Analysis: Suu Kyi release put Myanmar sanctions in spotlight

By Martin Petty

BANGKOK | Fri Nov 19, 2010 3:39pm GMT

BANGKOK (Reuters) - Nobel laureate Aung San Suu Kyi's re-emergence from seven years' incarceration thrusts Western sanctions back onto the agenda in Myanmar, adding a new dimension to the army-ruled country's fast-changing political landscape.

The release of the pro-democracy leader from house arrest on Saturday, six days after a much-criticized election, means she will have no official political role but could serve as a crucial go-between for the West and the country's reclusive military rulers toward reviewing sanctions.

Embargoes by the United States, Australian and European Union, intended to push the generals toward reforms, have been criticized as ineffective as long as neighbors China, Thailand and India pour investment into the country, enriching the regime.

Instead of an entrepreneurial middle class that could help clamor for change, the military and its cronies monopolize every industry, adding to a half-century of economic mismanagement in a country that was once one of Southeast Asia's most promising but where now a third of the people live in poverty, economists say.

Western multinationals sidelined by the sanctions are sizing up the vast potential of the country of 50 million people. The stakes are also high geopolitically for the United States as long as sanctions steer the country closer toward powerhouse China.

"If sanctions were lifted Myanmar would be of interest to mining, natural gas, agribusiness, tourism, financial services and telecommunications. Everything from ports to telecoms," said Douglas Clayton, a former hedge fund manager who is now chief executive and managing partner of Leopard Capital, a private equity fund specializing in frontier markets.

Clayton, who runs a $34 million fund in Cambodia backed by overseas investors, said he would quickly set up a Myanmar fund if sanctions ended and expects the investment scale would be in "billions of dollars rather than millions".

The question now is what exact role Suu Kyi will play.

"Suu Kyi's reappearance is something that will be utilized at a time when the U.S. and EU are looking for some kind of engagement," said Myanmar analyst and retired British diplomat Derek Tonkin.

"There are areas where she can play a considerable role. Suu Kyi could hold consultations with diplomats, even if the regime isn't prepared to talk to them at this stage. There are things she can do with the West that they can't do with the regime."

SANCTIONS U-TURN

Suu Kyi previously called for the sanctions but has changed her stance in recent years. She sent a letter last year to the country's paramount leader, Than Shwe, offering to help lift sanctions, but the junta dismissed her gesture as "insincere".

Speaking to reporters on Sunday, she declined to comment directly on whether she would urge the West to lift sanctions that many say hurt ordinary people by allowing the junta to monopolize the resource-rich economy.

"If people really want sanctions to be lifted, I will consider this," she said.

In secretive Myanmar, also known as Burma, no one knows if the attitude of Than Shwe and his clique of generals toward their arch enemy Suu Kyi has changed to the extent they might now see her as a means to end to their international isolation.

Some experts say sanctions benefit the regime as long as it receives economic and political support from China. Its isolation prevents international interference and investigations into its decades of gross human rights abuses.

Energy-hungry China props up the junta financially and offers it political protection by shooting down any attempts to inflict punitive action in the United Nations Security Council.

But others suggest China's support is not enough and the generals may be wary of becoming almost entirely dependent on their neighbor for their wealth and protection.

The lifelong soldiers are obsessed with security and keen to strengthen their military to fight domestic threats such as ethnic insurgencies or even an invasion by foreign forces. As long as arms embargoes are in place, their access to modern weapons technology is restricted mainly to China and Russia.

The release of the 65-year-old Oxford-educated Suu Kyi after the expiry of her sentence, which the generals described as "a pardon" might be a tactical move to get sanctions on the agenda.

"Being too close to China could be a problem in the long run and sanctions strike at the heart of this regime," said Aung Naing Oo, a Burmese academic and deputy director of the Thailand-based advocacy group, the Vahu Development Institute.

DEAL WITH THE DEVIL?

"They want more investment and a modern military and their chances of this are limited. They know Aung San Suu Kyi wants sanctions lifted and by releasing her, they're hoping she will return the favor."

It is assumed Suu Kyi will pursue some kind of political role outside Myanmar's new political system, which critics say was designed to exclude her, sideline opponents and entrench military rule behind a facade of democracy.

She was conciliatory on Sunday in a speech to supporters. She called for democracy and free speech but said she felt "no antagonism" toward the regime that detained her for 15 of the past 21 years, adding she was willing to work "with anyone".

A concern is the weight of expectation on Suu Kyi and the risk of upsetting her supporters if she is seen to be cooperating with the generals. It is unlikely she can have any impact on the formation of a military-dominated parliament and a government expected to be firmly under the control of the junta.

Analysts say Suu Kyi should try to avoid agitating the generals which could, as before, lead to her re-arrest.

"She will try to play an unofficial stateswoman-like role outside the established power structure and the regime will tolerate that as long as she can help the country and doesn't step out of line," added Aung Naing Oo.

"If she does that, they'll drag her through the mud."

(Additional reporting by Jason Szep) (Editing by Robert Birsel and Miral Fahmy)
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