EU’s Ashton in Myanmar as stalemate sours reform push

By Martin Petty

YANGON (Reuters) – EU Foreign Policy chief Catherine Ashton was in Myanmar on

Saturday to open a “new chapter” of relations following an easing of sanctions that could prompt a surge of investor interest

in the long-isolated state.

Her visit is the most high-profile by the European Union since the military’s brutal five-decade

rule of Myanmar came to an end last year, ushering in a quasi-civilian government with a reform agenda that has stunned the

world and convinced the bloc to suspend most of its punitive measures.

Ashton met newly elected lawmaker and Nobel

laureate Aung San Suu Kyi but made no comment on the tense standoff centred on her National League for Democracy (NLD)

party’s much-criticised refusal to take its parliamentary seats, which has left Myanmar in a political quagmire with no

clear way out.

The sanctions suspension, which Suu Kyi supports, was intended to allow aid and investment in the

resource rich but impoverished country to reward the government for its political and economic concessions, while reserving

the right to re-impose them if the reform process stalls.

Ashton acknowledged there was big interest from European

investors but said firms were taking a cautious approach.

“We recognise this is a journey that’s not finished.

There’s been a lot of interest from the business community, and rightly so,” she told a news conference alongside Suu Kyi at

the NLD’s dilapidated headquarters, shouting over malfunctioning microphones during intermittent power outages typical in

the underdeveloped country.

“They won’t make their decisions today, they’ll look at the investment potential and

opportunities and that needs to be done properly. I hope we’ll see all the elements come into place and make it an

irreversible process that can move forward. Much needs to be done.”

The trip comes at a time when the EU is vying with

Western powers to capture influence and strengthen commercial ties with Southeast Asia, a region with a combined economy of

more than $2 trillion dollars that plans to establish an EU-style economic community by 2015.

VAST

POTENTIAL

European firms now have the green light to compete with Asian companies for a share in Myanmar’s vast

untapped natural resources and take advantage of its strategic location, sandwiched between heavyweights China and India and

a gateway to the fast growing economies of ASEAN.

While investment in the former British colony is still seen as

risky, it is rich in oil, gas, teak and gemstones, with huge tourism potential and urgent needs for financial services, new

roads, hotels and railways and a proper telecoms infrastructure.

Suu Kyi was also tight-lipped about the impasse

between the NLD, the government and the fledgling parliament over a vow lawmakers must take to “safeguard” the constitution,

which also contains amendment provisions.

The NLD plans to amend the charter to reduce the military’s guaranteed

political stake and wants the oath changed, but what started as a quibble over a word has mushroomed into what European

diplomats say could become a protracted stalemate that no one wants, and no one quite knows how to resolve.

Suu Kyi

refused to say what the NLD’s next move would be and appeared to play down the urgency of the situation.

“We will

solve it in the best way possible,” she said. “We’re not at the point yet, it’s a bit premature to start this kind of

discussion.”

The standoff does not bode well for Western countries keen for stability in Myanmar as its inexperienced

rulers try to navigate through huge challenges ahead and maintain the pace of reforms, of which parliament is seen as a

crucial driver.

Ashton is expected to raise the issue during talks on Monday with Htay Oo, the secretary-general of

the ruling, army-backed Union Solidarity and Development Party (USDP), which dominates parliament. He last week told Reuters

the USDP would not support the NLD’s demand.

She will open an EU office in Yangon on Saturday, the bloc’s first

diplomatic presence in the country, then spend the next two days in the remote capital Naypyitaw, meeting President Thein

Sein and other moderates seen behind the reforms, including lower house speaker and power-broker Thura Shwe Mann and Railways

Minister Aung Min, who has negotiated ceasefires with numerous ethnic rebel armies.

(Additional reporting by Justyna

Pawlak in Brussels; Editing by Jonathan Thatcher)