Conditions in Burma and U.S. Policy

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Subject: Conditions in Burma and U.S. Policy Toward Burma

Conditions in Burma and U.S. Policy Toward Burma

                 For the period March 28, 1999 - September 28, 1999 
       
                 Plan for Implementation of Section 570 of Public Law 104-208
                 (Omnibus Appropriations Act, Fiscal Year 1997)
                 Submitted to the U.S. Congress, November 2, 1999
                 Released by the Bureau of East Asian and Pacific Affairs,
November 3, 1999
                 U.S. Department of State 




     The people of Burma continue to live under a highly repressive,
authoritarian military regime.
     The international community widely condemns that regime for its serious
human rights abuses.
     The State Peace and Development Council (SPDC), Burma's ruling military
junta since 1997,
     has made no significant changes in the governing policies of its
predecessor, the State Law and
     Order Restoration Council (SLORC), which seized power in 1988. 

     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
     stepping up repression of the National League for Democracy (NLD),
Burma's largest
     opposition party, and attacking its leader Aung San Suu Kyi, in the
state-controlled press. 

     SPDC economic mismanagement, combined with residual effects from the
Asian financial crisis,
     has sent the Burmese economy into a downward spiral that the regime
appears unable to halt.
     Economic fundamentals have become increasingly opaque as the government
has ceased
     publishing data on the money supply and foreign exchange reserves. The
Government of Burma
     reported to the International Monetary Fund (IMF) in June that it had
$350 million in foreign
     exchange reserves as of April 1999. According to official figures,
annual inflation was 49
     percent in 1998/99, although the actual rate is likely higher. The
Burmese kyat held steady due
     to administrative controls on currency markets. After authorities
increased electric bills
     eight-fold for companies and individual consumers in March and April,
power outages
     decreased, although power supplies remain unreliable. Gasoline and
diesel fuel are rationed to
     three gallons per vehicle per day. Onerous trade controls have made it
difficult for international
     business to turn a profit. 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. The United States has suspended
economic aid,
     withdrawn Burma from the general system of preferences (GSP) and
Overseas Private
     Investment Corporation (OPIC) programs, implemented an arms embargo,
blocked 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. Since 1989, the United States
has been unable to
     certify that Burma has cooperated in efforts against narcotics. We
remain engaged in multilateral
     diplomacy to encourage the Association of Southeast Asian Nations
(ASEAN), Japan, Korea,
     China, the European Union (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
has renewed the
     range of sanctions it implemented against Burma, including visa
restrictions similar to ours and
     the withdrawal of generalized system of preferences (GSP) benefits. 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 economic mismanagement by the regime, financial crisis
in much of Southeast
     Asia, and economic sanctions, approvals of new foreign direct
investment in Burma fell by 96
     percent in 1998, and are unlikely to pick up in the near term. Many
foreign investors have
     withdrawn from Burma due to the unfavorable political situation. The
government has
     demonstrated little will to rein in inflation-causing deficit spending
or to implement
     market-oriented reforms. In the past year the focus of economic policy
has been to support
     self-reliance and development of agriculture. The SPDC is unlikely to
develop the economy
     unless political developments in Burma permit an easing of restrictions
on lending by
     international financial institutions. 

     Measuring Progress Toward Democratization: 

     During the current review period (March-September 1999), the ruling
junta showed no sign of
     willingness to cede its hold on absolute power. The regime refuses 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 further 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. 

     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 was overwhelmingly made up of delegates hand-picked by the
junta, which
     carefully stage-managed the proceedings and ignored even limited
opposition views. The
     regime appeared 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. The Convention
has not met since
     mid-1996, and the SPDC's current plans for the body remain unclear. 

     In September 1998 the SPDC rounded up almost 1,000 opposition party
members, including
     200 members-elect of Parliament, and detained them without filing
charges in so-called police
     "guesthouses." These detentions came in response to the NLD's
announcement that it would
     seek to convene the Parliament, elected in 1990, but never allowed to
convene. After keeping
     the NLD members and parliamentarians in arbitrary detention for more
than six months, the
     SPDC began releasing them. A core group of about two dozen members of
Parliament,
     including Speaker-designate Dr. Saw Mra Aung, remain in detention. The
regime allows
     families to visit members of this group once a fortnight. 

     In September 1998 the NLD formed the "Committee Representing the
People's Parliament"
     (CRPP) to fulfill the role of the Parliament elected in 1990, but never
recognized by the regime.
     The CRPP began to approve and reject laws passed by the military
government. The SPDC
     viewed the CRPP as an attempt to create a parallel government and
launched a concerted
     effort to dismantle the NLD. As of September 1999, the SPDC had
announced the closure of
     over 50 NLD party offices and the resignation of over 34,000 NLD
members and orchestrated
     recall drives against 45 Members of Parliament-elect. These actions,
combined with the
     detentions described above, have crippled the NLD's nationwide
organizational capacity.
     Throughout late 1998 and early 1999, the SPDC organized mass rallies
denouncing Aung San
     Suu Kyi and the NLD in each State and Division. The state-controlled
media accompanied
     these rallies with virulent personal attacks on Aung San Suu Kyi. In
the past six months, the
     public rallies have ceased. However, the personal attacks on Aung San
Suu Kyi have
     continued, as have the recall drives against parliamentarians who
refuse to resign. 

     In January 1999, reportedly more than 200 Rangoon University students
were each sentenced
     to 14 years in prison for staging nonviolent demonstrations against the
regime the previous year.
     Numerous NLD leaders were also convicted and sentenced to long prison
terms. On the
     positive side, in January and in February the government released two
political prisoners before
     the end of their scheduled terms of incarceration. The releases came
shortly after visiting U.S.
     Congressman Tony Hall raised these cases with senior Burmese government
officials. 

     Burma is the world's leading producer of illicit opium, accounting for
about 90 percent of
     Southeast Asian production and about half of the world's supply.
Methamphetamine production
     and distribution from Burma is also becoming an increasing problem. The
Burmese government
     has expanded its counternarcotics efforts over the past few years.
Methamphetamine seizures
     tripled from 1997 to 1998 and continue to increase in 1999. During the
first quarter of this
     year, methamphetamine seizures totaled 1.8 million tablets. Significant
declines in both poppy
     cultivation and opium production have been recorded for the second
straight year. Through a
     combination of drought and eradication efforts, poppy cultivation
estimates for 1999 show a 31
     percent decline over 1998. Reduced cultivation will result in a 38
percent decline in opium
     production. Analysts fear that cultivation may return to past levels or
increase when the drought
     ends. Given the size of the narcotics problem in Burma, much more needs
to be done. Part of
     the problem is that the Burmese government does not control many of the
ethnic groups that
     traffic in drugs. Nevertheless, the government also needs to make a
greater effort at interdiction.
     While there is no evidence that the government is involved on an
institutional level in the drug
     trade, there are reports that corrupt army personnel in outlying areas
may be aiding the
     traffickers. The government implicitly tolerates continued involvement
in drug trafficking by
     ethnic insurgents who have signed cease-fire agreements. These
cease-fires have the practical
     effect of condoning money laundering as the government also encourages
former drug
     traffickers to invest their ill-gotten gains in the legitimate economy. 

     The United States recognizes that serious political and human rights
concerns preclude our
     working directly with the regime in Burma. The United States also
remains concerned 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
non-governmental program in
     Burma, the Old Soldiers Project of 101 Veterans, Inc., to replace opium
poppy cultivation with
     substitute, economically-viable alternative crops. Despite impressive
strides in a short period of
     time, the Burmese government suspended the Old Soldiers project in
September 1998. After
     the regime suspended the program, the United States worked with the UN
Drug Control
     Program (UNDCP) to keep the project operating under UNDCP auspices, but
the government
     rejected the proposal. We continue to work with UNDCP and through other
channels to try to
     convince the Burmese government to reverse its decision. 

     In further support of our counternarcotics efforts, we have encouraged
the (United Nations)
     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 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 townships in
the Wa region, without
     going through the government. On the development side, UNDCP is
providing 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. UNDCP
     has begun developing two pilot programs, one in the Wa region and one
in the Kokang area,
     targeting poppy cultivation. 

     The United States 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 the
     UN continuously apprise the National League for Democracy and Aung San
Suu Kyi of its
     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 United States
Government has earmarked
     $6.05 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 continued to worsen.
     The SPDC's severe violations of human rights 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. Most adherents of all religions duly registered with the
authorities generally enjoyed
     freedom to worship as they choose; however, the government imposed some
restrictions on
     certain religious minorities. Arbitrary arrests and detentions of those
who express dissenting
     political views continue. As of September 1999, hundreds, if not more,
of political prisoners
     remained in detention, including more than two dozen members of
Parliament elected in 1990.
     Prison conditions remained deplorable, and prisoners were subjected to
a lack of food and
     adequate medical care. The International Committee of the Red Cross
(ICRC) began making
     prison visits in May 1999. As of September, the ICRC reported it had
seen over 18,000
     prisoners, including 800 political detainees. ICRC officials reported
they were allowed to
     interview prisoners privately and to conduct complete inspections of
the facilities they visited. 

     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, the SPDC has put up blockades in front of Aung San Suu
Kyi's house to
     block gatherings in the street and prevent her from addressing party
supporters. The regime has
     allowed the NLD to hold several gatherings inside Aung San Suu Kyi's
compound, usually on
     national holidays, but often restricts the participation of observers
and journalists. The regime
     allowed the NLD to hold party congresses within the compound in May and
September 1997.
     Since September 1998, the NLD has ceased holding large gatherings at
the compound, since
     many key NLD members remain in detention. The SPDC has allowed the NLD
to hold events
     at party headquarters, but the regime continues to resort to tactics
designed to intimidate those
     attending the events as they did, for example, on July 17 when they
harassed or blocked party
     members from attending an event commemorating Martyrs Day. 

     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 1997 and some lower technical
institutes in March 1998.
     Some universities were briefly reopened in July 1998 to allow
previously enrolled students to
     take final exams and graduate. Medical schools were reopened in 1998
and remain open as of
     March 1999. Over the past eleven years of SLORC/SPDC rule, universities
have been open
     for undergraduate students for a total period of two-and-a-half years.
More than 300,000
     students are waiting for the universities to reopen in order to
continue their studies. 

     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.
     According to reliable reports, there may be more than one million
Burmese internally displaced
     by such army attacks. 

     Burma is a poor country, with an average per capita GDP of
approximately USD $406 at a
     trade-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, rampant
inflation has eroded real
     economic gains for the vast majority of the population. There is reason
to believe that money
     laundering is a significant factor in the overall economy given the
fact that the government
     encourages former traffickers to invest their funds in Burma. The pace
of economic reform has
     slowed since 1993, 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 international financial institutions, access to external credit
from the IMF, World Bank, and
     Asian Development Bank continues to be blocked. In September 1998 the
World Bank
     announced that Burma had defaulted on its loan repayments. 

     After rapid market depreciation in 1997 of the Burmese kyat, from ks.
150/dollar to ks.
     370/dollar, the local currency has stabilized at around ks. 350/dollar.
Rather than reflecting an
     actual strengthening of the currency, local analysts believe the steady
position of the kyat rate is
     due to narrow usage of foreign exchange and administrative controls
imposed on the foreign
     currency markets. The official exchange rate of ks. 6/dollar is still
used by the state sector to its
     advantage. In an effort to shore up scarce foreign exchange reserves,
the government imposed
     strict import and remittance controls on the private sector in 1997
permitting companies to
     remit only $50,000 in profits. In 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. 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 total of these controls is untenable and business
will decline inevitably as a
     result. 

     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. 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 on
     certain infrastructure projects. 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 non-governmental organizations
(NGOs) 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 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. While official statistics
released in 1997 show
     over 10,000 HIV-infected people, and about 2,000 AIDS patients,
international organizations
     estimate that at least one million Burmese may be HIV-infected. 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 counternarcotics efforts. Absent national
reconciliation, Burma will
     not be able to adequately address the many severe problems it faces,
including narcotics
     trafficking and abuse, low levels of education and poor economic
performance. 

     The United States actively works to promote international pressure on
the SPDC for a
     meaningful dialogue on a democratic transition and an improved human
rights climate. We are
     pursuing 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. 

     We support the UN's "good offices" approach to encouraging dialogue
between the regime and
     the democratic opposition as a means of achieving a peaceful transition
to civilian rule. We
     welcome the continued engagement of the UN Secretary General and his
senior representatives
     in this effort. UN Special Envoy for Burma Alvaro de Soto can play a
valuable role by
     encouraging the SPDC to initiate a genuine dialogue with the democratic
opposition, including
     Aung San Suu Kyi and the NLD. 

     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 International Labor Organization (ILO) to condemn the
lack of freedom of
     association for workers and the use of forced labor by the SPDC. In
June, with our support,
     the ILO took the unprecedented step of banning Burma from attending ILO
meetings and
     receiving technical assistance due to its forced labor practices. 

     In 1996, at our urging, the EU and associated European states joined us
in imposing a ban on
     visas for high-level SPDC and military 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. In October 1998, the EU broadened its visa
ban to include
     high-level tourism officials and urged EU citizens to defer vacation
travel to Burma. 

     ASEAN shares many of our goals with regard to Burma, but we disagree on
the means to
     achieve those goals. Many members of ASEAN believe that "constructive
engagement" of the
     SPDC 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 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]