U.S. Government Report on Condition

[moe@xxxxxxxxxxxxx]

Subject: U.S. Government Report on Conditions in Burma [29th October 1998]

Dear Netters,
                      The following  is the latest and most recent  report
on Conditions in Burma. The report reflects the current and ongoing U.S.
Policy towards Burma.

Peace.

Sincerely,

Julien Moe
----

29 October 1998 

TEXT: MARCH 28 TO SEPT. 28, 1998 REPORT ON CONDITIONS IN BURMA 

(SPDC has made no progress toward democratization)  (4700)

Washington -- President Clinton transmitted to Congress October 28 a
required report on conditions in Burma and U.S. policy toward Burma
for the period from March 28, 1998 to September 28, 1998.

A U.S. statute (Public Law 104-208) requires that such reports be
given to Congress every six months.

"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 report says. "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,"
the report continues.

According to the report, the Burmese economy is deteriorating due to
"SPDC economic mismanagement, combined with spill-over effects from
the Asian financial crisis."

"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," the report says.

"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," the report continues.

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

"We have taken strong measures to pressure the SPDC to end its
repression and move towards democratic government," the report says.
"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 Charg? d'Affaires, imposed visa restrictions on
senior officials and their families, and instituted a ban on new
investment by U.S. persons."

The United States remains 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,
according to the report.

Following are the official texts of the determination and the report:

(begin text of determination)

THE WHITE HOUSE
Office of the Press Secretary

October 27, 1998

MEMORANDUM FOR THE SECRETARY OF STATE

SUBJECT:  Report to the Congress Regarding Conditions
          In Burma and U.S. Policy Toward Burma

Pursuant to the requirements set forth under the heading "Policy
Toward Burma" in section 570(d) of the FY 97 Foreign Operations
Appropriations Act, as contained in the Omnibus Consolidated
Appropriations Act (Public Law 104-208), a report is required every 6
months following enactment concerning:

(1) progress toward democratization in Burma;

(2) progress on improving the quality of life of the Burmese people,
including progress on market reforms, living standards, labor
standards, use of forced labor in the tourism industry, and
environmental quality; and

(3) progress made in developing a comprehensive, multilateral strategy
to bring democracy to, and improve human rights practices and the
quality of life in Burma, including the development of a dialogue
between the State Peace and Development Council (SPDC) and democratic
opposition groups in Burma.

You are hereby authorized and directed to transmit the attached report
fulfilling these requirements to the appropriate committees of the
Congress and to arrange for publication of this memorandum in the
Federal Register.

WILLIAM J. CLINTON

(end text of determination)

(begin text of report)

Plan for Implementation of
Section 570 of Public Law 104-208
(Omnibus Appropriations Act, Fiscal Year 1997)

CONDITIONS IN BURMA AND U.S. POLICY TOWARD BURMA
FOR THE PERIOD MARCH 28, 1998 - SEPTEMBER 28, 1998

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 Charg? 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 Charg? 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 text of report)