Burma^* has been under military rule since 1962. However, in 2011 a new political system was introduced and a new military-backed government inaugurated that has reached out to the democratic opposition and armed ethnic opposition groups seeking more autonomy. Both of these groups reject the new constitution, which seeks to entrench the army’s power.

The thaw in the repressive climate of Burma was epitomised by by-elections held in April 2012 in which the opposition National League for Democracy, led by Aung San Suu Kyi, scored a resounding victory. President Thein Sein’s government has also reached initial peace agreements with most armed groups. But the challenges faced by a reformed Burmese state remain vast, while serious doubts remain as to the real commitment of military and business leaders to a thoroughgoing process of democratisation and accountability.

Current talks must lead to political dialogue to address ethnic issues, which remain the principle sources of conflict. Furthermore, although Burma is rich in resources, the country is extremely poor. Acknowledging the reform effort, the West has reversed its sanctions policy, and there is great interest in engaging with Burma in the political and economic spheres. However, regulations to manage foreign investment are weak, raising questions about prospects for sustainable and equitable economic development, especially in the contested and conflict-prone borderlands.

* In 1989 the military government changed the official name of the country from “Burma” to “Myanmar”. Using either name has since become apoliticised issue. The terms can be considered alternatives in the Burmese language. The UN uses “Myanmar”, but it is not yet commonly used in English, therefore “Burma” will be used in this report. This is not intended as a political statement.

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