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	Conditions in Burma and U.S. Policy Toward Burma For the period March 28, 1998 - September 28, 1998
	Plan for Implementation of Section 570 of Public Law 104-208 (Omnibus Appropriations Act, Fiscal Year 1997) Submitted to the U.S. Congress, October 28, 1998 Released by the Bureau of East Asian and Pacific Affairs, October 29, 1998 U.S. Department of State (Link to all periods available.)

The people of Burma continue to live under a highly repressive, authoritarian military regime that is widely condemned for its serious human rights abuses. The reorganization and renaming of Burma's ruling military junta in November 1997 through which the former State Law and Order Restoration Council (SLORC) became the State Peace and Development Council (SPDC) did not herald significant policy changes.

The regime has made no progress in the past six months in moving toward greater democratization, nor has it made any progress toward fundamental improvement in the quality of life of the people of Burma. To the contrary, conditions have worsened with the regime rounding up and detaining over 900 opposition National League for Democracy (NLD) officials and supporters, including 200 Members-elect of Parliament.

SPDC economic mismanagement, combined with spill-over effects from the Asian financial crisis has sent the Burmese economy into a downward spiral which the regime appears unable to halt. The government is reportedly virtually bankrupt with regard to foreign exchange reserves, holding an amount equal to only several weeks of imports. Inflation is increasing, while the kyat continues its downward slide against the dollar. Imported foodstuffs are growing more and more difficult to obtain. Both gasoline and diesel fuel are rationed to three gallons per vehicle per day. The military junta continues to dominate the political, economic and social life of the country in the same oppressive, heavy-handed way that it has since seizing power in September 1988 after harshly suppressing massive pro-democracy demonstrations.

U.S. policy towards Burma seeks progress in three key areas: democracy, human rights, and counternarcotics. We have taken strong measures to pressure the SPDC to end its repression and move towards democratic government. Since 1989, the United States has been unable to certify that Burma has cooperated in efforts against narcotics. The U.S. has suspended economic aid, withdrawn Burma from the General System of Preferences (GSP) and Overseas Private Investment Corporation (OPIC) programs, implemented an arms embargo, successfully opposed assistance from international financial institutions, downgraded our representation from Ambassador to Charge d'Affaires, imposed visa restrictions on senior officials and their families, and instituted a ban on new investment by U.S. persons.

We remain engaged in multilateral diplomacy to encourage ASEAN, Japan, Korea, China, the EU, and other nations to take similar steps and/or other actions to encourage progress by the SPDC in these areas of key concern. The EU renewed the range of sanctions it had in place against Burma in October 1997, including visa restrictions similar to ours and the withdrawal of the Generalized System of Preferences (GSP). We have also continued to urge the government of Japan to maintain the suspension of much of its bilateral aid program, including large-scale development assistance.

As a result of sanctions and the ongoing financial crisis in much of the rest of Southeast Asia, approvals of new foreign direct investment in Burma fell by 65 percent in FY 97/98, contributing to the financial collapse of the Burmese economy. U.S. and European investors continue to pull out of Burma due to the unfavorable political situation. While the government's own mismanagement contributes to the problem, the SPDC is unlikely to find a way out of the crisis unless political developments in Burma permit an easing of restrictions on lending by international financial institutions.

Measuring Progress Toward Democratization

During the review period, the ruling junta has shown no sign of willingness to cede its hold on absolute power. Since refusing to recognize the results of the free and fair 1990 elections in which the National League for Democracy (NLD) won a vast majority of both the popular vote and the parliamentary seats, the generals have continued to refuse to negotiate with pro-democracy forces and ethnic groups for a genuine political settlement to allow a return to the rule of law and respect for basic human rights.

In June 1998 NLD leader Aung San Suu Kyi challenged the SPDC to convene by August 21 the parliament chosen in the 1990 elections annulled by the military regime. However, the Burmese government rejected this historic opportunity to respond to NLD's call. After the August 21 deadline had passed with no government action, the NLD announced its intention to convene the parliament during the month of September. The SPDC responded by detaining hundreds of NLD MPs-elect, party members and local officials and threatening to de-register the NLD as well as arrest and jail even senior party leadership working to convene the parliament.

The government claims that the military-dominated National Convention is an appropriate forum for dialogue with the NLD and parties representing the country's ethnic minorities. But the National Convention, a body ostensibly tasked since 1993 with drafting a new constitution, is not a democratic forum as currently structured. Although the NLD initially participated, the convention is overwhelmingly made up of delegates hand-picked by the junta, which has carefully stage-managed the proceedings and ignored even limited opposition views. The regime appears determined to draft a constitution that would ensure a dominant role for the military forces in the country's future political structure. The NLD withdrew from the National Convention in November 1995 because of the undemocratic nature of the institution and was formally ejected by the SLORC in December of that year. However, the convention has not met since mid 1996, and the SPDC's current plans for the body remain unclear.

In July and August 1998, Aung San Suu Kyi attempted four trips by car to meet NLD leaders and rank-and-file in cities and towns outside Rangoon. On each occasion, her car was stopped by the security forces, and she and her traveling companions were prevented from completing their journey. Aung San Suu Kyi returned voluntarily from her first, second and fourth trips, but was forcibly returned to Rangoon in the third instance, suffering minor injuries as a result of manhandling by the security forces. The U.S. Embassy in Rangoon vigorously protested these violations of Aung San Suu Kyi's freedom of movement and assembly.

On August 18, SPDC Secretary 1 Khin Nyunt invited NLD Chairman Aung Shwe to a meeting which appeared to offer a hope of initiating a genuine dialogue. However, in the intervening weeks there have been no follow-up gestures from the SPDC that would indicate a desire for a meaningful dialogue with the NLD, including Aung San Suu Kyi, on the political future of Burma. On September 9, the NLD Chairman invited the SPDC to send any of its members to a meeting to discuss confidence-building measures. No government representatives answered the invitation or attended the meeting.

Accounting for about 90 percent of Southeast Asian production and about half of the world's supply, Burma is the world's leading producer of illicit opium. Recent reports suggest increased methamphetamine production and distribution from Burma as well. Although the Burmese government has expanded its counternarcotics efforts over the past few years, the impact has been limited. While part of the problem is that the Burmese government does not control many of the ethnic groups that traffic in drugs, the government also does not make sufficient effort at interdiction. There is also some evidence of corrupt elements in the military that may be aiding the traffickers, and there are signs that the Burmese encourage traffickers to invest in a multitude of development projects throughout the country.

The U.S. recognizes that serious political and human-rights concerns preclude our working directly with the regime in Burma. The U.S. also remains concerned about the commitment of the Burmese government to fight narcotics and about the potential damage that opium cultivation in Burma can inflict on the United States and the rest of the world. Against this backdrop, we have supported a small program, the Old Soldiers Project of 101 Veterans, Inc., in Burma to replace opium poppy cultivation with substitute, economically viable alternative crops. Despite impressive strides in a short period of time the Old Soldiers Project has not received permission from the Burmese Government to continue, and the project was suspended on September 15.

In addition, we have encouraged the UN to develop programs to assist the Wa and Kachin ethnic minority areas as well as joint programs with Thailand and China. The bulk of the UN effort has focused on developing a program in a key opium cultivating area in the Wa region. This $15 million program, managed by the UN Drug Control Program (UNDCP), builds on a small pilot program that resulted in the elimination of opium cultivation in the project area. The program specifically provides development and demand reduction assistance directly to the inhabitants of three villages in the Wa region, without going through the government. On the development side, UNDCP plans to provide support to the farming community and extensive infrastructure and extension services support. Provisions for developing hospitals and clinics are also included, as are demand reduction programs.

The U.S. and other donors worked with UNDCP over a long period to develop a program with reasonable benchmarks and effective oversight. We have also insisted that Aung San Suu Kyi is continuously apprised of the UN program. She has not objected to the program, but wants to be sure that the regime derives no moral or material support from it. Since 1994, the U.S. government has earmarked $5.7 million of our contribution to UNDCP for the Wa project. The funding goes to UNDCP and the project in the affected area, not to the Burmese government.

Measuring Progress on Improving the Quality of Life

During the review period, the quality of life of the average Burmese citizen has continued to worsen. The SPDC's severe violations of human rights have continued. There continue to be credible reports, particularly from ethnic minority insurgent-dominated areas along the Thai border, that soldiers have committed serious human rights abuses, including rape, forced porterage, and extrajudicial killing. Disappearances continue, and members of the security forces beat and otherwise abuse detainees. Arbitrary arrests and detentions of those who express dissenting political views continue. As of September 1998, hundreds, if not more, political prisoners remain in detention, including 200 Members of Parliament elected in 1990. Prison conditions remain deplorable, and prisoners are subject to a lack of food and adequate medical care.

The SPDC reinforces its rule via a pervasive security apparatus controlled by military intelligence which sharply restricts basic, internationally-recognized human rights to free speech, press, assembly, and association. Political party activity remains severely restricted. The activities of the NLD and Aung San Suu Kyi are monitored and circumscribed by the regime. Since late 1996, Aung San Suu Kyi has been prevented from addressing party supporters in front of her house, by blockades put up by the SPDC to prevent gatherings in the street. The regime has allowed the NLD to hold several gatherings inside Aung San Suu Kyi's compound, usually on national holidays, and allowed the NLD to hold a party congress within Aung San Suu Kyi's compound in May.

In response to street protests by large groups of students in November and December 1996, the SLORC closed the nation's schools and universities. The SPDC finally reopened primary and secondary schools in August 1996 and some lower technical institutes in March 1998. Some universities were briefly reopened in July to allow previously enrolled students to take final exams and graduate. The authorities announced that the fall term of classes would begin on schedule. Sporadic student protests broke out in August and September 1998. The government contained the protest, detained student protest leaders, and conducted examinations at one key university campus.

Over 900 opposition party members and Members of Parliament-elect were detained in a round-up of opposition figures that began in the early-morning hours of Sunday, September 6. By September 28, 200 opposition party Members-elect of Parliament were in government custody along with hundreds of rank and file supporters and other party officials. This is the second round of mass detentions in the reporting period, the first round-up resulted in the detention of over 180 MPs-elect and the placing of travel restrictions on almost one hundred other MPs-elect in late May. The first round-up immediately followed the National League for Democracy's (NLD) public challenge to the regime to convene the parliament chosen in the 1990 elections never recognized by the military government. The first and second rounds of mass detentions were clearly designed to prevent the NLD from physically convening the parliament. The regime reportedly has offered to release those detainees willing to sign undertakings promising not to engage in political speech or activities in the future.

Thousands of citizens of Burma remain in exile because of fear of persecution and poor economic conditions, placing a major burden upon neighboring countries. About 21,000 Rohingya Muslims from Arakan state remain in camps in Bangladesh. A few thousand students and dissidents remain in exile in Thailand. Approximately 119,000 individuals now reside in ethnic minority camps along the Thai-Burma border, among them thousands of new arrivals driven out by army attacks in the areas controlled by the Karen and Karenni ethnic minorities.

Burma is a poor country, with an average per capita GDP of approximately USD 406 at a weighted exchange rate, perhaps double that in terms of purchasing power parity. Progress on market reforms has been mixed and uneven. Beginning in 1988 the government partly opened the economy to permit expansion of the private sector and to attract foreign investment. Though modest economic improvement ensued, since 1993 the pace of economic reform has slowed, and major obstacles to further reform persist. These include disproportionately large military spending, extensive overt and covert state involvement in economic activity, excessive state monopolization of leading exports, a bloated bureaucracy prone to arbitrary and opaque governance, and poor education and physical infrastructure. In addition, due to international opposition and to the SPDC's unwillingness to cooperate fully with the IMF, SPDC access to external credit from the IMF, World Bank, and Asian Development Bank continues to be blocked by sanctions. In September 1998 the World Bank announced that Burma had defaulted on its loan repayments. The laundering of drug profits in Burma's legitimate economy is thought by some analysts to be extensive.

Since Spring, the kyat has depreciated in value on the open market quite rapidly, briefly falling to a level of 400 kyats to the dollar before the government stepped in and temporarily detained foreign exchange dealers. Currently, the street market rate for foreign exchange hovers around kyat 375/dollar, whereas the official market rate has been held to kyat 249.5/dollar, and the official exchange rate remains kyat 6/dollar. In an effort to stem the loss of scarce foreign exchange reserves, the government imposed strict import and remittance controls on the private sector in July 1997 allowing companies to remit only USD 50,000 in profits. In March 1998, the government further increased restrictions by limiting foreign exchange transactions to two state banks and by requiring that the content of imported goods be 80 percent "essential" items and only 20 percent non-essential items. Imports of most consumer foodstuffs were banned. These restrictions remain in place. Many foreign traders and investors still operating in Burma note that the sum of these controls is untenable. Should such controls continue, the climate for foreign trade and investment in Burma will be even more seriously damaged than it already has been by the U.S. ban on new investment and by consumer-led boycotts in the West.

The government restricts worker rights and uses forced labor on a widespread basis. In August, the ILO issued a scathing report describing the dismal labor rights situation in Burma. The use of porters by the army, with attendant mistreatment, illness, and even death for those compelled to serve, remains a common practice. The use of forced labor on some infrastructure development projects appeared to be lessening following the issuance of directives in 1995 to end the practice of forced civilian labor. The military authorities nonetheless continue to force ordinary citizens (including women and children) to "contribute" their labor, often under harsh working conditions, on construction projects in many parts of the country. Some of these projects, such as the moat of the Mandalay palace, were undertaken to promote tourism to the country. In the past few years, the military has begun using soldiers instead of civilians at certain infrastructure projects. Child labor continues to be a serious problem. On September 25, The U.S. Department of Labor released a Report on Labor Practices in Burma which includes evidence gathered by U.S. government officials on the use of forced labor in Burma.

As a largely underdeveloped country, Burma, with a rapid population growth rate, faces increasing pressure on environmental quality. Although the government has taken some steps to stem widespread clear-cutting, Burma's large tracts of remaining tropical forest remain under intense commercial exploitation. Some NGO's have charged that Burma's teak forests in the Thai-Burma border area are being rapidly destroyed by clear-cutting and deforestation, including by ethnic insurgent groups in league with foreigners. Because of the severe restrictions on embassy travel to outlying parts of Burma, it is difficult to document the overall extent of the problem.

The poor quality of life is also reflected in rising drug abuse. Burmese estimates put the addict population at approximately 60,000, but UNDCP and NGO's working in the health sector estimate the actual number is at least five times that figure. Intravenous use of heroin is contributing to the rapid spread of HIV/AIDS. Drug treatment services are not reaching most drug users because of a lack of facilities and a lack of properly trained personnel. Addiction and the spread of HIV/AIDS have become cross-border problems of concern to China as well, particularly in Yunnan province, on Burma's northern border.

Development of a Multilateral Strategy

The goals of U.S. policy toward Burma are progress toward democracy, improved human rights, and more effective counter-narcotics efforts. Failing national reconciliation, Burma will not be able to adequately address the many severe problems it faces, including narcotics trafficking and abuse, a low level of education and poor economic performance.

In recent months we have continued to pursue a multilateral strategy to seek improvement in our key areas of concern. We continue to consult about Burma regularly and at senior levels with leaders of the ASEAN nations, Japan, Korea, the European Union, Australia, New Zealand, Canada, and other countries having major trading and investment interests in Burma. At the same time, we urge them to press Burma for progress in the counternarcotics area, in particular to curb drug production and trafficking. These efforts have helped build and maintain strong international pressure on the military regime.

At the ASEAN meetings in Manila in July 1998 Secretary Albright, in conjunction with Foreign Minister McKinnon of New Zealand, led a discussion of the political impasse in Burma with foreign ministers from like-minded countries and coordinated a group of foreign ministers or representatives from Austria, Australia, Canada, Germany, Korea, Japan and the UK to meet Burmese Foreign Minister Ohn Gyaw on July 28 to express their concerns over the deteriorating conditions in Burma. The ministers expressed their concern and demanded a speedy, peaceful resolution to the situation as well as pressing for the immediate commencement of a SPDC dialogue with the democratic opposition, including Aung San Suu Kyi. Secretary Albright has continued to actively work to promote international engagement with the SPDC to press for a meaningful dialogue and an improved human rights climate.

The key to progress toward democracy and human rights is, first and foremost, direct negotiations about the political future of the country among the SPDC, the NLD, and the ethnic minorities. In all our public and private messages to the SPDC, leaders of third countries, and other interested parties, we stress the importance of beginning such talks as the key to achieving significant progress in Burma. At the same time, we urge them to press Burma for progress in the counternarcotics area. We work closely with countries in Asia and Europe to press the SPDC to begin talks. In response, leaders from the ASEAN nations, Japan, Australia, Canada, and the European Union have urged the regime, both publicly and privately, to move to dialogue with the democratic opposition and to curb drug production and trafficking.

In order to urge the SPDC to make progress in our areas of concern, we have taken a number of steps: suspending economic aid, withdrawing GSP and OPIC, implementing an arms embargo, blocking assistance from international financial institutions, downgrading our representation from Ambassador to Charge d'Affaires, imposing visa restrictions on senior regime leaders and their families, and implementing a ban on new investment by U.S. persons. We likewise have encouraged ASEAN, Japan, the EU, and other nations to take similar steps and other actions to encourage progress by the SPDC in these areas of key concern. Many nations join us in our arms embargo, including European countries, Canada, Australia, Japan and Korea. The EU limits its assistance to Burma to humanitarian aid. Our efforts in the international financial institutions continue to be successful in blocking loans to the regime, which is probably the single most effective sanction against the regime. Since 1988 we have taken an active role in pressing for strong human rights resolutions on Burma at the United Nations General Assembly and the UN Human Rights Commission, as well as having worked vigorously in the ILO to condemn the lack of freedom of association for workers and the use of forced labor by the SPDC.

In 1996, at our urging, the EU and associated European states joined us in imposing a ban on visas for high-level SPDC officials and their families. In addition, the European Union and Canada withdrew GSP trade benefits from Burma's agricultural and industrial products in March and August 1997, respectively, bringing their trade policies more in line with the U.S. withholding of GSP.

ASEAN shares many of our goals with regard to Burma, but we disagree on the means to achieve those goals. Most members of ASEAN believe that "constructive engagement" of the SPDC is the most effective way to promote positive change in Burma. Notwithstanding our differences in approach, we were encouraged that the Philippine Foreign Secretary and the Thai Prime Minister raised the possibility of "flexible engagement" by ASEAN on Burma thus publicly voicing their dissatisfaction with events in Burma. We will continue to raise our strong concerns about the situation in Burma with ASEAN and urge continued steps by ASEAN leaders to encourage progress by the SPDC. Secretary Albright has used and will continue to use multilateral meetings, including the ASEAN Regional Forum and Post Ministerial Conference, to directly press the Burmese for positive change in the presence of fellow ASEAN members.

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