LATEST REPORT TO CONGRESS ON BURMA

[moe@xxxxxxxxxxxxx]

Dear Netters,
                      tHE FOLLOWING IS THE LATEST REPORT TO CONGRESS ON BURMA

Peace.

Sincerely,

Julien Moe
----
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 


                                                                              

     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. 

     [end of document]