Doing Business in Authoritarian States: Tackling Dilemmas While Preserving Integrity

Should I stay or should I go now
If I go there will be trouble
If I stay there will be double
So you got to let me know
Should I stay or should I go

English punk band The Clash, 1981

Belarus has never been a democracy.

The same can undoubtedly be said of several other former Soviet republics. But perched as the country is on the edge of the European Union, decades of systematic human rights violations, as well as the recent crackdowns on civil and political rights, have earned it an unenviable reputation as “the last dictatorship in Europe”. The situation after Russia made use of Belarusian territory during its February 2022 invasion of Ukraine has certainly not made the situation less challenging for the country’s embattled civil society activists, many of whom have received or are expecting lengthy prison sentences.

In the following, we’ll leave aside the unprecedented developments in the region after Russia’s attack on Ukraine and look at the situation in Belarus leading up to that point. The Organisation for Security and Cooperation in Europe (OSCE) has not given thumbs up to a single election organised under ‘President’ Alexander Lukashenko, who came to power in 1994 and has held on ever since.

The UN currently has 13 Special Rapporteurs with single-country mandates. Belarus is the only European country with this special status, alongside notorious regimes such as Syria, North Korea, and the Central African Republic.⁷⁵

Belarus has been under various forms of western sanctions since 2004, the US and EU sanctions regimes being strengthened at times of deepening human rights crisis such as in 2006, 2011 and most recently, in 2020-2021. Whatever their effect, the international community's special attention bestowed on Lukashenko has yet to create a democracy or unseat him.

Yara International is a Norwegian chemical company particularly involved in producing fertilisers. The Norwegian government owns more than a third of the company and is its largest stakeholder. Yara is responsible for some 17,000 employees and has operations in over 60 countries.⁷⁶

Yara’s parent organisation until the de-merger of the fertiliser business in 2004 was Norsk Hydro. The company made its first purchase of potassium from Belarus in March 1996.

Potassium is commonly extracted from a mineral salt called potash. The curious-sounding word comes from pot-ash, referring to ashes soaked in a pot, which was how water-soluble salts containing potassium were historically produced. Although regular consumers rarely lend it a thought, potash is an essential fertiliser in global food production. Potassium is extracted from a few specific places around the world. One of those places is Belarus.⁷⁷

In 2020, some 43 million tonnes of potash were produced globally. The largest share by a long shot came from Canada (33 %), with Russia and Belarus producing an equal 17 % each and China 12 % of the total.⁷⁸ Smaller amounts came from Germany, Israel, and Jordan, while several countries in the Americas had minute shares of the cake alongside Laos and two former Soviet republics, Uzbekistan and Turkmenistan. The largest exporters of potash are Canada (39 %), Belarus (21 %), Russia (19 %), Germany (6 %), and Israel (6 %),⁷⁹ while China, Brazil, the US, and India are the largest consumers.⁸⁰

Belaruskali’s potash plant is in the town of Salihorsk.⁸¹ The name means “Salty Hills” and refers to the mounds of “kalinaya sol” – Russian for potash – that have dotted the area since the town’s construction in 1958.⁸² This potash city of Belarus currently has a population of just over 100,000.

Presidential power grab

At the time of Norsk Hydro’s (currently Yara) entry into the Belarusian market in 1996, Lukashenko was locked in a bitter power struggle with parliamentarian leaders. In the same year as the Norwegians made their first Belarusian potash purchase, Lukashenko forced through a referendum in which Belarusians were asked to vote on several issues, including constitutional amendments that would dramatically expand the president’s powers.

According to official results, almost 84 % of voters approved the amendments proposed by Lukashenko. Some 80 % supposedly also voted to retain the death penalty. The OSCE was markedly concerned⁸³ and condemned the vote as violating democratic standards.⁸⁴

Even at this early point, an OSCE fact-finding mission to Belarus concluded that “there is every indication that the Belarusian authorities are constructing a totalitarian system of government”.⁸⁵

They have been proven right.

In the 25 years since that first Norsk Hydro potash purchase, Lukashenko’s regime has made no attempt at building a democratic state or responding to the international community’s human rights concerns. On the contrary: Violations of fundamental human rights have grown systematic and endemic, including restrictions on fundamental freedoms, political imprisonments, and inhuman treatment by police. Public protests against Lukashenko have come in waves, as have the crackdowns on civil society. Still, the opposition has kept up a certain momentum despite arrests, imprisonment, and exile of central figures. Belarusian human rights organisations such as Viasna and news outlets like Charter’97 have kept up their invaluable work under extremely trying conditions.⁸⁶

In the years leading up to 2020, Belarusian repression seemed almost to have settled into some status quo. However, a tipping point in public opinion was reached by falsifying the results of the presidential elections on 9 August 2020 to secure Lukashenko’s sixth re-election.

“I won’t hang on to my seat with my fingers turning blue”, Lukashenka told the media before the elections.⁸⁷ However, with tens of thousands marching in the capitol’s streets, desperately hanging was precisely what he decided to do.

Unprecedented protests and repression

Following the announcement of results on 10 August 2020, thousands of protesters clogged Belarusian streets. The size of the demonstrations was unprecedented and would soon paralyse significant parts of Belarusian society, except the police force, who responded with unprecedented brutality. The protests quickly spread to all corners of society, including Belaruskali’s potash plant in Salihorsk.

At the first wave of protest supported by labourers at Belaruskali, Yara was indirectly drawn into the conflict between Lukashenko and the democracy movement. As the situation grew increasingly severe, it would raise difficult questions for the company’s leadership, including the fundamental question of whether to stay or go.

On 14 August 2020, in response to police raids and arrests in Salihorsk, residents gathered outside the potash plant with demands being read out in public. The demands included removing riot police, declaring voting results invalid and releasing political prisoners. The following Monday, 17 August, strike committees began being set up at Belaruskali and other factories such as the Belarus Metallurgical Plant and Grodno Azot.

According to the leadership at Belaruskali, 120 employees did not show up at work on 17 August, and a total of 671 employees were absent the following day.⁸⁸ However, this initial strike lasted only two days, with most employees returning to work after discussions with Belaruskali leadership.

The world watched in shock at the brutality of Belarusian riot police as they beat, arrested, and tortured civilian protesters. Videos and images of police violence were widely circulated in global media, partly thanks to the efficiency of popular Telegram channels such as Nexta,⁸⁹ co-founded by journalist Roman Protasevich. Lukashenko himself seemed pushed to the brink of madness. Two weeks into the protests gripping the country, he was seen jumping out of a helicopter brandishing a machine gun. He was apparently ready to protect his position come what may, shoulder-to-shoulder with his 16-year-old son, Kolya.

Yara CEO Svein Tore Holsether’s visit to Salihorsk on 18 September 2020 could hardly have come at a politically more turbulent time. The day before, on 17 September, Lukashenko was hit with a significant setback as the European Parliament not only voted to reject the result of the presidential elections but also to welcome the recently established Coordination Council as the “interim representation of the people”. MEPs called for EU sanctions against the regime.⁹⁰

Yara’s position

On 22 September 2020, the situation in Belarus had worsened to the extent that Yara felt it was necessary to issue an official statement addressing the events.⁹¹ In the statement, Yara underlined that the enterprise “respects international human rights, freedom of expression and the right to participate in free elections. We endorse the UN's guiding principles on business and human rights, and we recognise and respect workers' rights, including the right to organise and the right to strike.”

It pointed to “a clear expectation” that business partners follow Yara’s Business Partner Code of Conduct and “comply with laws and regulations, as well as internationally recognised standards for human rights, employee rights and ethical business conduct.”

The statement focused on the “safety and well-being” of Belaruskali workers while leaving out the specifics of the crisis gripping Belarusian society at the time. It referred to human rights standards set out in Yara’s Business Partner Code of Conduct and the importance for the future business relationship that Belaruskali adheres to the standards set out in this document.⁹²

Notably, the statement said Yara had support from stakeholders, including activists and trade unionists, in continuing “a close dialogue” with Belaruskali and the Belarusian Potash Company (BPC).

Even as the statement was published, students protested outside Minsk universities while masked police targeted individual protesters, dragging them into waiting minivans.⁹³ Throughout the ongoing political and human rights crisis, Yara was repeatedly criticised for its focus on the safety and well-being of the workers of its business partners while neglecting the broader picture of repression in the country and how its purchase of potash fed the Lukashenko Regime. There were also claims that Belaruskali misled Yara to believe it could help improve workplace conditions, which had been neglected for years.⁹⁴

The second wave of support from labourers came after 11 weeks of mass protests and after Lukashenko failed to react to an ultimatum to surrender power by midnight on 25 October. Some 100,000 people flooded the streets of Minsk⁹⁵ as opposition leader Svetlana Tikhanovskaya announced the launch of a nationwide strike.⁹⁶ Students joining the strikes were expelled from the university.⁹⁷ Apart from Belaruskali, strikes began at numerous other large Belarusian factories involved in the oil industry and producing cars, tractors, and appliances.

In Minsk, student strikers were expelled from the university.⁹⁸ In the mines, potash production was halted, and authorities fought back against the workers. On 12 September, Minsk Regional Court declared the strike to be illegal. On 19 November, Belaruskali announced through its Telegram channel that 49 employees at the factory had been fired for participating in the strike.⁹⁹

On 22 November, tens of thousands of people again gathered in Minsk, chanting “Long live Belarus!” while authorities shut down internet and telephone connections to hinder protesters from organising. Several hundred were arrested, and at least a dozen were taken to hospital after being beaten by riot police. Three days later, Yara issued another statement which largely echoed the points raised in the September statement but added that the company had engaged in frequent dialogue with Belaruskali management, underlining a continued belief in “dialogue as a tool for improvement”.¹⁰⁰ The statement referred, however, to a “deteriorating political and security situation” in Belarus and Yara’s concern for the well-being of the Belaruskali workforce.

By the time of Yara’s CEO statement on 5 December 2020, improvements in working conditions appeared not to have come about. On the contrary, Holsether said, Yara had not seen “significant improvements” for Belaruskali workers. The situation was “not tenable” for Yara as a company.¹⁰¹

The statement referred to the suppression of human and worker’s rights, as described in a “recent report by the OSCE Rapporteur”.¹⁰² It reiterates that “Yara has a strong commitment to the universal human rights agenda and backs the UN High Commissioner for Human Rights in her condemnation of human rights abuses in Belarus”. The statement’s focus is, however, on Yara’s “expectation that workers’ rights are respected” and the company’s concern at reports that workers who “have expressed their democratic rights in a peaceful manner” had been dismissed. The statement also referred to “alarming” safety incidents on site.

Increasing pressure on the company

On 17 December, Belaruskali issued a press release stating the company was revoking disciplinary measures against staff. It noted that those who had lost their jobs over strikes during the fall of 2020 (more than 50 employees) could get their jobs back if they re-applied.¹⁰³ According to Yara, the 17 December 2020 announcement by Belaruskali to provide for fired workers to return was “a direct consequence of the Yara engagement with Belaruskali …”¹⁰⁴

Yara’s social media presence was gradually transformed into a platform for Belarusian democracy activists. A casual “Season’s Greetings” on Yara’s Facebook page on Christmas Eve 2020 attracted over 1000 comments, most of them pleading with Yara to “stop supporting torturers and murderers” and “stop supporting the dictator”.¹⁰⁵ On Twitter, posts from Yara’s account on anything from holidays to climate change would attract negative reactions from Belarusian followers. A simple re-tweet from Davos about fair and sustainable development could draw dozens of angry comments about Yara’s contracts with the “fascist” Belarusian regime.¹⁰⁶

On 21 January 2021, a fourth public statement from Yara underlined that their approach of “seeking influence through continued presence” was supported by several Belarusian trade unions, including the Belarus Independent Trade Union (BITU), The Belarus Congress of Democratic Trade Unions (BKDP) and IndustriALL.¹⁰⁷

On the same day, Belaruskali issued a statement that they were ready for long-term cooperation with the Norwegian company on security issues, repeating the message from the 17 December statement that disciplinary measures had been lifted and adding that fired staff could be taken back to work if they presented such request.¹⁰⁸

To outside observers, some confusion of terms arose when in March 2021, the Belaruskali Strike Committee launched a petition, supported by the office of Tikhanovskaya, urging Yara to suspend their cooperation with Belaruskali temporarily. The online petition has collected over 84,000 signatures.¹⁰⁹

The petition acknowledged Yara’s “principled and consistent position regarding the violations of human and worker’s rights” and “is delighted that Belaruskali, one of the biggest businesses in our country, has such a well-reputed partner who is thoroughly committed to corporate responsibility and an ethical approach”. It still appeals, however, that Yara should “temporarily suspend” its cooperation with Belaruskali.

The main arguments provided are that Belaruskali remains under the control of the Lukashenko regime and “has no possibility to do what is right in law and ethics”. It must follow any instructions from the regime. And equally important, revenues from the business are feeding the oppressive machinery of the regime.

While all involved, excluding the Lukashenko regime, saw a democratic Belarus as the goal, these different statements made evident an important split in terms of the preferred approach – independent Belarusian trade unions supporting Yara’s tentative decision to stay, and the Strike Committee and opposition’s preference that the company should temporarily leave.

This points to an additional dilemma concerning likely outcomes and timing of developments in protest situations in authoritarian countries:

• Should an international company stay involved even if its human rights leverage is uncertain in anticipation of positive outcomes of political protests, leading to improved respect for human rights and democratic reforms, or should it instead suspend business partnerships “temporarily”, if feasible?

Lukashenko’s state of mind became evident on 23 May when Belarusian authorities had their air force divert a Ryan Air flight from Athens to Vilnius, forcing it to land in Minsk under the pretence of a bomb threat. It soon became evident that the special operation had been launched to arrest opposition activist and journalist Roman Protasevich and his girlfriend.

Lukashenko had crossed another red line in what many called a “state hijacking”, and the EU responded by stopping European airlines from using Belarusian airspace and banning the country's flagship carrier Belavia.¹¹⁰

Visiting Oslo for a string of meetings with the Minister of Foreign Affairs, the Norwegian Helsinki Committee and the Yara CEO, Tikhanovskaya told Norwegian media on 12 August that Yara should consider their moral obligations and “temporarily stop their cooperation with the regime until changes take place”.¹¹¹ After a meeting with Yara CEO Holsether, Tikhanovskaya repeated her position as expressed earlier in the year, that Yara should “freeze its activity” in Belarus until the rule of law and democracy was re-established and all political prisoners were released.

Holsether stated that the meeting provided him with deeper insights, “that we could have a stronger voice and take further action”, and that Yara would re-evaluate and “make a decision on our further presence in Belarus by December. Meanwhile we will continue to use our position to further drive the workers’ safety and human rights agenda.”¹¹²

On 10 January 2022, Yara announced that it initiated a “Belarus sourcing wind-down due to effects of sanctions on supply chain while continuing safety program and trade union support”.¹¹³ The reason was that “the effects on the supply chain from the current sanctions on Belarus” resulted in the withdrawal of “essential services required to enable potash exports from Belarus”.

In other words, Yara’s decision to leave came about because purchasing the Belarusian potash became too difficult in practical terms. The statement was consistent with earlier statements in underlining the importance of Yara’s efforts to support workers’ rights. According to Holsether, “this is a disappointing development. We remain strongly committed to the safety and well-being of Belaruskali’s workers. Despite the wind-down of potash sourcing, Yara aims to continue the industrial safety program initiated in 2021, in close cooperation with the independent trade union in Belaruskali and in full compliance with applicable sanctions.”

The main arguments

During Belarus's political and human rights crisis, several arguments were presented on why Yara should leave. Yara and others, including the Norwegian Helsinki Committee and the Confederation of Trade Unions in Norway (LO Norway), presented on the other side arguments for why it should maintain its business relationships in the country while promoting human and workers’ rights.¹¹⁴ In the following, the main arguments are presented.

First, a strong argument favouring maintaining business relationships was that Yara’s presence made its human and worker’s rights promotion possible. Yara stepped up its engagement in this regard after the August 2020 fraudulent elections when the country's ensuing political and human rights crisis escalated. It made systematic efforts to improve workplace safety and protect workers’ rights, including participating in peaceful protests, strengthening the role of independent trade unions, and reintroducing a system of Public Inspectors elected by the workers and from the trade unions.¹¹⁵

Beyond the official slogan of “responsibly feeding the world and protecting the planet”, the company considered that it was conquering more and more space in Belarus by pushing for improvements in workers’ rights, fertilising the soil for a strengthened safety culture even beyond its strict sphere of influence.

Yara’s purchase represented 11-12% of Belaruskali’s production, and Belaruskali, in turn, answered for 20% of Belarusian exports. Yara was Belaruskali’s largest private customer. Being associated with a Norwegian company may also have been important to the regime. This afforded Yara some leverage, which they used during Holsether’s visits to Belarus and through comprehensive programs to improve safety.

Several actors testified to the positive effects of Yara’s presence, underlining that it was among the very few, if not the only, company of such a size that engaged in the serious human rights situation and criticised the regime. They confirmed that the company contributed to improved safety work in the potassium mines and effectively defended trade union rights. Yara had comprehensive dialogue with trade unions, civil society organisations, and the Belarusian opposition, including meetings with opposition leader Tikhanovskaya.

It is also worth noting that Tikhanovskaya did not ask Yara to leave Belarus but to freeze its potash purchases until a new regime was in place. Yara, for its part, claimed that such a freeze was not possible and that the only alternative to stay was to terminate contracts and leave the country.¹¹⁶

In this way, the Belarusian opposition and Yara seem to have gotten caught in a situation where they argued past each other, particularly regarding the possibility of “freezing” the business until Lukashenko was removed from power. Tikhanovskaya said that she wanted Yara in Belarus, but “afterwards”.¹¹⁷ Yara representatives appreciated the logic behind the demand but said it is technically impossible to halt its relationship for an indefinite time.¹¹⁸ They believed that Tikhanovskaya’s approach would have been formulated differently had she been aware of the technical challenges involved.

The company considered it a balancing act. It deliberated the effect going out with a “big bang” would have as a statement on the precarious human rights situation in the country but held that leaving would mean that they believed that nothing more could be done to improve the situation or that their presence on the ground was “useless”. Yara did not think that to be true.

When the company finally decided to leave in January 2022, Yara repeated its belief that it is “possible to have a positive and lasting impact on responsible and safe operations in the entire value chain. … We remain ready to support the workers in Belaruskali regardless of the sanctions-related wind-down of our sourcing from Belarus.”¹¹⁹

It should be added that this argument goes well with the emphasis of the UN Guiding Principles (UNGP) on ensuring respect for human rights in a company’s operations as well as in its supply chain. As stated in the commentary to UNGP Article 19, “there are situations in which the enterprise lacks the leverage to prevent or mitigate adverse impacts and is unable to increase its leverage. Here, the enterprise should consider ending the relationship, taking into account credible assessments of potential adverse human rights impacts of doing so.” Yara proved, however, to have leverage and was able to influence the situation in its supply chain positively, although it admitted that it did not achieve “revolutionary results.” It is, however, according to the company, “widely recognised that improving a corporate safety culture” takes considerable time.

Second, an argument was repeatedly presented that Yara provided necessary income for the increasingly repressive Lukashenko regime and should therefore end its purchase from Belaruskali. Belaruskali is the world's largest potash producer, with an estimated share of world production of 20%.¹²⁰ The percentage share of Norway is only 3% in value terms and 3.1% in physical terms. But the share of Yara’s purchase was much more significant since much of the potash it bought did not go to Norway. Belaruskali sold potash to Yara worth $265 million to $289 million in 2020, while its total income from potash was $2.5 Billion.¹²¹

Data on how much Belarus earned from selling potash fertilisers in 2020 indicate that Yara’s share of the total value was 11-12%. According to experts, this was a significant amount for Belaruskali but not critical. Belaruskali would be able to redirect exports to other countries such as Brazil, India, or China. There was also an option to sell the potash to the Russian competitor, Uralchem. “The fertiliser may even be supplied to Yara as if it were Russian”, one expert stated.¹²²

Yara’s argument that if it left, others would fill the void seems, therefore, to be correct. The other part of the argument – that the Lukashenko regime is becoming increasingly repressive and that income from the potash industry is essential in financing repression – nevertheless holds. In May 2021, a group of human rights organisations submitted a communication to the Prosecutor of the International Criminal Court (ICC), documenting that “there is a reasonable basis to believe that the conduct of the Aleksandr Lukashenko regime amounts to a widespread and systematic attack on the civilian population. Its abuses, therefore, constitute crimes against humanity. Since May 2020, the regime has conducted a campaign of violence against the civilian population in a bid to retain power at all costs.”¹²³

Despite large-scale protests by the end of 2020 due to the government’s intense crackdown, the authorities escalated prosecutions against political and civic activists, independent journalists, and human rights defenders. In July 2021, Lukashenko announced a “purge” of civil society, and the authorities shut down dozens of independent mass media outlets and human rights groups. At the end of the year, there were at least 862 political prisoners facing beatings, threats, ill-treatment, and inhumane detention conditions. Close to 30 lawyers were disbarred for representing victims in politically motivated prosecutions and protesting human rights abuses.¹²⁴

In sum, this argument is valid in pointing to the importance of the potash industry for the regime. Still, Yara was right in underlining that its part of the about $2.5 Billion total annual income from the potash industry would be replaced by others. It was likely also correct that those replacing it would be less – if at all – engaged in improving human and worker’s rights.

Third, an argument was put forward, i.a., by Norwegian members of parliament that even if they recognised that Yara’s situation in Belarus included dilemmas, the company should listen to the internationally endorsed opposition leader, Tikhanovskaya, who appealed for the company to leave.¹²⁵

The Norwegian state had direct ownership of 36,2% in Yara, while one of the State’s Pension Funds owned 7,1%. The head of the Liberal party, Guri Melby, therefore asked the Norwegian government to clarify its position on Yara’s engagement in Belarus. “The question of keeping or terminating the contract is clearly a difficult dilemma for Yara. But when the democratically elected president of Belarus in such clear terms asks them to withdraw from the contract, then I think they should respect this view and end the contract”, she stated.¹²⁶

The head of the Christian Democrat party, Olaug Bollestad, also stated that Yara should listen to the Belarus opposition. “It is not sustainable over time to be on a collision course with the democratic opposition in the country”.¹²⁷

In a written appeal to Yara published in Norwegian daily VG on 3 January 2022, Tikhanovskaya underlined that the deterioration of human rights in Belarus continued. In addition, documentation had come forward that the leadership of Belaruskali had played an important role in electoral fraud over several years. “There is solid evidence that all election committees in Salihorsk were at all times chaired by top executives from Belaruskali Production Units. The committees are also filled with employees from the company. Belaruskali's task is to guarantee that Lukashenko wins the election,” she stated. “It is clear that Belaruskali – Yara’s partner – is part of the oppressive regime in Minsk. This is a fact. And financing the regime means financing oppression.”¹²⁸

Even if Yara had made substantial efforts to improve worker’s rights, the overall picture of financial and operational links in falsifying elections between Belaruskali and the repressive regime should compel Yara to reconsider its position in the view of the opposition leader. Thirty-two international companies – including Rolls Royce, Scandia Steel and British American Tobacco – had already decided to leave. Yara should follow suit.¹²⁹

In responding to the appeal, Yara stated that it was true that it could not change the regime but could improve only the conditions for workers in Belaruskali’s mines. – “A small step in the right direction is better than no step at all.” The company had abided fully with international sanctions regulations and conducted extensive stakeholder dialogues dealing with the situation.¹³⁰

At the same time as this exchange took place in Norwegian media, it became known that the Lithuanian government, in light of a new round of US sanctions against Belaruskali, coming into effect on 8 December 2021, was struggling to find a way to cancel contractual obligations of its state railway company to transport Potash through Lithuania for export.¹³¹

In the end, this effect of US sanctions compelled Yara to leave. The potash could no longer be exported through Lithuania.

When the Norwegian government answered Guri Melby, clarifying its position on Yara’s engagement in Belarus, Yara had already informed that it would stop purchasing potash from Belaruskali. On 10 January 2022, Minister of Trade and Industry Jan Christian Vestre spoke in the Parliament, outlining the principles relevant in Yara’s situation of the Government’s relationships with companies in which the state was a shareholder.

“The state as the owner has expectations that companies with a state ownership share are in the front of developing responsible business. Yara has stated that they make continuous assessments of the situation and emphasises that this is a very demanding case with a balance of partly conflicting considerations.

The state's exercise of ownership in Yara and other companies with state ownership is based on a clear division of roles and responsibilities between the owner, the board, and the company’s administration in line with the Norwegian company law. This means that the company's board and administration are responsible for the operation of the company, including assessing the business conditions associated with Belarus.”¹³³

In researching this report, we found no government statement deviating from these principles. The government stated its trust in Yara, striking the right balance between conflicting considerations, underlining that it would be a breach of ownership principles to interfere directly in its decision-making.¹³⁴

The discussion above could be portrayed as a struggle between two approaches, one focusing on weighing consequences in the sphere of influence of Yara staying or leaving, and the other focusing on the contribution of the Belarussian potash industry to repression and a deteriorating human rights situation in the country. Linked to the second approach was also a reference to the importance of ‘messaging’ and ‘the way you communicate your values’: a Western company known for its principled support for human rights should in no way stay with or risk being perceived as staying with a repressive regime.

While human rights groups traditionally put the most weight on arguments belonging to the second approach – referring to the broader context of state oppression and how dealing with state-owned companies provides support for the regime – the UNGP could be read as putting much more focus on how companies operate within their more narrowly understood sphere of influence, i.a., its supply chain and local communities affected by its or partners’ business operations.

The need for balancing these two approaches is one of the main takeaways from the discussion of Yara in Belarus. Without weighing both categories of arguments, one misses out on the complexities of the situations. Regarding consequential or utilitarian perspectives, Yara believed there to be an even broader context to consider. Deciding on whether to stay or leave Belarus had consequences well beyond the relations with Belaruskali and the national context of repression in Belarus.

Potash is an essential nutrient for plant growth and global food production. The mining of potash requires long-term perspectives, as developing a new mine takes several years and requires substantial investments. Contracts in the business are long-term. On this background, Yara noted an adverse effect of Belarus’ isolation. The continued threat of and imposition of sanctions against Belarus had led to an increase in potash prices, something that at least in the short term would lead to more money flowing into state coffers but also to higher food prices worldwide and reduced food security.¹³⁵

Lastly, and geopolitically, to the extent that one considers Russian influence over an isolated Belarus to be a further negative to the growth conditions for democracy, Yara’s withdrawal from the country would not fertilise the soil.

- And how are things otherwise? With the business and all?
- Oh, taking one day at a time. We just made a small investment in Brazil which I hope will pay off.

In the novel “New Earth” (1893), by Norwegian Nobel laureate Knut Hamsun

Before an important de-merger in 2004, Yara and its fertiliser business in Belarus were part of a larger and more well-known parent company, Norsk Hydro.

Soon after the fertilisers were taken out, Hydro Oil & Gas was merged with Statoil in 2006, which in 2018 changed named to Equinor. Hydro, however, retained its engagement in the aluminium industry and is currently the eighth largest aluminium company in the world. Even so, it has only a third of the capacity of the two largest aluminium companies globally, both Chinese. It has half the capacity of the world’s third largest aluminium company, which is Russian.¹³⁶

The Norwegian government owns 34,3% of Norsk Hydro through the Ministry of Trade and Fisheries, while the Government Pension Fund Norway holds an additional 7,7%.¹³⁷ Like Yara’s experience in Belarus, Hydro has faced human rights-related challenges while working abroad but on a different continent. And not due to perceptions of indirect support given to a brutal dictator responsible for widespread violations. Instead, Hydro has been accused of being the source of human rights abuses by causing environmental damage and violating the rights of vulnerable communities in Brazil.

Hydro has over 6070 employees in Brazil, in 11 different locations around the country.¹³⁸

The Mineração Rio do Norte bauxite mine in Trombetas was established in 1970, during a period of exceptional economic growth known as the “Brazilian Miracle”, but also at a time when serious human rights violations were taking place under the military dictatorship which existed in the country from the 1960s until around 1985.¹³⁹

Norsk Hydro made its first investment in a bauxite mine as early as 1974. In 1977, the company established an office in Rio de Janeiro under Hydro Comércio & Indústria Ltda. Hydro’s alumina refinery in Brazil, which it acquired in 2010, is called Alunorte and is in the state of Pará in the north. It is the world’s largest of its kind outside of China.

Looking back on its history in Brazil during an anniversary at the turn of the millennium, Hydro reflected that as a newcomer, the company had been “completely aware of the importance of cooperating with local companies and nurturing relations with Brazil’s producers and importers.”¹⁴⁰

The question today, not 25 but 45 years down the road, is whether the company neglected to also nurture sufficient relations with the local population.

To summarise complex operations in Brazil, a type of rock known as bauxite is extracted from two mines in the country’s north. The bauxite, or “aluminium ore”, is transported from these mines to the Alunorte refinery in Barcarena. It is refined into a chemical compound called aluminium oxide, or alumina. These mounds of white powder are finally transported to the Albras aluminium plant next door, where the alumina is smelted into primary aluminium.

From there, the sky is literally the limit, as the aluminium is processed further and finds its way into everything from beer cans to airplanes.

Allegations of environmental damage

For years before the dramatic flooding in 2018, Hydro’s operations in the municipality of Barcarena were subject to allegations of environmental damage. The bauxite residue deposits were said by social media users to leak, contaminating the surrounding area. This led to inspections by Brazilian authorities.

A short documentary published by Brazil de Fato online newspaper in June 2018 says locals had complained already in June 2003 about the “red mud spill” from Alunorte.¹⁴¹ They saw signs of pollution in the rivers over the years, not just from Alunorte but also from other industries in the area. In the video, many point to rashes and other skin diseases. Locals interviewed say that they have all but stopped fishing in the rivers in Barcarena because the fish and shrimp caught there tastes like “perfume” or “detergent”. A doctor in chemistry, Simone Pereira, is interviewed, saying she has tested the water and found it to contain lead, “and we’ve known about it since 2014”.¹⁴²

In another video report published in December 2020 by Mongabay, residents claim that polluted water in the areas is causing abnormal numbers of stomach cancer and diarrhoea and that birds and other animals can feel the contamination in the fruit and therefore avoid eating it.¹⁴³

Hydro has never accepted that its operations are a source of pollution but concedes that its communication with affected communities was not good enough from the start. According to the company, they gradually built up their Corporate Social Responsibility (CSR) team in Brazil. Since 2016, they have increased its size from 10 employees to more than 25 with subject matter experts in human rights, stakeholder engagement, and social dialogue.

Nonetheless, for several years, news reports about Hydro’s operations in Barcarena and their environmental and social impact drew a negative image, sometimes leaving the reading public with an impression of a powerful foreign company exploiting resources and leaving little or nothing for the local and indigenous population.

A short quote from Hydro at the end of Brazil de Fato’s 15-minute documentary does little to balance the impression: “There is no evidence of long-lasting impact on Barcarena’s rivers and communities”. The quote is the only time we hear Hydro’s perspective, and the quote is immediately contrasted with the company’s soaring profit numbers.

For over a decade leading up to 2018, Hydro and Alunorte were the subjects of lawsuits in Barcarena. According to Hydro’s annual report 2021, there are still unsettled legal issues following the stormwater overflow from the bauxite residue deposits at Alunorte in 2009. In 2012, more than 5,400 claims related to the overflow were filed in the local court. By the end of October 2021, a total of 5035 cases were closed with a favourable decision to Alunorte, and 419 cases were pending decision from the lower Court and/or the Court of Appeal.¹⁴⁴ It generally seems very difficult for plaintiffs to break through with their arguments, the courts finding that there is “no evidence” that they have suffered from spillage of bauxite residue and water contamination.

In short, suspicions had been directed at Norsk Hydro and Alunorte for years without being confirmed by courts before events in 2018 took the matter to a new level.

On 17-18 February 2018, a thunderstorm caused extreme rainfall in the area of Norsk Hydro’s operations, causing water to flood streets, homes, and rain forests near the Alunorte plant, and contaminating drinking water wells.¹⁴⁵ In the aftermath, Hydro claimed that “all relevant inspecting authorities” confirmed that “there were no leaks or overflow from the bauxite residue deposit areas”. The only issue discovered by inspectors was described as being of irrelevant impact, concerning a crack in the sealing of a pipe that was not in use, which led to “very limited” amounts of rainwater escaping the area.

This contrasted with media reports giving voice to claims that Hydro stood accused of “contaminating water, causing diarrhoea and vomiting and poisoning fish and local produce”.¹⁴⁶

While not admitting to having caused any spillage or pollution, Hydro did recognise that they did not “adequately inform the local population” – not in terms of warning of potential pollution, but instead of “not giving them reassurance that they were not affected.”¹⁴⁷

Nonetheless, media reports started claiming Hydro was responsible for polluting drinking water. At this early stage, disagreements about the facts of the matter were evident. The Instituto Evandro Chagas (IEC), a non-profit promoting public health, said they had found high levels of heavy metals in the drinking water. At the same time, Hydro noted that their research showed values acceptable by WHO standards.

A string of lawsuits

Whether or not Hydro’s operations did cause hazardous pollution in the area would become a central point of disagreement between the local population filing lawsuits against Hydro and Alunorte on the one hand and the company and its lawyers on the other. The UN Special Rapporteur on toxics and human rights¹⁴⁸ did not visit Alunorte during his Brazil country visit in 2019. Still, many of his observations may be relevant: “Throughout Brazil, factories and plants are located in unimaginably close proximity to communities, who are subjected to grave infringements of their human rights.”¹⁴⁹

Following the 2018 rainfall, Brazilian authorities imposed a temporary production embargo on Alunorte, leaving it operating at half capacity. While residents filed lawsuits, Hydro underlined in its reports that staff at the plant came out in large numbers to support the resumption of normal operations to “secure value and jobs and Hydro’s contribution to sustainable growth.”

The events led to a renewed string of lawsuits in the Brazilian justice system, as complex as they are numerous. Lawsuits were filed against Norsk Hydro, Alunorte, the Municipality of Barcarena, the State of Pará, and even against the National Institute of Metrology, the Department of Mineral Production, and the Federal Environmental Agency. The plaintiffs were numerous and varied, but an association named Cainquiama was involved in many of the cases appearing between March 2018 and May 2019.

Cainquaima is the short name for the Amazon Association of Mixed Race, Indigenous and Quilombolas, the latter being the term for descendants of enslaved people from Africa who escaped horrific conditions in Brazilian plantations in the hinterland, in so-called quilombos. Over three centuries, Brazil received 40% of all enslaved people shipped to the Americas and was the last nation in the Western world to officially abolish slavery in 1880.¹⁵⁰

Today, poverty and unemployment are endemic in these settlements, including in the villages around Hydro’s aluminium production.¹⁵¹

The Cainquaima association is frequently represented in the media by Maria do Socorro Silva, a local woman with a powerful life story.¹⁵² She has taken on Hydro in leading international media such as The Guardian: “The Norwegians get rich at our expense. They don’t care about our poor and miserable people.”¹⁵³ Or in the Financial Times stating that the Norwegians were the reason, “her grandson died after being born with his intestines outside his body, while others were missing organs or had undeveloped bones.”¹⁵⁴ Socorro even travelled to Norway, where she offered a bottle of water from Barcarena to former Hydro CEO Svein Richard Brandtzæg.

According to Hydro, they had for long-time difficulties meeting with representatives of Cainquaima, who wished to meet only in the court system. This changed in 2022 when Cainguaima and Maria do Socorro Silva started to take part in dialogue meetings with Hydro.¹⁵⁵

The UN Special Rapporteur on toxics and human rights noted in his report after visiting Brazil in 2019: “Indigenous, quilombola and other Afro-Brazilian communities are often the most exposed to toxic pollution, further accentuating their already precarious situations. There is a strong intersection with poverty, and low-income communities in urban centres are also implicated.”¹⁵⁶

Outside of the media storm, Hydro provides a detailed summary of the lawsuits and the legal claims faced by the company in its annual reports. These involve claims that “chemical waste was intentionally discharged” from Alunorte, that deposits were subject to a “fraudulent license”, and that bauxite residue had been “illegally dumped” in an ecological reserve or discharged through “hidden pipes”. Claims were also made that the products used in Brazil are “more toxic than the ones used in Norway”, ultimately preventing locals from sustaining their livelihoods as farmers and fishermen, as well as claims by both labourers and the local population that they experienced severe health problems due to toxic waste from Alunorte and other industries in the area.

As of September 2022, lawsuits are still circulating in the Brazilian legal system, but allegations of such seriousness do not remain in the legal sphere. Regardless of the counterclaims presented by Hydro in the courtrooms and research reports, the fallout from the flooding quickly reached international media.

Although Hydro produced systematic overviews of the situation, including a detailed timeline,¹⁵⁷ dense text hidden away in reports has less impact than headlines in major international newspapers or articles by well-known and respected transparency groups like Global Witness, which wrote about death threats against Maria do Socorro Silva.¹⁵⁸

On 5 February 2021, the London-based law firm PGMBM filed a group-action lawsuit against Hydro in the District Court of Rotterdam in the Netherlands¹⁵⁹ on behalf of 9 persons and the Cainquiama association, which has 11,000 members.¹⁶⁰

Today, Hydro admits that they underestimated the conflict potential between the company and the local population before the crisis. They were not sensitive to societal conflicts, which included a low level of trust in weak institutions. In addition, Barcarena is characterised by high crime rates and is located on the smuggling route out of Brazil. The area is complicated demographically, as it consists of different communities with differing needs, wishes and historical backgrounds.

30% of the population has no access to clean water. Given a lack of relevant education among the locals, the plants were operated by personnel from the outside, creating more friction.¹⁶¹

The dilemmas

Hydro’s main challenge in Barcarena was not that political opposition and civil society demanded it to leave. The company was instead faced with a somewhat paradoxical combination of deep mistrust and exceedingly high expectations that it would fill the void of weak institutions and local government, which could not provide basic services to the population.

Like Yara in Belarus, Hydro experienced that Pilar I of the UNGP was not in place. Neither local nor national authorities invested in sufficient measures to ensure the fulfilment of the human rights of the local population. However, there were also significant differences, such as the violated human rights being economic and social rather than civil and political. The main problem with authorities may also have been the inability to fulfil rights, rather than blatant disrespect and unwillingness, as in Belarus.¹⁶²

According to international evaluations, Brazil is “a democracy that holds competitive elections, and the political arena, though polarised, is characterised by vibrant public debate. However, independent journalists and civil society activists risk harassment and violent attack. The government has struggled to address high rates of violent crime and disproportionate violence against and economic exclusion of minorities. Corruption is endemic at top levels, contributing to widespread disillusionment with traditional political parties.”¹⁶³

Like Yara in Belarus Hydro faced complex dilemmas, which it is still struggling to tackle. But in the end, the company benefitted from Brazil being a more open society, courts being more independent, and lack of other characteristics of authoritarian playing fields.

Among the complicating factors was that even though Hydro had a long history of business activities in Brazil, its engagement in the north of the vast country was new. When it bought ownership in Alunorte from a big Brazilian mining company, Vale, in 2010,¹⁶⁴ it was informed that relationships with local communities were overall good. Over time it turned out, however, that the local communities had little knowledge about the Alunorte operations and their consequences, according to Hydro.¹⁶⁵

In general, Hydro invests substantially in local communities where its business activities are located. According to the company, “we always focus on taking care of local communities. That is our tradition. We entered Brazil with the same attitude, but we did not know enough about the conflicts in the society, the low trust in institutions, and the weakness of those institutions.”¹⁶⁶

There are about 127 000 inhabitants in the Barcarena municipality.¹⁶⁷ Fishery and agriculture are the main occupations, while Hydro is the largest employer, with several thousand employees. However, many employees are not recruited locally because it is hard to find persons with sufficient competence. Hydro is seen as the strongest actor in the area, resulting in many demands from the local community.

The February 2018 incident created a problematic situation. Due to the heavy rains, partially treated rainwater from the refinery area was discharged into the Pará river. Monitoring of the river at the time showed, however, that pH and turbidity limits remained within the relevant permit limits even during this (unlicensed) discharge. Hydro maintains that “there were no leaks or overflow from the bauxite residue deposit areas. This was confirmed on-site by all relevant inspecting authorities, and later confirmed by relevant authorities in public hearings, including in a congressional hearing in Brasilia on 15 March.”¹⁶⁸

But even if independent investigations confirmed Hydro’s claims, the local population did not believe them. The media reported that previous leakages from the dam had led to significant damage to the environment, and pictures were circulated of water allegedly escaping from the landfill, leading to further suspicions. According to Hydro, the research they had been involved in documented only short-term damage. Pictures of water allegedly escaping from the landfill circulated in the media, but the photos were taken inside the Alunorte compound, and canals led the water to the cleaning facilities.¹⁶⁹

The main dilemma resulting from the situation was:

• Due to the long-ingrained mistrust, Hydro had to invest substantially in proving that they did not fit the picture of greedy Norwegians that did not care about the wellbeing of the local population and the environment. It was not enough to win cases in the courtroom and prove that Hydro operations and installations did not cause environmental degradation. They had to support infrastructure development on the ground while ensuring they did not take over the authorities’ role.

According to Hydro, the company could “be a catalyst to start processes. We have been committed to contributing financially to sustainable initiatives for ten years. The municipality now sees that this is a win-win. We also contribute to platforms for dialogue and more resources and bring in other major players who contribute resources (like USAID).”¹⁷⁰

Another dilemma was how Hydro could communicate its values and principles while constantly being accused of being guilty of local pollution that harmed both the environment and people.

• Hydro’s “goodwill” measures were interpreted as acceptance of responsibility for environmental degradation. National authorities and politicians entered the blaming game against the company, and it became a widely believed narrative in Brazil that Hydro had polluted. When Hydro CEO at the time, Svein Richard Brandtzæg, came to visit in early March 2018, it was rather interpreted as Hydro accepting responsibility than signalling the company’s willingness to address the broader problems caused by the rainfall, weaknesses in the authorities’ response, and the overall issue of lack of essential services provided to the population.

Lawsuits against the company will continue to nurture a negative image of Hydro and negative coverage in local, national, and international media.

• Even if the company wins in the courts, this may not help Hydro to overcome the negative narrative that it is a significant foreign actor that can win due to its size and financial muscles. The company may be portrayed as a major international player who always gets its will, even though this is not based on reality.¹⁷¹

The way forward

Being determined to stay in Alunorte and continue developing its operations there, Hydro has initiated a range of long-term measures to help develop the community and build trust with the local population. It has established the Sustainable Barcarena Initiative, “a platform for sustainable development funded by but independent from Hydro”. Hydro has committed NOK 250 million through the platform to local community investments.¹⁷²

In 2019, the company established the Hydro Sustainability Fund, “a non-profit organisation created to promote sustainable development and support community-based projects, following the guidelines outlined within the scope of the Sustainable Barcarena Initiative”. The fund finances projects that may contribute to sustainable development based on local needs. It is financed by Hydro, Albras and Alunorte and has a 10-year investment commitment of NOK 250 million.¹⁷³

Part of the approach is frequently meeting the local population to provide information and engage in dialogue. Annually, several hundred such meetings take place. Community leaders and other representatives from the communities have visited Alunorte to better understand the operations. Hydro also supported the establishment of a technical school with 1200 students to increase local hiring of staff.¹⁷⁴

In conclusion, even though Hydro faced complex challenges and dilemmas related to its operations in Barcarena, the possibilities for addressing them were better than in Yara’s situation in Belarus. Belarus is a brutal autocracy, while Brazil is a functioning democracy, although its flaws and a dictatorship-admiring far-right president, Jair Bolsonaro, create fear that tyranny may come back.¹⁷⁵ Hydro seems never to have doubted that it would be able to stay in a way that is in line with the company’s stated principles and values. Time was on its side.

Even though the playing field in Barcarena entailed difficulties for Hydro in terms of lack of popular trust, widespread poverty, inadequate public services, a “blame game”, and “politicisation” concerning the environmental problems in the area, it did not entail some of the characteristics of authoritarian playing fields. It was enough for the company to address the issues within its sphere of influence locally; it did not need to include the consequences of feeding an authoritarian government in its human rights deliberations, as Yara was constantly challenged to do in Belarus.

While Yara in Belarus was able to improve work conditions and safeguard other critical human rights of workers and local communities around the mines, it could not influence the overall human rights situation of the country. Hydro was not expected to do that in Brazil and could focus on local issues around its plant. In the end, it may come out strengthened and with a model of dealing with local problems that inspires respect and become an example.

'George Orwell,' I repeated - 'the author of Nineteen Eighty-Four.' The old man's eyes suddenly lit up. He looked at me with a brilliant flash of recognition, slapped his forehead gleefully, and said, 'You mean the prophet!'

Emma Larkin, “Finding George Orwell in Burma”

Telenor is Norway's sixth largest company by turnover.¹⁷⁶ It is partially state-owned but to an even larger degree than Yara and Hydro, with the Norwegian Government owning 56% of the company.

Telenor operates in broadband, TV, and mobile telephony in the Nordic countries but is also a prominent actor in Asia. Over the past few years, Telenor has withdrawn from some Eastern European countries, such as Serbia, Hungary, Montenegro, Bulgaria, and most recently, Russia and Ukraine. At the same time, it has strengthened its presence in several Asian countries.

Telenor entered Myanmar in 2013, during a period of reforms welcomed by Western governments and businesses eager to enter the market. Before starting up, it conducted pre-entry due diligence,¹⁷⁷ engaging with civil society and representatives of ethnic groups in the country and conducting stakeholder dialogue. “We built a big network in the country, which proved important after the 2021 military coup”, according to Telenor.¹⁷⁸

Eight years later, following the coup, the company announced its decision to withdraw. Telenor retains large operations in countries like Thailand, Malaysia, and Bangladesh, but Myanmar is a closed chapter. The company’s decision to sell its operations was met with strong criticism from the local and international human rights community and Myanmar’s exiled political opposition.

In some ways, the criticism of Telenor in Myanmar was the opposite of what Yara went through in Belarus. While democracy activists in Belarus urged Yara to leave and accused the company of being in cahoots with dictator Lukashenko, many activists in Myanmar demanded that Telenor stay and oppose the new regime and support the opposition. Others demanded Telenor leave, but when it became known that Telenor Myanmar would be sold to a “dodgy” Lebanese investment firm, M1 Group, this was portrayed as a “further nail in the coffin” for freedom of expression and privacy in the country.¹⁷⁹

“Something everyone in Telenor is proud of”

Today’s Myanmar is very different from the country that Telenor entered with support from the Norwegian government in 2013. At the time, Myanmar had just started what, in hindsight, was a short period of transition to democracy after the military accepted holding parliamentary elections and the country embarked on a period of liberalisation. The country had been under military rule since 1962 but started in 2011 to implement political, economic, and administrative reforms to improve its international standing. Tens of thousands of prisoners were released under a series of amnesties, including several prominent political prisoners. Authorities also made promises to end forced labour and other pressing human rights issues and to combat corruption. While serious human rights challenges remained, developments in Myanmar over the past decade were met with “cautious optimism” both inside the country and internationally.

In 2013, at a relatively early stage in the reform period, Telenor was awarded one of two contracts for developing telecommunications in Myanmar, receiving its license the following year. The signing of a nationwide telecommunications license agreement with the Myanmar government occurred on 30 January 2014. As Gunn Wærsted, Chairperson of Telenor’s board, put it, “[t]he development of Telenor Myanmar from 2014 is something everyone in Telenor is proud of, and it enjoyed strong support from Norwegian politicians.”¹⁸⁰ In a relatively short time, Telenor Myanmar built an industry from scratch. “We have never built a network so fast and become profitable in such a short time”, according to the company.¹⁸¹

In the November 2020 general elections, the National League of Democracy (NLD), led by Aung San Suu Kyi, won by a landslide, achieving a clear majority in Myanmar’s Assembly of the Union. Angered by the defeat of the military-backed Union Solidarity and Development Party (USDP), the Armed Forces declared the election results illegitimate. On 1 February 2021, a military coup d’état began unfolding.¹⁸²

The coup was widely condemned internationally as an attack on Myanmar’s transition toward democracy. The Norwegian government condemned the coup, urging “military leaders to adhere to democratic norms and respect the outcome of the elections.”¹⁸³ Telenor also publicly expressed concerns about the worsening situation in Myanmar during the period following the coup.¹⁸⁴

As of September 2022, the Assistance Association for Political Prisoners (AAPP), a human rights organisation focusing on Myanmar, said 2272 people had been killed by the military since the coup, while over 15,000 had been arrested. More than 12,000 remained in detention.¹⁸⁵

“The power of the rifle prevails”

The coup was carried out by detaining the leaders of the NLD and other civilian officials, including Aung San Suu Kyi and President U Win Myint, cabinet ministers, the chief ministers of several regions, politicians, writers, and activists. It was announced on the military Myawaddy TV station, citing the 2008 Constitution, which allows the military to declare a national emergency. As the military seized infrastructure control, they also suspended most television broadcasts and telephone and internet access in major cities.¹⁸⁶

In July 2021, Telenor announced that it had entered into an agreement to sell Telenor Myanmar to M1 Group for about 100 million euros. Telenor had earlier booked a loss of about 730 million euros after seeing its mobile business in Myanmar severely restricted following the coup.¹⁸⁷ Reactions to the sale announcement were unusually strong, both in Norway and internationally. As a Norwegian media outlet put it, Telenor was “carpet bombed with criticism”.¹⁸⁸

At the core of the matter for civil society was the military regime’s demand for access to personal metadata from Telenor. According to Myanmar Now, an online news outlet, the junta-controlled Ministry of Transport and Communications (MOTC) made at least 200 requests over a one-year period for information, including records of calls, call locations and the last known location of a number. In commenting on why Telenor abided by these requests (which it later specified to have been 153), the company underlined that “[v]iolating or not complying with directives issued under the existing legal framework would have severe and completely unacceptable consequences for our employees.”¹⁸⁹

However, the red line for the company was that it became clear in May-June 2021 that the military would not accept that it did not activate equipment for lawful intercept. This equipment is commonly used to investigate crime and allows law enforcement to request real-time access to the content of communications, traffic data, and location information, i.e., information on the location of mobile terminals or phones.¹⁹⁰

Most countries require licensed telecommunications operators to provide their networks with legal interception gateways and nodes for the interception of communications. In democratic countries like Norway, there are regulatory frameworks restricting police or security services’ access to such interception, including by requiring court orders in the investigation of serious crimes.

Myanmar’s parliament had failed to put such a legal framework in place, and Telenor refused to activate the equipment. In September 2021, Telenor stated, “… as a legal and regulatory framework that safeguards our customers and adheres to fundamental human rights and international laws is not in place in Myanmar now, operating such equipment in this situation would constitute a breach of our values and standards as a company.”¹⁹¹ Interception equipment had also been under EU and Norwegian sanctions since 2018.

Under the new military rule, and due to more threatening actions against its employees, Telenor concluded that it could not continue refusing to activate the equipment: “We would not be able to resist activating the monitoring system, which provides for the authorities in real time to hear content and know where someone is when they speak.”¹⁹²

In a response to criticism of its decision to sell its operations, Telenor stated on 13 November 2021:¹⁹³

At Telenor, we live by our Code of Conduct and operate with the same ethical business standards across all our operations. Developments in Myanmar since the military took power on 1 February, unfortunately, mean that it is no longer possible for us to adhere to these standards, keep our employees safe and at the same time remain as an operator in Myanmar. It has also become clear that Telenor’s continued presence would require Telenor Myanmar to activate intercept equipment... Ultimately, this conflict between local and international law and human rights principles made a continued presence in Myanmar impossible for Telenor Group.

The sale of Telenor Myanmar to M1 Group, would allow for continued employment for our 750 employees, and access to service with a fourth operator, for 17 million subscribers, as well as essential industries such as hospitals and banks. This decision was not motivated by financial or strategic objectives.

In short, Telenor decided to leave since it deemed it could not protect its customers from the military rulers without risking the safety of its employees. It would not be able to uphold its code of conduct, including respecting human rights and EU and Norwegian sanctions, in a situation where “the power of the rifles prevails”.¹⁹⁴ Telenor CEO Sigve Brekke summarised the situation by referring to “three reasons why we think a sale is necessary: it is the safety of our employees, but also the regulatory conditions and also that there is good compliance.”¹⁹⁵

On 18 March 2022, Telenor announced that the government of Myanmar had approved the sale of Myanmar Telenor. On 25 March 2022, Telenor confirmed the sale had been completed with significant financial loss.¹⁹⁶

The dilemmas

While Telenor considers that the company carried out thorough due diligence procedures ahead of its engagement in Myanmar and that its entry into the market was “applauded”, the situation quickly deteriorated after the coup. In conversations with the Norwegian Helsinki Committee, Telenor described technological and moral dilemmas without any clear positive outcomes.

First, as mentioned above, at the core of the concern among Telenor and civil society in Myanmar was the handing over of metadata and the possibility of lawful intercept of mobile traffic, a function allowing authorities to listen in on conversations in real-time and to see where a person is located geographically.

In authoritarian states or military dictatorships, the possibility is misused to survey political opposition and democracy activists that the regime considers a threat.

• In accepting interception in its network, Telenor could eventually be accused of complicity in gross human rights violations. Telenor’s dilemma resulted from the risk that democracy activists could be targeted if their metadata was transferred into the hands of the military regime or if the regime would listen in to their mobile conversations.
• Denying requests by the regime would, however, be in breach of Myanmar’s laws, putting its employees at risk of arrests, mistreatment and even killings by a notoriously brutal military regime.
• Telenor’s choice was, therefore, between the risk of becoming complicit in human rights violations against customers if it gave in to the requests of the military regime or, if denying access, risking its staff being arrested and subject to mistreatment. The military rulers in Myanmar declared a state of emergency, with extensive use of martial law and a lack of due process. Telenor employees in data centres (under martial law) opposing a direct order from the military risked being shot and killed.¹⁹⁷

Telenor had refused demands to enable lawful intercept until May-June 2021, when they realised that further refusals would pose an unacceptable danger to their staff. To avoid becoming complicit in human rights violations or risking the safety of its staff, the company decided to withdraw.

Second, by deciding to sell Telenor Myanmar to M1 Group, the company faced another dilemma. Activists demanded that Telenor delete metadata before transferring the business to its new owners. The Minister for Telecommunications, Information and Technology in the exiled National Unity Government wrote a damning op-ed in the Norwegian daily Aftenposten entitled “Telenor has failed Myanmar”. In the article, he accused the company of putting the lives of democracy activists in danger. “It is deeply irresponsible and difficult to understand.”¹⁹⁸

Telenor argued, however, that deleting metadata could not be done without endangering the company’s employees. In a statement, Telenor explained, “Some players have said they understand that we have to leave the country but have asked us to close the operation and delete data, or to delete data before we transfer the business to the new owner. We cannot do this without exposing our employees to significant danger – it can have unacceptable consequences if we do not respond to direct orders or local law enforced by the military authorities.”¹⁹⁹

Adding to the pressure on the company, the Norwegian Forum for Development and Environment, a network of about 60 Norwegian civil society organisations, reported Telenor to the Norwegian police for complicity in crimes against humanity, such as the arrests, torture, or executions of customers due to handing over metadata.²⁰⁰

A Norwegian expert on international criminal law, Hanne Sophie Greve, told the media that she feared Telenor could become complicit in crimes against humanity: “The military dictatorship in Myanmar acts so brutally that there is reason to fear that it commits crimes against humanity. It is claimed that people in Myanmar have been arrested, tortured, and killed as a result of Telenor handing over sensitive telecommunications data”. If the company in this situation sells itself out of Myanmar in a way that means that the military dictatorship gets access to telecommunications data for Telenor's around 17 million subscribers, "the company could, in the worst case, risk being held responsible for complicity in crimes against humanity.”²⁰¹

In February 2022, Myanmar’s exiled unity government sent a letter to the Norwegian Prime Minister requesting that the Norwegian government stop the sale of Telenor Myanmar. Even some of Telenor Myanmar’s staff asked for the deal to be stopped.²⁰² Norwegian Parliamentarians also raised concerns. Jan Christian Vestre, Minister of Trade and Industry, responded, “as an owner in a telecommunications company with operations in Myanmar, we cannot stop the transfer of metadata. This is a difficult answer to give, but it’s a straightforward and honest answer. The company tells [the Norwegian government] that they had to choose between alternatives that could all have serious consequences. The sale of Telenor Myanmar may have consequences for Norway’s reputation abroad, but so would the other alternatives. This is not a simple matter.”²⁰³

Telenor’s CEO defended the decision, saying it was the company’s “most difficult challenge ever. The deteriorating situation and conflict with our values, Norwegian law, and international law made Telenor’s continued presence in Myanmar impossible. I am proud of the impact we have created through delivering communication services to the people of Myanmar and devastated that the story has ended here. Our thoughts are with the people of Myanmar.”²⁰⁴

Human rights organisations devoted to Myanmar say they cannot verify whether metadata from Telenor has led to arrests, imprisonment, or other reactions against democracy activists, as this information is not made public by authorities.²⁰⁵ There are several other factors, though, that may correct the picture somewhat. In general, the police and not the military requests access to metadata. The military coup may also have a limited effect on the use of metadata because the amount of data is vast. Finding what one searches for among the enormous number of recorded connections is difficult. In addition, democracy activists have switched to encrypted communication and use several sim cards to avoid being targeted. They know the danger of being intercepted while communicating online or using mobile phones and can take precautions.²⁰⁶

Third, the fact that Telenor, during its engagement in Myanmar, became known for its high ethical standards and transparency, for instance, by publishing directives it received from authorities until this became too dangerous for the employees, may also have contributed to the strong reactions against the company when it decided to withdraw.²⁰⁷ When it entered Myanmar, Telenor had “a clear ambition to support the country in its progress towards democracy and economic development”.²⁰⁸ Telenor supported educational and other projects to support development in the country.²⁰⁹

In this way, the company may have heightened expectations. Telenor was the only European telecom actor and may have been perceived as a guarantor of privacy and fundamental freedoms in ways no business actor can deliver on.²¹⁰ As we have seen, the OECD and UN guidelines do not request companies to breach national laws to safeguard human rights. But this was precisely what some democracy activists and international commentators demanded. It may be argued that a company must do its utmost to avoid aiding and abetting international crimes, but this was precisely what the company wanted to avoid by selling its operations. In all its communications, it underlined that it was bound by its code of conduct and international law. When developments in Myanmar meant it could no longer abide by these standards, it decided it could no longer operate there.

This dilemma may be formulated in several ways:

• Companies that adhere to high ethical standards during difficult circumstances may create unfulfillable expectations that they will function as guarantors against abuse and fight with repressive governments in almost activist ways. Since other telecom companies in Myanmar had ties to the military or operated without the same ethical standards as Telenor, the company, in the end, was judged hard when it decided it could not live up to its standards and had to withdraw.
• Based on its hierarchy of principles, including the top priority that no employee should have to sacrifice life or health, Telenor could not be open about the reasons for its decisions.²¹¹ If it deemed disclosure of information could jeopardise the safety of its staff, it had to keep silent instead of providing full explanations. Winning the argument was thus not priority number one, even if it could weaken the credibility and hurt the image of the company. According to Gunn Wærsted, Head of Telenor’s Board, “[e]ven now that the sale of Telenor Myanmar has been completed, there are trade-offs that we still cannot be open about. Simply because we fear reprisals against 730 employees who are still working in Myanmar, and who do not have the opportunity to leave the country.”²¹²
• Based on the bad experiences of companies with high ethical standards that become the target of hard accusations to the contrary while striving to tackle dilemmas, we may end up with such companies staying away from authoritarian or otherwise difficult playing fields. This may be an unwanted outcome of an otherwise positive development of companies investing more in respecting international human rights standards.

The way forward

While withdrawing from Myanmar in March 2022, Telenor has still to close its Myanmar chapter completely. The company is processing its experiences to learn from them and possibly avoid similar dilemmas in the future to occur.²¹³

The Committee Seeking Justice for Alethankyaw (CSJA) has complained Telenor to the National Contact Point for Responsible Business Norway (NCP) for “an incident where an inactive mobile tower owned and operated by a vendor to TML, was used in a military operation to kill and drive out unarmed civilians from Alethankyaw in Rakhine State in Myanmar in August 2017».²¹⁴ The NCP found, however, that “Telenor has not caused or contributed to the misuse of the mobile tower”. It should though have conducted stakeholder dialogue with the most vulnerable groups after the military operations, in this case, the Rohingya. “The NCP recommends Telenor to prioritise the most vulnerable groups in future stakeholder engagement.”

The overall assessment by the NCP must have been a relief for Telenor:

The NCP has determined that Telenor in general sought to respect human rights and carry out due diligence in accordance with the OECD Guidelines. There were several positive features in Telenor’s efforts to identify, prevent and mitigate human rights risks and communicate about these in Myanmar. Human rights policies were included in contracts with vendors and business partners and followed up. Telenor engaged with stakeholders in Myanmar and internationally.

A second complaint to the NCP on Telenor’s withdrawal from Myanmar is still pending.

The human rights situation in Myanmar remains dire. In March 2022, the UN High Commissioner for Human Rights released a report urging the international community to take “concerted, immediate measures to stem the spiral of violence”.²¹⁵ The call did not prevent further deterioration. In June, the UN Special rapporteur for Myanmar sounded the alarm over the junta’s decision to enforce death sentences.²¹⁶ On 25 July, the military went through with the execution of four democracy activists, with more executions expected to follow.²¹⁷

Telenor was then right in deeming it could not stay in Myanmar and, at the same time, uphold its values and principles. Whether it should have remained regardless is still a controversial issue.

However, it is little doubt that the company tried its best to tackle dilemmas according to its principles and values.