Transcript: Burning the Midnight Oil

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Host 0:15

So before we get into today's show, I just want to add a quick reminder that any donations given to our nonprofit better Burma will be shared directly with those in Myanmar who need it most. Any and all donations will make such a difference right now. Go to insight myanmar.org/donation If you would like to contribute, or stay tuned to the end of the episode and hear more options, with that, let's get into the show.

Brad 1:48

And welcome back. My guest today is a recurring guest, Mike Hawk that we already interviewed with regards to the murmur bill and subsequently also the NDA. And today we're going to be doing a follow up episode on the recently announced and even more recently activated US sanctions against the Myanmar oil and gas enterprise or emoji II. So Mike, thank you for coming on and bringing this to our attention. And would you like to just give a brief explanation of yourself and your work for our audience?

Michael Haack 2:24

Sure. Yeah. Thanks so much, I really appreciate the opportunity to chat with you again. So I'm Mike. I live in Washington, DC. And I've been sort of on and off doing solidarity work with with Burma since 2002, when I first went to Mesa. And right now I'm working for something called Myanmar Policy Institute, spent two years getting the Burma Act passed, and now that it's passed, have been mostly looking at things around that can be considered implementation, emoji sanctions being part of that, but also, the the long, drudgery, that is the appropriations process in the US Congress have been spending a lot of time watching that, because the US passes laws, and then later decides whether or not it's going to spend money on those laws. So it's quite a process anyway. So that's, that's what I've been up to you. Thanks for having me on the show.

Brad 3:30

And, yeah, definitely, like going back to when, when we were discussing the Burma act. And when we were looking at the NDAA provisions, I remember the frustration of having to wait very long periods of time to see whether Congress was actually going to do something. And whether the the things that Congress talks about, you know, making a certain amount of money available for a certain goal is actually going to eventuate in terms of hard cash, or whether those are more, you know, theoretical spendings that may or may not trickle down. So I share the frustration, but I'm looking at this article that you've written this this opinion piece that you've written for frontier, Myanmar, and it's entitled new US sanctions on emoji II hitting the generals where it hurts. Question mark. So let's, let's talk about that, that that question mark. First and foremost, what actually do these sanctions provide for? Yeah,

Michael Haack 4:29

excellent question. So basically, what they say is that US entities cannot provide financial services to Myanmar oil and gas enterprises or any sort of subsequent entity, you know, like emoji can't just like change their name and then get exempted. So what that means basically is that US banks can't make loans, they can't make transfers to emoji. That might sound like Okay, not that big a deal. But it is actually a pretty big deal. When you think about emoji is the biggest source of foreign exchange for the Myanmar military. And the biggest trade even even today to the best that we know. Most trade even that the happens from Myanmar, and even that the Myanmar military itself as it is engaged in happens in dollars, right, the dollar is a very, very important currency. And so by cutting this off it it provides a hurdle to the Myanmar military to fund itself. It's not going to be a game changing hurdle. And we can sort of get into why. But it does trip them up. So I think it's a good thing. It's a very good thing. I know the State Department has been thinking about this, looking at this thinking very hard about this. They had to get the politics in line before it happened. We can talk about what I mean by that as well. But you know, I think I think it's a big deal. The the biggest deal with emoji sanctions actually happened when the European Union sanctioned emoji II, which led to the Bank of China actually putting the money that would have gone to mo GE, through this way, you know, pipeline. And they put it into escrow. So the Myanmar military wasn't receiving that money. And that was the Bank of China complying with European Union sanctions, because they're afraid of the, you know, they don't want to make the Europeans angry, basically, or have to transfer things through European banks. So it can have broad effects. The way these sanctions were written, though, it that we us definitely wrote them with Thailand in mind. And, you know, to allow Thailand to sort of to punch as hard as we can toward the emoji II but allow Thailand, you know, PBT, Pasco, others to, then but I think particularly Thailand was the concern here to to, you know, allow them to continue to get gas there from Myanmar. And, unfortunately, that means continue payments, but not in dollars. So it is, it is significant.

Brad 7:48

So there's quite a lot here that I that I do want to sort of touch on, because, you know, do you and this may be very obvious, but I think to a lot of people, myself included, there are a lot of dimensions in what you've just said that that are very, very significant. So the first thing I want to look at is the state of Myanmar, petrochemicals because or fossil fuels because we saw over a year ago, the withdrawal of Chevron from the United States total from France and Woodside from Australia. These were major fossil fuel extraction companies, that was saying, Hey, we're going to wind down our businesses. I think totaal was the most aggressive from memory. They said it's six months to dismantle. And, you know, I reached out to a contact of mine who actually used to work for Chevron back before all this. And he said, Well, the thing is, the dismantling process is going to be very, very slow. And if what we're hearing from other analysts with regards to the amount of oil or gas available in the Yunnan gas fields is true. What these companies may have been announcing is not actually a moral position, it was just them saying, Well, you know, the gas fields where we're currently operating are running dry, and we don't want to open up new operations to last for the next 10 years in a war torn country. So with regards to the petrochemicals, was Myanmar have really making that much of that of that industry? In the immediate sort of precedents? Like throughout 2020 to 2023?

Michael Haack 9:23

Well, I think yeah, so the best that I've you know, been able to get intelligence on this like it. It continues to the question is about in the years to come. You're right there has been a dip, but my understanding is it's not hasn't been significant. yet. I mean, I guess it depends on what you mean by significant but the real You're right. That the the the gas fields are running dry. But you the dramatic kind of drop off hasn't happened yet. totaal did it, you know, they total actually pulled out it's sold its shares. Chevron has not like Chevron is still owns their shares in the, in the Yudanaka. Pipe is

Brad 10:18

Chevron still in other Chevron employees in the country?

Michael Haack 10:23

I don't know that but they they still own. You know. Now it's actually the majority share, although PPT is the controlling owner, from what I understand, I don't understand why that is the arrangement. But the what basically what happened is when when totaal pulled out, they sold their shares, they just split them proportionally between the other three owners, which is PVT mo GE, and, and Chevron. Chevron then agreed to sell their shares to a Canadian company. But that deal has not gone through it hasn't been finalized. So Chevron still has their shares. And they're still making money off the pipeline. Why it hasn't been finalized? I'm not sure. But it might partly have to do with the fact that the it's an evolving regulatory environment, right, like the US sanctions. You know, I think for a long time, the US has been sort of signaling that it was going to do these sanctions. And I don't know if that complicated the deal or what. But yeah, Chevron's still in there. But

Brad 11:36

so I'll just on this, like, what we saw, you know, a year ago or two years ago, within the actual fine print, or not even all that fine, actually, within the print of, you know, the Burma act that Congress was passing back and forth. And then later in the NDAA, there were these significant slices cut out to make provisions specifically for US companies, namely Chevron to do business with Mo GE, the it almost feels like Congress was protecting emoji II in order to protect the interests of large US companies. Would you know that maybe that's just a very cynical view?

Michael Haack 12:18

Yeah. So that's, that's a black and white, I hear what you're saying. Um, so it went back and forth, like the version of the Burma act, so that many versions of the Burma Act passed the House of Representatives, before the Senate finally agreed to one that was in the NDAA. So it's the backdrop here, the one of the versions that passed the House, the one that actually passed in a house version of the NDAA. They had very strong language about emoji II and sanctioning it. But that that language was watered down for the final version. And it's true, I mean, Chevron was lobbying against it for a certain period of time. For much of when I was sort of banging my head against the wall with all these other grassroots people that try and get the Burma act through the Congress. You know, we heard from offices Democrat and Republican that, you know, Chevron, or, you know, different organizations that work for Chevron, had been lobbying against it or been lobbying for an exemption. And the the sort of tension between that and the people who said, No, you know, why would we give you an exemption was one of the many tensions that that, you know, slowed the bill down. But, you know, at the end of the day, like, the, the corporate lobby did eventually change their mind on this. They, they, you know, I got confirmation from various sources, they, they basically told State and Treasury that they were, they didn't mind if they sanctioned emoji, I think, partly for the reasons you're saying, like it's running dry anyway. You know, it's, uh, I think, you know, I'd hope at least reputational liability matters. I mean, maybe they don't care what I see, but a bunch of Congress members like banging their fists about it, you know, it's, you know, oil companies benefit a lot from their relationship with US Congress, you know, in the US, you know, security apparatuses around the world, so, and diplomatic cover, etc, etc. So, you know, it doesn't matter if, you know, a lot of congress people are kind of yelling at them. And so I you know, I don't think this would have passed if if basically like, the corporate lobby hadn't just been like, Okay, we don't care anymore, like, do what you want. But, you know, it's significant in that it trips up the regime and those those The small ways.

Brad 15:02

And so let's also talk. Another really important point that you brought up is the dollar now, the military, you know, we've had Sean tonnelle, on talking about the the business practices of the military and how they literally own the printing presses and they make all this money, but they can only print Burmese chat. And the international community doesn't really like trading in that. So. So the military literally needs to acquire US dollars in order to purchase the weapons, the jet fuel, the bombs, the missiles, the helicopters, the jets and all that. And you're saying that this industry is the primary source by which the Burmese military acquires US dollars? Is that correct? I,

Michael Haack 15:46

from what I understand, it's it's the like, largest single source.

Brad 15:51

Okay. So, so this distance is a very important question. Right. Does sanctioning emoji II, even if it's not necessarily the biggest earner for the military as such, the sanctioning emoji II still play a significant role in limiting their access to the type of currency that they can use to buy additional sort of weapons and ammunition and things of that nature from their allies?

Michael Haack 16:20

Yeah, it's going to trip them up.

Brad 16:25

Okay, so you, you've said, trip them up a couple of times so far, right.

Michael Haack 16:31

Good question. I mean, yes, it's gonna be harder for them to get dollars. And yes, that will be harder for them to buy the things that they need for weapons of war.

Brad 16:43

Yes, you sound like there's a but coming.

Michael Haack 16:45

I mean, it's not a but it's just not, you know, I don't think it's going to be enough that it's going to like tip the balance or anything like that. I mean, it's good that the US is doing this. I think that I think that the US is, is I think this was a very well thought out policy, and I have a lot of respect for the people who actually finally implemented it. I just, you know, it's hard because I spend like all day with activists and stuff, and I always hear the like, Aha, if we just did this, then the regime would fall or whatever. So I feel very cautious about speaking in that sort of hyperbole. I mean, this is this is a good step. And

Brad 17:25

and I definitely respect that like, accurate information. realistic information is much more valuable than feel good information. Yeah. And so understanding what this legislation and will and will not do is important and, and so on that. So in the realm of reality, where we unfortunately have to live, the US government saying we're going to sanction X, Y Zed does not actually essentially stop its its operations. Now, let's take an extreme North Korea, and North Korea, you can sanction anything in any one. And the state will get people to change their names, they will issue the new birth certificates, companies will be dissolved new companies will be created. And sanctions are routinely skirted on that sort of scale from sanctions actually doing what they're intending to achieve. And sanctions doing nothing, because they only applied to entities that can be readily dissolved and renamed. How, how bad is Myanmar?

Michael Haack 18:25

Um, that's an interesting question. I mean, I would say that this sanction is, is in the realm of like, pretty serious that it especially when you when you at least, compared to the other ones that we've dropped on Myanmar? You know, the MF TV sanctions, I think also, you know, have blocked flow of dollars. Of an at least have caused people to have to change accounts and things like that. From what I understand the US intelligence is following this, although I don't have access to that kind of information. I just kind of hear whispers. And sometimes when I talk to the people who do talk to US intelligence, I'm like, Are you sure the source wasn't just this guy also talked to you, and then they kind of turned red? So it's like a sort of a small world of information out here, unfortunately. But, you know, how serious are these sanctions? I mean, I think this is a serious stuff by the by the US. I don't think Burma is the top priority of the United States in the region. Right. Like, I think our relationship with Thailand is much more important to the US. I'm not saying it should be or shouldn't be. I mean, in the end, I think that's kind of colored this whole you know, discussion the whole time, but also domestic interests. I mean, in the in the paper I talked about, or the article I talked about You know, when I was just came back from Mesa, you know, everybody had been asking for sanctions. So I got involved in the boycotts, I actually, you know, me and a few other students like, led a boycott that ended with this major US company to stop sourcing from Burma. And then we lobbied for the sanctions. And, you know, at that time, I didn't really know what was happening behind the scenes. And at that time, a much earlier, you know, Burma related piece of legislation was held up by, by Chevron, you know, for these exact reasons. And at that point, they're able to kind of convince activists that, well, you know, if Chevron is to pull out, the Chinese company would just take over, nobody wants that, blah, blah, blah, blah, blah. Now, like understanding what I understand about geopolitics, like I don't think there is any way in hell like the EU at the US, I don't Chevron would have thumbed its nose at the US in that way, by selling its shares to a Chinese company, you know, like, it's like, this sort of silly, but it was like, that was like the kind of fear mongering that that was used for everybody to be like, okay, whatever, let's not go after Chevron. And they let them go. And what they did is they went after, like the most vulnerable people in Burma basically, like they, you know, we ended up just having a blanket ban on apparel imports at the time, apparel was quickly growing industry in Burma. And, and the US was about 50%, of Burma's apparel market at that point, like the US was still very rich compared to the rest of the world, the US is still very rich compared to the rest of the world. But China hadn't really come into its own as a market. And other countries had it so that the US share of the global apparel market was huge. And it was literally 50% of Burma's exports. And so it was devastating when when the US put in those sanctions, and I played a role in that. I mean, like, like 80,000 people are sorry. You know, acumen to that, that a lot of people lost their jobs, you know, and they're young women. And I don't think it really hurt the regime in any way, partly because the regime was really profiting there in quite a bit off the energy exports, which was like politically impossible to touch back then. So I think that just the way that the US has been willing to go after the energy sector, the way that I mean, Chevron may have finally kind of just, you know, shrugged his shoulders and said, Okay, do what you want to the, to Treasury and state, but the fact that it didn't come without pressure, I mean, the pressure was there. And and the fact that the US is willing to be a little bit rough on its own oil company, I think is significant. I mean, it's very easy. There's, there's a machine of sort of good information about, I learned the word semiotic loop recently, what like, you know, will give good news from Burma, you know, think tanks and sort of, like a lot of people in the US, like, repeat it, and then it gets broadcast back into Burma. And it often doesn't mean all that much, you know, like, and I think even the 2003 sanctions are sort of like that as like this big fanfare. And then later, we, like, banned the financial services, which was a big deal. But, you know, what really did was like, take a bunch of people to jobs and didn't in any way really hurt the regime's coffers, like, in this sense, like, we are targeting, you know, what is a significant revenue source for the regime? And, and it is, you know, it's not cost free for the population. I mean, I do think there'll be a slight bump in inflation, but it's not nearly as as costly is as these other sanctions were ended. And it's something that the US can adjust as it as it goes. And so I don't know, I think it's the best of a lot of bad options that the US had. I don't know. And so I do think it's something to celebrate that it happened. It is definitely a result of grassroots pressure.

Brad 24:38

I mean, you sound very hesitant to celebrate this and what when it comes to apparel sanctions, that's definitely something that I would like to look at, because it's something that I did follow as it was happening, and then as it was quietly on happening in 2003. No, no. 2003 I mean, post,

Michael Haack 24:57

post coup. Yeah, right. Right when Pete are calling for it. And then they sort of backed up.

Brad 25:01

A lot of companies moved out of the country. And then countries quietly moved back in. And we had calls from from different groups. So that's, you know, the way that sanctions have generally been utilized, especially in the context of Myanmar and countries like it. I think it's an important story to cover. It's out, it's out of the scope of our discussion today. But it's an important story to cover, because I think you're talking about semeiotic loop, I just described that as everybody wants to feel informed, but nobody wants to do the amount of research necessary to actually be informed. And this, this creates a market for people to sell you simple narratives that make you feel good, but unfortunately, that amplify bad decisions and bad understanding of circumstance. And, you know, it's,

Michael Haack 25:46

and I would say, especially, maybe not, especially because things people know lots of a lot about, they still make bad decisions now. But like, the, it will tell me like Burma, which is sort of a low information environment, right. Like it's, it's, it just feels like that can be heightened at times, you know, where you get a little bit of information. And big decisions are made on that. Yeah.

Brad 26:12

So I'm looking at the article that you've written. And what I'm finding very interesting, it's, number one, you're mentioning the relationship with the Thai government and the pressure that the Thai are putting on this. Now. We had Graham on some time ago to speak about the state of the Myanmar power grid, which we've which we've done twice. And I asked him, you know, when is the system going to collapse, and he estimated that Myanmar electricity as a thing will probably collapse around 2030. Because the gas that the Myanmar regime was hoping to utilize to expand the power grid with new gas power stations, a lot of that has preemptively been earmarked for export to Thailand, there's nothing that they can or they're willing to do about even the military is not willing to renege on the deal with the Thai government. So how, how much are the tide dependent on this?

Michael Haack 27:12

I mean, that's a good question. People say, you know, there's radically different numbers out there about it. Probably somewhere between 10 and 17%. Other people will say Thailand's a net energy exporter, they don't really need that, you know, they've already kind of figured out I don't, you know, I I think the thing is, is like, and this, you know, this is a prediction, it's not something that can be said, for sure. So I understand why it's not at all reassuring for Thailand. But we tried to make the argument that Thailand could do essentially what China did, where they keep getting the, you know, the the resources across the pipeline, but they don't pay anymore. And they blame the West. And, and, you know, that's sort of the best of all worlds, you know, like, it's, it's like, um, you know, Bank of China can say, hey, we're just complying with the EU sanctions. Yeah. But you know, there's no reason for the regime to want to cut a China's access, right. It's the the end. So we tried to make the argument that Thailand could do the same thing. You know, I, you know, if I was a Thai minister, something, you know, I want to keep those factories along the Thai Burma border running. Would I be compelled by that? I don't know. But that was the argument that we tried to make.

Brad 28:52

I think that's, I think it's fair. And I think one other thing that you've written with regards to Thailand, which stood out to me, was that the two parter, right, which comes back to what we spoke about earlier, with regards to currency, the Thai government wants to move away and start using Bart in an international trade capacity, which, you know, makes sense. It gives the currency prestige and stability and all that sort of stuff. But also, moving away from what, you know, whether whether we were going to be sort of conspiratorial or whatever what is commonly referred to as the petro dollar. As the very much us heavily, heavily recommended standard for petrochemical trade. Is is an interesting move, but it means that if the Burmese regime is selling to the Thai, they're not receiving US currency as an influx and in fact, what you're saying in the article here, is that because the sanctions prohibit us entities from doing anything with emoji, that all So means that if the Thai government wanted to send us currency to the to the junta and Myanmar, in compensation, the US financial institutions that would normally have to process those transactions are legally barred from doing so. Meaning that it's actually very likely or it's it sounds based on what you've written in this in this frontier Myanmar article, it's very likely that this will seriously slow the flow of US currency to to the hunter. Is that Is that a fair assessment?

Michael Haack 30:31

Yeah, it seriously slow I think is a good way to put it. Yeah.

Brad 30:37

Okay. So because you, you still sound very hesitant to just celebrate. And again, I appreciate that you're not trying to oversell personality,

Michael Haack 30:50

I don't know, I just don't, I think it's partly just where I'm situated in, in the Burma world. These days. I, I I'm very, very hesitant to make some kind of giant like this is going to crash through him, like, like an article basically saying that about something has come out, like every week since the coup. And everybody shares it. And everybody celebrates and like, and and people take it mostly it's ignored, you know, occasionally, like, I don't know, the Washington Post ran something a one above the fold recently, basically, to that tune about 1027. Um, I don't know, I'm, I'm just sort of like, I'm hesitant to get on that train. You know, like, I think it's good to push for the things that we're pushing. I'm glad that we're doing that pushing. This will deny the regime, you know, currently dollars, which is very important. But yeah, I mean, it's sort of just my kind of the way I I guess you're part of the reason I'm reacting the way I'm reacting is I want people to think it's good. I want people to understand, like the politics about how something like this happens, like what, what all is at stake. I mean, like, you have basically like, grassroots in the US. pretty diverse coalition of people that includes you know, religious folk, like the Baptist, particularly, you know, you have human rights groups, you have the influence of corporations over the US government, and you have the US is concerned about its its allies. And all of those things kind of boil together to make a decision like this, which I think it's, I really want people to understand that that's, those are different inputs into the US system. That's how we make decisions. We know I'm speaking as if I'm the sovereign. I'm not I'm just a guy. But you know, that's how the United States government makes decisions. It's multifaceted. And yeah, so I think this is big. I mean, the, they're still going to find ways to get dollars, they're still going to find ways to fund themselves. But this is good. I mean, I also have, I've been sort of talking to folk and thinking a little bit, I do think the regime was in the 90s and early 2000s, especially, you know, after the sort of the apparel boom was crushed. I mean, a lot of the foreign exchange came from, and it's so a lot still comes from, it's just the regime is a little bit more diversified than it used to be in terms of trade. But I do think this is extremely important. So I don't know. Yeah, sorry. I guess I should sound more enthusiastic. I'm enthusiastic, but I worry about what the enthusiasm from the United States does when you think about this sort of, like semiotic lube. And, and I just worry about that.

Brad 34:18

I mean, look, I'm enthusiastic, I think I think we hear it insight Myanmar are enthusiastic lately, because we've had, you know, a slew of people coming in talking about the massive successes, all of and subsequent to Operation 1027, which you mentioned in your article, and you are much more, I think, conservative in your in your Outlook. And, you know, I respect that like no one no one can. No one can predict the future. But, but we've we've been looking at an uptick of positive news and the important thing here is that the uptake of positive news has largely been internal to Myanmar has not been dependent on the aid or the goodwill of, of foreign nations. But this definitely feels like this is a really nice little Christmas gift almost because, you know, for, for all of the uncertainty, what you what it sounds like you've ultimately said to me here today is that emoji II is one of, if not the largest sources of foreign currency for the hunter. It has been sanctioned by the European Union, it has now been sanctioned by the United States. And corollary to that the ability to convert gas not just into a, an internationally sellable exportable product, but to convert it into US dollars in particular, has additionally been hindered, because even sales due to third party countries now are going to have to work through more layers. Yeah, to to turn into US dollars. And and considering what other people have been telling us that, you know, the military desperately needs to get helicopters, jet fuel replacement parts, things like that, all of which would be sold in US dollars are most easily sold in US dollars, it seems like this is a very significant step that is going to like it's hamstringing the military at the worst possible time for the military to face yet and other issue like they're losing on all fronts. And now they've just been cut off from a lot of the US currency that they that they depend on. Like, I understand that I respect that you want to be realistic, and that you want to be moderated, and that you don't want to oversell something, and you don't want to give people false hope. And I think that's a wonderful approach to take a very professional approach. But it really seems to me, everything that you've said today is just saying the generals have woken up seeing this news, and just started probably crying quietly in the corner. Would that be a fair picture to paint?

Michael Haack 37:10

I think I think probably that this was anticipated. I don't know for a fact.

Brad 37:19

So this is coming.

Michael Haack 37:21

Yeah. I mean that the US has been talking about it ever. It's talking about it before the show the US talks a lot. Yeah, yeah. And so I mean, they're, they're moving things around. I mean, I think it's bad it Yeah, it's another headache for the generals.

Brad 37:44

Okay. I think it's a very sober look at this issue. Definitely, look, you've written this article, I think it's a very well written article. Very accessible, you know, you don't load it full of highly complicated legally sticking economic terminology. So I would recommend to all of our listeners, to check this article, we'll we'll add a link to the article below. But if you want to search for it, it's it's new US sanctions on emoji hitting the generals where it hurts. I mean,

Michael Haack 38:12

one thing I've been thinking a lot about is like, you know, and this is this is not actually related. But I think the big question about Myanmar, that's, that's never address, there's never been addressed to me, in a way that I find satisfactory, is what exactly does ethnic federalism look like? And if the end goal of the revolution is an ethnically federated state, and things like the, you know, the democracy charter, see, that includes like regulating internal migration and things like that? Like, what, what, how exactly, are all of these identities that are going to be related to states going to be pleased? And where in the world be it, you know, northern India, northeastern India, or, you know, South Africa during the pawn to stones or other experiments with this sort of Athan the size, you know, state making, like where has that been successful and satisfactory and where it has led to a lasting peace?

Host 39:46

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