AYE AYE WIN | February 5, 2012 10:16 AM EST | AP
Compare other versions »

YANGON, Myanmar — A U.N. human rights envoy said Sunday that Myanmar is considering letting foreign observers monitor April elections that are viewed as crucial for gauging the nation’s much-heralded democratic reforms.

The envoy, Tomas Ojea Quintana, praised the “continuing wave of reforms in Myanmar, the speed and breadth of which has surprised” Myanmar watchers around the world. Quintana ended a six-day visit to the country on Sunday.

After nearly half a century of iron-fisted military rule in Myanmar, a nominally civilian government took office last March. The new government has surprised even some of the country’s toughest critics by releasing hundreds of political prisoners, signing cease-fire deals with ethnic rebels, increasing media freedoms and easing censorship laws.

“My mission confirmed that a positive impact has been made,” Quintana said. “However, serious challenges remain and must be addressed. There is also a risk of backtracking on the progress achieved thus far.”

During his trip, Quintana met with senior government ministers, political prisoners and Nobel Peace laureate Aung San Suu Kyi, the longtime political prisoner whose bid for a parliamentary seat has drawn intense international interest.

He called the upcoming polls “a key test” of the government’s commitment to reforms.

“I must stress that the credibility of the elections will not be determined solely on the day of the vote, but on the basis of the entire process leading up to and following election day,” Quintana said.

He said that in talks with Myanmar’s Election Commission, “I was informed that the use of international observers was under consideration.”

Allowing outside monitors would be a major step for the long-isolated country, where international bids to send observers were rejected in 2010 and 1990, the last two elections.

A string of visiting American officials has also singled out the April polls as a measure of whether the West will lift sanctions that were imposed on Myanmar during the military junta’s rule.

Quintana cited a number of human rights concerns, noting that authorities continue to detain an unknown number of political prisoners. He urged the government to allow an investigation to determine how many remain behind bars.

The April election is being held to fill 48 parliamentary seats vacated by lawmakers who were appointed to the Cabinet and other posts.

MATTHEW PENNINGTON | January 26, 2012 02:38 AM EST |

Compare other versions »
WASHINGTON — Partisan squabbling has hobbled the business of government in Washington, but on one foreign policy issue at least, Democrats and Republicans appear willing to set aside their differences and get things done. It is Myanmar.

The Obama administration has support from key Republicans to restore full diplomatic relations and contemplate easing sanctions against the country also known as Burma, reversing two decades of U.S. isolation of a reviled military regime.

Primarily that is because the president has political cover from a slight figure idolized on both sides of the political aisle in Washington: democracy leader Aung San Suu Kyi.

“She’s really the key figure,” said Walter Lohman, director of Asian studies at the conservative Heritage Foundation think tank. “As long as they stay close to her, I don’t see any controversy.”

Standing up for Nobel peace laureate Suu Kyi has long been a pillar of Washington’s policy toward Myanmar. The administrations of Bill Clinton and George W. Bush both urged the military to honor the rejected 1990 election victory by Suu Kyi’s party. They pursued policies that left the ruling junta an international outlier.

That was an uncontroversial stance, backed by other Western governments, and a relatively painless one for Washington because of the limited American business and strategic interests in the country. In recent years, however, misgivings about emerging superpower China’s pervasive influence over its southern neighbor have given traction to the argument that the U.S. should be more engaged.

While there is far more bipartanship on U.S. foreign policy than on domestic issues, Myanmar is unusual to the extent that influential Republicans and Democrats alike appear on the same page as the White House. On other areas of foreign policy where there is broad agreement, differences in nuance and tactics cause divisions.

For example, the U.S. remains the staunchest international ally of Israel but Republicans accuse Obama of being too sympathetic to Palestinians. Despite billions in weapon sales to Taiwan, lawmakers of both parties have said it is not enough. Obama also faces bipartisan demands to punish China for keeping its currency undervalued.

The U.S. first applied sanctions on arms sales to Myanmar after its bloody suppression of a democracy uprising in 1988. Republican and Democratic lawmakers have since tightened restrictions to cover political, economic and trade ties, making them among the stiffest Washington has against a foreign government.

“In many respects, most of our major policy initiatives were designed and implemented by the legislative branches, so there will need to be partnership in place as we go forward,” Kurt Campbell, the top U.S. diplomat for East Asia, said last week.

The most prominent voice in Congress on Myanmar has been the top Republican in the Senate, Mitch McConnell, a staunch advocate of Suu Kyi’s cause for years. He has emerged an unlikely supporter of the administration’s engagement strategy, which has gained traction since the military staged fresh but flawed elections in November 2010, then freed the opposition leader and began releasing political prisoners.

After McConnell made his first visit to Myanmar this month, he praised the decision to exchange ambassadors with that government for the first time in more than 20 years, a significant endorsement as the U.S. ambassadorial nominee will need Senate approval.

McConnell wrote in a newspaper commentary that according to Suu Kyi and others he met, Myanmar appears to have made more progress in the past six months than in the previous five decades of military rule. He concluded it was too soon to lift sanctions but was open to rewarding the government for further reforms, saying he would take his cue from Suu Kyi.

It is unusual for McConnell to endorse an administration initiative with such enthusiasm, especially in an election year. During 2011, Republican opposition made it a struggle for Obama even to keep government running and raise the debt ceiling, and McConnell has said his single most important goal is the make Obama a one-term president.

Obama’s Republican rival in the 2008 presidential election, Sen. John McCain, visited Myanmar this week and struck a similar note to McConnell’s. Like the administration, both the Republican senators are watching to see whether by-elections April 1, in which Suu Kyi is a candidate, will be free and fair before deciding whether it is time to act on sanctions. They also want to see more releases of political prisoners, an end to decades of ethnic violence and a severing of military ties with North Korea.

Even with their support, setting U.S. policy toward Myanmar will not be all smooth sailing. While some easing of sanctions can probably be conducted by executive order from the president, other steps will require approval by both houses of Congress.

Some in the Republican-controlled House have accused the Obama administration of moving too far, too fast.

The hawkish Republican leader of the House Committee on Foreign Affairs, Rep. Ileana Ros-Lehtinen of Florida, has called concessions to the military “grossly premature.”

Rep. Chris Smith, R-N.J., a dogged human rights advocate, voiced concern over alleged persecution of Christians in Myanmar. He told The Associated Press that while he was supportive of Suu Kyi, the U.S. should not be naive in its dealings with the government and “reward that which can be taken back in a heartbeat.”

Smith said the U.S. had normalized diplomatic and trade relations with authoritarian regimes in Vietnam and China only to see them crack down on activists afterward.

BY BERTIL LINTNER | NOVEMBER 30, 2011

Secretary of State Hillary Clinton is in Myanmar, on a trip that is being hailed as a stunning breakthrough in bilateral relations and a sign that the Southeast Asian pariah state may finally be ready to rejoin the international community after two decades of isolation. It is a victory, analysts say, for the long-suffering forces of good and democracy over a brutal and self-serving military junta. But the truth is far more complicated.

COMMENTS (11) SHARE:

Twitter Reddit Buzz

More…

According to the conventional wisdom in the Western media, Myanmar’s Nov. 2010 elections may have been rigged and flawed, but nevertheless led to unprecedented policy changes and new initiatives. The new president, Thein Sein, has even been dubbed “Myanmar’s Gorbachev” for his seemingly daring moves toward openness and respect for (at least some) democratic values. He has held talks with pro-democracy icon Aung San Suu Kyi, political prisoners have been released, and censorship of the media has been relaxed. Consequently, Clinton has said that the time is right to visit the country to “promote further reform.”

But the secretary’s visit has as much to do with Myanmar’s relations with China and North Korea as with its tentative progress on democracy and human rights.

If Western observers are to be believed, recent developments in Myanmar reflect a power struggle between “reform-minded moderates” and “hardliners” within the government and the military that still controls it.

The political reality is far more convoluted.

In August and September of 1988, Myanmar saw the most massive and widespread pro-democracy demonstrations in recent Asian history. Strikes and protests were held in virtually every city, town, and major village throughout the country against a stifling military dictatorship that has held Myanmar in an irongrip since the army seized power in 1962 and abolished the country’s democratic constitution. Suu Kyi, the daughter of Myanmar’s independence hero Aung San, happened to be in the country at that time (she then lived in England) and people turned to her for leadership. She then emerged as the main leader of the country’s pro-democracy movement.

But the government didn’t fall. It retreated into the background, and on Sept. 18, 1988, the military moved in, not to seize power — which it already had — but to shore up a regime overwhelmed by popular protest. The result was a brutal massacre. Thousands of marchers were mowed down by machine-gun fire, protesters were shot in custody, and the prisons were filled with people of all ages and from all walks of life.

Not surprisingly, Western countries, led by the United States, condemned the carnage. Later, sanctions were imposed on the regime, but they were always half-hearted and had little if any effect in terms of foreign trade. Still, sanctions turned Myanmar into an international outcast and prevented it from having full access to U.N. funding and international monetary institutions.

China, which long had coveted Myanmar’s forests, rich mineral and natural gas deposits, and its hydroelectric power potential, took full advantage of the situation. In fact, it had already made its intentions clear in the Sept. 1985 edition Beijing Review, an officially sanctioned news magazine and a mouthpiece of the government. An article titled “Opening to the Southwest: An Expert Opinion,” written by Pan Qi, a former vice minister of communications, outlined the possibilities of finding an outlet for trade for China’s landlocked southern provinces of Yunnan and Sichuan through Myanmar to the Indian Ocean. It also mentioned the Burmese railheads of Myitkyina and Lashio in the north and northeast, and the Irrawaddy River as possible conduits for Chinese exports. It was the first time the Chinese outlined their designs for Myanmar, and why the country was so important to them economically. Until then, China had supported the Communist Party of Myanmar and other insurgent groups, but after the death of Mao Zedong in 1976 and Deng Xiaoping’s ascendance to power, Beijing’s foreign policy shifted from supporting revolutionary movements in the region to promoting trade. This was the first time this new policy towards Myanmar was announced, albeit rather discreetly, by the Chinese authorities.

The first border trade agreement between Myanmar and China was signed in early August 1988, days before the uprising began in earnest. After the movement had been crushed and sanctions were put in place, China moved in and rapidly became Myanmar’s most important foreign trade partner. It helped Myanmar upgrade its antiquated infrastructure — and supplied massive amounts of military hardware. In the decade after the massacres, China exported more than $1.4 billion worth of military equipment to Myanmar. It also helped Myanmar upgrade its naval facilities in the Indian Ocean. In return, the junta gave Beijing access to signals intelligence from key oil shipment sealanes collected by the Burmese Navy, using equipment supplied by China. The strategic balance of power in the region was being upset in China’s favor.

But the real resource play came later, and in spades. A plan to build oil and gas pipelines was approved by China’s National Development and Reform Commission in April 2007. In Nov. 2008, China and Myanmar agreed to build a $1.5 billion oil pipeline and $1.04 billion natural gas pipeline. In March 2009, China and Myanmar signed an agreement to build a natural gas pipeline, and in June 2009 an agreement to build a crude oil pipeline. The inauguration ceremony marking the start of construction was held on Oct. 31, 2009, on Maday Island on Myanmar’s western coast. The gas pipeline from the Bay of Bengal to Kunming, in China’s Yunnan province, will be supplemented with an oil pipeline designed to allow Chinese ships carrying fuel imports from the Middle East to skirt the congested Malacca Strait. And in September of last year, China agreed to provide Myanmar with $4.2 billion worth of interest-free loans over a 30-year period to help fund hydropower projects, road and railway construction, and information technology development.

Western sanctions did not cause Myanmar’s economic — and strategic — push into “the hands of the Chinese,” as many foreign observers have argued. But Western policies certainly made it easier for China to implement its designs for Myanmar. This has, in return, caused the West to rethink its Myanmar policy — at the same time as the country’s growing dependence on China has caused considerable consternation within Myanmar’s military leadership. U.S. strategic concerns were outlined as early as June 1997 in a Los Angeles Times article by Marvin Ott, an American security expert and former CIA analyst. “Washington can and should remain outspokenly critical of abuses in [Myanmar]. But there are security and other national interests to be served…it is time to think seriously about alternatives,” Ott concluded.

But the turn took some doing. When it was revealed in the early 2000s that Myanmar and North Korea had established a strategic partnership, Washington was alarmed. North Korea was providing Myanmar with tunneling expertise, heavy weapons, radar and air defense systems, and — it is alleged by Western and Asian intelligence agencies — even missile and nuclear-related technology. It was high time to shift tracks and start to “engage” the Burmese leadership, which anyway seemed bent on clinging on to power at any cost, no matter the consequences.

The 2010 election in Myanmar, no matter how fraudulent it was, was just the opportunity that Washington needed. Myanmar suddenly had a new face and a country run by a constitution, not a junta. It was the perfect time for Myanmar’s generals to launch a charm offensive in the West, and for the United States and other Western countries to begin the process of détente — and of pulling Myanmar from its uncomfortable Chinese embrace and close relationship with North Korea. Hardly by coincidence, Clinton visited South Korea before continuing on to Myanmar. For more than a year, it has been known in security circles that the United States wants South Korea to lure Myanmar away from its military cooperation with North Korea. The much richer South would be able to provide more useful assistance to Myanmar than the North, the argument goes.

At the same time, many staunchly nationalistic Burmese military officers have become dissatisfied with their country’s heavy dependence on China as well as uncontrolled immigration by Chinese nationals into the north of the country. The first blow against China came in Oct. 2004, when the then-prime minister and former intelligence chief Lt.-Gen. Khin Nyunt was ousted. The Chinese at first refused to believe that their man in Myanmar, Khin Nyunt, had been pushed out. How could the generals dare to move against a figure so key to the relationship? Nevertheless, both sides managed to smooth over the incident, and bilateral relations appeared to be returning to normal. Then, in 2009, Burmese troops moved into the Kokang area in the northeast, pushing more than 30,000 refugees — both Chinese nationals and local, ethnic Chinese — across the border back into China.

Still, China did not get the message — until Sept. 30 of this year, when Thein Sein announced that a China-sponsored, $3.6 billion hydroelectric power project in the far north of the country had been suspended. The dam was going to flood an area in Myanmar bigger than Singapore, and yet 90 percent of the electricity was going to be exported to China. Now, China has threatened to take legal actions against the Burmese government for breach of contract. This was the final straw. Today, it is clear that Sino-Burmese relations will never be the same.

To strengthen its position vis-à-vis China, Myanmar has turned increasingly to its partners in the Association of Southeast Asian Nations (ASEAN), which it is due to chair in 2014. Even more significantly, when Gen. Min Aung Hlaing, who was appointed commander-in-chief of Myanmar’s military in March, went on his first foreign trip in mid-November, he did not go to China — but instead to China’s traditional enemy, Vietnam. Myanmar and Vietnam share the same fear of their common, powerful northern neighbor, so it is reasonable to assume that Min Aung Hlaing had a lot to discuss with his Vietnamese hosts.

But the strategic change in Myanmar didn’t happen overnight. In the same year as Khin Nyunt was ousted, an important document was compiled by Lt. Col. Aung Kyaw Hla, a researcher at Myanmar’s Defense Services Academy. His 346-page top secret thesis, titled “A Study of Myanmar-U.S. Relations,” outlined the policies which are now being implemented to improve relations with Washington and lessen dependence on Beijing. The establishment of a more acceptable regime than the old junta provided has made it easier for the Burmese military to launch its new policies, and to have those taken seriously by the international community.

As a result, relations with the United States are indeed improving, exactly along the lines suggested by Aung Kyaw Hla in 2004. While paying lip service to human rights and democracy, there seems to be little doubt that Sino-Burmese relations — and North Korea — will be high on Clinton’s agenda when she visits Myanmar this week. On a visit to Canberra in November, President Barack Obama stated that, “with my visit to the region, I am making it clear that the United States is stepping up its commitment to the entire Asia-Pacific region.” The United States is a Pacific power, Obama said, and “we are here to stay.” But he was quick to add: “The notion that we fear China is mistaken. The notion that we are looking to exclude China is mistaken.”

That statement was about as convincing as Thein Sein’s assurance that he had suspended the dam project in the north because he was concerned about “the wishes of the people.”

The two old adversaries, Myanmar and the United States, may have ended up on the same side of the fence in the struggle for power and influence in Southeast Asia. Frictions, and perhaps even hostility, can certainly be expected in future relations between China and Myanmar. And Myanmar will no longer be seen by the United States and elsewhere in the West as a pariah state that has to be condemned and isolated.

Whatever happens, don’t expect relations to be without some unease. Decades of confrontation and mutual suspicion still exist. And a powerful strain in Washington to stand firm on human rights and democracy will complicate matters for Myanmar’s rulers — who are still uncomfortable and unwilling to relinquish total control. And last of all, there’s China. Myanmar may be pleased that the reliance on a dominant northern neighbor might be lessened shortly, but with so many decades of ties and real, on-the-ground projects underway, the relationship with Beijing isn’t nearly dead yet.

Q
By Bob Ivry, Bradley Keoun and Phil Kuntz – Nov 27, 2011 6:01 PM On Nov. 26, 2008, then-Bank of America Corp. Chief Executive Officer Kenneth D. Lewis wrote to shareholders that he headed “one of the strongest and most stable major banks in the world.” He didn’t say that his firm owed the central bank $86 billion that day. Photo: Joshua Roberts/Bloomberg
The Federal Reserve and the big banks fought for more than two years to keep details of the largest bailout in U.S. history a secret. Now, the rest of the world can see what it was missing.
The Fed didn’t tell anyone which banks were in trouble so deep they required a combined $1.2 trillion on Dec. 5, 2008, their single neediest day. Bankers didn’t mention that they took tens of billions of dollars in emergency loans at the same time they were assuring investors their firms were healthy. And no one calculated until now that banks reaped an estimated $13 billion of income by taking advantage of the Fed’s below-market rates, Bloomberg Markets magazine reports in its January issue.
Saved by the bailout, bankers lobbied against government regulations, a job made easier by the Fed, which never disclosed the details of the rescue to lawmakers even as Congress doled out more money and debated new rules aimed at preventing the next collapse.
A fresh narrative of the financial crisis of 2007 to 2009 emerges from 29,000 pages of Fed documents obtained under the Freedom of Information Act and central bank records of more than 21,000 transactions. While Fed officials say that almost all of the loans were repaid and there have been no losses, details suggest taxpayers paid a price beyond dollars as the secret funding helped preserve a broken status quo and enabled the biggest banks to grow even bigger.
‘Change Their Votes’
“When you see the dollars the banks got, it’s hard to make the case these were successful institutions,” says Sherrod Brown, a Democratic Senator from Ohio who in 2010 introduced an unsuccessful bill to limit bank size. “This is an issue that can unite the Tea Party and Occupy Wall Street. There are lawmakers in both parties who would change their votes now.”
The size of the bailout came to light after Bloomberg LP, the parent of Bloomberg News, won a court case against the Fed and a group of the biggest U.S. banks called Clearing House Association LLC to force lending details into the open.
The Fed, headed by Chairman Ben S. Bernanke, argued that revealing borrower details would create a stigma — investors and counterparties would shun firms that used the central bank as lender of last resort — and that needy institutions would be reluctant to borrow in the next crisis. Clearing House Association fought Bloomberg’s lawsuit up to the U.S. Supreme Court, which declined to hear the banks’ appeal in March 2011.
$7.77 Trillion
The amount of money the central bank parceled out was surprising even to Gary H. Stern, president of the Federal Reserve Bank of Minneapolis from 1985 to 2009, who says he “wasn’t aware of the magnitude.” It dwarfed the Treasury Department’s better-known $700 billion Troubled Asset Relief Program, or TARP. Add up guarantees and lending limits, and the Fed had committed $7.77 trillion as of March 2009 to rescuing the financial system, more than half the value of everything produced in the U.S. that year.
“TARP at least had some strings attached,” says Brad Miller, a North Carolina Democrat on the House Financial Services Committee, referring to the program’s executive-pay ceiling. “With the Fed programs, there was nothing.”
Bankers didn’t disclose the extent of their borrowing. On Nov. 26, 2008, then-Bank of America (BAC) Corp. Chief Executive Officer Kenneth D. Lewis wrote to shareholders that he headed “one of the strongest and most stable major banks in the world.” He didn’t say that his Charlotte, North Carolina-based firm owed the central bank $86 billion that day.
‘Motivate Others’
JPMorgan Chase & Co. CEO Jamie Dimon told shareholders in a March 26, 2010, letter that his bank used the Fed’s Term Auction Facility “at the request of the Federal Reserve to help motivate others to use the system.” He didn’t say that the New York-based bank’s total TAF borrowings were almost twice its cash holdings or that its peak borrowing of $48 billion on Feb. 26, 2009, came more than a year after the program’s creation.
Howard Opinsky, a spokesman for JPMorgan (JPM), declined to comment about Dimon’s statement or the company’s Fed borrowings. Jerry Dubrowski, a spokesman for Bank of America, also declined to comment.
The Fed has been lending money to banks through its so- called discount window since just after its founding in 1913. Starting in August 2007, when confidence in banks began to wane, it created a variety of ways to bolster the financial system with cash or easily traded securities. By the end of 2008, the central bank had established or expanded 11 lending facilities catering to banks, securities firms and corporations that couldn’t get short-term loans from their usual sources.
‘Core Function’
“Supporting financial-market stability in times of extreme market stress is a core function of central banks,” says William B. English, director of the Fed’s Division of Monetary Affairs. “Our lending programs served to prevent a collapse of the financial system and to keep credit flowing to American families and businesses.”
The Fed has said that all loans were backed by appropriate collateral. That the central bank didn’t lose money should “lead to praise of the Fed, that they took this extraordinary step and they got it right,” says Phillip Swagel, a former assistant Treasury secretary under Henry M. Paulson and now a professor of international economic policy at the University of Maryland.
The Fed initially released lending data in aggregate form only. Information on which banks borrowed, when, how much and at what interest rate was kept from public view.
The secrecy extended even to members of President George W. Bush’s administration who managed TARP. Top aides to Paulson weren’t privy to Fed lending details during the creation of the program that provided crisis funding to more than 700 banks, say two former senior Treasury officials who requested anonymity because they weren’t authorized to speak.
Big Six
The Treasury Department relied on the recommendations of the Fed to decide which banks were healthy enough to get TARP money and how much, the former officials say. The six biggest U.S. banks, which received $160 billion of TARP funds, borrowed as much as $460 billion from the Fed, measured by peak daily debt calculated by Bloomberg using data obtained from the central bank. Paulson didn’t respond to a request for comment.
The six — JPMorgan, Bank of America, Citigroup Inc. (C), Wells Fargo & Co. (WFC), Goldman Sachs Group Inc. (GS) and Morgan Stanley — accounted for 63 percent of the average daily debt to the Fed by all publicly traded U.S. banks, money managers and investment- services firms, the data show. By comparison, they had about half of the industry’s assets before the bailout, which lasted from August 2007 through April 2010. The daily debt figure excludes cash that banks passed along to money-market funds.
Bank Supervision
While the emergency response prevented financial collapse, the Fed shouldn’t have allowed conditions to get to that point, says Joshua Rosner, a banking analyst with Graham Fisher & Co. in New York who predicted problems from lax mortgage underwriting as far back as 2001. The Fed, the primary supervisor for large financial companies, should have been more vigilant as the housing bubble formed, and the scale of its lending shows the “supervision of the banks prior to the crisis was far worse than we had imagined,” Rosner says.
Bernanke in an April 2009 speech said that the Fed provided emergency loans only to “sound institutions,” even though its internal assessments described at least one of the biggest borrowers, Citigroup, as “marginal.”
On Jan. 14, 2009, six days before the company’s central bank loans peaked, the New York Fed gave CEO Vikram Pandit a report declaring Citigroup’s financial strength to be “superficial,” bolstered largely by its $45 billion of Treasury funds. The document was released in early 2011 by the Financial Crisis Inquiry Commission, a panel empowered by Congress to probe the causes of the crisis.
‘Need Transparency’
Andrea Priest, a spokeswoman for the New York Fed, declined to comment, as did Jon Diat, a spokesman for Citigroup.
“I believe that the Fed should have independence in conducting highly technical monetary policy, but when they are putting taxpayer resources at risk, we need transparency and accountability,” says Alabama Senator Richard Shelby, the top Republican on the Senate Banking Committee.
Judd Gregg, a former New Hampshire senator who was a lead Republican negotiator on TARP, and Barney Frank, a Massachusetts Democrat who chaired the House Financial Services Committee, both say they were kept in the dark.
“We didn’t know the specifics,” says Gregg, who’s now an adviser to Goldman Sachs.
“We were aware emergency efforts were going on,” Frank says. “We didn’t know the specifics.”
Disclose Lending
Frank co-sponsored the Dodd-Frank Wall Street Reform and Consumer Protection Act, billed as a fix for financial-industry excesses. Congress debated that legislation in 2010 without a full understanding of how deeply the banks had depended on the Fed for survival.
It would have been “totally appropriate” to disclose the lending data by mid-2009, says David Jones, a former economist at the Federal Reserve Bank of New York who has written four books about the central bank.
“The Fed is the second-most-important appointed body in the U.S., next to the Supreme Court, and we’re dealing with a democracy,” Jones says. “Our representatives in Congress deserve to have this kind of information so they can oversee the Fed.”
The Dodd-Frank law required the Fed to release details of some emergency-lending programs in December 2010. It also mandated disclosure of discount-window borrowers after a two- year lag.
Protecting TARP
TARP and the Fed lending programs went “hand in hand,” says Sherrill Shaffer, a banking professor at the University of Wyoming in Laramie and a former chief economist at the New York Fed. While the TARP money helped insulate the central bank from losses, the Fed’s willingness to supply seemingly unlimited financing to the banks assured they wouldn’t collapse, protecting the Treasury’s TARP investments, he says.
“Even though the Treasury was in the headlines, the Fed was really behind the scenes engineering it,” Shaffer says.
Congress, at the urging of Bernanke and Paulson, created TARP in October 2008 after the bankruptcy of Lehman Brothers Holdings Inc. made it difficult for financial institutions to get loans. Bank of America and New York-based Citigroup each received $45 billion from TARP. At the time, both were tapping the Fed. Citigroup hit its peak borrowing of $99.5 billion in January 2009, while Bank of America topped out in February 2009 at $91.4 billion.
No Clue
Lawmakers knew none of this.
They had no clue that one bank, New York-based Morgan Stanley (MS), took $107 billion in Fed loans in September 2008, enough to pay off one-tenth of the country’s delinquent mortgages. The firm’s peak borrowing occurred the same day Congress rejected the proposed TARP bill, triggering the biggest point drop ever in the Dow Jones Industrial Average. (INDU) The bill later passed, and Morgan Stanley got $10 billion of TARP funds, though Paulson said only “healthy institutions” were eligible.
Mark Lake, a spokesman for Morgan Stanley, declined to comment, as did spokesmen for Citigroup and Goldman Sachs.
Had lawmakers known, it “could have changed the whole approach to reform legislation,” says Ted Kaufman, a former Democratic Senator from Delaware who, with Brown, introduced the bill to limit bank size.
Moral Hazard
Kaufman says some banks are so big that their failure could trigger a chain reaction in the financial system. The cost of borrowing for so-called too-big-to-fail banks is lower than that of smaller firms because lenders believe the government won’t let them go under. The perceived safety net creates what economists call moral hazard — the belief that bankers will take greater risks because they’ll enjoy any profits while shifting losses to taxpayers.
If Congress had been aware of the extent of the Fed rescue, Kaufman says, he would have been able to line up more support for breaking up the biggest banks.
Byron L. Dorgan, a former Democratic senator from North Dakota, says the knowledge might have helped pass legislation to reinstate the Glass-Steagall Act, which for most of the last century separated customer deposits from the riskier practices of investment banking.
“Had people known about the hundreds of billions in loans to the biggest financial institutions, they would have demanded Congress take much more courageous actions to stop the practices that caused this near financial collapse,” says Dorgan, who retired in January.
Getting Bigger
Instead, the Fed and its secret financing helped America’s biggest financial firms get bigger and go on to pay employees as much as they did at the height of the housing bubble.
Total assets held by the six biggest U.S. banks increased 39 percent to $9.5 trillion on Sept. 30, 2011, from $6.8 trillion on the same day in 2006, according to Fed data.
For so few banks to hold so many assets is “un-American,” says Richard W. Fisher, president of the Federal Reserve Bank of Dallas. “All of these gargantuan institutions are too big to regulate. I’m in favor of breaking them up and slimming them down.”
Employees at the six biggest banks made twice the average for all U.S. workers in 2010, based on Bureau of Labor Statistics hourly compensation cost data. The banks spent $146.3 billion on compensation in 2010, or an average of $126,342 per worker, according to data compiled by Bloomberg. That’s up almost 20 percent from five years earlier compared with less than 15 percent for the average worker. Average pay at the banks in 2010 was about the same as in 2007, before the bailouts.
‘Wanted to Pretend’
“The pay levels came back so fast at some of these firms that it appeared they really wanted to pretend they hadn’t been bailed out,” says Anil Kashyap, a former Fed economist who’s now a professor of economics at the University of Chicago Booth School of Business. “They shouldn’t be surprised that a lot of people find some of the stuff that happened totally outrageous.”
Bank of America took over Merrill Lynch & Co. at the urging of then-Treasury Secretary Paulson after buying the biggest U.S. home lender, Countrywide Financial Corp. When the Merrill Lynch purchase was announced on Sept. 15, 2008, Bank of America had $14.4 billion in emergency Fed loans and Merrill Lynch had $8.1 billion. By the end of the month, Bank of America’s loans had reached $25 billion and Merrill Lynch’s had exceeded $60 billion, helping both firms keep the deal on track.
Prevent Collapse
Wells Fargo bought Wachovia Corp., the fourth-largest U.S. bank by deposits before the 2008 acquisition. Because depositors were pulling their money from Wachovia, the Fed channeled $50 billion in secret loans to the Charlotte, North Carolina-based bank through two emergency-financing programs to prevent collapse before Wells Fargo could complete the purchase.
“These programs proved to be very successful at providing financial markets the additional liquidity and confidence they needed at a time of unprecedented uncertainty,” says Ancel Martinez, a spokesman for Wells Fargo.
JPMorgan absorbed the country’s largest savings and loan, Seattle-based Washington Mutual Inc., and investment bank Bear Stearns Cos. The New York Fed, then headed by Timothy F. Geithner, who’s now Treasury secretary, helped JPMorgan complete the Bear Stearns deal by providing $29 billion of financing, which was disclosed at the time. The Fed also supplied Bear Stearns with $30 billion of secret loans to keep the company from failing before the acquisition closed, central bank data show. The loans were made through a program set up to provide emergency funding to brokerage firms.
‘Regulatory Discretion’
“Some might claim that the Fed was picking winners and losers, but what the Fed was doing was exercising its professional regulatory discretion,” says John Dearie, a former speechwriter at the New York Fed who’s now executive vice president for policy at the Financial Services Forum, a Washington-based group consisting of the CEOs of 20 of the world’s biggest financial firms. “The Fed clearly felt it had what it needed within the requirements of the law to continue to lend to Bear and Wachovia.”
The bill introduced by Brown and Kaufman in April 2010 would have mandated shrinking the six largest firms.
“When a few banks have advantages, the little guys get squeezed,” Brown says. “That, to me, is not what capitalism should be.”
Kaufman says he’s passionate about curbing too-big-to-fail banks because he fears another crisis.
‘Can We Survive?’
“The amount of pain that people, through no fault of their own, had to endure — and the prospect of putting them through it again — is appalling,” Kaufman says. “The public has no more appetite for bailouts. What would happen tomorrow if one of these big banks got in trouble? Can we survive that?”
Lobbying expenditures by the six banks that would have been affected by the legislation rose to $29.4 million in 2010 compared with $22.1 million in 2006, the last full year before credit markets seized up — a gain of 33 percent, according to OpenSecrets.org, a research group that tracks money in U.S. politics. Lobbying by the American Bankers Association, a trade organization, increased at about the same rate, OpenSecrets.org reported.
Lobbyists argued the virtues of bigger banks. They’re more stable, better able to serve large companies and more competitive internationally, and breaking them up would cost jobs and cause “long-term damage to the U.S. economy,” according to a Nov. 13, 2009, letter to members of Congress from the FSF.
The group’s website cites Nobel Prize-winning economist Oliver E. Williamson, a professor emeritus at the University of California, Berkeley, for demonstrating the greater efficiency of large companies.
‘Serious Burden’
In an interview, Williamson says that the organization took his research out of context and that efficiency is only one factor in deciding whether to preserve too-big-to-fail banks.
“The banks that were too big got even bigger, and the problems that we had to begin with are magnified in the process,” Williamson says. “The big banks have incentives to take risks they wouldn’t take if they didn’t have government support. It’s a serious burden on the rest of the economy.”
Dearie says his group didn’t mean to imply that Williamson endorsed big banks.
Top officials in President Barack Obama’s administration sided with the FSF in arguing against legislative curbs on the size of banks.
Geithner, Kaufman
On May 4, 2010, Geithner visited Kaufman in his Capitol Hill office. As president of the New York Fed in 2007 and 2008, Geithner helped design and run the central bank’s lending programs. The New York Fed supervised four of the six biggest U.S. banks and, during the credit crunch, put together a daily confidential report on Wall Street’s financial condition. Geithner was copied on these reports, based on a sampling of e- mails released by the Financial Crisis Inquiry Commission.
At the meeting with Kaufman, Geithner argued that the issue of limiting bank size was too complex for Congress and that people who know the markets should handle these decisions, Kaufman says. According to Kaufman, Geithner said he preferred that bank supervisors from around the world, meeting in Basel, Switzerland, make rules increasing the amount of money banks need to hold in reserve. Passing laws in the U.S. would undercut his efforts in Basel, Geithner said, according to Kaufman.
Anthony Coley, a spokesman for Geithner, declined to comment.
‘Punishing Success’
Lobbyists for the big banks made the winning case that forcing them to break up was “punishing success,” Brown says. Now that they can see how much the banks were borrowing from the Fed, senators might think differently, he says.
The Fed supported curbing too-big-to-fail banks, including giving regulators the power to close large financial firms and implementing tougher supervision for big banks, says Fed General Counsel Scott G. Alvarez. The Fed didn’t take a position on whether large banks should be dismantled before they get into trouble.
Dodd-Frank does provide a mechanism for regulators to break up the biggest banks. It established the Financial Stability Oversight Council that could order teetering banks to shut down in an orderly way. The council is headed by Geithner.
“Dodd-Frank does not solve the problem of too big to fail,” says Shelby, the Alabama Republican. “Moral hazard and taxpayer exposure still very much exist.”
Below Market
Dean Baker, co-director of the Center for Economic and Policy Research in Washington, says banks “were either in bad shape or taking advantage of the Fed giving them a good deal. The former contradicts their public statements. The latter — getting loans at below-market rates during a financial crisis — is quite a gift.”
The Fed says it typically makes emergency loans more expensive than those available in the marketplace to discourage banks from abusing the privilege. During the crisis, Fed loans were among the cheapest around, with funding available for as low as 0.01 percent in December 2008, according to data from the central bank and money-market rates tracked by Bloomberg.
The Fed funds also benefited firms by allowing them to avoid selling assets to pay investors and depositors who pulled their money. So the assets stayed on the banks’ books, earning interest.
Banks report the difference between what they earn on loans and investments and their borrowing expenses. The figure, known as net interest margin, provides a clue to how much profit the firms turned on their Fed loans, the costs of which were included in those expenses. To calculate how much banks stood to make, Bloomberg multiplied their tax-adjusted net interest margins by their average Fed debt during reporting periods in which they took emergency loans.
Added Income
The 190 firms for which data were available would have produced income of $13 billion, assuming all of the bailout funds were invested at the margins reported, the data show.
The six biggest U.S. banks’ share of the estimated subsidy was $4.8 billion, or 23 percent of their combined net income during the time they were borrowing from the Fed. Citigroup would have taken in the most, with $1.8 billion.
“The net interest margin is an effective way of getting at the benefits that these large banks received from the Fed,” says Gerald A. Hanweck, a former Fed economist who’s now a finance professor at George Mason University in Fairfax, Virginia.
While the method isn’t perfect, it’s impossible to state the banks’ exact profits or savings from their Fed loans because the numbers aren’t disclosed and there isn’t enough publicly available data to figure it out.
Opinsky, the JPMorgan spokesman, says he doesn’t think the calculation is fair because “in all likelihood, such funds were likely invested in very short-term investments,” which typically bring lower returns.
Standing Access
Even without tapping the Fed, the banks get a subsidy by having standing access to the central bank’s money, says Viral Acharya, a New York University economics professor who has worked as an academic adviser to the New York Fed.
“Banks don’t give lines of credit to corporations for free,” he says. “Why should all these government guarantees and liquidity facilities be for free?”
In the September 2008 meeting at which Paulson and Bernanke briefed lawmakers on the need for TARP, Bernanke said that if nothing was done, “unemployment would rise — to 8 or 9 percent from the prevailing 6.1 percent,” Paulson wrote in “On the Brink” (Business Plus, 2010).
Occupy Wall Street
The U.S. jobless rate hasn’t dipped below 8.8 percent since March 2009, 3.6 million homes have been foreclosed since August 2007, according to data provider RealtyTrac Inc., and police have clashed with Occupy Wall Street protesters, who say government policies favor the wealthiest citizens, in New York, Boston, Seattle and Oakland, California.
The Tea Party, which supports a more limited role for government, has its roots in anger over the Wall Street bailouts, says Neil M. Barofsky, former TARP special inspector general and a Bloomberg Television contributing editor.
“The lack of transparency is not just frustrating; it really blocked accountability,” Barofsky says. “When people don’t know the details, they fill in the blanks. They believe in conspiracies.”
In the end, Geithner had his way. The Brown-Kaufman proposal to limit the size of banks was defeated, 60 to 31. Bank supervisors meeting in Switzerland did mandate minimum reserves that institutions will have to hold, with higher levels for the world’s largest banks, including the six biggest in the U.S. Those rules can be changed by individual countries.
They take full effect in 2019.
Meanwhile, Kaufman says, “we’re absolutely, totally, 100 percent not prepared for another financial crisis.”
To contact the reporters on this story: Bob Ivry in New York at bivry@bloomberg.net; Bradley Keoun in New York at bkeoun@bloomberg.net; Phil Kuntz in New York at pkuntz1@bloomberg.net.
To contact the editors responsible for this story: Gary Putka at gputka@bloomberg.net; David Scheer at dscheer@bloomberg.net.

November 28, 2011 06:33 AM EST

——————————————————————————–
BEIJING — China’s vice president met Monday with the head of Myanmar’s armed forces amid concerns over the safety of shipping on the Mekong River and just days before a breakthrough visit to the long-isolated country by U.S. Secretary of State Hillary Clinton.

Xi Jinping pledged to maintain strong ties with Myanmar and encouraged Gen. Min Aung Hlaing to push for solutions to unspecified challenges in relations, China’s Foreign Ministry said in a statement.

“As a component of overall bilateral relations, China-Myanmar military ties have developed very well over the past few years,” the statement quoted Xi as saying.

The ministry statement did not directly mention the deaths of 13 sailors killed in an attack on two Chinese cargo ships in early October on the Mekong in Southeast Asia. China, Laos, Myanmar and Thailand are due to begin joint security patrols on the river next month.

However, the ministry said Myanmar’s general pledged to strengthen military exchanges and cooperation to safeguard peace and stability.

The joint security operation’s headquarters will be in China, although it isn’t clear whether Chinese boats will patrol stretches of the river belonging to its neighbors. China will help train and equip police in Laos and Myanmar.

Drug smugglers were initially suspected in the October attack near the Thai-Myanmar border. But nine Thai soldiers later surrendered.

Beijing has long provided key diplomatic and economic support for Myanmar, but relations have been strained by fighting between Myanmar’s army and rebel groups that has sent refugees across the border into southwestern China.

China was also caught off guard by the suspension this summer of a major dam project being built by a Chinese company in Myanmar that presaged a significant about-face in Myanmar’s domestic politics.

After a new government took office in March, Myanmar has eased some political restrictions and met with opposition leader and Nobel Peace Prize laureate Aung San Suu Kyi. That has earned diplomatic dividends, such as Clinton’s visit starting late Wednesday.

MATTHEW PENNINGTON | November 19, 2011 08:36 AM EST |

WASHINGTON — The first visit to Myanmar in a half-century by the top U.S. diplomat will open a door for that nation’s military-dominated government to reduce its international isolation and dependence on China, a staunch but mistrusted ally.

Secretary of State Hillary Rodham Clinton plans to travel to Myanmar, also known as Burma, on Dec. 1-2, to meet with government and opposition leaders. It is the culmination of a two-year effort to engage with a repressive government the U.S. long had shunned.

Washington hopes to encourage further democratic reform rose after Myanmar staged elections last year that ushered in a government of civilians, albeit one dominated by a military structure that had directly ruled the country since 1962.

The new government also freed and began high-level talks with Nobel laureate and opposition leader Aung San Suu Kyi.

The Obama administration’s diplomatic overtures have a strategic intent, too, of seeking to expand U.S. ties in economically vibrant Southeast Asia as a counter to the growing influence of China.

China has been an all-weather friend to its southern neighbor, Myanmar, and its ruling generals. After a bloody 1988 crackdown on democracy protesters that heralded Myanmar’s descent into pariah status, China provided diplomatic support, investment and weaponry, while Western nations imposed tough economic, trade and political penalties.

Despite that backing, Myanmar’s fiercely nationalistic leaders have an ingrained suspicion of China and are wary of becoming in thrall to another power. They have sought to balance China’s influence by building ties with a neighbor to the west, India.

“Burma has always been uncomfortable with both of those relationships and wants to balance them with others,” said Priscilla Clapp, who served as the top U.S. diplomat in the country between 1999 and 2002. “That’s the choice they are making now.”

She said that many of the older generation of army officers that now hold senior positions in the government first gained their military experience fighting insurgents who once controlled large tracts of the vast country’s north, backed by China under then-ruler Mao Zedong.

China has long since ended that support. Its economic footprint has grown in the past two decades, particularly in the north of the country, through investments and exploitation of natural resources, such as oil, gas, minerals and timber.

The Chinese influence has bred resentment among the wider population, said Aung Din, a former political prisoner in Myanmar and now executive director of the U.S. Campaign for Burma.

Probably the single most significant decision made by the new government of President Thein Sein has been to suspend work on a massive, China-backed hydropower dam in northern Kachin State that would have yielded major revenues from electricity exports.

Thein Sein said the project, which would have flooded an extensive area and disrupted the flow of the nation’s main Irrawaddy River, was against the will of the people.

His decision also sent a powerful signal at a time the U.S. was making energetic efforts to engage Thein Sein’s government: Myanmar was not beholden to China.

Myanmar will have to do more to get what it really wants from Washington, which is the lifting of sanctions.

That would require the approval of Congress, where some influential lawmakers have strong personal interest in restoring democracy to Myanmar. The country will first need to fully reconcile with Suu Kyi, release its political prisoners and make peace with ethnic insurgents.

In the meantime, the Obama administration can reward progress with significant gestures.

Clinton’s visit, the first by a U.S. secretary of state since John Foster Dulles in 1955, is a diplomatic boost to Thein Sein and rewards the tentative reforms he has initiated so far that could yet face resistance from hard-liners in the military establishment.

Clinton’s visit also should strengthen the hand of Suu Kyi, who gave her green light for the trip and whose approval will be key to further U.S. steps to deepen ties with the government.

Even if Myanmar’s government unclenches its fist to meet the extended hand that the Obama administration says it is offering, do not expect lightning political change.

Washington has welcomed the decision of Suu Kyi’s party to contest coming by-elections after unfair regulations were amended. But even if it should fare well, her party will have limited leverage. The military-proxy party controls nearly 80 percent of the seats.

___

Online:

____

EDITOR’S NOTE – Matthew Pennington covers U.S.-Asian affairs for The Associated Press.

November 14, 2011 05:32 AM EST |

YANGON, Myanmar — Democracy leader Aung San Suu Kyi said Monday that Myanmar’s government has taken positive steps toward reform in the year since she was released from house arrest but more needs to be done, including freeing hundreds more political prisoners.

The Nobel peace laureate, speaking to more than 100 journalists on the anniversary of her release, cited her meetings with minister Aung Kyi and President Thein Sein as progress.

“Looking back at the past year, I think I can say that it has been eventful, energizing and to a certain extent encouraging,” said Suu Kyi, who was detained most of the past two decades by Myanmar’s former military government.

The international community’s hopes were not high after the country carefully orchestrated the Nov. 7, 2010, election. As expected, the polls brought to power a proxy party for the military, which ran the country since a 1962 coup.

But that perception has changed in recent months, as the new government eased censorship, legalized labor unions, suspended an unpopular, China-backed dam project and began talks with Suu Kyi’s pro-democracy movement.

There are still key issues to be addressed, however. Suu Kyi on Monday mentioned the plight of both political prisoners and ethnic minorities as well as the need for rule of law and an independent judiciary in the country.

“An issue of great importance to all of us who are working for democracy in Burma is that of political prisoners. Some had been released over the last year, but there are still many who remain in prison,” Suu Kyi said, using the name for the country that the pro-democracy movement prefers.

She said she had no news about wide speculation that the government would announce the release of more political prisoners Monday.

“We do not have any specific information on who has been released if anybody has been released at all,” she said.

A government-appointed human rights body on Sunday urged the president to release political prisoners or transfer them to prisons close to their families, signaling such action may be imminent.

Myanmar’s three state-owned newspapers published the open letter from National Human Rights Commission chairman Win Mra calling for an amnesty “as a reflection of magnanimity,” or to transfer political prisoners in remote prisons to facilities with easy access for their family members.

The letter’s publication is significant because the tightly controlled newspapers closely reflect government positions. An amnesty of 6,359 prisoners in October happened the same day state-run newspapers published a similar appeal.

A prisoner release in the next few days is also anticipated because a meeting of the Association of Southeast Asian Nations begins Thursday in Bali, Indonesia. Myanmar is seeking to chair ASEAN in 2014, and the release of political prisoners would be seen as a positive development favoring its bid, which is likely to be decided at this week’s summit.

No release had been announced by mid-afternoon Monday.

Myanmar is estimated to hold as many as 2,000 political prisoners.

Release of Myanmar political prisoners may be soon

??????? ?????????????????????????????? ???????????????????????

November 13, 2011 07:15 AM EST |

YANGON, Myanmar — A government-appointed human rights body on Sunday urged Myanmar’s president to release political prisoners or transfer them to prisons close to their families, signaling such action may be imminent.

Speculation is considerable that a new amnesty covering some of an estimated 2,000 political prisoners will be issued this week, perhaps as early as Monday.

A comprehensive release of political detainees would boost Myanmar’s already active diplomatic efforts to improve relations with the United States, which shunned the previous military regime because of its poor human rights record and failure to allow free and democratic politics.

Myanmar’s three state-owned newspapers published an open letter Sunday from National Human Rights Commission chairman Win Mra calling on President Thein Sein to grant amnesty “as a reflection of magnanimity,” or to transfer political prisoners in remote prisons to facilities with easy access for their family members.

The letter’s publication is significant because the tightly controlled newspapers closely reflect government positions. An amnesty of 6,359 prisoners in October happened the same day state-run newspapers published a similar appeal.

A prisoner release in the next few days is also anticipated because a meeting of the Association of Southeast Asian Nations, or ASEAN, begins Thursday in Bali, Indonesia. Myanmar is seeking to chair ASEAN in 2014, and the release of political prisoners would be seen as a positive development favoring its bid, which is likely to be decided at this week’s summit. U.S. Secretary of State Hillary Clinton will also be there to meet regional leaders.

“It appears there are real changes taking place on the ground, and we support these early efforts at reform,” Clinton told reporters Friday on the sidelines of an annual Pacific Rim summit. “We want to see the people of Burma able to participate fully in the political life of their own country.” The military changed the country’s name to Myanmar in 1989, but supporters of the country’s pro-democracy movement prefer to use the old name.

Myanmar’s nominally civilian government, which took power in March, has declared its intention to liberalize the hard-line polices of the junta that preceded it. It has taken some fledgling steps, such as easing censorship, legalizing labor unions, suspending an unpopular, China-backed dam project and beginning talks with Nobel peace laureate Aung San Suu Kyi and her pro-democracy movement.

In his open letter, Win Mra requested that the president grant amnesty “to those prisoners convicted for breach of existing laws, who do not pose a threat to the stability of the state and public tranquility.”

The appeal clearly referred to political prisoners, although the term was not used. The government asserts that it holds no political prisoners, only people convicted under criminal law.

“If for reasons of maintaining peace and stability, certain prisoners cannot as yet be included in the amnesty, the commission would like to respectfully submit that consideration be made for transferring them to prisons with easy access for their family members,” the letter said.

In recent years, political detainees who in the past would have been held at Insein Prison in the main city of Yangon have instead been sent to jails in remote parts of the country in an apparent effort to make it difficult for them to communicate with the outside.

The actual number of prisoners is disputed by the Human Rights Commission, which says that while the U.N. Secretary-General and a number of countries claim there are nearly 2,000 prisoners of conscience, the actual figure is only 500, of which at least 200 had been released under October’s amnesty.

About 70 political prisoners were also released under a large-scale amnesty for convicts in May. Myanmar has more than 60,000 prisoners in 42 prisons and 109 labor camps.

Ohn Kyaing, a spokesman for Suu Kyi’s National League for Democracy and a leader of its humanitarian support group, said it was difficult to arrive at a precise figure, because the numbers “vary according to criteria used to define the status of prisoners of conscience.”

He added, however that his network is aiding the families of more than 700 political prisoners, and that there could be families of other prisoners who had not contacted the NLD.

Long-term detainees who remain behind bars include prominent student activists, such as Min Ko Naing, who are serving 65-year prison sentences and politicians from ethnic minority parties, such as Shan leader Hkun Htun Oo, who have sentences of more than 80 years.

“The authorities have not contacted us but we heard that another round of amnesty is coming soon. Our hopes are high again but nothing is certain here,” one of Min Ko Naing’s sisters told The Associated Press by phone.

GRANT PECK | November 8, 2011 09:55 AM EST |
BANGKOK — Myanmar’s elections last year seemed like just another self-serving maneuver by the country’s generals to keep their thumbs on the scales of power. Then some surprising things began to happen.

The new government eased censorship, legalized labor unions, suspended an unpopular, China-backed dam project and began talks with Nobel peace laureate Aung San Suu Kyi and her pro-democracy movement.

A revolution it isn’t, however.

Political prisoners still languish in jails. The military still draws accusations of routine abuse against ethnic groups. And the country’s long-suffering citizens remain highly skeptical of their government, believing its reforms could be aimed at lifting Western sanctions or avoiding an Arab Spring.

“The government is never sincere, and they will backtrack any time once their wishes are fulfilled,” 45-year-old lawyer Myint Thein said in Yangon.

So far, most of the optimism appears to be outside the country as it emerges from a long reliance on China, with Myanmar and the West both eager to reconcile after decades of frosty relations.

U.S. envoy Derek Mitchell told reporters in Yangon on Friday that Myanmar’s new government has taken a series of positive steps and that Washington would like to support its reforms.

“We would look to respond in kind,” he said.

The international community’s hopes were not high after Myanmar’s carefully orchestrated Nov. 7, 2010, election. As expected, the polls brought to power a proxy party for the military, which has run the country since a 1962 coup.

But that perception has changed in recent months, said Asian Studies director David Steinberg of Georgetown University.

“You have a whole set of new things happening,” Steinberg said. “I don’t know how far and how fast they can go on these things. But they are moving and … they are moving in a manner that we might not have predicted.”

In one of the most closely watched aspects, however, the administration has so far fallen short: Large-scale clemencies for convicts have included less than 300 of an estimated 2,000 political prisoners, with many of the more prominent ones remaining behind bars.

“It is too early to know whether the government’s change of tone and talk of reform is cynical window-dressing or evidence that significant change will come to the country,” New York-based Human Rights Watch said in a statement.

In October, labor unions were legalized, along with the right to strike.

Last week, the government amended election regulations to encourage Suu Kyi’s party to re-enter the political arena, after previously barring her from politics with rules that prompted her party to boycott last year’s elections.

President Thein Sein reopened a long-stalled dialogue with Suu Kyi, inviting her to the presidential mansion, where she was greeted by his wife and grandchild. The warm reception was a stark contrast to the cold loathing she reportedly received from Senior Gen. Than Shwe, head of the former ruling junta.

Suu Kyi said she found Thein Sein genuine and sincere, with a desire for reform.

Suu Kyi, who spent most of the past two decades detained by the ruling generals, has appeared more generous in her assessment of the new government than many of the people she represents.

“It may be that she feels this is the time when she could have a longer range impact, maybe not short range, but in the long run a buildup of democratic forces,” Steinberg said.

But Maung Zarni, a Myanmar exile who is a visiting fellow at the London School of Economics, doubts Suu Kyi will be able to shake the military grip on institutional power.

“Maybe she is gambling here. But structurally the dice is in the military’s favor,” he said in an email interview.

Disappointment has been part of Myanmar politics since independence hero Gen. Aung San – Suu Kyi’s father – was assassinated in 1947 by rivals on the eve of independence from Britain.

After a 1962 coup, Gen. Ne Win took power with a despotic socialism that plunged the vibrant economy into misery. A massive democracy uprising in 1988 was smashed by the army.

The junta that took over from Ne Win staged an election in 1990, only to refuse to hand over power when Suu Kyi’s party won a landslide victory. Democracy activists went to prison, and the country plunged into international isolation, with Washington leading the backlash against the junta by cutting U.S. aid and vetoing assistance from institutions such as the World Bank.

There the deadlock stood, more or less, for the next two decades.

Suu Kyi won the Nobel Peace Prize, and moved in and out of house arrest. The military accepted some foreign investment in oil and gas, splurged on much-needed infrastructure and cobbled uneasy cease-fires with restive minority groups along the country’s borders.

In September 2007, a massive fuel price hike helped trigger widespread street protests in a so-called Saffron Rebellion. Once again, the military put down the uprising with violence.

By 2010, the junta moved to hold an election under a constitution of its own careful crafting, ensuring it would hold veto power in any future, nominally civilian government.

Then, Thein Sein took office on March 30.

The ex-general, a former prime minister in the previous junta, gave what Steinberg described as a “remarkable self-critical” inaugural speech, mentioning “good governance, clean government and the importance of the fourth estate.”

His government unblocked several banned websites, allowed Internet access for Suu Kyi and dropped its routine broadsides against foreign broadcasting stations.

In addition to wooing Suu Kyi, Thein Sein offered peace talks with the country’s ethnic minority groups, which were unhappy over a plan to disarm their militias.

Most stunningly, Thein Sein’s government suspended a controversial China-built hydropower dam project in northern Kachin State on Sept. 30 because it was “against the will of the people.” Ethnic activists and environmentalists had denounced the dam, and Suu Kyi’s party also had taken up the potentially hot issue.

The move signaled an important foreign policy shift.

Isolated by the U.S. and other Western nations, Myanmar, also known as Burma, has leaned heavily on China as its key ally, but also has been wary of its huge neighbor.

“Burma is not a client state of China, never has been; the Burmese are far too nationalistic and they fear China and they have from the very beginning, but at the same time they know they need to work with China,” Steinberg said.

An opening to the United States reduces dependence on Beijing, which is also a win for Washington, he said.

The government also may hope to ensure that reforms come from the top down, rather than risk a bottom-up revolution that spirals out of control as in the Middle East over the past year, Steinberg said.

“Nearly everyone is more willing to compromise now because, after 20 years, nearly everyone knows that the Myanmar people deserve so much better than what they have,” said Thant Myint-U, a historian from Myanmar and grandson of the late U.N. Secretary General U Thant.

“The question should really be why has it taken so long to take the very simple and commonsense steps that we’ve seen over the past few months.”

YANGON, Myanmar — Myanmar’s president signed a revised law on political parties on Friday in an apparent attempt to encourage Nobel laureate Aung San Suu Kyi’s National League for Democracy to accept the political system and reregister as a party.

President Thein Sein signed the amendments to the Political Party Registration Law as senior U.S. diplomats were ending a visit to encourage his government to push forward with democratic reforms. A U.N. envoy has also been visiting.

If the National League for Democracy reregisters as a legal party, it could join upcoming but still unscheduled by-elections which would be the first electoral test of its popularity in more than two decades.

Bringing Suu Kyi’s party back into the fold would also give the government greater legitimacy at home and abroad.

The group was delisted as a political party last year after it refused to register for November 2010 elections, saying they were being held under undemocratic conditions.

The amendments of the party law signed by Thein Sein on Friday alter three areas of the party law to accommodate Suu Kyi and her party.

The law, originally enacted in March last year by the previous military junta, prohibited anyone who has been convicted of a crime from being a member of a political party. Suu Kyi had been convicted on a trumped-up charge, and would have had to leave the party she helped found. The clause has now been dropped, clearing the way for former political prisoners to engage in politics.

Another article was amended to say that registered parties shall “respect and abide” by the constitution rather than “safeguard” it. The change was evidently made to accommodate criticisms of the charter by Suu Kyi’s group without making them illegal.

The third amendment says that any party that registers after the general election must run candidates in at least three constituencies in by-elections to remain legally registered. The original law said a party had to stand at least three candidates in the general election, which would have been an impediment to Suu Kyi’s party since it boycotted the 2010 polls.

“Now that the law has been passed, we will hold a meeting to decide whether or not we will register,” the spokesman of Suu Kyi’s group, Nyan Win, told The Associated Press. Nyan Win said the amendments were in line with the group’s wishes.

The junta that ruled Myanmar until handing over power to the current elected military-backed government in March this year enacted a constitution and other laws with provisions aimed at limiting Suu Kyi’s political activities, fearing her influence. Her party overwhelming won a 1990 general election, but the army refused to had over power, instead repressing Suu Kyi and other democracy activists.

The U.S. and other Western countries imposed political and economic sanctions against the junta for its failure to hand over power and its poor human rights record.

The elections last November gave an army-backed party a huge majority in Parliament, and the constitution contains provisions that ensure the continued domination of the armed forces.

However, Thein Sein, who was the junta’s prime minister, has instituted a series of small reforms to encourage political reconciliation, including an easing of censorship and the opening of a dialogue with Suu Kyi.

At the same time, the Obama administration has sought to engage the government, shifting away from the previous U.S. policy of shunning it.

U.S. special envoy to Myanmar Derek Mitchell told reporters in Yangon on Friday that Thein Sein’s government has taken positive steps and that Washington views the release of political prisoners and bringing the National League for Democracy into the political system as necessary reforms.

“We are thinking very actively about how we can support reform by our actions as we see the government taking those concrete steps,” he said. He said the U.S. “would love to respond in kind” and was consulting closely with the government.

The U.S. could gradually ease its sanctions against Myanmar and allow aid from multilateral lending institutions such as the World Bank, over which it has exercised a veto.

Vijay Nambiar, a special adviser to the U.N. secretary-general, also concluded a visit Friday and added his voice to those encouraging further reforms.

“An important purpose of my visit was to directly relay to the Myanmar leadership and other stakeholders the secretary-general’s encouragement of the important steps taken in recent months to advance the reform agenda led by President Thein Sein, as well as the significant efforts made by all concerned to advance national dialogue and reconciliation,” he said in a statement. “At this juncture, it is of crucial importance, for Myanmar’s regional and global standing, to maintain the positive momentum that these initiatives have generated.”

October 30, 2011 09:14 AM EST |
YANGON, Myanmar — Myanmar democracy movement leader Aung San Suu Kyi met Sunday with a Cabinet minister to discuss issues whose resolution could lead to a breakthrough in the country’s long-running political deadlock.

Labor Minister Aung Kyi read a joint statement after their meeting that said the two had discussed an amnesty, peace talks with ethnic armed groups and economic and financial matters.

Some 200 of an estimated 2,000 political prisoners were released on Oct. 11 under an amnesty for 6,300 convicts.

An elected but military-backed government took power in March after decades of repressive army rule and its new president, Thein Sein, has moved to liberalize the political atmosphere.

In the past week, Parliament has amended a law to try to woo Suu Kyi’s National League for Democracy into reregistering as a political party.

The government would like to see the United States and other Western nations lift political and economic sanctions imposed against the repressive former ruling junta. Without Suu Kyi’s blessings they are unlikely to do much.

A recent visit by Washington’s special envoy to Myanmar has raised expectations that major developments may come soon.

It was the fourth meeting between Aung Kyi – the government’s designated liaison officer – and Suu Kyi since July after the nominally civilian government took over power from the military’s junta regime in March.

Parliament’s recent amendment of the 2010 political party registration law appeared to meet some objections from Suu Kyi and her National League for Democracy that it discriminated against them. Her organization was delisted as a political party last year after it refused to register for the November 2010 election, claiming it was being held under undemocratic conditions.

A party set up as a proxy for the military won a resounding victory, giving credence to criticism that the military’s roadmap to democracy is just a smoke screen for continued domination by the army.

The amendments, not yet signed into law by Thein Sein, are meant to encourage the NLD to reregister as a political party, which in turn would amount to giving at least tacit recognition to the legitimacy of Thein Sein’s government.

Suu Kyi has not committed herself or her party to such a move

Asked if the NLD would register, she said, “Once we see the law, then we will hold a party meeting and decide whether or not we will register.”

MATTHEW PENNINGTON | October 17, 2011 04:11 PM EST |

WASHINGTON — Myanmar must release more political prisoners and end abuses against ethnic minorities if it wants to transform its relations with Washington, a U.S. official said Monday.

Special envoy to Myanmar Derek Mitchell noted a trend toward greater openness in the Asian country but said questions remain about Myanmar, also known as Burma, and its commitment to democratic reforms.

“Right now I think there are a lot of restrictions that make them into a pariah state. And Burma is a proud country with a tremendous history, and they deserve to come out of the shadows and take their prideful place in the region,” Mitchell told a news conference.

Myanmar held flawed elections last year, its first voting since democracy leader Aung San Suu Kyi swept a 1990 vote and was barred from taking power. The government recently stopped work on a controversial China-backed dam project and last week freed as many as 250 of its more than 2,000 political detainees.

Last month, Mitchell made his first visit to Myanmar since his appointment, aiming to advance the Obama administration’s engagement with the military-dominated government after years of isolating it because of its poor record on human rights.

Mitchell welcomed the government’s recent moves as encouraging and said his September visit yielded productive meetings with Myanmar officials, traditionally viewed as xenophobic. He said they were willing to discuss anything he raised.

He would not give specifics about how Washington could reward the government for progress toward positive change. Myanmar currently is subject to tough trade and economic sanctions.

He said the United States had made some gestures already: easing travel restrictions that enabled Myanmar’s foreign minister to visit the State Department in Washington last month after attending the U.N. General Assembly in New York. The U.S. also is inviting Myanmar to participate in other international dialogues.

Mitchell called on Myanmar to release all remaining political prisoners and said that while the government had held discussions with the democratic opposition, it had not made comparable progress in its relations with ethnic minorities in the north and east. He said credible reports of human rights abuses, including against women and children, continue to emerge.

“We made it very clear that we could not have a transformed relationship as long as these abuses and credible reports of abuses occur,” he said.

Myanmar is an ethnically diverse nation, and most of the minorities have taken up arms at some point against the government dominated by the military and the ethnic Burman majority. Legions of villagers have been displaced by brutal military campaigns, and this year has seen violence flare in the Kachin and Shan states against ethnic armies that had reached cease-fires with the Myanmar regime.

October 13, 2011 03:07 PM EST |

YANGON, Myanmar — A human rights group and prominent activist on Thursday called for Myanmar to free all of its political prisoners after only about 10 percent of an estimated 2,000 were released under a presidential amnesty.

The Thailand-based Assistance Association for Political Prisoners (Burma) said the amnesty for 6,359 convicts was insincere and primarily an effort to appease the international community. It estimated that at least 207 political prisoners had been freed.

“The use of amnesties by past regimes has come at times of mounting international pressure and been used as tokens of change, rather than substance of change,” it said in a statement. “This week’s prisoner release does not suggest anything different from earlier amnesties.”

A major release of political detainees has been eagerly awaited by Myanmar’s opposition, as well as foreign governments and the U.N., as a gesture toward liberalization by the elected government after decades of harsh military rule.

A failure to release a significant number could hamper the country’s efforts to burnish its human rights record and win a lifting of Western economic and political sanctions.

The United States, which is seeking ways to step up engagement with Myanmar after years of isolation, has welcomed the releases but is urging the government to go further.

John Kerry, chair of the Senate Foreign Relations Committee, said Thursday the releases were the most recent sign that Myanmar’s President Thein Sein and his advisers “seem to be distancing themselves from the failed policies of the past.”

In a statement, the Democrat senator said the committee – which oversees U.S. foreign policy – would be watching to see how the freed people are treated and whether it part of a broader movement that will include the release of all political detainees.

Zarganar, the most prominent dissident freed Wednesday under the amnesty, also issued a plea for all the country’s political prisoners to be released.

“Free everyone, free them all, including the former military intelligence chief and his men,” the popular comedian and social activist told The Associated Press. He said the former intelligence officers – who once were responsible for persecuting dissidents such as himself and ended up in jail for being on the losing side of a power struggle – should be freed because they were also convicted by the previous military government.

____

Associated Press writer Matthew Pennington in Washington contributed to this report.

September 26, 2011 10:50 AM EST |

YANGON, Myanmar — Democracy activists freshly tested the new Myanmar government’s avowed tolerance for dissent by gathering peacefully Monday at a central landmark in the country’s biggest city in honor of giant protests four years ago.

Four truckloads of riot police and two prison vans stood nearby but police did nothing to interfere with almost 60 activists who held a prayer vigil at Sule pagoda in Yangon. However, police harassed or stopped marchers in other parts of the city.

A nominally civilian but army-backed government that took power earlier this year from a decades-long ruling junta has said it will liberalize politics, but it still continues to hold about 2,000 political prisoners.

The demonstrators at Sule pagoda said they were marking the September 2007 crackdown on protests led by Buddhist monks that brought as many as 100,000 people onto the streets of Yangon until the army quashed them with deadly force. Several dozen people were believed killed and thousands jailed.

“We are holding this peaceful expression of our wishes in accordance with the Constitution. We are exercising our rights,” said Han Win Aung, one of the organizers, vowing to hold similar activities on the 26th of every month to let the people’s voice be heard.

For the first time in recent memory, both the marchers and journalists openly photographing and filming them were left unmolested by police.

Monday’s protesters called for freeing political prisoners and stopping construction of a dam on the Irrawaddy River they say is environmentally and socially deleterious.

In small but growing numbers, dissidents have staged protests after power was handed to a civilian government, despite skepticism the new regime is sincere about bringing about democratic change.

In northern Yangon, authorities stopped some 100 activists who sought to join the group on Sule pagoda, but made no arrests when some sought to continue their march.

(This version CORRECTS year of big protest to 2007 instead of 2006.)

Many lives have been lost, and are still being lost, as regimes and their opponents have faced off against each other.

Tunisia, Egypt, and now Libya are embarking on a new era and face the challenge of building more inclusive societies, economies and governance systems.

That will involve strengthening legislative and judicial bodies, fostering transparency and accountability in government at all levels, building new institutions and overhauling political and economic systems in general.

Transformations from authoritarian to more participatory systems take time, and there will be bumps along the way. The United Nations Development Programme (UNDP) is able to share experiences from working in many countries in transition.

On Oct. 23, for the first time, Tunisians are scheduled to elect representatives to the National Constituent Assembly. Building on Tunisia’s historic achievements in gender equality, there are attempts to boost the number of female candidates on party electoral lists to lift the representation of women.

Tunisian women of all ages and from all backgrounds played a crucial role in the quest for democracy and freedom. Female judges in black robes marching down the streets of the capital in January will remain among the most vivid images of the Arab uprisings.

UNDP is providing women candidates running for the first time in October’s election with information on how to mount campaigns, engage civil society and use new and traditional media. We are also promoting dialogue among Tunisians on the public image and perception of women’s participation in politics.

In Egypt, UNDP is available to support the election process and security sector reform. In Libya, the U.N.’s broad team is tackling humanitarian challenges and stands ready to assist the transition.

Around the world, the United Nations does a great deal to develop and strengthen democratic institutions and practices.

UNDP alone dedicated more than U.S. $1.6 billion to building democratic governance last year. We currently support one in three parliaments in the developing world and are involved on average every two weeks in an election.

Democracy cannot be exported or imposed; it must come from the will of the people. The rest of us can support nations on the path they lay out for themselves to meet their aspirations for equity, inclusiveness and empowerment.