West set to reward Myanmar reformers

(BANGKOK) - Western powers are poised to loosen sanctions against Myanmar to bolster reformers, analysts said, following landmark elections which foreign governments have hailed as a step towards democracy.

Pro-democracy leader Aung San Suu Kyi's entry into political office for the first time is expected to prompt the United States and Europe to ease some -- but not all -- measures against the quasi-civilian regime, observers believe.

With the military and its political allies still firmly in control despite the opposition's crushing victory in Sunday's by-elections, experts say the West will be reluctant to give up all its leverage.

But doing nothing could leave President Thein Sein under pressure from reactionary elements within the regime who are wary of change after decades of military rule that lined the pockets of the generals and their cronies.

"Some hardliners will be angry," said Win Min, a political scientist at Harvard University who believes Washington will lift certain financial sanctions against the country formerly known as Burma.

"Moderates will be strengthened by the result, which would lead to the revoking of the main part of the sanctions," he told AFP.

Sunday's polls were widely praised by the international community, after Suu Kyi's National League for Democracy (NLD) secured at least 40 of the 44 seats it contested, according to partial official results.

The big win has left the ruling party facing an uncertain future with general elections set for 2015.

US President Barack Obama's administration, which in 2009 launched a drive to engage Myanmar, described the by-elections as "an important step in Burma's democratic transformation".

Myanmar, which languished for decades under a repressive junta, has announced a series of reforms since a controversial 2010 election brought a civilian government to power -- albeit one with close links to the military.

The easing of most US sanctions would require approval in Congress, where lawmakers have welcomed changes in Myanmar but also urged caution as they seek progress on more fronts including resolving ethnic violence.

Suu Kyi, who said she hoped the elections would mark the start of a "new era", holds huge influence in Washington and a move on US sanctions would almost certainly need her support.

Experts say the European Union could move more quickly. Indeed, the bloc indicated on Monday that it would send a "positive signal" when it reviews sanctions on the country later this month.

"The Europeans are much more bullish about the situation and more willing to lift sanctions than the Americans, who are a bit more cautious," said Sean Turnell, a Myanmar expert at Macquarie University in Sydney.

"But from both parties we're likely to see some reaction. On the American side there will be some initiation of the lifting of some of the sanctions as a sign of goodwill and as an opportunity to support the reformers," he added.

The 27-nation EU already lifted some sanctions on the regime this year to encourage reforms and foreign ministers will decide the next steps when they meet on April 23 in Luxembourg.

Foreign Secretary William Hague of Britain, Burma's former colonial ruler, welcomed the progress represented by the NLD's "remarkable" by-election wins, while urging Thein Sein to stay on the reform track.

Initial steps by the West are likely to focus on areas that can improve the lives of ordinary Burmese, while measures that target former regime officials and their cronies could be the last to be lifted, analysts say.

The loosening of sanctions would send another signal that Myanmar is opening up for business after years of isolation during which investment was largely limited to Asian firms seeking to tap the country's abundant natural resources.

But experts believe many investors will remain wary unless the government addresses wider concerns such as a dysfunctional economy, crumbling infrastructure and a murky legal system.

"Burma's economic problems don't come from sanctions. The fact that the country never attracted much in the way of foreign investment except in extractive industries before wasn't because of sanctions," said Turnell.

"The Thais, the Chinese, the Singaporeans could have been investing in more productive activities, and the fact that they didn't had everything to do with the economic mismanagement that successive regimes had put in place."

EU relations with Myanmar