Burmese Spring

Last week, U.S. Secretary of State Hillary Clinton arrived in Burma in the midst of a massive political thaw. For decades the West has shunned the Asian country, whose ruling generals brutally repressed their own people. But with the government showing signs of a liberalizing shift, Burma is giddy with change.

In November 2010, the military regime released opposition leader and Nobel Peace Prize winner Aung San Suu Kyi, who has been under house arrest for most of the past two decades. Clinton's visit—the first by an American secretary of state in more than half a century—marks another milestone. Both acts have been initiated by newly elected President Thein Sein, who has surprised democracy advocates and rankled hardliners with his swift and radical reforms: legalizing unions and public protest; loosening the shackles on the state press; and releasing hundreds of political prisoners.

Thein Sein's boldest move has been a break with China. In September the president halted the controversial $3.6 billion Myitsone dam, a project funded by Chinese investors to generate electricity for millions of Chinese. The project has been vehemently opposed by locals, mainly due to the planned relocation of some 10,000 villagers. But few expected the government to hear their complaints, much less halt the project. "This was the first time the government has acknowledged public opinion," says Than Htut Aung, a leader of the dam opposition. "It represents a revolutionary change in the country."

Experts say the rift over the dam is indicative of Burma's intention to lessen its longstanding dependence on China, which has been a major source of trade and aid in the wake of crippling Western sanctions. Last year, China pumped $8 billion into Burma's economy, nearly a third of the country's GDP and a fourfold increase over Chinese investment last year, according to local media reports. Despite China's cash infusion, though, dissatisfaction with the superpower is rampant. "All they do is take our minerals and resources," says a teacher in Rangoon, who requested anonymity. "China doesn't help us grow or invest in our development. That's why we need to turn more to countries like America."

The cold shoulder to China may also be a concession to the West by the government, says Sean Turnell of Sydney's Macquarie University, an analyst of Burma affairs. "Clearly, there's a political calculation, too—a playing of the 'China card' with respect to Burma's international relations," he says. "This decision was the first real marker of serious intent­—that what is going on in Burma is not just simply nice words."

Local diplomats and dissidents agree. "The changes haven't just been startling, they've been revolutionary," says a Western diplomat in Rangoon. "And they have been constant. Sometimes it's hard to keep up, with new reforms announced almost every day. There is still a lot to be done, but Burma has gone from darkness to a kind of sunrise, practically overnight."

Even Suu Kyi, who has long spurned compromise with the regime, has signaled confidence in Burma's thaw. After meeting with Thein Sein, she announced she could work with him to move Burma forward. In late November, her National League for Democracy (NLD), formerly outlawed from politics, was allowed to re-register as a party, with the intention of contesting the next by-elections. Senior party leaders told Newsweek that Suu Kyi intends to run for Parliament, and she is widely expected to make a bid for the presidency in the 2015 general election.

"It's Burma rebooted," says U Tin Oo, the 84-year-old second-in-command at the NLD, who has been at Suu Kyi's side for decades, including a 14-year stint in prison. "Everything is happening with a speed we couldn't even foresee," he said at NLD headquarters. Once a gloomy building under watch from goons in sunglasses, it's now a beehive of activity. Party volunteers register young new members. Huge posters of Suu Kyi and her father, national hero Aung San, cover the walls, while Suu Kyi DVDs and buttons are on sale at several tables. "It's completely revolutionary," Oo says.

Most here believe the reforms are genuine, and a sign that sanctions have worked. Once among Asia's richest countries, Burma has seen its economy all but collapse, leaving its 62 million people among Asia's poorest, earning on average $2.20 a day. Most banks are not allowed to handle transactions involving Burma—effectively blocking remittances from overseas—and credit cards cannot be used inside the country. Inflation is rampant; for example, most vehicles are secondhand heaps sold for scrap, yet sell for exorbitant prices. Still, things have been getting better since the thaw. "Before, these junk cars cost $30,000," says U Moe Kyaw, head of the country's largest independent research firm, MMRD. "Now they have dropped to $10,000."

It's this desperate situation that likely drove the government to try reforms, in hopes of attracting investment. "We have to increase development," says a local government monitor. "Before, we just had too much China. We were being cornered, putting all of our fruit in one basket. We need more development and a better balance."

Despite the country's optimism, most Burmese realize it will take years to phase out sanctions and restore international ties, not to mention rebuild civil society out of the shambles of a police state. Another concern is ethnic infighting, which has recently flared up in the restive northern border areas, where a dozen ethnic groups—some with large armies—have battled the government since independence from the British in 1948. Last month, Thein Sein re-launched peace talks with many of the rebel groups.

"He's really moving things forward on so many fronts at once, it's astonishing," says another Western diplomat who regularly comes for meetings in Burma, including several with both the president and Sui Kyi. "He's stuck his neck out so far that [the military] won't even need to chop it off. If he doesn't get results and recognition from the West, it will fall off."

Luckily for Thein Sein, recognition from the West seems to be guaranteed. Last week, Clinton told the president that the U.S. intends to loosen restrictions on aid groups operating in Myanmar, and more measures would follow if the government continued to reform and to release political prisoners. After her own meeting with Clinton, Suu Kyi gave a grudging nod to an ease in sanctions, just not immediately. "If we go forward together, all of us, the opposition, the government and the international community, there will be no turning back from the road to democracy," she said. "We are not on that road yet, but we hope to get there as soon as possible."

Sanctions against Burma may remain in place for some time, since they are the trump card to push for further reforms. This rankles local businessmen and overseas investors, who yearn for fewer restrictions. Resource-rich Burma has considerable oil and gas reserves, pristine forests, and most of the world's jade, a stone highly prized by China.

Despite the ongoing sanctions, it's impossible not to smell the intoxicating fragrance of opportunity in Burma these days. All flights to the country are booked, not only by tourists but also by investors eager for an early piece of Burma's economy, which could boom once sanctions are lifted. "We aren't just ready to go but itching to do so whenever things change, and everyone expects that within months, if not weeks," said one Bangkok executive, who noted that many hotel chains already have sites staked out.

"I'm cautiously, cautiously optimistic," says Oo, the longtime ally of Suu Kyi. "This is all just a slight flicker of democracy. But through that flicker, we hope to build and increase it a little, and a little more, to make democracy burn brightly in Burma."