This Dec. 21, 2009, photo released by the Democratic Voice of Burma shows Burmese defector Sai Thein Win at the control panel of an industrial machine at an undisclosed location in Burma

It may seem counterintuitive, but Burma has a lot going for it. Blessed with abundant natural resources, the nation is home to the last of the world’s ancient teak forests; it produces tens of thousands of tons of jade every year; it’s at the center of the global ruby trade; and most important, it has natural gas. Lots of it. Burmese gas already powers half of Bangkok, and it will soon start flowing to China, making billions of dollars of profit. For many though, it’s where the money is being spent that’s worrying.

Up until a few years ago, Burma’s military government, cut off from trade with the West, led a “hand-to-mouth existence,” says Sean Turnell, an economics professor at Macquarie University in Australia. Now, thanks in no small part to its resource-hungry neighbors, the pariah state has $6 billion in cash reserves, says Turnell. As cash is flowing in, the military junta that has run the country since 1962 is spending lavishly. With about a third of the country in poverty, the junta could invest in health, education or job creation, but instead, new evidence suggests Burma is spending billions on outlandish military projects, including a secretive nuclear weapons program. Turnell says the junta is “absolutely paranoid about international interference in the country.” (See pictures of Burma’s slowly shifting landscape.)

A documentary released last month by the Norway-based NGO Democratic Voice of Burma (DVB) details the beginnings of a clandestine Burmese nuclear program. Though much of the documentary’s evidence comes from a single defector living in hiding, hundreds of color photographs appear to confirm the rumors that have been swirling for the past few years that Burma has been pursuing the bomb. The Burmese Ministry of Foreign Affairs calls DVB’s accusations “baseless,” but Robert Kelley, a former director of the International Atomic Energy Agency and weapons scientist at Los Alamos National Lab, concluded from the DVB evidence that the technology in the photos “is only for nuclear weapons and not civilian use or nuclear power.”

The documentary’s primary source, a former Burmese army major named Sai Thein Win, is a Russian-trained missile expert — not a nuclear engineer — who says he was second in command at a top-secret military factory that made parts for Burma’s nuclear weapons program. The photographs Sai Thein Win supplied to DVB dovetail with other evidence that suggests Burma is undertaking a massive nuclear project. Dictator Watch, a U.S.-based opposition watchdog group, provided TIME with a list of some 660 Burmese students studying engineering and military-related fields in Russia, more than 65 of whom are studying nuclear-related subjects. According to Roland Watson of Dictator Watch, the list is just a batch from 2009; he claims he’s heard from multiple independent sources that there are more than 3,000 Burmese military researchers who have studied in Russia over the past decade. In the film, Sai Thein Win estimates that the number could be as high as 10,000. In fact, Sai Thein Win says he was in the first group of Burmese students sent to Russia, in 2001, where he studied missile technology at the Moscow Engineering Physics Institute, once the primary training ground for Soviet nuclear weapons experts. (See pictures of Burma’s decades-long battle for democracy.)

Despite Burma’s presumed investment of hundreds of millions of dollars in its alleged nuclear weapons program, the country is still years away from any kind of bomb. Kelley told TIME that Burma’s apparent attempt to enrich uranium using laser isotope separation — a complex and expensive method that has stumped many richer nations — was “kind of dumb.” At this rate, it’s going to be a long time before Burma’s leader, General Than Shwe, ushers Burma into the nuclear club — though that may be news to Burma’s top brass. The Irrawaddy, a Burmese newsmagazine in exile based in Thailand, reported that Than Shwe was furious at his officials after learning that Kelley’s report for the DVB said a nuclear weapon “may be beyond Burma’s reach” at this time. Khin Maung Win, the deputy chief editor of the DVB, told TIME that Than Shwe “has been lied to by his own people.”

Sanctions, Khin Maung Win says, have prevented Burma from freely acquiring much of the technology it needs for its nuclear program. Though the DVB documentary suggests Burma has acquired some large-scale German- and Swiss-made tools, it also shows Sai Thein Win holding a prototype of a missile component, the part’s rough edges revealing Burma’s lack of precision machinery. But for now, Turnell of Macquarie University says the government has easy access to the money needed to keep the nuclear project flush. At the moment, says Turnell, Burma makes roughly $3 billion a year from its gas exports. When a new pipeline opens in 2013, Burma stands to make an additional $2 billion a year. “The regime is cashed up,” he says.

The Burmese junta isn’t using its newfound wealth just to fund its alleged nuclear weapons program. It has built a new capital city, Naypyidaw, deep in the center of the country, where the generals would be safe in the event of an amphibious assault. North Korea is believed to be helping Burma construct an elaborate network of tunnels designed to protect Burma’s military leadership from airborne attack. It’s a plan the DVB estimates has already cost some $3.5 billion. Last year, Burma bought at least 20 MiG-29 fighter planes from Russia, and late last month, the Irrawaddy reported that some 14 North Korean–made truck-mounted missile launchers had been set up at military bases around the country. Why is Burma spending so much on defense? “It’s part of a crazy dream of Than Shwe that Burma should be a big and powerful empire,” says Bertil Lintner, a Thailand-based journalist who has written books on Burma and North Korea.

Meanwhile, the people in Burma continue to suffer. In a 2000 World Health Organization ranking, Burma had the second worst health system in the world, sandwiched between the Central African Republic and Sierra Leone. This shouldn’t be a surprise, given that only 1.8% of Burma’s total public expenditure is on health, also the second lowest in the world, according to the United Nations Development Program. “This is not a modern, developmentally focused government like China or Vietnam,” Turnell says, adding that the country’s irrational military spending “is the great scandal. Its poor have so many needs.” (See TIME’s special on the battle for global health.)

If this sounds similar to another Asian pariah state, it should; Burma is trying to follow the North Korean model, according to Khin Maung Win. Than Shwe reportedly admires Kim Jong Il for standing up to the international community, and ever since the countries formalized relations in 2007, the two states have deepened their military connections, say DVB sources. Relations between the two countries, however, have not always been so amicable. In 1983, North Korean operatives attempted to assassinate the South Korean President in a Rangoon bomb attack that killed 21, and Burma severed official diplomatic relations for more than two decades. Recently, though, the countries seem to have bonded as joint pariah states, with the junta’s No. 3 general, Shwe Mann, visiting North Korea in 2008. Nowadays, Khin Maung Win says there could be hundreds of North Korean military experts at any given point in Burma acting as advisers to key parts of Burma’s defense industry.

Right now, there is no evidence that the North Koreans are directly helping with Burma’s alleged nuclear weapons program, but analysts worry this might not always be the case. Burma has cash, and North Korea needs it — desperately. Defectors say Burma wants a bomb; U.S. intelligence says North Korea already tried helping build a nuclear reactor for Syria before Israel bombed it. “A couple years ago, I would’ve pooh-poohed the whole thing,” says Turnell of Burma’s nuclear weapons program. But now, he says, “The whole story is a perfect fit.”

Read about Burma’s ruling general.

http://www.time.com/time/world/article/0,8599,2002713,00.html