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Conditions In Burma And U.S. Policy (r)

Conditions in Burma and U.S. Policy Toward Burma 

For the period March 28, 1997 - September 28, 1997

Plan for Implementation of Section 570 of Public Law 104-208 
(Omnibus Appropriations Act, Fiscal Year 1997) 
Submitted to the U.S. Congress, December 2, 1997
Released by the Bureau of East Asian and Pacific Affairs, December 5, 1997
U.S. Department of State 

The people of Burma continue to live under a highly authoritarian military
regime that is widely condemned for its serious human rights abuses. The
military regime in Burma, the State Law and Order Restoration Council
(SLORC), 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.

Observers agree that the Burmese economy appears to be further weakening
and that the government has a serious shortage of foreign exchange reserves
with which to pay for imports. Money from the trafficking of illicit
narcotics likely accounts for a substantial net inflow of what foreign
exchange is coming in. The SLORC continues to dominate the political,
economic and social life of the country in the same arbitrary, heavy-handed
way that it has since seizing power in September 1988 after harshly
suppressing massive pro-democracy demonstrations.

U.S. policy toward Burma seeks progress in three key areas: democracy,
human rights, and counternarcotics.

We have taken strong measures to pressure the SLORC 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 The U.S. has suspended economic aid, withdrawn GSP and OPIC,
implemented an arms embargo, blocked assistance from international
financial institutions, downgraded our representation from Ambassador to
Charge, and imposed visa restrictions on senior leaders and their families.

In addition, the President signed Executive Order 13047 invoking the
authority of section 570(d) of the Foreign Operations, Export Financing,
and Related Programs Appropriations Act, 1997 and of section 203 of the
International Emergency Economic Powers Act to impose a ban on new
investment by U.S. persons in Burma effective May 21, 1997. The order
prohibits U.S. persons from engaging in any of the following activities if
they are undertaken pursuant to an agreement, or pursuant to the exercise
of rights under such an agreement, that is entered into with the Government
of Burma or a nongovernmental entity in Burma on or after May 21, 1997:

-- entering a new contract that includes the economic development of
resources located in Burma;

-- entering a new contract providing for the general supervision and
guarantee of another person's performance of a contract that includes the
economic development of resources located in Burma;

-- the purchase of a share of ownership, including an equity interest, in
the economic development of resources located in Burma; or

-- entering into a contract providing for the participation in royalties,
earnings, or profits in the economic development of resources located in
Burma, without regard to the form of the participation.

Additionally, the executive order prohibits:

-- persons from facilitating transactions of foreign persons that would
violate any of the foregoing prohibitions if engaged in by a U.S. person; and

-- any transaction by a U.S. person or within the United States that evades
or avoids, or attempts to violate, any of the prohibitions in the order.

We are engaged in vigorous multilateral diplomacy to encourage ASEAN,
Japan, the EU, and other nations to take similar steps and/or other actions
to encourage progress by the SLORC in these areas of key concern. The EU
imposed visa restrictions similar to ours and, earlier this year, withdrew
certain trade preferences. Canada also withdrew GSP completely in August,
imposed a requirement that all Canadian exports be issued an export permit
prior to shipment to Burma, and issued a government statement discouraging
further investment in Burma by Canadian firms. Japan's suspension of much
of its bilateral aid program remains in force.

The net effect of these U.S. and international measures has been a further
decline of investor confidence in Burma and deeper stagnation of the
Burmese economy. While Burma's economic crisis is largely a result of the
SLORC's own heavy-handed mismanagement, the SLORC is unlikely to find a way
out of the crisis unless political developments permit an easing of
international pressure.

Measuring Progress Toward Democratization

In the past six months the SLORC 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.
Although SLORC Secretary-1 Lt. General Khin Nyunt did relent in response to
prompting by ASEAN nations and Japan and agreed to meet with NLD Chairman
Aung Shwe in July, the lack of substance of the meeting, and the refusal of
the SLORC to meet with  Aung San Suu Kyi, suggest the SLORC remains
unprepared to consider meaningful steps toward resolving the political
crisis in Burma with the NLD. This was reinforced with the subsequent
sentencing of four NLD members, all close associates of Aung San Suu Kyi,
to lengthy prison terms after closed trials, and the continued attacks on
Aung San Suu Kyi in the government-controlled press.

The SLORC 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. The Convention is overwhelmingly made up of
delegates hand-picked by the SLORC, which has carefully stage-managed the
proceedings and ignored even limited opposition views. The SLORC 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
SLORC's current plans for the body are unclear.

The worsening narcotics situation in Burma reflects the SLORC's disregard
for the rule of law. Burma is the world's largest source of illicit opium,
and output increased by an estimated nine per cent in 1996 to 2,560 metric
tons but decreased slightly in 1997 to 2,365 metric tons. Nevertheless,
Burmese law enforcement actions against producers and traffickers remain
limited. Leading trafficker Khun Sa, who "surrendered" to Burmese forces in
early 1996, has never been brought to justice. Even as heroin production
remains high, Burmese traffickers are also diversifying into
methamphetamines, which are posing severe problems for neighboring states.
In addition, traffickers are increasingly investing in legitimate sectors
of the economy, and there is reason to believe that drug profits are being
laundered through the Burmese economy at substantial levels. The SLORC has
taken limited actions to counter this dangerous trend.

Measuring Progress on Improving the Quality of Life

In the past six months the quality of life of the Burmese has worsened. The
SLORC's severe violations of human rights have continued. There continue to
be credible reports, particularly from ethnic minority-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 continue for
expression of dissenting political views.  As of September 1997, several
hundred, if not more, political prisoners remain in detention, including 29
Members of Parliament elected in 1990. Prison conditions remain deplorable
and prisoners are subject to a lack of food and adequate medical care. As
an example, U Tin Shwe, a former NLD Central Executive Committee member,
died in Insein prison in June after prison authorities refused to allow him
to see medical specialists to
obtain treatment for his heart condition. 

The SLORC reinforces its rule via a pervasive security apparatus led by
military intelligence and sharply restricts basic 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 last year Aung San Suu Kyi has
been prevented from addressing party supporters in front of her house, as
the SLORC puts up blockades to prevent gatherings there. However, on
September 27-28, the SLORC allowed the NLD to hold its party congress on
Aung San Suu Kyi's compound. The meeting drew over 700 NLD members.

In response to street protests by large groups of students in November and
December 1996, the SLORC closed the nation's schools and universities.
While the SLORC finally reopened primary schools in August of this year,
universities remain closed to prevent another outbreak of student protest.

Prior to the onset of the rainy season in June, the Burmese Army continued
its assault begun in February on the forces of the Karen National Union
near the Thai border. Up to 20,000 Karen were forced to flee into Thailand,
the vast majority of them civilians, including women, children and the
elderly. Thousands of civilians were forcibly conscripted to serve as
porters for the Burma Army in its offensive. The Democratic Kayin Buddhist
Association (DKBA), with the support of the Burmese army, attacked refugee
camps in Thailand, burning shelters and destroying the meager possessions
of hundreds of refugees as well.

Thousands of other citizens of Burma remain in exile because of fear of
persecution and poor economic conditions. 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 perhaps $200 to
$300. Even after adjusting for the relative purchasing power of the Burmese
currency, per capita GDP is perhaps $600 to $900. 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 human and physical
infrastructure. In addition, the SLORC does not have access to external
credit from the IMF, World Bank, and Asian Development Bank. Money
laundering in Burma is a
growing problem, and the laundering of drug profits is thought by some
analysts to have a widespread impact on the Burmese economy.

Since June, the Kyat has depreciated in value on the open market quite
rapidly, briefly rising to a level of almost 300 Kyats to the dollar before
the government stepped in and briefly detained foreign exchange dealers.
Currently, legal foreign exchange dealers are allowed to sell Kyats at a
rate of roughly 200 Kyats to the dollar, though the official rate remains
six to the 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, allowing companies to remit only $50,000 in
profits overseas and permitting importers to bring in only $50,000 worth of
goods per month. Foreign investors still operating in Burma note that the
situation regarding remittance controls is untenable.   Should such
controls continue, the climate for foreign 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. In June, the
government raised gasoline prices for most consumers from 25 Kyat to 180
Kyats per gallon, causing a  concomitant rise in the price of
transportation for most Burmese and further fueling the serious rise in
inflation in the country, which was estimated to be over 40 percent during
the month of August.

Despite rampant inflation, the government has thus far been able to
maintain a stable and low price for rice.  However, severe monsoon flooding
throughout much of Burma in July and August, concentrated particularly in
rice-growing regions of central Burma and in the Irrawaddy delta region,
could severely impact the country's main monsoon rice crop and lead to a
serious rise in the price of rice.

The Government restricts worker rights and uses forced labor on a
widespread basis. The use of porters by the army -- with attendant
mistreatment, illness, and even death for those compelled to serve --
remains a common practice. Although the use of forced labor on some
infrastructure development projects appeared to be lessening as 1997
progressed, 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 some parts of the country. Some of
these projects -- such as the moat of the Mandalay fort -- were undertaken
to promote tourism to the country. In the past year, the military has begun
using soldiers instead of civilians at certain infrastructure projects,
following the issuance of directives in 1995 to end the practice of forced
civilian labor.
Child labor continues to be a serious problem.

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 NGOs have charged that Burma's teak forests in the
Thai-Burma border area are being rapidly destroyed by clear-cutting and
deforestation. 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
NGOs 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
Addiction and the spread of HIV/AIDS have become cross-border problems in
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 address
systematically the many severe problems it faces, including narcotics
trafficking and abuse, a low level of education, and poor economic

In recent months we have forged a vigorous 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 ASEAN nations, Japan, Korea,
the European Union, Australia, Canada, and other countries having major
trading and investment interests in Burma. These efforts have helped build
and maintain strong international pressure on the SLORC.  While
acknowledging that it was their decision to make, we urged ASEAN to
postpone offering membership in that organization to Burma this summer in
light of the SLORC's abysmal record on human rights and counternarcotics.
Despite our arguments that Burma under its current leadership has far to go
to emulate the kinds of constructive policies that ASEAN itself has pursued
for the past three decades, ASEAN leaders decided to pursue their stated
policy of constructive engagement with Burma by bringing it into the
organization on July 23. At the subsequent post-ministerial conference in
Kuala Lumpur, Secretary Albright made very clear to ASEAN leaders her
expectation that ASEAN will now seek results from that policy by persuading
SLORC to begin a meaningful political dialogue with Aung San Suu Kyi and
the NLD and to take effective steps against drug production and export.

The key to progress toward democracy and human rights is, first and
foremost, a direct dialogue about the political future of the country among
the SLORC, the NLD, and the ethnic minorities. In all our public and
private messages to the SLORC, leaders of third countries, and other
interested parties, we stress the importance of beginning such a dialogue
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 our friends and allies in Asia and Europe to press the SLORC
to begin dialogue. In response, leaders from 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 SLORC 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, 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 SLORC in these areas of key concern. Many nations join us in our arms
embargo, including European countries, Canada, Australia, Japan and Korea.
The EU and Japan limit their assistance to Burma to humanitarian aid and,
for Japan, debt relief. Our efforts in the international financial
institutions continue to be successful in blocking loans to the SLORC,
which is probably the single most important
sanction we have 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 SLORC.

Late last year, at our urging, the EU and associated European states joined
us in imposing a ban on visas for high-level SLORC 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 respectively, bringing their trade policies more in line with the
U.S. ban on GSP. 

ASEAN shares many of our goals with regard to Burma, but we disagree on the
means to achieve those goals.   ASEAN believes that "constructive
engagement" of the SLORC is the most effective way to promote positive
change in Burma. We will continue to raise our strong concerns about the
situation in Burma with ASEAN and urge continued steps to encourage
progress by the SLORC.

[end of document]