Conditions in Burma and U.S. Policy Toward Burma for the Period March 28, 2004 - September 27, 2004

Released by the Bureau of East Asian and Pacific Affairs
September 29, 2004

Introduction and Summary

Prospects inside Burma for political change, improved human rights, and economic reform continued to decline over the past six months. The aftermath of the violent, junta-instigated May 2003 attack against democratic opposition leader Aung San Suu Kyi and her supporters dimmed hopes for any meaningful political dialogue and national reconciliation. Although the junta allowed the National League for Democracy (NLD) to reopen its party headquarters in Rangoon, all other NLD offices throughout Burma remained closed. Senior NLD leaders Aung San Suu Kyi and U Tin Oo, detained since May 2003, remained under house arrest and the government refused to investigate the attack. The Government of Burma (GOB) continued to arrest people for taking part in peaceful political activities and over a thousand persons remained jailed for their political beliefs. The ruling State Peace and Development Council (SPDC) continued to ignore international calls for national reconciliation and the establishment of democracy by promoting its own seven-step "road map" to a "genuine and disciplined democratic system." In May, the junta reconvened a National Convention, adjourned since 1996, to complete the drafting of a new constitution. However, the SPDC handpicked pro-junta delegates to attend the Convention, declined to allow the participation of the majority of individuals elected in 1990, failed to include the democratic opposition, and prohibited free and open debate. The junta failed to set a timetable for taking subsequent steps on its "road map," including an oft-promised transition of power to an elected government. The SPDC and the Karen National Union (KNU) maintained a temporary cease-fire, but the junta postponed negotiations while the National Convention was in session from May to July and the two sides have yet to formalize an end to over five decades of armed conflict.

The United States continued to consult with countries in the region, the European Union and other interested parties to maintain pressure on the Burmese junta to make progress toward a political transition. In 2004, the United States renewed sanctions imposed after the events of May 2003. They included a new import ban and a prohibition on the provision of financial services. In 2003, the EU broadened the scope of its freeze on assets and visa restrictions; Canada imposed visa restrictions; and Japan froze new development assistance to the junta (although Japan is now providing assistance to some humanitarian projects). No other country has adopted the economic sanctions imposed by the United States.

The SPDC’s dismal economic policies have resulted in widespread poverty and the flight of most foreign investors. The latest U.S. economic sanctions led to the closure of garment factories that had relied on exports to the United States. In addition, sanctions caused the Burmese to rely more on Euros than on US dollars for foreign exchange. The Burmese government’s reversal in January 2004 of a ten-month old rice liberalization policy remained in effect, including a ban on all exports of rice and other staple commodities. The 31-country member Financial Action Task Force (FATF) maintained countermeasures on the GOB for its failure to enact mutual legal assistance legislation that meets international standards. Most countries require additional transaction reporting requirements and the U.S. bans correspondent relations with Burmese financial institutions.

The SPDC continued to abuse severely the human rights of its citizens. Freedom of speech, press, religion, assembly, and association remain greatly restricted. Burmese citizens are not free to criticize their government. Egregious abuses of ethnic minority civilians by the Burmese military including rape, torture, execution and forced dislocation continued. Forced labor, trafficking in persons, and religious discrimination remained serious problems. In September 2004, the State Department again designated Burma as a Country of Particular Concern for "particularly severe violations of religious freedom."

Immediate U.S. policy objectives in Burma are the release of Aung San Suu Kyi, U Tin Oo, and other NLD officials and members; the release of all political prisoners; the re-opening of all NLD party offices and the start of a genuine dialogue on democracy and political reform. Overall U.S. policy goals include the establishment of constitutional democracy, respect for human rights and religious freedom, the repatriation of refugees with monitoring by UNHCR, the return home of internally displaced persons (IDPs), cooperation in fighting terrorism, regional stability, a full accounting of missing U.S. servicemen from World War II, combating HIV/AIDS, eliminating trafficking in persons, ending forced labor, and increased cooperation in eradicating the production and trafficking of illicit drugs.

The U.S. will continue to urge other nations to use sanctions and diplomacy to press the junta to release Aung San Suu Kyi, U Tin Oo, and all political prisoners and to allow all political parties to operate. The U.S. also encourages all countries with a major interest in Burma, particularly Burma’s immediate neighbors such as China and India, ASEAN members, and Japan, to use their influence to convince the government to undertake immediate steps on political reform and human rights. We will continue to urge the international community to support the UN Secretary General in his efforts to start genuine talks on a political transition in Burma and to support UN efforts to improve the dismal human rights situation.

I. Measuring Progress toward Democratization

Burma’s pro-democracy movement continued to face severe repression following the May 2003 junta-sponsored attack on Aung San Suu Kyi and her supporters. Although the junta allowed the NLD to reopen its party headquarters in Rangoon on April 17, NLD offices countrywide remain shuttered. Aung San Suu Kyi, the Nobel Laureate General Secretary of the NLD, and U Tin Oo, the party’s Vice Chairman and a former Minister of Defense, remain under house arrest. On April 13, authorities released NLD Chairman U Aung Shwe and NLD Spokesman U Lwin after ten months under house arrest.

Due to the efforts of UN Commission on Human Rights Special Rapporteur Paulo Sergio Pinheiro, and pressure from the United States and other members of the international community, the SPDC released from prison the other individuals arrested in direct connection with the government’s May 2003 attack on the NLD. However, the government has subsequently re-arrested several of them. Many activists rounded up in the aftermath of the May 2003 attack languished in detention without trial and over 1,300 long-term political prisoners remained in prison, including individuals who had completed their original sentences.

U.S. officials persistently requested meetings with Aung San Suu Kyi and U Tin Oo; however, the government prohibited U.S. and other diplomats in Burma from visiting either of the detained democracy leaders. The UN Secretary General’s Special Envoy Razali Ismail, Pinheiro, and representatives of the International Committee of the Red Cross (ICRC) saw Aung San Suu Kyi on several occasions. However, the government has denied the two UN envoys an opportunity to return to Burma since Razali visited Rangoon in early March 2004 and Pinheiro visited in November 2003.

On July 7, U.S. import restrictions contained in the Burmese Freedom and Democracy Act of 2003 were renewed. President Bush stated that the United States "will maintain pressure on the regime until there is tangible progress toward the restoration of democracy and protection of human rights for all the peoples of Burma" and that "America will remain steadfast in seeking freedom for the Burmese people." The President called on other concerned nations to join the United States in pressing the junta to live up to its commitments to restore full democracy and human rights to the people of Burma.

Following the strengthening of U.S. sanctions and increased international pressure over the junta’s repression of the pro-democracy movement, the Burmese government announced in August 2003 its seven-step "road map for democracy," a plan that rehashed old promises for a transition of power and offered vague plans to draft a new constitution and hold elections. On May 17, the junta reconvened a National Convention, adjourned since 1996, as the first step of the "road map" purportedly to draft a new constitution. However, the SPDC handpicked pro-junta delegates to participate in the Convention, refused to allow the participation of the majority of individuals elected to Parliament in 1990, and prohibited free and open debate.

The NLD expressed its strong desire to join the National Convention, and made numerous concessions to the junta, but the SPDC refused to release NLD leaders or to allow the party to reopen offices, thus failing to create conditions that would permit the democratic opposition (the NLD as well as pro-democracy ethnic groups) to participate freely. The Convention adjourned in July, with no tangible results. In August, UN Secretary General Kofi Annan released a statement that, "the National Convention does not currently adhere to the recommendations made by successive resolutions of the General Assembly" and that, without the NLD and other political parties, "the National Convention and the roadmap process will be incomplete, lacking in credibility, and therefore unable to gain the full support of the international community, including the countries of the region." The junta did not set a timetable for subsequent steps in the "road map.

On June 26, three small bombs exploded and four were disarmed at the main Rangoon train station. The GOB blamed exile opposition groups for the incident, as it has done in response to similar events in the past, but provided no convincing evidence.

During the past six months, the SPDC continued to seek support from countries in the region for its "road map to disciplined democracy." Prime Minister General Khin Nyunt traveled widely throughout the region, including trips to China and to ASEAN countries. In December 2003, the Thai government invited the Burmese Foreign Minister to "explain" the SPDC road map to officials from selected Asian and European countries. The United States was not invited to attend. A second Bangkok meeting scheduled for late April collapsed when the Burmese government cancelled its participation.

Razali continued his efforts to encourage a political dialogue between the SPDC and the NLD. These efforts consisted primarily of diplomatic discussions outside of Burma. Despite the UN Secretary General’s repeated requests, the junta denied Razali the opportunity to return to Burma following his March 1-5 visit to Rangoon -- his twelfth visit to Burma as the Secretary General’s Special Envoy. At that time, he met with Aung San Suu Kyi, ethnic leaders, and government officials.

The junta also stymied Pinheiro’s efforts to achieve greater government respect for human rights. Pinheiro last visited Burma in November 2003, when he met with Aung San Suu Kyi and urged the government to release prisoners associated with the May 2003 attack on the NLD, and appealed for an independent investigation of the incident. Pinheiro also continued to urge the government to allow an independent investigation of allegations of rape and other abuses by the Burmese military in ethnic regions.

The government continued to deny visas for certain foreign officials, including some Members of Congress and their staff, seeking to travel to Burma to engage in dialogue with the government and the political opposition.

The SPDC and Burma’s largest remaining ethnic insurgent group, the Karen National Union (KNU), secured a temporary cease-fire after KNU leader General Bo Mya visited Rangoon in January and after the two sides held productive talks in February. However, the junta postponed negotiations while the National Convention was in session from May to July and the two sides have yet to formalize an end to over five decades of armed conflict.

II. The Quality of Life in Burma

(Economy)
The import ban that took effect with the 2003 Burmese Freedom and Democracy Act (BFDA) and a simultaneously issued Presidential Executive Order led to the closure of dozens of garment factories with an estimated loss to date of around 50,000 to 60,000 jobs. However, new orders from importers in EU member states enabled the remaining factories to continue production and some to rehire laid-off workers. President Bush renewed these import restrictions in July 2004, following passage of a Congressional joint resolution to renew economic sanctions under the BFDA.

The 2003 Executive Order also prohibits the provision of financial services to Burma. U.S. and other financial institutions immediately blocked U.S. dollar transactions, slowing Burma’s already sluggish formal foreign trade. The Treasury Department reported that it blocked $13.3 million worth of transactions, of which it subsequently licensed $1.7 million, and U.S. banks maintaining correspondent accounts with Burmese banks blocked over $320,000.

The Burmese junta maintained tight control over all foreign currency transactions. U.S. sanctions were designed to deny the junta profits from foreign currency transactions used to fund their repressive methods of internal control. In response, the country’s banks shifted from U.S. dollar to Euro-denominated letters of credit and remittances. Many traders turned increasingly to informal trade, particularly along Burma’s borders with China and Thailand. In recent months, some hotels and other retail businesses started to offer creative offshore alternatives to clear U.S. dollar credit card transactions, thus bypassing the U.S. prohibition on the provision of financial services. Overall, the economy appears to have adjusted to U.S. sanctions. Chronic economic mismanagement by the junta and a correspondingly poor business and investment climate continued to be the primary reasons for shrinking trade. Economic growth remained stagnant. The junta’s severe neglect of the education sector, coupled with the moving of undergraduate programs away from central universities to ineffective satellite campuses under tighter government control, further eroded what was once a well-educated and skilled Burmese labor force.

In June, the GOB abruptly raised taxes on many imports by up to 1,000 percent and quadrupled the customs dollar/kyat exchange rate, a new policy designed to increase state revenue but one that proved to be burdensome to importers and to drive more trade underground.

The GOB did not lift its "temporary" ban, announced in January 2004, on the private sector export of rice and several other staples. However, the GOB allowed several government entities to export small quantities of rice, leading observers to believe that the junta had reversed the March 2003 privatization of the rice market.

In April, the GOB issued a long-awaited mutual legal assistance law to improve international law enforcement cooperation in money laundering and other transnational cases. Nonetheless, in July the 31-member states of the Financial Action Task Force (FATF) reviewed Burma’s status as a "non-cooperative" country for money laundering and determined that this legislation contained a number of serious deficiencies that needed to be addressed before the FATF could consider asking its members to lift countermeasures against Burma.

To date, the GOB has made limited progress in addressing deficiencies identified by the FATF, and serious problems persist within the anti-money laundering legislative and operational framework. A GOB committee formed in November 2003 to investigate two banks accused of money laundering – Asia Wealth and Myanmar Mayflower – has taken little action.

(Human rights/forced labor)
The SPDC severely abused the human rights of its citizens. Freedoms of speech, press, assembly, religion, and association remained restricted. Burmese citizens were not free to criticize their government. Security forces regularly monitored the movements and communications of residents, searched homes without warrants, and relocated persons forcibly without just compensation or legal recourse. On September 15, the United States again designated Burma a "Country of Particular Concern" for particularly severe violations of religious freedom, especially among Muslim and Christian populations. Also in 2004, the United States again ranked Burma as a Tier 3 country for its unwillingness to make serious and sustained efforts to combat the trafficking of persons.

Following a violent, government-orchestrated May 2003 attack on NLD leader Aung San Suu Kyi and her convoy in Depeyin (northwestern Burma), authorities arrested approximately 135 NLD members or supporters at or near the attack site and over 250 pro-democracy activists elsewhere across Burma. The government released most of the "Depeyin" detainees, although authorities subsequently re-arrested several. Aung San Suu Kyi and U Tin Oo, both participants in the convoy, remained under house arrest and all NLD offices other than Rangoon headquarters were still closed.

Through September 2004, the GOB released 44 of the country’s roughly 1,300 long-term political prisoners, although the majority of these released detainees had already completed their original sentences. Concurrent to these releases, the GOB arrested and sentenced additional individuals for their peaceful political activities.

In November 2003, the government sentenced to death nine persons convicted in a secret trial for alleged treason. Among those sentenced to death was the editor of a sports magazine who criticized the government for misuse of funds designated for soccer programs. In March 2004, the government admitted that it had sentenced to death three individuals in part for communicating with the ILO and a Thailand-based labor rights group. In response, the ILO continued to postpone implementation of a plan of action to address forced labor practices. The ILO had originally intended to sign and begin implementing this plan of action in the summer of 2003, but decided against it after the brutal attack on Aung San Suu Kyi and her convoy on May 30. In May 2004, under intense international pressure, the GOB commuted the three sentences. In one case, the conviction for high treason was upheld, but the sentence was commuted to life in prison. In the other two cases, the convictions were altered to "encouraging, harboring or comforting persons guilty of high treason" and the sentences reduced to three years imprisonment.

Patterns of abuses remained most egregious in ethnic minority areas. However, ethnic sources reported a decline in these human rights abuses in Karen and Mon States since the GOB and the KNU began peace talks in January 2004. The abuses included censorship, persecution, torture, disappearances, extrajudicial executions, the curtailing of religious freedom and demolition of places of worship, forced relocations, rapes, and forced labor. The U.S. and the international community reiterated the call for an independent investigation of the rapes of hundreds of mostly ethnic minority women by the Burmese military. The SPDC did not respond to Pinheiro's request to conduct an independent assessment into these abuses inside Burma nor did the government reply to his call for an independent investigation of the May 2003 attack on the NLD.

The junta allowed UNHCR to maintain a presence in northern Rakhine State, providing humanitarian support and protection services to more than 230,000 Rohingya Muslims who had returned from Bangladesh. Approximately 20,000 Rohingya refugees remained in camps in Bangladesh, although another estimated 200,000 Rohingyas lived illegally in southernmost Bangladesh.

More than 142,000 Burmese ethnic minorities lived in camps along the border in Thailand. In February 2004, the UNHCR gained SPDC permission to begin work for the first time on the Burmese side of this border region and to assess conditions for the eventual repatriation of refugees and for the return home of internally displaced persons. Although the UN High Commissioner for Refugees (UNHCR) gained access to assess the former conflict areas of Karen, Mon, and Tanintharyi States, the United Nations concluded that, absent a formal agreement between the SPDC and the KNU, current conditions are not adequately secure for the repatriation of thousands of refugees from Thailand and the return home of thousands of internally displaced persons.

Over one million Burmese, both ethnic minorities and ethnic Burmans, lived illegally in Thailand; many of them are economic migrants, others were victims of conflict or abuse. Burmese living illegally in neighboring countries were willing to endure an often perilous existence, working in dangerous or exploitative jobs, because they believed it was even more dangerous and/or economically difficult to live under the military government in Burma. Some observers remained concerned that unemployed garment workers could be added to the already large number of trafficking victims from Burma, but reported numbers of former workers taking this path appeared small and confirming the numbers involved is difficult to determine. The government's economic mismanagement, political intransigence, and repression remained the primary causes of unemployment, illegal migration, and trafficking.

There was abundant evidence that the practice of forced labor in Burma continued. These abuses met the U.S. and UN definitions of trafficking in persons, and were key factors in Burma’s tier 3 designation in the Department’s 2004 TIP Report. There were no reports that authorities have prosecuted any individual for use of forced labor. The Burmese government supported or tolerated the use of forced labor for large infrastructure projects and the Burmese Armed Forces used forced conscription to enlist porters. We understand that it is Burmese policy to recruit soldiers at age 18 or above, with some exceptions granted for volunteers at an earlier age. Burma is a signatory to the Convention on the Rights of the Child which permits voluntary recruitment of those 15 and above. In the past, recruiting drives targeted children to meet quotas, but anecdotal evidence at least in Rangoon suggested this is not currently a common practice. In March and April, however, the ILO Liaison Officer in Rangoon transmitted to the GoB nine detailed allegations concerning forced recruitment into the army of boys between the ages of 13 and 16. In May, the GOB confirmed three of the allegations, said one was unfounded, and stated the other five were still under investigation. Ethnic minority insurgent groups, as well as those that concluded cease-fire agreements, continued to conscript child soldiers, and we have seen numbers of child soldiers with these forces, particularly the United Wa State Army (UWSA).

Burma’s junta allowed only limited respect for religious freedom. It generally infiltrated or monitored the meetings and activities of virtually all organizations, including religious ones. It systematically restricted efforts by Buddhist clergy to promote human rights and political freedom, discouraged or prohibited minority religions from constructing new places of worship, and in some ethnic minority areas, coercively promoted Buddhism over other religions. Christian groups continued to experience difficulties obtaining permission to repair existing churches or build new ones in most regions, while Muslims reported that they essentially were banned from constructing any new mosques or expanding existing ones anywhere in the country. Anti-Muslim violence continued to occur. Muslims’ activities were monitored, and the junta placed restrictions on their travel and worship countrywide. For these reasons, in September 2004, the Secretary of State again designated Burma a "Country of Particular Concern" under the International Religious Freedom Act for particularly severe violations of religious freedom.

(Environment)
The Ministry of Forestry (MOF) is responsible for overseeing the protection of the environment and the SPDC's profitable logging operations, a source of revenue for Burma’s army and insurgent groups. The MOF instituted a program to increase the size of protected areas. However, the government committed few resources to support the policy. Consequently, illegal logging and illicit trade in wildlife products, much of it in border areas where ethnic minority groups have some autonomy, overwhelmed the government’s efforts to protect natural resources. Conservationists are engaged in a losing battle to fight encroaching agriculture, logging, and poaching on "protected lands." In April 2004, the GOB, in conjunction with the NGO Wildlife Conservation Society, announced the formation of an 8,400 square mile tiger reserve in the Hukaung Valley in northwestern Burma.

The Shwe Natural Gas Pipeline Project being considered by an environmental consortium led by Daewoo International generated environmental and human rights concerns similar to those expressed about the Yadana pipeline. Other environmental concerns in Burma included threats to reefs and fisheries and overall water resource management.

The government focused on the commercial possibilities of eco-tourism. During the last several years, the government opened up areas in Chin State, Kachin State, Sagaing Division, and Tanintharyi Division to specially arranged eco-tourism. There were credible reports that in the promotion of some of these tourism activities the government expropriated civilian property and forced others to provide services, including transportation for the tourists and their baggage.

III. Development of a Multilateral Strategy

Immediate U.S. policy objectives in Burma remained securing the release of Aung San Suu Kyi, U Tin Oo, and all other political prisoners and encouraging a genuine dialogue on democratic political reform, including the re-opening of all NLD offices. The United States continued its efforts to encourage all countries with a major interest in Burma, particularly Burma’s immediate neighbors China, and India, and ASEAN members, to use their influence to convince the generals to take these steps, noting that future regional stability requires that the SPDC take a more constructive position on political dialogue, economic reform, and the institution of rule of law. Most countries in the region expressed concern, and agreed that the SPDC must work with the democratic opposition in order to effect a smooth political transition. Although the EU imposed many sanctions that parallel U.S. sanctions, no other country joined the U.S. in adopting an investment ban, an import ban, or a financial services ban.

The ILO has long been concerned with the serious forced labor problem in Burma, which violates its obligations under the ILO's Forced Labour Convention. In June 2000, the International Labor Conference concluded that the GOB had not taken effective action to deal with the use of forced labor in the country and, for the first time in its history, called on all ILO members to review their policies to ensure that those policies did not support forced labor. In June 2004, the Conference concluded that at its November 2004 session, the ILO Governing Body should be ready to consider "reactivation and review of the measures and actions taken, including those regarding foreign direct investment, called for in the resolution of the International Labor Conference of 2000, unless there was a clear change in the situation in the meantime." The U.S. supported the ILO’s continuing close scrutiny of Burma, given the country’s failure to deal effectively with its pervasive forced labor problems.

Overall U.S. policy goals included the establishment of constitutional democracy, genuine respect for human rights and religious freedom, the repatriation of refugees with monitoring by UNHCR, the return home of IDPs, cooperation in fighting terrorism, regional stability, a full accounting for missing U.S. servicemen from World War II, stemming the spread of HIV/AIDS, combating trafficking in persons, ending forced labor, and increased cooperation in eradicating the production and trafficking of illicit narcotics. We will therefore continue to urge the international community to support the UN Secretary General in his efforts to start genuine talks on a political transition in Burma.

The United States co-sponsored the annual human rights resolution on Burma at the 2003 UN General Assembly and the annual Burma resolution at the 2004 UN Commission on Human Rights, both of which were adopted by consensus.

The United States maintained extensive sanctions on Burma. These measures now include an arms embargo, bans on new investment and imports, an asset freeze, and a prohibition on the exportation of financial services to Burma or the provision of financial assistance to the GOB. The Department of State will maintain visa restrictions on SPDC members, senior military officers, and other senior officials of the junta; officials of the Union Solidarity and Development Association (USDA); and managers of state-owned enterprises, along with their family members.

These sanctions will be kept in place until there is significant progress toward political transition and genuine respect for human rights or until a democratically elected government in Burma requests that they be lifted.

We remain concerned that the junta’s neglect and economic mismanagement are leading to a humanitarian crisis in Burma. In 2004-2005, we plan to double an ongoing $1 million program to address the growing HIV/AIDS epidemic in Burma by funding only international non-governmental organizations to undertake prevention and care activities; no assistance is provided directly or indirectly to the government through this program. We also seek a greater commitment to more effective prevention, treatment, and care programs, including for pregnant mothers and high-risk groups.

The Burmese Government, however, provided cooperation on counterterrorism issues, and the U.S. welcomed its growing cooperation with states of the region on narcotics issues. The U.S. appreciated the government of Burma's continued bilateral cooperation in the full accounting of missing U.S. servicemen from World War II and the participation of U.S. officials in an annual joint opium yield survey.