Mark Farmaner, says pulling cover will speed the collapse of the military

The insurance industry is perhaps unique in that it can operate in a country without leaving any physical evidence of its presence. It needs no factories or infrastructure, not even an office. It operates quietly behind the scenes, but its role is critical. Without insurance, companies can’t operate, can’t trade, can’t invest.

Until now, the main focus of the Burma Campaign UK and our sister organisations around the world has been on companies with a physical presence in Burma.

When we have engaged with the insurance industry, it has been more to do with its shareholdings in other companies than its own operations.

The critical role that the insurance industry plays in facilitating company’s investments in countries like Burma has not received much attention. That is about to change.

In most countries, trade and investment can benefit ordinary people, but in Burma the opposite proved to be the case. The influx of investment and increasing exports boosted revenue for the regime. Military spending increased to such a degree that in most years it now accounts for up to half of government spending.

At the same time, the regime reduced spending on health and education. According to figures from the Asian Development Bank and UN, as a percentage of GDP Burma now spends less on health than any other country in the world. And while a few people in major cities saw an increase in income, overall people in Burma were becoming poorer.

The increased capacity of the army also allowed the regime to step up its war against ethnic nationalities, including the widespread use of rape against women and children. Nor did the increased contact with the outside world lead to any political reforms – quite the opposite.

The democracy movement saw trade and investment flooding in and, rather than helping people, it was hurting them by helping to entrench military rule. It was only in the mid 1990s that serious calls for targeted economic sanctions began.

The call for sanctions didn’t originate from the Burma Campaign UK. It came from inside Burma, from people who were experiencing first-hand the consequences of a regime with increased resources.

Given the extraordinary diversity of Burma with its different ethnic groups and myriad political parties, the unity that there is around the call for targeted sanctions is extraordinary.

If the insurance industry were to cease providing cover for companies in Burma, the regime would be plunged into immediate crisis.

“If the insurance industry were to cease providing cover for companies in Burma, the regime would be plunged into immediate crisis

Mark Farmaner

Exports such as gas and timber would cease, and the regime, which depends on trade and investment for its survival, would no longer be able to fund the half million strong army that keeps it in power.

Critically, such a measure would also hit the business elite around the regime, whose wealth also comes from investment and exports of natural resources. The impact on most people in Burma would not be so severe. Most are in the agricultural sector.

The financial crisis for the regime that such a measure would create would be highly effective in driving the regime to the negotiating table, and engaging in the UN’s proposed process of democratisation and reconciliation.

The regime’s vulnerability to economic pressure is without doubt. The recent uprising was triggered by increases in fuel prices of up to 500%. As protests grew in August and September the regime refused to back down on price increases, as it is so desperately short of funds.

On 15 October the EU finally agreed on targeted economic sanctions against the regime. The UK took the lead in pushing for these sanctions. The sanctions agreed include measures that the Burma Campaign UK and Burmese democracy movement have been calling for over 10 years. They ban investment in, and imports of, Burmese gems, timber and metals.

There is also agreement in principle on investment sanctions, but with no date set for implementation.

This is the first time the EU has agreed effective sanctions that will have an impact on the regime.

But further measures are also being discussed, particularly in the financial and banking sectors. A ban on the provision of insurance to Burma will be a key demand of the Burma Campaign UK and our European colleagues in the coming months.

In addition to calling for the insurance ban, we will also be targeting insurers individually.

It is time the insurance industry took on board the ethical considerations regarding its involvement in Burma. Companies operating there face not only ethical considerations, but also severe reputational risk.

Insurance companies should take the lead now and agree a voluntary end to involvement in Burma, and avoid the pain and controversy of a public campaign.