paragraph says:
> "there will always be a few rogue companies who will do business in an
> unethical way and be tempted to sacrifice principle and take higher risks by
> the promise of an exceptionally high return."   You are saying that
> companies which do business with dictatorships do so because of the "promise
> of an exceptionally high return."   But your first paragraph argues that
> companies will make more profit with democratic governments.


I don't think I contradicted myself. I said there will always be a few 
rogue who will do business in an unethical way which would not be 
acceptable to more responsible companies. Such rogue companies would 
accept the climate of bribery and corruption endemic in many 
dictatorships, and may even approve of such practices. Most responsible 
companies (which I would consider to be in the majority) would demand 
more ethical business standards and prefer to work within a more 
stringent legal framework and would pass up dodgy business opportunities 
in more risky countries. It is the companies with higher business 
standards that will thrive in the long term.

So I am saying that companies have greater security of profit in 
democratic countries but that some rogue companies will be attracted by 
the lure of potentially higher profits of more risky projects. It is all 
a matter of where the company feels comfortable on the risk-reward 
spectrum (higher risk also implies greater risk of failure). It is 
possible for investments to lose money. About 200 billion dollars of 
foreign investment recently disappearing down a black hole of theft and 
corruption in Russia is a prime example of that. Anyone who thinks Total 
and UNOCAL are not risking money in Burma is being naive.

> 
> While stablity is useful for companies, dictatorships are often quite stable
> environments for companies to invest in.    And they don't have to bother
> with messy things like environmental laws, labor laws, high taxes and
> organized labor pools to deal with.      Take the history of Latin America
> (as well as other areas of the world) where the CIA and the US military,
> often at the urging of US corporations, repeatedly overthrew democratic
> governments and installed dictatorships.    If dictatorships are such
> unpleasant environments for companies to do business in, then why would the
> United Fruit Company and other corporations push to overthrow democracies.

I hope we both agree that we are talking about a minority of businesses 
here, and that we are not trying to tarnish all business by the actions 
of a few. That may be consistent with Marxist dogma but it is hardly 
realistic.

Yes, the CIA did unpleasant things in the past to protect American 
investments. It was largely part of the Cold War and involved a larger 
ideological struggle. However, I will mention in passing that the right 
to own property is enshrined in the Universal Declaration of Human Rights 
(article 17 I think) and that extreme left-wing governments which attempt 
to seize all private property are violating the human rights of the 
owners. I personally do not consider those who promoted the spread of 
communism to have human rights on their side. However, this discussion is 
moving away from the statement of dawn star and the actions of Total in 
Burma.


> 
> Similarly, with Total and UNOCAL, having a dictatorship in Burma is very
> convenient.    How else would they get such a ready supply of forced labor,
> have villages relocated on demand for their pipeline, have virutally no
> environmental laws and have such a high rate of profit?

This is a much more relevant point. I am no expert on the Total 
involvement in Burma. However, I will make a few comments.

As far as I know Total and UNOCAL are building a pipeline to carry gas 
from Burma to Thailand. There is nothing in principle wrong with this, 
unless of course you are prejudiced against private companies for 
political reasons or against the exploitation of natural resources for 
environmental reasons.

The next questions I would ask are: Are Total and UNOCAL directly 
responsible for the use of forces labour and relocation of villages? Or 
is the SPDC responsible for these violations of human rights? Does Total 
and UNOCAL admit any responsibility for the use of forced labour or 
support its use? Have they ever condemned such practices?

What is Total's motivation in building the pipeline? Are they building it 
with the intention of supporting the military regime? Are they building 
it to aid the development of a third-world country? Are they building it 
as a normal commercial venture? I would suspect that it is primarily the 
last of the three (despite implied accusations by others that it is 
primarily the first). Are they breaking any laws, national or 
international, by constructing the pipeline? If the NLD, and Aung San Suu 
Kyi, came to power, would they immediately call a halt to the 
construction of the pipeline or its closure if the gas had already 
started flowing? I would suspect not, since the revenues produced would 
be greatly welcomed by the new government to aid the reconstruction of 
the country. Total and UNOCAL may even be praised for the contribution 
they were making to improving the Burmese economy. But they would just be 
doing what they are doing now ......... building or operating a pipeline. 
Nothing that they are doing would have changed (provided responsibility 
for the human rights abuses lay with the SPDC that had been removed from 
power).

Of course, if Total and UNOCAL are directly responsible for the human 
rights abuses, then condemn them and demand that they change their 
practices. If the SPDC are responsible for the abuses, then pressure 
Total and UNOCAL to put pressure on the SPDC to end such practices and 
pay fair wages for the work done. However, think more carefully before 
you condemn Total and UNOCAL simply for building a pipeline. Such 
criticism would be for political reasons because you don't like the 
regime in power in the country. As I wrote above, if the NLD gained 
power, the pipeline could be seen as of great benefit to Burma and Total 
and UNOCAL to be thanked for building it.

A reasoned case can be made that the best method of improving the human 
rights situation in Burma is to attempt to improve the economy even if 
this does have the unfortunate consequence of providing financial support 
to the military regime, but I won't go into that here. However, I think 
some of harshest critics of Total should decide which of their criticisms 
are rational, which are emotional, and which are political.


> Kevin Rudiger
> 
> From: Neil McDougall <xlo39@xxxxxxxxxxxxxx>
> To: dawn star <dawnstar@xxxxxxxxxxxxx>
> Cc: burmanet-l@xxxxxxxxxxx <burmanet-l@xxxxxxxxxxx>
> Date: Wednesday, December 02, 1998 8:26 PM
> Subject: Re: TOTAL/PetroFina "Big Move"
> 
> >How about trying dialogue with the company instead of just insulting it
> >from the sidelines? Also try not repeatedly to write stupid statements
> >such as 'companies would much rather do business with dictators than with
> >democratic governments'. Companies want do do long-term planning since
> >the return on capital investment is calculated over many years.
> >Dictatorships are inherently unstable and volatile and power can shift to
> >different hands by a simple military coup with other officers gaining the
> >upper hand. Well-established democracies are clearly more stable. Also
> >companies wish to operate within an established legal framework so that
> >their investments cannot just be appropriated i.e. they wish those in
> >power to be subject to the law and not just able to make it up as they go
> >along. Companies desire an independent judicial framework. Dictatorships
> >clearly see themselves as above the law. For these reasons, responsible
> >companies would much rather do business in countries with established
> >democratic governments than with dictatorships.
> >
> >Of course, there will always be a few rogue companies who will do
> >business in an unethical way and be tempted to sacrifice principle
> >and take higher risks by the promise of an exceptionally high return.
> >
> >If you, dawn star, are prejudiced against all companies and the
> >capitalist system in general for some political reason, you should say
> >so. If you are not, I suggest you stop making irresponsible accusations
> >about all companies (in previous postings) and stick to verifiable facts.
> >How can anyone trust the facts about Total you claim to be accurate when
> >at the same time you unjustifiably insult all companies?
> >
> >I don't know your political motivations, but I at least respect the fact
> >that you criticised trade with the Cuban dictatorship just as much as you
> >criticise trade with the Burmese regime. I may not share your views but
> >in this respect you are even-handed.
> >
> >
> >dawn star wrote:
> >>
> >> so where do we go from here as Total expands through Belgium industrial
> >> territory to become even a bigger world energy giant? any comments?
> >>
> >> TOTAL MAKES BIG MOVE
> >>
> >> The London-based Financial Times business daily newspaper
> >> leads its December 1 front page with a top story in headlines
> >> "Total set for PetroFina takeover/ French oil group likely to announce
> >> move for Belgium rival" :
> >>
> >> "Total, France's second-biggest oil group,
> >> is expected to announce this morning the takeover of PetroFina, the
> >> Belgian oil group, as the wave of mergers sweeping through
> >> the oil sector set to continue...The emergence of Total as bidder for
> >> PetroFina (sic), one of Belgium's biggest industrial companies, came as
> >> a surprise
> >> after recent speculation on Elf Aquitaine, the other big French oil
> >> company.In the past, Thierry Desmarest, Total's chairman,
> >> has been lukewarm towards takeovers and mergers, noting
> >> that Total has one of the fastest-growing production
> >> profiles in the industry. But analysts said a tie-up with
> >> PetroFina would strengthen its European downstream presence,
> >> as well as enhance its overall international exploration
> >> effort, especially in the North Sea...."
> >>
> >> "Total is expected to announce a share-swap deal for PetroFina
> >> stakes held by Baron Albert Frere -- the secretive Belgian financier
> >> who controls 30 percent of PetroFina -- and by Belgian energy
> >> group Tractebel...It is also likely to leave Mr. Frere as one of the
> >> largest
> >> single shareholders of Total, a position he already holds in another
> >> French company, multi-utility group Suez Lyonnaise des Eaux."
> >>
> >> extracts reprinted from FT by dawn star
> >> EuroBurmaNet
> >> Worldwide Total Boycott
> >> euroburma.com
> >
> >
> >