International Herald Tribune
April 26, 2001

To support secret talks between opposition leaders and Rangoon’s military government, Japan has quietly approved the largest grant aid package since Burma’s ruling generals cracked down on pro-democracy demonstrations in 1988.

The move, which breaks a long-standing de facto ban on bilateral international assistance to Burma, took place in consultation with the United Nations and the United States.

Sources familiar with the progress of the United Nations-brokered talks in Rangoon said the grant, which sets aside ?.5 billion ($28.6 million) for reconstruction of turbines in a hydropower dam, was intended to serve as a tangible reward to the military government for having kept open a dialogue with the opposition leader and Nobel laureate Daw Aung San Suu Kyi.

“You can do positive re-enforcement for the discussions with a pat on the back, kind words or a dam,” said a person familiar with the deal. “The Japanese decided to do it with this dam.”

Rehabilitation of the Baluchaung dam was agreed to earlier this month and quietly announced during a little-publicized visit to Tokyo by Burma’s deputy foreign minister, Khin Maung Win. The dam, in eastern Kayah Province, was built by Japan in the 1960s as part of war reparations. Japanese consultants will leave for Burma in the next few weeks to draw up a feasibility study.

The agreement was not announced in Burma’s official press and went unnoticed by many observers, including Rangoon-based diplomats.

The reconciliation talks started last October at the prompting of a new UN special envoy, Razali Ismail.

“This is a very significant move by Japan,” a Rangoon-based source said. “Japan has been trying to keep it quiet yet cooperate with Razali to reward progress for the talks.” Mr. Razali, a Malaysian, overcame years of stalemate to start talks between Daw Aung San Suu Kyi, who heads the National League for Democracy, and leaders of the military junta.

The talks remain secret, but some of the government’s more virulent propaganda against Daw Aung San Suu Kyi has eased. In another hint of progress, the Burmese government earlier this month let in an envoy from the UN human rights office for the first time in five years.

Nonetheless, many diplomats and observers fear that Japan’s grant has come too soon in a still nascent process.

“This is a risky step for Japan: If the dialogue falters, Japan could be criticized for acting prematurely,” said Mike Jendrzejczyk, Washington director of Human Rights Watch/Asia. “Clearly no further grants should be given without fundamental human rights progress in Burma.”

Japanese officials declined to say whether Daw Aung San Suu Kyi approved of the grant but confirmed that consultations took place on all sides.

For Japan to undertake the dam project with minimum interference, Mr. Razali needed the United States to muffle its formerly strong opposition to the plan.

Last year the United States raised objections against such bilateral aid and specifically criticized an early version of the dam project, warning that its approval amounted to a reward without progress on human rights. The United States now takes a more moderate stancethanks to the progress of the talks in Burma and a new Washington administration that is hostile toward sanctions-based foreign policy.

Mr. Razali failed in another attempt to rally support when he visited the World Bank earlier this year to request an opening of low-level engagement with Burma. The bank rejected the request since the Burmese government had shown so little response to its previous attempts at cooperation,sources said.

In 1998 the Burmese government rejected a billion-dollar offer of aid from the World Bank and the United Nations in exchange for political reforms. At the time, government leaders expressed outrage at foreign criticism of Burma’s domestic affairs, insisting the nation could ignore outside pressures and survive in total isolation if necessary.

Mr. Razali’s approach, according to a Rangoon-based source, “doesn’t impose conditions, but acts more like an orchestra conductor. Each government and institution is like an instrument that he tries to put in harmony with the others.” Public disclosure of the grant, however, may raise criticism of Japan by Burma’s vociferous exile activist community.

Another point of contention may be Tokyo’s assertion that the project amounts to simple humanitarian aid. “This hydropower plant provides electricity to 20 percent of the nation, including many hospitals,” a Japanese official said. “In that way we may classify this as a humanitarian project.”

According to some estimates, however, up to one-third of the electricity generated by the dam is used by the country’s military.