Burma Across the Threshold
Image Credit: Brendan Nicholson

Burma Across the Threshold


Aung San Suu Kyi’s participation in by-elections for Burma’s new parliament, her sweeping win, and the government’s endorsement of the result have completed a sea-change in the country’s politics – and as a result, its relations with the Western world, including Australia.

Events have moved quickly since President Thein Sein, a former army general and prime minister in the previous military regime, moved quickly to show his bona fides after taking office last April in the aftermath of tightly controlled elections:

— Thein Sein’s direct dialogue with Suu Kyi drew her into political participation under the Constitution she had earlier rejected.

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— Truces were negotiated with many of the 11 armed ethnic insurgent groups, culminating in this month’s visit to Yangon by leaders of the Karen National Union.

— The controversial Myitsone hydro- electric scheme being built by a Chinese- led consortium on the upper Irrawaddy was suspended.

— Large groups of political prisoners have been released, including leaders of the 1988 student uprising.

— A plan to open up the economy has seen the first major step with adoption of a market-based exchange rate.

— The April 1 by-elections have been judged free and fair, the wins by Suu Kyi and nearly all of the other National League for Democracy candidates ratified.

The simple paradigm of a revered democracy advocate holding out in her enforced isolation against a brutal, reform-resistant military now needs to be abandoned. The outside world must engage with a more complex political situation, judiciously supporting reformers and good policy in both government and opposition.

Only three days after the by-elections, the United States announced a substantial easing of its political and economic sanctions. It will send a new ambassador, expected to be President Barack Obama’s special Burma envoy Derek Mitchell, to fill a post left vacant in protest since the former military regime annulled the 1990 election won by the NLD.

The United States’ $35 million aid program will be formalized and extended through a new office in the embassy and Washington will be more ready to approve World Bank and United Nations development projects. Government leaders and officials seen as positive reformers will be allowed to travel to the United States, and even invited.

The biggest impact will come from the lifting of barriers in the U.S. financial system to clearance of transactions involving parties in Burma. These have not only blocked payments routed through American institutions or in U.S. dollars, but inhibited third-country banks through fear of attracting U.S. Treasury penalty.

As a result, visitors will be able to use their credit cards to pay for hotels, domestic air travel and other expenses inside Burma, avoiding the present need for large amounts of hard cash. Exports of commodities priced in U.S. dollars will no longer need indirect payment through a third-country currency, which shaves up to 4 percent off earnings.

The Americans are also selectively lifting their ban on investments in Burma. Tourism, agriculture, banking and telecommunications are favored sectors, unlike extractive industries such as ruby mining and timber, which are beset with illegality and located in areas of ethnic conflict zones.

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