The Cable

Airport project seen as test case for the new Burma

On Monday morning, the White House released a vague agenda for this afternoon's historic bilateral meeting between President Barack Obama and Thein Sein, the first president of Burma, also known as Myanmar, to visit Washington in almost 50 years. While its release ticks off the major issues -- including democratic reform, "ethnic tensions," and economic development -- sources tell The Cable that a contract to operate Burma's Yangon airport will likely be brought up.

The contract, which involves the renovation and operation of the former Burmese capital's airport, is worth $1 billion over 30 years and has attracted bids from some of the most powerful corporations in the world. More importantly, from a geostrategic standpoint, it also pits a U.S. consortium including giants Boeing and McKinsey against a joint venture involving the massive Chinese-owned company China Harbour Engineering and Pioneer Aerodrome Service, a firm connected to Burma's former military regime.

As with most things in the historically secretive Burmese system, the decision-making process is opaque, but Burma watchers are observing the airport project closely as a sign of which way the political winds are blowing.

In preparation for Monday's meeting, a source familiar with the bid tells The Cable that last week officials with the Department of Commerce and National Security Council prepared to brief senior White House officials on the bid by the American consortium, the New York-based ACO Investment Group. Another source with ties to the administration said that senior State Department officials also raised the issue with the White House. "It's very much on the White House radar ... it's likely to come up," said the source.

The surge in economic interest in Burma comes as Sein opens up the country to foreign investment in an effort to modernize its infrastructure and develop its financial sector ahead of the 2015 elections. Last July, the United States lifted a raft of economic sanctions against Burma after Sein kickstarted a gradual reform process, which resulted in the election of human rights icon Aung San Suu Kyi to parliament after years under house arrest.

Still, Obama is expected to walk a "fine line," as Reuters put it, between fostering ties with the quasi-military government and defending human rights. (Sein earned a bit of good will on Friday after pardoning 20 political prisoners. However, human rights groups were quick to allege that 160 political activists remain in imprisoned and others note that sectarian violence in the western state of Rakhine has worsened since the United States.dropped sanctions last year.)

ACO is bullish on Burma, planning to invest $700 million in the country, including $200 million in the Yangon International Airport should it win the contract. "Many Western institutional investors and companies are taking a wait-and-see approach as Myanmar comes out of reform," Hari Achuthan, managing director at ACO, told The Cable. "Someone like ACO however, will only help attract more foreign investment into the country. The U.S. government advocating for ACO on its projects would provide a lot of confidence both for investors and the Government of Myanmar."

National Security Council Spokeswoman Caitlin Hayden declined to comment on specific investments to be discussed with President Sein, but told The Cable, "We expect the President to have a constructive and substantive discussion with President Thein Sein about the status of his reform efforts and the challenges the Burmese government is facing in the ongoing transition." A White House release adds that Obama looks forward to discussing how to "bring economic opportunity to the people of [Myanmar], and to exploring how the United States can help." The State Department declined to comment on any specific investments, but an official speaking on background with The Cable said, "In general, we encourage U.S. business to invest in Burma and to do so responsibly. Responsible investment is essential to the success of the reform process in Burma, bringing prosperity to the people of Burma and creating job opportunities for Americans."

The consortium was co-founded by Achuthan and former United Airlines president Ronojoy Dutta. It includes the Asia Group, a Washington and Singapore-based investment and consulting firm founded by Kurt Campbell, the recently departed assistant secretary of state for East Asian and Pacific Affairs. Campbell was the architect of a range of policy initiatives in Obama's first term, most notably, the opening up of Burma and Washington's subsequent rapprochement with the country. When asked if his revolving-door involvement in Myanmar created a conflict of interest, Asia Group COO Nirav Patel told The Cable that Campbell's activities in the country have been "extremely consistent" over the years. "This is intrinsically about supporting reform," he said. "You can't get to supporting reform without people taking [investment] risks. That's something we're very passionate about."

The U.S. government, meanwhile, may have multiple reasons for supporting the consortium. For one, it's rarely shy about promoting American businesses in its goal of increasing U.S. exports and trade. For another, the U.S. Treasury makes no bones about how it feels about one of ACO's leading competitors on the bid: Asia World, Myanmar's biggest and most diversified conglomerate. Both of its founders, Steven Law and his father Lo Hsing Han, are still on the U.S. sanctions list. Treasury even has its own flow chart of the two founders' involvement in "illicit activities," which include the Burmese junta and drug trafficking stretching back to the ‘70s. Law has repeatedly denied U.S. claims of his and his father's involvement in the region's drug trade.

It remains to be seen which consortium Burma will ultimately choose. Airport operators in Japan, Singapore and South Korea are also competing in the final stage of bidding, and the Burmese government is expected to announce the winner by June 25.

The Cable

Issa subpoenas Pickering on Benghazi

House Oversight Chairman Darrell Issa (R-CA) is done asking nicely, and on Friday, issued a subpoena for retired Amb. Thomas Pickering, co-chair of the Accountability Review Board (ARB) on Benghazi, to appear for a deposition on last year's attack.

"While I am very much committed to having you testify publicly and appreciate your newfound willingness to do so, I was disappointed that you are attempting to limit the Committee's understanding of the Accountability Review Board by refusing to participate in a voluntary transcribed interview prior to testifying publicly," Issa wrote in a letter to Pickering. "In light of your continuing refusal to appear voluntarily for a transcribed interview, however, I have found it necessary to issue a subpoena to compel your appearance at a deposition."

All week, Issa's office had been publishing open letters to Pickering requesting his participation in a private, transcribed interview, and all week Pickering declined, saying he was willing to testify publicly about his review of the State Department's response to the attack, but insisting that a private deposition was inappropriate.

"Depositions are usually reserved for fact witnesses and people under investigation," he told The Cable. "We are not fact witnesses to Benghazi and we are not under investigation."

Shortly after Issa's announcement, Rep. Elijah Cummings (D-MA), ranking member of the Oversight Committee, issued a press release condemning the subpoena as emblematic of "extreme Republican overreach."

"Today's subpoena is a stark example of extreme Republican overreach and the shameful politicization of this tragedy," Cummings said. "Both Admiral Mullen and Ambassador Pickering have made clear that they stand ready and willing to testify at a public hearing to respond directly to these reckless accusations, but Chairman Issa is now imposing new conditions to keep them behind closed doors. The Chairman should reverse his decision, conduct a responsible and bipartisan investigation, and allow the American people to hear directly from these officials."

Issa insists a private deposition is a necessary precursor to a public hearing.

"A fully informed hearing, in which the Committee begins with a factual understanding of how the Board reached its conclusions, is critical to engaging in a public discussion with you about criticisms career State Department officials levied at the ARB's efforts and recommendations," Issa wrote.

As The Cable noted last week, the dispute can best be described as a battle over the American public's perception of what happened in Benghazi. Issa knows that a transcribed interview with Pickering will better allow him to control the narrative of the next Benghazi hearing, and certainly, it helps for running a hearing more efficiently. Pickering thinks Issa is running a "political circus," and as he told The Cable on Wednesday, "now that the circus has been launched, we want to make our case in front of the public," not in a private setting.

Interestingly, Admiral Mullen, the other co-chair of the ARB, has been given a pass. When The Cable asked Issa's office if he too had been served a subpoena, Issa spokeswoman Becca Watkins said "he was not."

The subpoena requires Pickering to show up for a deposition on Thursday, May 23, at 10 a.m. Pickering did not immediately respond to a request for comment.