Myanmar's military junta looks set to make a major gesture of reconciliation towards the opposition in a bid to stave off tougher sanctions by the West and greater isolation from its Asian neighbours.
The generals, in power for most of the last 40 years and shunned by many countries for their human rights record, may free a large batch of political prisoners and could announce moves towards reform of the impoverished Southeast Asian country.
There is also a chance, diplomats say, that the government could free the leader of the opposition, Nobel Peace laureate Aung San Suu Kyi, from the de facto house arrest she has endured for more than 18 months.
Hopes of progress towards democracy have been raised by a top U.N. official, who left Myanmar on Friday hinting of a dramatic breakthrough in secretive talks between Suu Kyi and the junta. U.N. Special Envoy to Myanmar Razali Ismail, who had four days of meetings with the generals and lengthy discussions with Suu Kyi including dinner at her Yangon home, said he was optimistic about the prospects for political progress.
The Malaysian diplomat said the parties in Myanmar were now "committed to the national reconciliation process". "A few important developments may well happen quite quickly," said Razali, who has been brokering the talks for 18 months.
Diplomats said the envoy of U.N. Secretary-General Kofi Anan must have had solid grounds for making such a statement. "He chooses his words very carefully," said one well-informed European diplomat, who declined to be identified. Razali rarely speaks in public about Myanmar, and when he does, he is cautious, weighing his remarks, he said. The most likely "important developments" would be either the release of Suu Kyi or a mass release of political prisoners. Of the two options, the latter is most likely, diplomats say.
LOCKED UP, HARASSED AND EXILED
Although the junta has freed more than 200 political detainees over the last year, Amnesty International says about 1,500 are still languishing in jail, including many members of Suu Kyi's National League for Democracy (NLD). The NLD won the country's last democratic elections in 1990 but has never been allowed to govern. Instead, its members have been locked up, harassed or exiled and its party offices closed.
The release of Suu Kyi, the charismatic daughter of assassinated independence hero Aung San, is widely regarded as the single most important step the junta could take to show the outside world that it is considering political change.
And a major gesture is necessary if Yangon is to avoid another wave of international sanctions by the United States and other Western countries who have been outraged at the military's treatment of Suu Kyi, who was released from six-years house arrest in 1995, and her supporters. The United States and the European Union already deny Yangon some aid and restrict the issue of visas to Myanmar officials. The U.S. congress is now considering banning all imports from Myanmar, which would hit its textiles industry -- one of Myanmar's few legitimate foreign exchange earners.
U.S. officials say Myanmar's biggest earner is probably heroin and methamphetamines. The U.S. government says Myanmar was the world's top producer of opium in 2001, thanks to a decline in Afghanistan when the Taliban banned cultivation of opium poppies. U.S. diplomats say the Bush administration could push a sanctions bill through by mid-year if there is no progress. Europe would face heavy public pressure to follow suit.
The junta's relations with the 10-member Association of South East Asian Nations (ASEAN), which admitted Myanmar in 1997 hoping engagement would bring change, are also becoming strained.
Singapore, Malaysian and Thai businesses hoped to profit from the military's move to open up Myanmar's isolated economy in the mid-1990s but have instead run up against informal Western boycotts and the junta's arbitrary decision making. Last month the government banned all foreign trading firms, many of which were from neighbouring countries, in an effort to protect local firms, turning a deaf ear to ASEAN protests.
ISOLATIONISM
"ASEAN can play a really significant role, if it chooses to, in pressing for change here," said a Yangon-based diplomat. "But the regime is consistently trying to keep ASEAN out of their political business. If they revert to isolationism, they really risk the whole relationship with ASEAN."
Economic pressure is also mounting. The Myanmar economy is moribund with the kyat currency at an all-time low of 1,000 to the dollar on the black market, inflation rampant and hours each day of electricity black-outs.
Freedom for Suu Kyi, an immensely popular icon for the pro-democracy cause inside and outside Myanmar, is the key demand of the opposition who say there can be no real progress as long as she is confined to her lakeside home in the Myanmar capital.
Partly because of this, diplomats think her release may have to wait a little longer. The junta would not want to be seen to be caving in to international pressure to release her but would prefer instead to let her go when they choose, they say.
"She still represents something very important for the people: their aspirations, what the country could and should be, which is why they don't release her," said a Western diplomat. But the junta may have to free her soon.
"We've always said if there's positive change we'll respond, but of course, the reverse is also true," said the Western diplomat in Yangon. "If Razali comes and there's no release, I'm not sure how much mileage is left."