Weekly Business Roundup (September 13, 2008)

By WILLIAM BOOT

Russia Steps up Role in Burma Oil Hunt

Another Russian company has been awarded a license to explore for oil in Burma.

Nobel Oil will team up with the state Myanmar Oil and Gas Enterprise to look for the black liquid in two areas of Kachin State near the Chinese border. Nobel is the fourth Russia-linked firm to be awarded oil exploration licenses by MOGE within the last two years.

And like the others, Nobel is a mysterious enterprise. It claims to be based in London, but the only address given on its Internet Web site is for Baku, the capital of Azerbaijan, formerly part of the Soviet Union and now a member of the Moscow-led Commonwealth of Independent States.

The Moscow-based company JSC Zarubezhneft is looking for offshore oil and gas with the Sun Group of India in southeast Gulf of Martaban, while Silver Wave Sputnik Petroleum and Silver Wave Energy are drilling onshore in the northwestern Sagaing region near the border with India. Some reports say Zarubezhneft is Russian-government controlled.

Nobel Oil will explore in the Hukaung and U-Ru areas of Kachin, said MOGE, but no other details of the joint venture have been disclosed.

MOGE claims Burma has 3.2 billion barrels of recoverable oil reserves, but the figure has never been independently verified.

India Cannot Outflank China for Junta’s Trade Favors, says Study

India has no chance of competing with China for influence with the Burmese junta to secure large quantities of gas, oil and hydroelectric power, says a study in the Harvard International Review.

“Although it does not appear that China has voiced concerns over India’s minor advances in Burma, Beijing will not sit idly by and watch its influence over Burma erode. Chinese moves to counter Indian intentions may include further arms sales [and] zero-interest loans or grants,” say the analysts Ryan Clarke and Sargeet Dalliwall.

The authors predict that India will end up damaging its trade and political interests with Asean, the US and the European Union by maintaining its current “appeasement policy toward Burma.”

“China undoubtedly uses it political influence in Burma to swing the Junta in favor of some of its major companies, such as PetroChina, as business and political interests often intersect in this region and the Junta has a monopoly over Burma’s natural gas sector as well as nearly all other economic activity,” say Clarke and Dalliwall.

“Given India’s clear limitations in lobbying for its state-owned firms, it cannot expect major victories over the Chinese in securing natural resources in Burma, especially since India recently lost its ‘preferential buyer’ status on several fields, likely a result of Chinese pressure on the Junta.”

Clarke, from the Centre of International Studies at Cambridge University, and London-based lawyer Dalliwall, say New Delhi should ponder its unwinnable position against China before it “agrees to its next arms deal for the junta or protects it at the United Nations.”

They suggest that a re-evaluation of the New Delhi government’s Burma policy is necessary if India is to maintain its reputation as a champion of democracy.

Electronic Commodity Trading Plan Bypasses ‘Cyber City’

The Burma regime’s much-vaunted, high-tech “cyber city,” Yadanabon Naypyidaw, supposedly under construction near Mandalay, will have no role to play in new efforts to bring the country’s disjointed commodity markets into the 21st century by linking them all by computers.

At present, Burma’s different commodity trading bases communicate with one another only by telephone, concedes the Union of Myanmar Federation of the Chambers of Commerce and Industry.

The federation is seeking to develop a “centralized network for the commodity exchange centers scattered across the country.”

It plans to base the system in Rangoon, underlining evidence that efforts by the junta to move the country’s administration to the money draining and isolated new capital of Naypyidaw have failed with the business community.

Burma is one of the few remaining countries where day-to-day commodity trading is not carried electronically.

Yadanabon Naypyidaw is 70 kilometers from Mandalay which is 300 kms north of Naypyidaw and 600 kms from Burma’s chief commercial center, Rangoon—leading some observers to label the project a farce with no practical use in the country’s commercial development.

The Paris-based freedom of information watchdog Reporters Without Borders has described Yadanabon as a “joke.”

A few companies may be interested because of low costs, but they all know the situation of the Internet [in Burma],” said RWB’s Vincent Brossel.

Junta Pleas on Behalf of N. Korea as Trade Ties Grow

Burma’s generals have stepped up their efforts to build closer ties with renegade state North Korea.

Amid reports that North Korea is now trading a range of goods with Burma openly—since diplomatic relations were restored last year— comes news that the junta last week backed the Koreans in the United Nations over aid funding.

The UN’s Development Program (UNDP) suspended aid to North Korea because of financial irregularities—not unlike the exchange rate scam foisted on the UN by the Burmese junta for post Cyclone Nargis cash aid, said the New York Based NGO Inner City Press.

A UNDP meeting in New York said it would need guarantees on avoiding losses through enforced state currency exchange rates before resuming aid to North Korea. But Burma’s UN representative jumped to the Koreans’ support, alleging “political motives” for the suspension of aid.

Burma told the UNDP meeting that aid programs should be under what it termed “national ownership,” Inner City Press reported.