09/25/2013 12:29 EDT | Updated 11/25/2013 05:12 EST

Western Business Must Walk the Talk in Myanmar

Many people in Myanmar commemorated the 25th anniversary this September of one of the bloodiest crackdowns in the country's history. Western business should be encouraged to bring more socially responsible practices to Myanmar but should take critical measures to ensure that they not become part of the democracy-hindering problem rather than the solution.

Many people in Myanmar commemorated the 25th anniversary this September of one of the bloodiest crackdowns in the country's history that began earlier in August of 1988 and resulted in more than 3,000 dead by the September of that year. Many were students and Buddhist monks.

Led by Aung San Suu Kyi, who would become a Nobel Prize Winner, they were demanding a return of the democracy that had been stolen by a military junta. The present transition to democracy in the country owes much to those who faced the military's bullets and many who paid with their lives. Whether the courageous people of Myanmar will enjoy the stability and freedom of a fully functioning democracy will depend on how far the military wishes to give up power after five decades of brutal rule. It will also depend on how foreign investors, especially from the West, help in that transition to an effective democracy.

Western business from the U.S., Canada, Europe and Australia have, in some notorious examples around the world, left a terrible legacy of their role in environmental degradation, complicity in human rights abuses and the undermining of the rule of law in their foreign operations especially in the extractive industries sector according to human rights activists.

After a brief visit to the country to promote the rule of law and human rights in commercial relations and dispute settlement in Myanmar organized by the International Commission of Jurists, some vital lessons were learned. Perhaps the most crucial is that it is critical that any western business interested in investing in Myanmar's vast natural resources during its very fragile transition to democracy in that country, not provide more examples of gross corporate irresponsibility. Sadly Myanmar is ripe for such exploitation.

In the course of five decades of brutal military rule a vicious commercial relationship between Chinese, Thai and some western corporations and the military junta have irresponsibly exploited the vast reserves of oil and gas, precious and other minerals and some of the most sought after timber on the planet.

The fragile civilian regime that came to power after the controversial election in 2010 has welcomed western business to share in the wealth of the country and compete with the established Chinese and other Asian corporations. The western multinationals, many of whom have signed up to the UN Global Compact, and the UN guiding principles of business and human rights or who advertise their own social responsibility records in glossy annual reports, must avoid becoming part of the terrible legacy of business and the lack of the rule of law and human rights in Myanmar.

In some of the most major extractive industry projects, local populations have been forcibly moved off their homes and land without any warning or compensation to make way for giant copper mines or pipelines running the length of the country increasing the possibility of violent conflict between the military and the many indigenous peoples where much of the natural resources are located. Due to the active participation of the military who are involved in almost every sector of the economy, there are few regulatory or legal prohibitions to prevent such massive exploitation of the people and the country. There is no requirement for environmental or social impact assessments to be carried out before major extractive industry projects are approved and start operations. Likewise corruption is endemic to almost every sector of the economy and life in the country. Myanmar was listed as the least transparent in the world in terms of natural resource governance by the Revenue Watch Institute's 2013 Index.

While the national government in the military-built capital of Nay Pyi Taw has tried to assuage the concerns of western governments by signing up to the Extractive Industries Transparency Initiative, it has not done the prerequisite steps to be an effective implementing state. Moreover, there are disturbing signs of violent suppression of any civil society protests at extractive industry projects.

Western business should be encouraged to bring more socially responsible practices to Myanmar but they should take critical measures to ensure that they too, not become part of the human rights and democracy-hindering problem rather than the solution. These should include showing leadership to the civilian government by insisting in concession agreements that they, even voluntarily, undertake independent environment, social and human rights impact assessment before any investments in extractive projects with Myanmar or other foreign companies are undertaken.

Similar ongoing assessments during the life of the project would also be showing the civilian government how responsible extractive industry projects should be regulated. It is also critical that western companies have effective policies and operational compliance systems to ensure that local communities are not targets of violence by their own and local security forces. Likewise, they should resist all forms of bribery and corruption even if these come from governmental sources.

It would be naïve to think that if they start walking the talk on such social responsibility issues, they will compete on equal grounds with some of the other Asian competitors that are seeking to extract as much profit from Myanmar as is possible. But these companies are now starting to face the wrath of the people and will face steadily increasing repercussions. But for those western companies there should be more at stake than competing with these exploitative counterparts. The values of democracy, human rights and anti-corruption espoused by their home governments and indeed many of their own shareholders and civil society stakeholders are also at stake in what should be one of the richest parts of South East Asia but instead is the poorest. The world is watching.

Errol Mendes is a professor of international law, business and human rights law at the University of Ottawa. He also assisted in the development of the human rights principles in the UN Global Compact. He is presently a Visiting Fellow at Harvard Law School during the fall 2013 semester.

Photo gallery 1988 Myanmar Uprising See Gallery