[Federal Register Volume 67, Number 237 (Tuesday, December 10, 2002)]
[Presidential Documents]
[Pages 75799-75807]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-31247]


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  Federal Register / Vol. 67, No. 237 / Tuesday, December 10, 2002 / 
Presidential Documents  

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 Title 3--
 The President

[[Page 75799]]

                Memorandum of November 6, 2002

                
Report to the Congress Regarding Conditions in 
                Burma and U.S. Policy Toward Burma

                Memorandum for the Secretary of State

                Pursuant to the requirements set forth under the 
                heading ``Policy Toward Burma'' in section 570(d) of 
                the Fiscal Year 1997 Foreign Operations Appropriations 
                Act, as contained in the Omnibus Consolidated 
                Appropriations Act (Public Law 104-208), a report is 
                required every 6 months following enactment concerning:

1)

progress toward democratization in Burma;

2)

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

3)

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

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

                    (Presidential Sig.)B

                THE WHITE HOUSE,

                    Washington, November 6, 2002.

Billing code 4710-10-M


[[Page 75800]]

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

                Conditions in Burma and U.S. Policy Toward Burma for 
                the Period March 28, 2002-September 27, 2002

                Introduction and Summary

                Progress towards a real dialogue between Burma's 
                military regime and the NLD's Aung San Suu Kyi took a 
                step forward in May with the government's decision to 
                release her from effective house arrest. Since then, 
                Aung San Suu Kyi has been free to carry out her party 
                duties as General Secretary, and, in a change from 
                conditions in her pre-detention days, to travel freely 
                throughout Burma. Since her release, Aung San Suu Kyi 
                has made trips to Moulmein, Mandalay, and Hpa'an. She 
                has also presided over a slow revival of the NLD as a 
                political party. Virtually crushed by the government 
                during the days leading up to Aung San Suu Kyi's 
                detention in September 2000, the NLD has now re-
                assembled most of its party leadership and reopened 62 
                out of over 300 offices throughout Burma. It has also 
                benefited from the release of more than 300 of its 
                party members who had been held as political prisoners. 
                Unfortunately, the steps the government has taken to 
                rebuild confidence with the NLD have not been matched 
                by equally serious steps towards a political dialogue 
                on constitutional issues. As a result, questions still 
                remain regarding the government's overall commitment to 
                political transition.

                In regard to human rights, the government's record 
                remains poor. The regime has, however, improved its 
                cooperation with international human rights 
                organizations, finally agreeing to allow the ILO to 
                appoint a liaison officer in Rangoon and to conduct on-
                site surveys in Burma of areas along the Thai/Burmese 
                border that have been identified by Amnesty 
                International and others as ``hot spots'' for forced 
                labor. It has also continued to work with the 
                International Committee of the Red Cross on 
                improvements in prison conditions and released almost 
                400 political prisoners over the past two years. 
                Unfortunately, hundreds remain in prison, several 
                students were arrested for expressing political dissent 
                in recent months and substantive improvements in prison 
                conditions have yet to be realized. We are also deeply 
                concerned by ongoing egregious human rights abuses of 
                civilians in ethnic regions, including killing, 
                torture, rape, forced labor, and forced relocations. 
                The regime has responded to accusations leveled by 
                human rights groups in Thailand of widespread army 
                rapes in Shan State with investigations by three 
                separate teams from the Burmese Army, the Ministry of 
                Home Affairs, and the Myanmar National Women's 
                Cooperative Association, but concluded--incredibly--
                that there was no evidence that Burmese Army personnel 
                had been involved in any rapes in Shan State between 
                1996 and 2001. That conclusion, together with the lack 
                of any international involvement in the investigation, 
                has left international observers in serious doubt about 
                the government's willingness to deal effectively with 
                Burmese Army abuses in areas of internal conflict.

                The areas of Burma under effective control of ethnic 
                groups make Burma one of the world's largest producers 
                of opium, heroin, and amphetamine-type stimulants, 
                despite the fact that its overall output of opium and 
                heroin has declined sharply in recent years, partly as 
                a result of improved Burmese government 
                counternarcotics efforts. Opium production in Burma has 
                now declined for five straight years, and, in 2002, 
                Burma produced less than one-quarter the opium and 
                heroin that it did six years before. Unfortunately, as 
                opium production has declined, the production of 
                methamphetamines has increased, particularly in 
                outlying ethnic majority regions governed by former 
                insurgents, areas that are not under firm government 
                control. According to some estimates, as many as 400 to 
                800 million methamphetamine tablets may be produced in 
                Burma each year, although these estimates are difficult 
                to verify.

[[Page 75801]]

                In July, the U.S. Centers for Disease Control and 
                Prevention conducted a countrywide assessment of the 
                HIV/AIDS pandemic in Burma and concluded that it had 
                shifted from an epidemic limited to high-risk groups to 
                a widespread epidemic affecting the general population. 
                The government continued to downplay the extent of the 
                epidemic in the country; however, both the government 
                and the NLD are very interested in international 
                assistance to combat HIV/AIDS. USAID is initiating a 
                new $1 million HIV/AIDS prevention program in the 
                country; assistance will be provided through 
                international NGOs--no assistance will be directed to 
                the government.

                There are few signs of any government commitment to 
                economic reform, despite rapidly deteriorating economic 
                conditions. Two problems stand out. In the energy 
                sector, a run of disastrous public investment decisions 
                has left the economy largely without fuel for either 
                its electric generating facilities or many of its basic 
                industries. In the fiscal budget the situation is even 
                more desperate. There, the deficits of Burma's state-
                owned enterprises are estimated to absorb all of the 
                revenues collected by the government, leaving the 
                government proper (i.e., the army, the navy, the health 
                and education services, and all ministerial operations) 
                to run on monies borrowed from the Central Bank. This 
                in turn has produced a rapid expansion in the money 
                supply, a commensurate surge in inflation, and a sharp 
                depreciation in the value of the domestic currency (the 
                kyat). It has also undermined public confidence in the 
                military government's ability to manage the economy 
                over the long run.

                U.S. policy goals in Burma include progress towards 
                democracy and national reconciliation, respect for 
                human rights, a more effective counternarcotics effort, 
                counterterrorism efforts, regional stability, HIV/AIDS 
                mitigation, and accounting for missing servicemen from 
                World War II. We encourage talks between the leader of 
                the National League for Democracy (NLD) Aung San Suu 
                Kyi and the military, recognizing that these are the 
                best hope for meaningful democratic change and 
                protection of human rights. Part of our strategy is to 
                consult regularly, at senior levels, with countries 
                with major interests in Burma and/or major concerns 
                regarding Burma's current human rights practices.

                In coordination with the European Union and other 
                states, the United States has maintained sanctions on 
                Burma. These include an arms embargo, an investment 
                ban, and other measures. Our goal in applying these 
                sanctions is to encourage a transition to democratic 
                rule and greater respect for human rights. Should there 
                be significant progress towards those goals as a result 
                of dialogue between Aung San Suu Kyi and the military 
                government, the United States would look seriously at 
                measures to support this process of constructive 
                change.

                Measuring Progress toward Democratization

                At the time of the dramatic release of NLD General 
                Secretary Aung San Suu Kyi on May 6, 2002, the 
                government promised that she would be free to move 
                about the country--a promise it has generally kept in 
                the months since. Initial difficulty in visiting some 
                UN projects appears to have been resolved. Over the 
                past four months Aung San Suu Kyi has traveled to 
                Moulmein, Mandalay, and Hpa'an. On each trip she 
                coordinated travel and security arrangements with the 
                government, but otherwise set her own itinerary. She 
                also met freely with NLD party workers and the general 
                public; however, in line with general restrictions on 
                all political parties in Burma, she was not allowed to 
                hold outdoor rallies or meetings. In Rangoon, 
                similarly, she has resumed her party duties with 
                minimal government interference and has continued to 
                meet with both Burmese and foreign visitors on a 
                regular basis, although the government still limits her 
                access to high-ranking foreigners. Since March, foreign 
                visitors have included UN Special Envoy Razali Ismail, 
                who has facilitated communication between the 
                government and the NLD, Japanese Foreign Minister 
                Kawaguchi, EU Troika representatives, and ambassadors 
                of European and ASEAN countries.

[[Page 75802]]

                NLD efforts to rebuild itself as a political party have 
                also accelerated to some degree over the past six 
                months. Badly crippled by government repression during 
                the 1990s, the NLD has now re-assembled most of its 
                national leadership (with the notable exception of 
                senior party adviser U Win Tin, who remains in prison). 
                As of September 27, 2002, 62 of the NLD's party offices 
                have re-opened, including 36 of 40 in Rangoon. All of 
                the party's Central Executive Committee members have 
                been released, as have a majority of the party members 
                who were detained during the government's crackdowns in 
                the 1090s. However, 16 of the party's MPs remain in 
                prison. Altogether, 325 NLD party members have been 
                released from prison or house arrest since 2000, 
                leaving about 200 NLD prisoners still in detention.

                The NLD has also resumed some normal party activities, 
                including public meetings on major public holidays. 
                However, outdoor meetings are banned (for both the NLD 
                and all other registered political parties) and party 
                elections remain forbidden under a decree first issued 
                by the Central Election Commission in 1990. The 
                government has refused to grant a publication license 
                to the NLD party's newsletter, despite repeated NLD 
                requests for permission to publish. Two student members 
                of the NLD were also recently arrested for carrying 
                banned political literature. The NLD, for its part, has 
                moderated its public criticism of the regime. While it 
                has called repeatedly for democracy in Burma, it has 
                also stated flatly that it is prepared to work with the 
                government on a process of political transition. Aung 
                San Suu Kyi has indicated recently that humanitarian 
                assistance for Burma's people could be welcome, 
                provided that it is delivered through mechanisms that 
                are transparent, accountable, and beneficial to the 
                Burmese people, as opposed to the government. She told 
                EU representatives that economic sanctions are a matter 
                to be decided by individual foreign states.

                Despite the steps the government has taken to rebuild 
                confidence with the NLD, it has not yet responded to 
                the NLD's calls for a serious dialogue on 
                constitutional issues, nor has it sketched out a 
                roadmap for reform or a timetable for elections. As a 
                result, doubts remain regarding the government's 
                commitment to dialogue. While it has repeatedly 
                asserted that its goal is a restored democracy, it has 
                yet to convince its critics, including the U.S., that 
                it is genuinely committed to that course. The U.S. 
                continues to recognize the results of the 1990 
                elections and will continue to push for the full 
                restoration of the civil and political rights of the 
                people of Burma.

                Human Rights

                The SPDC's human rights record remains poor with 
                repression of political dissent, forced labor, ethnic 
                persecution, lack of religious freedom and trafficking 
                in persons all figuring prominently. Burma was 
                designated a Country of Particular Concern for 
                particularly severe violations religious freedom in 
                2001. Burma has been the scene of severe human rights 
                abuses, particularly in ethnic minority areas, where 
                there have been many reports of extrajudicial killings, 
                rapes, and disappearances. Some of these were 
                highlighted during the past six months in publications 
                by Amnesty International and groups based on the Thai 
                border. The Department of State's annual Human Rights 
                Country Report on Burma includes credible reports of 
                rape and other atrocities committed by the Burmese 
                military, especially in ethnic minority areas. In June 
                2002, the Shan Human Rights Foundation (an organization 
                initially related to the Shan United Army, a narcotics-
                trafficking organization), together with the Shan 
                Women's Action Network, published a report, based on 
                interviews with displaced persons, which alleged that 
                Burmese Army personnel had been involved in multiple 
                rapes involving hundreds of women between 1996 and 
                2001. The report also argued that the Burmese Army had 
                used rape systematically as a weapon of war in its 
                counter-insurgency operations. The Burmese investigated 
                these charges with three separate teams from the 
                Burmese Army, the Ministry of Home Affairs and the 
                Myanmar National Women's Cooperative Association, but 
                concluded--incredibly--that

[[Page 75803]]

                there was no evidence that Burmese Army personnel had 
                been involved in any rapes in Shan State during the 
                five-year period covered by the SHRF/SWAN report. 
                Following subsequent international pressure, the 
                Burmese have approached both the International 
                Committee of the Red Cross and UN Special Rapporteur 
                Pinheiro for possible involvement in an investigation, 
                but there remains doubt about the Burmese government's 
                willingness to deal effectively with Burmese Army 
                abuses in areas of internal conflict. We are urging 
                that the UN independently investigate the reports.

                The Burmese government dealt more effectively with 
                other allegations of human rights abuses. It has 
                continued to work with the International Committee of 
                the Red Cross on improvements in prison conditions. It 
                has also allowed ICRC to open up five regional offices 
                throughout the country, staffed by 34 international 
                volunteers, to provide protection to ethnic minorities. 
                Similarly, it has allowed the United Nations High 
                Commission on Refugees to maintain a presence in 
                northern Rakhine State, providing support and 
                protection services to more than 230,000 Rohingya 
                Muslims who have returned from Bangladesh. After nearly 
                a decade, however, some 22,000 Rohingya refugees still 
                remain in two refugee camps in Bangladesh. In spite of 
                ongoing repatriation efforts, for the last few years 
                repatriations to Burma have not kept up with the camp 
                birthrates and restrictions on movement in Burma have 
                made life exceedingly difficult for this population. 
                Furthermore, nearly 130,000 other Burmese ethnic 
                minority displaced persons live in several camps along 
                the border in Thailand because they do not feel it is 
                safe to return. Given continued insurgent activity 
                among some ethnic groups, associated human rights 
                abuses are likely to continue.

                The government has also made some progress on forced 
                labor, which remains an issue of serious concern to the 
                international community. In November 2000, the 
                International Labor Organization (ILO) Governing Body 
                concluded that the Government of Burma had not taken 
                effective action to deal with the use of forced labor 
                in the country and, for the first time in its history, 
                called on all ILO members to review their policies to 
                ensure that those policies did not support forced 
                labor. The United States strongly supported this 
                decision.

                Over the past year, the Government of Burma has slowly 
                begun to work with the ILO on measures to address the 
                problem. In September 2001, it allowed an ILO High 
                Level Team to visit Burma to assess the situation. That 
                team concluded that the GOB had made an ``obvious, but 
                uneven'' effort to curtail the use of forced labor, but 
                that forced labor persisted, particularly in areas 
                where the government was waging active military 
                campaigns against insurgent forces. It also recommended 
                that the ILO establish a permanent presence in Burma. A 
                second ILO team visited Burma in February 2002 to 
                follow up on this recommendation, and eventually 
                agreement was reached with the ILO in Geneva regarding 
                the appointment of an ILO liaison officer, pending the 
                establishment of a permanent ILO office in Rangoon. 
                That liaison officer has since been appointed. The ILO 
                has also identified a permanent representative to serve 
                in Burma. Perhaps most importantly of all, in August 
                2002, the ILO began field visits to sites along the 
                Thai/Burmese border which have been identified by 
                Amnesty International and other organizations as ``hot 
                spots'' for forced labor and Burmese Army abuse of 
                ethnic minorities. That said, there were continuing 
                signs that forced labor remains a problem, with 
                reports, even in Rangoon, of laborers being dragooned 
                by the military.

                Finally, the government has continued with the slow 
                release of political prisoners. Altogether, 
                approximately 400 political prisoners have been 
                released from detention since October 2000. In response 
                to an appeal from UN Special Rapporteur Pinheiro, the 
                government has also released, on humanitarian grounds, 
                approximately 400 women prisoners who either had small 
                children or were pregnant. To date, releases have 
                included a majority of the NLD members held in prison, 
                all members of the NLDs Central Committee, several 
                major ethnic leaders, several student leaders, and all

[[Page 75804]]

                but 19 of the MPs elected to the 1990 Parliament. Even 
                with these releases, however, hundreds of political 
                prisoners remain in prison or under detention in Burma 
                as of September 2002, including approximately 200 NLD 
                members.

                Burma is a Tier 3 human trafficking country that has 
                not developed prevention, protection or law enforcement 
                programs to address fully the serious trafficking 
                problems that plague the country, but has made some 
                progress in recognizing and publicizing the perils of 
                trafficking in persons. It has signed the 1950 
                Convention for the Suppression of Traffic in Persons 
                and the Prostitution of Others and is a participant in 
                the UN Inter-Agency Project on the reduction of 
                trafficking in the Mekong sub-region although its other 
                international and regional anti-trafficking cooperation 
                is very limited. In a report delivered to the U.S. 
                Government in August, it also highlighted the recent 
                information activities of Myanmar National Committee 
                for Women's Affairs; the enforcement efforts of a newly 
                formed Working Committee for the Prevention of 
                Trafficking in Persons (which is chaired by the Home 
                Minister); the legislation it has applied to combat 
                trafficking; and the jail sentences that it has handed 
                out to more than 100 traffickers over the past 3 years. 
                However, information on its funding of anti-trafficking 
                activities and its support for the repatriated victims 
                of trafficking remains scant. The government's 
                cooperation with international NGOs concerned about 
                human trafficking has also been minimal. While it 
                appears that the government has finally begun to 
                recognize the significance of its human trafficking 
                problems, it is equally obvious that it has not yet put 
                together programs that can deal with all aspects of 
                those problems. Given its current economic 
                circumstances, we do not anticipate the emergence of 
                effective programs in the near term.

                Counternarcotics

                The ethnic majority areas of Burma make it one of the 
                world's largest producers of illicit opium, heroin, and 
                amphetamine-type stimulants, despite the fact that its 
                overall output of opium and heroin has declined sharply 
                in recent years, partly as a result of improved Burmese 
                government counternarcotics efforts. Opium production 
                in Burma has now declined for five straight years and, 
                in 2002, Burma produced an estimated 630 metric tons of 
                opium, less than one-quarter of the 2,560 metric tons 
                of opium produced six years earlier. Unfortunately, 
                Burma's success in reducing the production of opium and 
                heroin has been partially undercut by rapidly 
                increasing production of amphetamine-type stimulants, 
                particularly in outlying regions governed by former 
                insurgents. According to some estimates, as many as 400 
                to 800 million methamphetamine tablets may be produced 
                in Burma each year, although verification of this 
                estimate is difficult due to the mobile, small-scale 
                nature of the methamphetamine production facilities.

                The policy of the SPDC central government is to end 
                narcotics trafficking, but the SPDC realizes that this 
                will be a long-term process as it has been elsewhere. 
                There are reliable reports that individual Burmese 
                officials, particularly in outlying areas, may be 
                involved in narcotics production or trafficking, but we 
                do not have evidence that the government is complicit 
                in the drug trade. While the government has 
                consistently urged former ethnic insurgents to curb 
                narcotics production and trafficking in their self-
                administered areas along the Chinese border, it has 
                only recently, with the support and assistance of 
                China, begun to crack down on these groups. Since 
                September 2001, it has begun to enforce pledges 
                elicited from each former insurgent group to make their 
                self-administered areas opium-free and, in March 2002, 
                pressured each group (including the Wa and the Kokang 
                Chinese) into issuing new decrees outlawing narcotics 
                production and trafficking in areas under their 
                control. However, the Wa have not committed to 
                eliminating narcotics production until 2005.

                The government has improved its cooperation with 
                neighboring states, particularly China. In 2001, Burma 
                signed Memoranda of Understanding on narcotics control 
                with both China and Thailand. The MOU with China

[[Page 75805]]

                established a framework for joint operations, which in 
                turn led to a series of arrests and renditions of major 
                traffickers in 2001 and 2002, many of whom were 
                captured in the former insurgents' self-administered 
                areas. Altogether, over the past 18 months, Burma has 
                returned to China 22 fugitives from Chinese justice, 
                including principals from one group that China 
                described as ``the largest armed drug trafficking gang 
                in the Golden Triangle.'' Burma's MOU with Thailand, 
                similarly, committed both sides to closer police 
                cooperation on narcotics control and to the 
                establishment of three joint ``narcotics suppression 
                coordination stations'' at major crossing points on the 
                border. That cooperation has since been interrupted by 
                tensions on the border, but both governments have made 
                clear that they look forward to resuming cooperation 
                once these tensions have been cleared away.

                Finally, Burma has participated in multilateral efforts 
                to control narcotics trafficking in the Golden 
                Triangle. Since November 2001, Burma has participated 
                in ACCORD, the ASEAN and China Cooperative Operations 
                in Response to Dangerous Drugs, which serves as an 
                umbrella for a variety of global programs aimed at 
                strengthening the rule of law, promoting alternative 
                development, and increasing civic awareness of the 
                dangers of drugs. It also signed UNDCP's 1993 
                Memorandum of Understanding among the six regional 
                states--Burma, China, Thailand, Laos, Vietnam, and 
                Cambodia--to control narcotics production. Finally, as 
                China and Thailand have become more active 
                multilaterally, Burma has joined the trilateral and 
                quadrilateral programs organized by either to 
                coordinate counternarcotics efforts among the four 
                states of the Golden Triangle (Laos, Burma, China, and 
                Thailand).

                Under pressure from the Financial Action Task Force 
                (FATF), which designated Burma as a ``non-cooperating'' 
                state in June 2001, the Government of Burma has also 
                begun to take action on money laundering issues. In 
                June 2002, it enacted a new and potentially powerful 
                money laundering law, which, if properly enforced, 
                should address many of the FATF's concerns. That 
                legislation criminalizes money laundering in connection 
                with virtually every kind of serious criminal activity 
                and levies heavy responsibilities on banks with regard 
                to reporting. Penalties are also substantial. The 
                police, in cooperation with the Central Bank and the 
                Attorney General's office, are now training their first 
                financial investigators and should begin prosecutions 
                under the new law within the next few months.

                Despite these steps, the United States judged earlier 
                this year that Burma's visibly improving 
                counternarcotics efforts were not yet commensurate with 
                the scale of the problem. To encourage further 
                progress, we have sustained a program of operational 
                cooperation between police authorities in Burma and the 
                U.S. Drug Enforcement Administration. We have also 
                continued to work with the GOB on annual opium yield 
                surveys in Burma, and with UNDCP and other donors on 
                opium reduction and crop substitution programs. In 
                September 2001, the United States pledged an additional 
                $1,000,000 to support UNDCP's Wa Alternative 
                Development Project, which has helped reduce opium 
                production in the territories of the United Wa State 
                Army. Notwithstanding the lack of Burmese financial 
                resources and capacity, we do not, as a matter of law, 
                provide bilateral narcotics assistance.

                HIV/AIDS

                In July, the U.S. Centers for Disease Control and 
                Prevention (CDC) conducted an in-depth assessment of 
                the HIV/AIDS epidemic in Burma, including among high-
                risk groups and pregnant women. The CDC assessed 
                capacity at various levels in preventing the spread of 
                HIV and providing care and treatment for those 
                infected. The CDC concluded that the data, while 
                limited, on HIV/AIDS in Burma indicates a widespread 
                epidemic of greater than two-percent prevalence 
                affecting the general population. Previous estimates by 
                the World Health Organization, UNAIDS, and others had 
                indicated an epidemic of less than two-percent 
                prevalence limited to high-risk populations. CDC 
                observed a limited national HIV/AIDS prevention program 
                run by the government, but that some efforts are 
                underway by non-governmental

[[Page 75806]]

                organizations. Voluntary HIV testing and counseling is 
                extremely limited, and very few people know their HIV 
                status. Programs to prevent mother-to-child 
                transmission of HIV are small and limited and in need 
                of strengthening at all levels. The government has made 
                blood safety a high priority, but quality control is 
                questionable. Availability of care and treatment for 
                those infected with HIV is very limited and trained 
                staffs are few, while some non-governmental 
                organizations provide some care services.

                The government generally denies the extent of the HIV/
                AIDS epidemic in the country, and their programs do not 
                reflect the latest thinking of the scientific community 
                on prevention, treatment, and care. However, like the 
                NLD, the government is very interested in international 
                assistance to combat the growth of the epidemic. CDC 
                made a number of recommendations to strengthen and 
                improve HIV/AIDS surveillance in the country and change 
                policy and program implementation by the government to 
                improve the effectiveness of the response to HIV/AIDS 
                in the country. Policy recommendations included 
                initiating widespread voluntary HIV testing and 
                counseling, including allowing international non-
                governmental organizations to conduct testing and 
                counseling. The CDC also recommended that national 
                implementation by the government of a mother-to-child 
                transmission prevention program be accelerated, that a 
                national HIV/AIDS care program be developed, and that 
                programs targeting high risk groups be strengthened and 
                enhanced.

                The U.S. Agency for International Development (USAID) 
                is in the process of providing $1 million to 
                international non-governmental organizations operating 
                HIV/AIDS prevention project in the country; none of 
                these resources would be directed to the government.

                The Quality of Life in Burma

                The military government's management of the Burmese 
                economy has been catastrophic. The government's ill-
                thought efforts to maintain discipline and control, and 
                exclude foreign expertise and participation, have had 
                predictably disastrous results.

                Two problems stand out. In the energy sector, a run of 
                disastrous public investment decisions has left the 
                economy without fuel for either its electric generating 
                facilities or many of its basic industries. In January 
                2002, the nation's peak generating capacity was 
                sufficient to meet only about two thirds of the 
                nation's peak demand and since then the situation has 
                deteriorated further, with no prospect of relief until 
                late 2003 or early 2004 at the very earliest. Until 
                then, at least 30 to 40 percent of the nation's 
                electricity customers will be without power at any 
                given time.

                In the fiscal budget, the situation is even more 
                desperate. There, a failed fiscal concept, in which the 
                GOB attempted to run the entire government mostly on 
                the basis of the profits of the state-owned 
                enterprises, has left the GOB without any basis for 
                running the government over the long term, as profits 
                have turned to losses in one state-owned enterprise 
                after another. In fact, in Burma's fiscal year 2001/
                2002, the reported deficits of the state-owned 
                enterprises actually absorbed all the revenues 
                collected by the government, leaving the government 
                proper (i.e., the army, the navy, the health and 
                education services, and all ministerial operations) to 
                run on monies borrowed from the Central Bank. This has 
                in turn produced a rapid expansion of the money supply, 
                a commensurate increase in inflation and a sharp 
                depreciation in the value of the domestic currency (the 
                kyat). Over the past two years, the kyat's unofficial 
                value has depreciated from a rate of approximately 360/
                dollar in September 2000 to 1,100/dollar now, while 
                inflation has accelerated to an annualized rate that is 
                now approaching triple digit levels.

                The government has attempted to deal with these 
                pressures with a series of ad hoc restrictions on 
                economic activity that reinforce (at least temporarily) 
                its system of control while punishing private sector 
                trade and investment. Thus far, however, the only 
                consequence has been a crippled private sector

[[Page 75807]]

                and a weakened banking system. Inflation has not ebbed 
                and the kyat, after a brief rally in early June 2002, 
                has resumed its downward slide.

                Looking ahead, there is really no prospect for relief 
                for Burma without foreign financing support. The 
                problems within the economy, and particularly within 
                the fiscal budget, are simply too vast and too deeply 
                entrenched to be treated now on the basis of Burma's 
                own resources. However, access to that foreign 
                financing support will likely depend on progress in 
                regard to structural reforms and political transition.

                Development of a Multilateral Strategy

                U.S. policy goals in Burma are progress towards 
                democracy, improved human rights, more effective 
                counternarcotics efforts, counterterrorism efforts, 
                regional stability, HIV/AIDS mitigation, and accounting 
                for missing servicemen from World War II. We encourage 
                talks between Aung San Suu Kyi and the military 
                government in the hope that it will lead to meaningful 
                democratic change and national reconciliation in Burma. 
                We also consult regularly, at senior levels, with 
                countries with major interests in Burma and/or major 
                concerns regarding Burma's human rights practices.

                The United States has co-sponsored annual resolutions 
                at the UN General Assembly and the UN Commission on 
                Human Rights that focus on Burma. We have also 
                supported ILO's unprecedented decision on Burma given 
                its failure to deal effectively with its pervasive 
                forced labor problems. Most importantly, we strongly 
                support the mission of the UN Secretary General's 
                Special Representative for Burma, Razali Ismail, whose 
                efforts have been instrumental in facilitating 
                communication between the government and Aung San Suu 
                Kyi.

                In coordination with the European Union and other 
                states, the United States has imposed sanctions on 
                Burma. U.S.-imposed sanctions include an arms embargo, 
                a ban on all new U.S. investment in Burma, the 
                suspension of all bilateral aid, including 
                counternarcotics assistance, the withdrawal of GSP 
                privileges, the denial of OPIC and EXIMBANK programs, 
                visa restrictions on Burma's senior leaders, and a hold 
                on all new lending or grant programs by the World Bank, 
                the IMF, the ADB, and other international financial 
                institutions in which the United States has a major 
                interest. We have maintained our diplomatic 
                representation at the Charg[eacute] d'Affaires level 
                since 1990.

                Our goal in applying these sanctions is to encourage a 
                transition to democratic rule and greater respect for 
                human rights. Nevertheless, we remain concerned about 
                the growing humanitarian crisis in Burma and will, 
                during the coming year, initiate a new $1 million 
                program to deal with the growing HIV/AIDS epidemic in 
                Burma. This funding will go directly to international 
                NGOs (including Population Services International) to 
                support programs including condom distribution and 
                educational efforts. We will also use a small portion 
                of the funding from the U.S. Burma earmark to develop 
                programs inside Burma in support of democracy. None of 
                these funds will be disbursed to or through the 
                government. We will also continue to examine the 
                potential for law enforcement cooperation with Burma on 
                terrorism and narcotics issues. Should there be 
                significant progress in Burma in coming months on 
                political transition and human rights, then the United 
                States would look seriously at additional measures that 
                could be applied to support this process of 
                constructive change.

                [FR Doc. 02-31247 Filed 12-9-02; 8:45 am]

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