Chinese Blood on Burmese Soil

By Tom Kramer
The Irrawaddy News

Peng Jiasheng is the Kokang leader whose residence was raided by government troops on August 8, setting off a regime offensive and leading to the loss of the Kokang region to junta troops. He was interviewed by The Irrawaddy on the reasons for the offensive, the role of China, the allegations of illegal drug trafficking, the borders guard force and the future of ethnic minorities in Burma.

Question: How would you describe the current situation in the Kokang region?

Answer: The incident on August 8 was the junta’s excuse. It wanted to do away with the local ethnic minority army a long time ago. A larger nationality wants to eliminate a smaller one. This is typical nationalistic chauvinism. This was a massacre.

Peng Jiasheng (Photo: Tom Kramer)

In order to avoid further harm to the Kokang people, the Myanmar National Democratic Alliance Army (MNDAA) retreated. This is not what we wanted and also it is not what the people in the international community who support our people would like to see.

Now the situation in Kokang is even more complicated. Currently, the situation is very bad.

The government troops took over the Kokang area for about 10 days, but there were many reported cases where their soldiers committed robbery, rape and killed civilians. Many people are still afraid to go back home. Most of the shops owned by Chinese businessmen were either destroyed or robbed. This is a calamity. The prosperous environment of Kokang of only a few months ago no longer exists. People are living in deep distress.

This conflict has brought great trauma to the Kokang people. The war will be long. It will be impossible to end soon.

Q: The ceasefire agreement you signed with the regime in 1989 has collapsed. What do you believe was the motive behind the offensive and the regime’s attempt to arrest you?

A: In March 1989, the Kokang people agreed to peace and development. In the same year, 17 other local ethnic armed forces also started peace talks with the junta. This brought to an end the large scale of armed conflict in the country.

The alliance army is also one of the legal ethnic armed forces that were recognized by the military government. Over the past 20 years of peace and development, the Kokang was the first group in the country to promise the international community that we would stop drug production. We enforced the ban on poppy cultivation in 2002 in our area. The anti-drug production effort and success were recognized by the UN and the international communities.

With help from the World Food Programme, the Chinese government and other international aid agencies, we implemented a lot of poppy substitution projects, mainly to grow sugar crane, tea, walnuts and other crops. We achieved very good progress in the poppy substitution.

Step by step, the people in our area began to work their way up from poverty. This can be seen by everybody. However, as the military government wants to achieve their goal of controlling the whole country, it felt it needed to take action against the peace and the ceasefire groups.

Q: Soon after the government troops captured Laogai, the state-run-media repeatedly accused you of involvement in illegal arms factories and drugs. How do you respond to those allegations?

A: Burma is still a country without a real government. The army cannot represent the government. After the election in 1990, the junta usurped power in the country. Ever since then, there has been no proper government in our country. The international community has never officially acknowledged them as the government. Burma is currently a country managed by a temporary council that was set up by the junta. It was called the State Law and Order Restoration Council and was later changed to the State Peace and Development Council. The government army is also an ethnic armed force, so it can not represent this country.

In 1989, for the sake of the peace and welfare of the country, the Kokang people took the initiative to approach the junta-controlled council. This was to protect peace in the country, and to let the people live in peace. Over the past 20 years, we trusted the junta and have been respectful of them. Our political proposition is always the same: support the central government, take the road to peace and development, maintain nationality unification, guard national unity and strive for the autonomous rights of the Kokang people. We never wanted to separate from the country; we only wanted a recognized position for the Kokang people among all of Burma’s nationalities.

Q: How many people were killed in the latest conflict?

A: In this conflict, the Kokang people suffered great loss. We had 14 alliance army soldiers killed in battle, but what we do not know is the number of civilians killed. For example, some na?ve young people joined with the traitor Bai Suocheng and his army. In the battles, they were to be used by the government troops to fight against us. These young people refused because they were Kokang and could not kill their own people. The government troops took their weapons away and shot them with machine guns. On Aug. 27, 27 Kokang youth were killed together.

Q: Why did the junta decide to single out your group? Was there any reason other than the regime’s allegation of your involvement in opium and illegal drugs?

A: A lot of things happened over the past month that we never thought could happen. The Kokang alliance army is one of the legal armed forces in the country. All our weapons are old and the ammunition is left over from the days of the Burmese Communist Party. Many of these weapons are in need of repair. It is reasonable to have a factory to repair weapons. This factory is well known by all the SPDC officials in Kokang. They have visited it before. But now they used it as an excuse to take action against us.

The motivation behind this is obvious. They want to eliminate the Kokang and other ethnic armed forces and achieve their goal of a junta-managed “unified” country. It goes without saying that the junta will not stop with the Kokang.

They will take the war to other groups with all kinds of excuses. If you want to condemn something, you can always find a charge. The government army is the strongest in the country. It can crack down on whichever ethnic groups it wishes. It can accuse any ceasefire group of drugs, or weapons…anything. The current situation on drugs, for example, in the four special regions in Shan State is that there is no poppy cultivation, according to investigations by the international agencies. However, in SPDC-controlled areas, there is more than 250,000 mu [Chinese land unit: 667 square meters] of poppy cultivation. This is the work of the junta, and this is how it behaves.

Q: Several ethnic ceasefire groups including the MNDAA rejected the junta's proposal for a Border Guard Force (BGF). Why did you reject the BGF plan?

A: We are not really against the idea of transferring the army to a BGF, but the terms and conditions were too rigorous. For example, all the officers above 50 would be forced to retire and find their own livelihood. The key leaders of the local government and the commanders of the army would also be appointed by the junta. These proposals are not acceptable to any of the ceasefire groups. It is also not acceptable to the local people. Our requirements were simple: we want to have a high level of national autonomy to protect the interests of the Kokang people.

Q: The Kokang and other ethnic groups are unhappy with the 2008 constitution. What do you see as its faults?

A: Regarding the constitution proposed by the junta in 2008, it is all about the power and interest of the junta. We do not believe that any rights and interests of the minorities are ensured in the constitution. How can we accept such a constitution that does not represent the people of the country? on the approval of this constitution, there are things that happened that few people know about. For example, in some of the Kokang villages, the junta sent people to vote in the referendum. The local people did not want to participate, so the junta officials themselves wrote [out] all the votes. There were villages where about 100 people voted No, but on their ballots it was reported that more than 3,000 people voted Yes. This is how it was approved.

Q: You merged with the CPB in the past and led the successful mutiny in 1989. You went to Beijing and you were closely associated with Chinese officials in the past. Today, China is the closest ally of the regime as well as a good friend of ethnic groups along the Sino-Burmese border. What was China's role in the recent conflict in the Kokang region?

A: During the Aug. 8 incident planned by the junta and the armed conflict afterwards, the Chinese government did not give us assistance. We could not talk to the Chinese government about protection and asylum. However, as the Kokang are in fact Chinese, when the refugees fled to China the local authorities took very good care of them. That we really appreciate.

Q: What is your message to Chinese leaders who plan to build a gas pipeline through the Kokang region?

A: What I want to say here is no matter what happens in Burma, we are ethnic Chinese and our roots are in China. This we will never forget. For the sake of the rights and position of the Chinese in Burma, we will continue our struggle.

Q: How do you see the future of Burma and the ethnic minorities?

A: Regarding the future of the ethnic minorities in Burma, this is a complicated issue. If Burma does not set up a democratic government that is elected by the people and therefore really represents the people, the future of the minorities in Burma will get worse.

Q: Did you receive any political backing or military support from other ethnic groups along the border? Are they united in their goals?

A: All the minority ceasefire groups along the China-Burma border areas have good relations with each other and have supported each other over a long period of time. Our fate and experiences are the same. But due to certain difficulties, our alliance is not as strong as it should be. Therefore the junta had its opportunity, and now the Kokang area is under junta control.

Q: Are you worried about losing your personal property and your businesses in Burma and China?

A: Currently, all my personal property has been confiscated by the junta. My property in China was also taken away by the relevant department of the Chinese government. This is a problem that I can not solve by worrying about it.

Q: Please describe the refugee situation. There were reports of government officials and soldiers attacking Chinese nationals? Was the recent attack designed to demonstrate that the government is not a puppet of China?

A: I think the reason why the junta attacked the Kokang is because of the following:

First, the junta wanted to develop better relationships with America, India and some Western authorities, in particular with America. In order to improve the relationship with America, the junta is eager to prove that the junta is not a puppet government supported by the Chinese government. That is why the junta chose the Kokang to fight against.

They also wanted to test the response of the Chinese government. The Kokang and the Chinese have a blood relationship. The Kokang people are basically Chinese; they are part of the Chinese family. The Chinese in Burma were not officially recognized by the Burmese and therefore for centuries they lived in a very low economic and social position. Only after the meeting in Ninakan in 1947, after the national government’s recognition, were the Chinese living in these areas called Kokang. But as a matter of fact, the Kokang people are Chinese. We are the descendants of the Yellow emperor. The anti-Chinese movement in 1967 in Burma feels like yesterday.

Even today, many Chinese living in Burma still do not dare to declare that they are Chinese. In 1989, when the Kokang Alliance Army was established, all the Chinese in Burma looked at the Chinese armed forces as the “lighthouse.” Now the ‘”lighthouse” has gone off.

The second reason I think is that the SPDC forces were already in Kokang for more than 10 years, and they understood the situation in Kokang, including the relationships among the Kokang leaders.

They therefore bought off the traitors Bai Suocheng and Wei Chaoren. This resulted in an internal split in Kokang before the war broke out. Bai Suocheng and Wei Chaoren betrayed their people and surrendered to the junta.

Now the junta has taken over the Kokang area, and it is clear about the response of the Chinese government. So their next step will be to reinforce the policy of cracking down on other minority groups along the border. The junta will act recklessly and become more unbridled.

Q: Where are you living now?

A: For many years, I worked in Kokang. I never had a chance to travel to the big cities in Burma. Now that I have more time, I am travelling in the big cities in Burma. I really feel that my country is beautiful, and it deserves a government that can represent the people by building and developing the country. I currently have no plans to go back to Kokang.

Burma Newscasts - Chinese Blood on Burmese Soil
Monday, September 14, 2009

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China’s Failed Foreign Policy

By NYO OHN MYINT/MOE ZAW OO
The Irrawaddy News

The recent breakdown of a two-decade-old ceasefire between Burma’s military junta and ethnic militias in the country’s north demonstrates the failure of China’s outdated foreign policy, according to Burmese political analysts.

Since the collapse of the Soviet Union, Beijing has aggressively pursued a path of rapid economic development as the surest way to avoid a similar fate. Although it has dramatically expanded its trade ties with the rest of the world, the principle of non-interference in other countries’ political affairs remains the cornerstone of its foreign policy.

However, as the situation in Burma attests, this principle may no longer be sufficient to protect China’s national interests.

Beijing certainly enjoys the economic benefits of being the Burmese junta’s best friend. Since 1989, China has been the regime’s most important supplier of military aid, providing jet fighters, armored vehicles and naval vessels, as well as extensive training to Burmese military personnel. In exchange, it has been given access to Burma’s abundant natural resources.

A joint statement on “Future Cooperation in Bilateral Relations between the People’s Republic of China and the Federation of Myanmar,” issued in June 2000, indicated the future direction of Sino-Burmese relations, which were to be based on the “Five Principles of Peaceful Coexistence” and the consolidation of mutual relations for wider regional stability and development.

Despite Beijing’s willingness to be more direct in persuading Burma to enhance its economic reforms and to push for political reconciliation at home, China still regards Burma’s poor human rights record as an “internal affair.”

At the same time, the United States has continued to denounce the Burmese generals’ human rights records and refusal to honor the 1990 election results. Washington’s harsh criticism, especially during the Bush administration, gave the Burmese generals no other choice but to turn to the Chinese government for support. In 2003, when the US imposed tougher sanctions against the regime under the Burmese Freedom and Democracy Act, Beijing was highly critical of the move.

China’s foreign policy is completely divorced from the harsh realties of life under military rule in Burma. Without taking this suffering into consideration, Beijing has used its veto at the United Nations Security Council to block resolutions designed to push Burma toward genuine political reform. This has allowed the junta to simply move forward with its efforts to orchestrate a political transition from an absolute dictatorship to a faux democracy within the framework of a militarized constitution.

China has continued to back the Burmese regime as part of its policy of extending its influence within the region. However, Burma’s long history of ethnic conflict and political dissent presents serious challenges to Chinese policy, which may not be viable in the long run.

Another problem facing Beijing is that the Burmese regime is deeply distrustful of China. In the 1970s and early 1980s, Burma’s armed forces fought hard against the Burmese Communist Party, which was backed by China’s ruling Communist Party. This experience has left a bitter taste in the mouths of many Burmese generals and continues to affect the thinking of the current military leadership.

China’s current dual-track policy of supporting both the junta and the ethnic groups living along the Sino-Burmese border has helped to keep these memories alive. It has also raised the specter of renewed conflict with China. In a 2006 quarterly report, Burma’s ruling military council said that it needed to brace for an invasion from the northeast—obviously referring to China.

According to a reliable source, officials from China’s Yunnan Province have recognized the significance of developments inside Burma and are seeking to minimize the negative impact of Beijing’s policy. However, China can’t change its foreign policy within a few years; it will take decade, said a high-ranking diplomat from Beijing.

However, other China watchers have argued that Beijing is less interested in dealing with the Burmese junta since it purged Gen Khin Nyunt, the former intelligence chief, in 2004. Chinese leaders know that the current rulers in Naypyidaw have little interest in engaging with the outside world, but believe that the generals would not dare to turn their guns against China.

China may also feel that it is paying too high a price for backing Burma politically. Some analysts suggest that Beijing could move away from its long-held position on Burma in international forums to protect its broader geopolitical interests. China realizes that defending Burma may have triggered a more aggressive US policy in the Asia-Pacific region. Beijing is carefully observing the current US administration’s reengagement in the region to decide whether Burma should be a center of China’s foreign policy.

China is aware that regional countries have supported a new Burma policy by the US government in terms of their constructive engagement and economic interests. China could be isolated by its Burma policy, proving its policy is still inferior to that of the US.

In the post-Cold War era, China should have more pro-active and tangible fairness to the citizens of the region, rather than putting its emphasis on ruthless authoritarian rulers. Beijing’s ignorance may have impacted the understanding of the Burmese generals. All the socialist states in the Association of Southeast Asian Nations (Asean) are willing to yield to the US political engagement while they enjoy China’s limited favor in economic prosperity.

In recent years, Burma has moved to develop strategic and commercial relations with India, with which it shares a long land border and the Bay of Bengal. Increasing trade and military cooperation with India and developing bilateral relations with Japan within Asean shows a shift in Burma’s foreign policy to avoid excessive dependence on China.

Chinese analysts closely observed the Kokang incident in August and questioned whether the Sino-Burmese relationship was really impacted. In line with the 2008 constitution, the regime was attempting to ensure the stability of border areas by neutralizing armed forces that are independently standing outside the framework of the constitution.

“They (the Burmese military) don’t always heed China’s advice. China has so little leverage against them because China, in some sense, depends on them,” said Shi Yinhong, a professor of international relations at Renmin University in Beijing.

Chinese officials were not only extremely upset over the lack of forewarning about the border clash but were also worried about the future political consequences.

China-Burma relations may be at a crossroads. Only demanding ethnic rights and showing concern about the situation at the border cannot reflect China’s foreign policy in terms of its status in the international arena. China should bring the role of Aung San Suu Kyi and a settlement of the general political crisis to the forefront of its Burma policy in order to show China’s role in finding a solution along with the US and the international community.

Nyo Ohn Myint is a chairperson and Moe Zaw Oo is secretary of the National League for Democracy (Liberated Area) Foreign Affairs Committee.

Burma Newscasts - China’s Failed Foreign Policy
Thursday, September 10, 2009

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Prelude to a Civil War?

By HARN YAWNGHWE
The Irrawaddy News

Many were surprised by the State Peace and Development Council (SPDC) attack against the Kokang forces.

Some had been so preoccupied with the trial of Aung San Suu Kyi that they were not even aware of the impending crisis. Others could not understand why the Burmese military would turn against their allies who have had a cease-fire agreement for more than 20 years.

Yet others thought that the Burma Army would never dare to incur the wrath of China. After all, had the Chinese not, in June, requested Vice-Snr-Gen Maung Aye to maintain stability on the border? This development was especially surprising to those who were convinced that Burma is a client state of China.

This failure to anticipate events underscores the weakness of the Burmese democracy movement, in particular, and the international community, in general.

We have often failed to understand the strategy and plans of the ruling military government. We have looked at their actions through our own prisms and misinterpreted their intentions. We have tended to see SPDC pronouncements as propaganda and have not paid enough attention to what it is planning to do.

Nobody is happy with military rule in Burma so we dismiss the SPDC “road map” to democracy and its constitution. But how many of us have actually studied the constitution in detail, not to criticize it, but to see how the military actually plans to implement its “road map” policies and how we can use its plans to our advantage?

In 2004, the SPDC announced the “road map,” and last year it announced plans for an election in 2010. We were outraged when the referendum was held two weeks after Cyclone Nargis had devastated the delta and Rangoon. We would not have been surprised had we realized that Snr-Gen Than Shwe takes the “road map” seriously.

He will not allow anything to stand in its way. A series of recent events has also taken some of us unaware—he release of U Win Tin; the first ever post-1990 congress of the National League for Democracy (NLD); Aung San Suu Kyi’s trial, the unseasonable attack on the Karen National Union; the attack on Kokang and now possibly an attack on the Wa.

These seem to be the random acts of a paranoid and unpredictable leader—the image we like to portray of Snr-Gen Than Shwe. But in reality, all these events have a common goal: the success of the 2010 elections. They are the rational outworking of a well-calculated and orchestrated operation plan of the SPDC.

The proposal to the ethnic cease-fire groups to transform themselves into Border Guard Forces (BGF) under the control of the Burma army is also an attempt to clear the decks before the 2010 elections. It was meant to either provoke the cease-fire groups to reject the proposal and be destroyed or frighten them into submission and acceptance of the SPDC road map.

It is clear that the BGF proposal was a provocation. This is because during the past 20 years, nothing of this matter was ever discussed with the cease-fire groups. They were told they could keep their arms and could negotiate with the newly elected government on the political terms they wanted.

Suddenly, in April they were told they had until October 2009 to decide. Analyzing the ceasefires, it is clear that the SPDC never meant to negotiate. The plan was to stop hostile action, provide incentives to entice individual commanders to split from the main groups and slowly weaken the ethnic groups to the point where they could be easily eliminated.

The cease-fire groups cannot accept the BGF because it is actually a plan to destroy the groups by attrition. But if they refuse to accept the proposal, they will be destroyed now, before the elections. The Kokang (MNDAA), the Wa (UWSA) and the Mongla (NDAA) groups rejected the BGF proposal and also refused to accept the SPDC’s road map and constitution. They do not want any changes. Therefore, if nothing changes, the SPDC will move against the UWSA and the NDAA. Which group will be attacked first will depend on the tactical advantage.

What about China? Is the SPDC not beholden to China? The short answer is—no. Whatever we may think about the SPDC, the Burma Army is very proud of the fact that it is “patriotic.” The SPDC has never danced to the tune of a foreign power. It has, rather, made foreign powers big and small dance to its tune. Since the SPDC has been largely ostracized internationally, it has had to depend on China.

But it was never happy about it. When Burma was discussed at the UN Security Council and it had to depend even more on China, the SPDC began to cultivate Russia, so that it would not be at China’s mercy. But Snr-Gen Than Shwe’s problem was solved when John Yettaw decided to take a swim. He enabled the SPDC to ensure that Aung San Suu Kyi would have no role in the election, and he also enabled Than Shwe to raise the stakes and create a direct link with the Obama administration.

This in turn gave Than Shwe the card he needed to ignore China’s wishes and move against the Kokang and Wa.

If Snr-Gen Than Shwe’s calculations are correct, the SPDC will be able to wipe out the Wa and Mongla groups, and the 2010 elections can be held on a less contentious playing field according to schedule.

The unpredictable factor, of course, is how much resistance the Wa army will offer. And what the reaction of the other cease-fire groups will be. Some like the Kachin Independence Organization (KIO) and the New Mon State Party (NMSP) are in the process of negotiating with the SPDC over the BGF issue.

Other groups like the KNU and the Shan State Army (South) are watching closely to see how the battle develops. If Than Shwe’s calculations are wrong, Burma could face a period of serious instability and the 2010 elections will be jeopardized.

But on the other hand, the SPDC may have decided that the elections could actually lead to democratization, and it is trying to create a pretext to postpone the elections indefinitely.

Harn Yawnghwe is executive director of the Brussels-based Euro-Burma Office.

Burma Newscasts - Prelude to a Civil War?
7 September 2009

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Inevitable US policy shift on Burma: why and how

by Min Zaw Oo

Mizzima News - The recent visit of US Senator Jim Webb has stirred up speculation and criticism of what the visit could mean for Washington’s Burma policy, especially from traditional supporters of the opposition movement residing in the West. A common, critical sound bite belittles Webb’s visit as a personal trip. But all detractors and critics largely ignore the fundamental facts related to the visit and the inevitability of a US policy shift on Burma.

There are three major underlying reasons encompassing the US’s new policy towards Burma.

Strategic Paradigm Shift

Under President Obama the most fundamental deviation from the Bush administration’s foreign policy is the recognition of the limit of US power in the world. The Bush administration’s neo-conservative worldview called for the use of US power to bring about freedom and democracy. In contrast, Obama and his strategic advisors acknowledge that the extension of US power has reached a critical threshold.

The US has become a declining power in the face of a rising China, Russia and India. Although the US is still the most powerful nation militarily, the US economy is largely interdependent with the Asian economy. China holds the largest percentage of US debt. The combination of Japanese and Chinese ownership of US debt has reached 45 percent of US Treasury securities.

In addition, the military gap is narrowing. A recent study conducted by the RAND Corporation, an influential US think-tank, concludes the Chinese military could defeat US forces in the Taiwan Strait if the US attempted to deter a Chinese offensive to reclaim Taiwan. Meanwhile, Russia has fielded its latest S-400 air-defense system which it claims to be superior to the US’s second-generation Patriot missile system.

During this onset of US power decline the strategic goal of the Obama administration has become the restoration of US dominance in the world. But Obama realizes that the most effective approach to this end will be the utilization of ‘soft power,’ which calls for friendliness rather than coercion.

Under a new strategic paradigm, Obama will deliberately drop democracy promotion from the US’s major foreign policy agenda. He carefully avoided the word ‘democracy’ in his inaugural speech. In contrast, he explicitly proclaimed the US will reach out to non-democracies rather than preaching to them the merits of political transformation in the interests of the US.

This new strategic perspective will shape the US’s policy shift on Burma as well.

The Role of ASEAN

Another strategy shift from the Bush administration has been the US’s perspective on ASEAN. The former administration considered it a non-priority strategic region except in the case of the War on Terror.

The Bush administration refused to ratify the Treaty of Amity and Cooperation (TAC), requiring all signatories to refrain from using military force against other member states. Additionally, the issue of Burma used to be an obstacle between the US and ASEAN. The Bush administration promoted more bilateral relations with non-NATO allies such as Thailand and the Philippines, rather than multilateral cooperation with the region as a whole.

While the US kept its distance from ASEAN, China launched an efficacious charm offensive in the region. After ASEAN was hit by the financial crisis in 1997, Chinese economic assistance to countries in the region surpassed US aid, even to traditional US allies Thailand and the Philippines.

China’s ratification of the TAC pacified the fear of ASEAN countries concerning the rise of the dragon. ASEAN, as a consequence, has grown increasingly comfortable with China over the last ten years. China’s total trade with ASEAN has grown by 1,034 percent since 1995, whereas the same figure for the US stands at a mere 75 percent.

The new administration in Washington feels China’s heat in the region. Bilateral relations cannot simply preserve waning US influence in Southeast Asia, in the view of the new administration, with non-NATO allies; the US has to embrace ASEAN as a whole. As a result, Washington acceded to the TAC on July 22nd, 2009.

If the US aims to move closer to ASEAN, Burma cannot be allowed to be a stumbling block between Washington and rising Asian power blocs.

China Factor

The third reason is the strategic role of China in the region. The Burma-China relationship will enter a new chapter after China completes an oil pipeline connecting the Andaman Sea with China’s Yunnan province. The move is alarmingly strategic.

Past Chinese interest in Burma was less critical than many observers have speculated, with trade accounting for a fraction of one percent of overall Chinese exports, while China has failed to transfer any strategic weaponry to Naypyitaw.

However, the 2.9-billion dollar Chinese oil pipeline will drastically transform the role of Burma in China’s strategic calculus. China has been geographically vulnerable to a naval blockade, being confined by Japan to the east, Taiwan to the south and South Korea to the north of China – all US allies. In addition, China lacks a naval force capable of protecting its sea lines.

Chinese security analysts from the Energy Research Institute (ERI) and China Institute of International Studies (CIIS) have long been advocating the construction of overland transnational oil pipelines to China to overcome its energy insecurity in the face of a possible military confrontation with the US.

The projected oil pipeline from Burma will reinforce China’s long-term strategic energy initiative. The pipeline will be much more significant than any existing China-Burma engagements. China may even consider protecting its interest in Burma under a nuclear umbrella.

The pipeline in Burma will be a plausible reason for China to send its advanced submarines, China’s major naval assets, to the Andaman Sea to protect its strategic interest, simultaneously restricting the regional power projection of the US Navy’s 7th fleet.

Although the US is militarily capable of attacking China’s land-based pipelines and pumping stations in Burma, any military action involving a third-country in an event of direct confrontation between the US and China will be politically complicated – especially since the US’s recent accession to the TAC effectively limits Washington’s potential counter measures.

Burma used to be a moral issue for the United States. At this time, however, Washington’s renewed interest in Burma is derived from US security and national interests.

United States’ Policy Review on Burma

In recent weeks the CIA, Pentagon and Department of Energy have been ordered to intensify research on Burma with an aim of compiling a comprehensive report for policy review.

To this extent, Jim Webb is not a lone wolf. Senior senators such as John Kerry and Richard Lugar, a key figure in the Senate Committee on Foreign Relations, acknowledge the shortcomings of the current US policy on Burma. Lugar previously broke ranks with his Republican Party on Cuba, calling for normalization of diplomatic relations between the two countries.

As the moral dimension of the Burma policy still looms large in Washington, advocates of new initiatives prefer behind-the-scenes approaches. Although the official position of the State Department is still intact, analysts within the policy circle are busy calculating the pros and cons of the US’s policy on Burma.

The moral dimension of the current policy is set to fade, albeit not entirely dissipated. If US national interest becomes the backbone of its new policy on Burma, Washington’s policy shift concerning Naypyitaw will be unstoppable.

How will the US engage Burma?

Regardless of policy perspectives, the US’s engagement with Burma’s military government will be quite different from the way ASEAN does business.

Democratization and human rights will still be a part of US policy goals in Burma. But the US will drop some major preconditions for engagement, such as the release of Aung Sun Suu Kyi and all political prisoners.

In the near future the two countries will likely experience quid pro quo engagement, ranging from counter-narcotics to political prisoners. Among all initiatives, however, the focus of US policy will be on the 2010 elections.

This is a major shift from the Bush administration, which adamantly demanded that transition in Burma must come through a negotiated settlement between the government and the NLD. While the US’s new policy will hail any conciliatory settlement between the opposition and the government, Washington will no longer hold its breath on a dialogue-driven transition in Burma. The US, in the wake of successful elections, will very likely embrace a military-led transition in the country if the new government manages to free Aung San Suu Kyi and remaining political prisoners after 2010.

The most crucial aspect of the US’s policy on Burma will probably be the legitimacy of the 2010 election. Washington does not want to altogether abandon its moral code, and thus will need a plausible reason to facilitate its policy shift on Burma. The legitimacy of the 2010 election will be the best ticket for the US to move closer to Burma in the near future.

The international community, including the US, has asked the Tatmadaw government to hold an inclusive election. Inclusiveness calls for the political participation of opposition parties, especially the NLD. To legitimize the election the Tatmadaw government has to allow the NLD and other opposition parties to contest. On the other hand, the NLD’s voluntary boycott, per se, will not de-legitimize the election as long as the government formally allows it to participate. Historically, opposition boycotts to elections sponsored by ruling regimes, such as in Bangladesh in 1991 and in Ethiopia in 1995, have proved fruitless.

As long as the elected representatives reflect the actual vote, the 2010 election will be internationally perceived as legitimate.

The election will strategically alter Burma’s political landscape for decades to come. Concurrently, Burma’s relationship with the US will depend on the legitimacy of the election and civilian representation in the post-2010 government reflective of electoral results. If, then, the new government is capable of addressing international concerns on human rights issues, Burma’s relationship with the West will gradually strengthen.

(Min Zaw Oo is a PhD candidate writing a dissertation on the study of 115 transitions to democracy at George Mason University. He holds a MA in security studies from Georgetown University and MS in conflict analysis and resolution from George Mason University.)

Burma Newscasts - Inevitable US policy shift on Burma: why and how
7 September 2009

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China to promote trade with Thailand and Burma

by Usa Pichai

Chiang Mai (Mizzima) - With China keen on opening one more border trade checkpoint with Burma, a boost in trade is likely by corporates in Northern Thailand and southern China.

Thailand’s Department of Exporting Promotion organized an event on Wednesday to promote trading and investing in Xishuangbanna Prefecture in Yunnan Province, southern China close to Shan State in Burma.

Apmornphan Nimanan, Chiang Mai province Governor presided over the event and said that Thailand and Xishuangbanna have close cultural ties. Besides, transportation is smooth along Mekong River and over land by R3A route between Thailand – Lao – China or R3B between Thailand – Burma – China, according to a report in the government run Thailand’s News Bureau website.

Earlier, regarding discussions with officials in Chiang Rai Province, Qian Min, the Director of Trade Office’s Xixuangbanna said R3B is the shorter route but there are many checkpoints in Burma that result in excessive transport costs.

“Our officials will discuss this issue with the Burmese authority in Keng Tung and open the Mongla-Daluo border checkpoint soon,” he said. Kieng Tung is located in Shan State, Burma.

The Burmese side of the Mongla-Daluo checkpoint is under the control of the ceasefire group the National Democratic Alliance Army-Eastern Shan State (NDAA-ESS), led by Sai Linn aka Lin Mingxian, which is also known as Shan State Special Region 4.

Dao Linyin, Governor of Xishuangbanna Dai Autonomous Prefecture said in Chiang Mai that the R3A is used officially, which would benefit trading between China and Southeast Asian nations.

“China would speed up cooperation with Thailand in commercial, investment and tourism and infrastructure development. We will also provide more support for investors with special privileges. If there are problems that the local government can solve, we will do so immediately,” she said.

Early this year, Chinese authorities placed restrictions on this border checkpoint to curb drug smuggling, where trading and other business including casinos were affected.

Burma’s cross-border trade was banned by the late dictator Gen. Ne Win after the military assumed power in 1962 but the ban was lifted following negotiations in 1988.

Bilateral trade has risen steadily since, increasing by 60 per cent in the fiscal year ending 31 March, 2008, and constitutes 24 per cent of Burma's trade, making China a major trading partner, second only to Thailand.

Trading between China and Thailand has also risen steadily. In 2008 it was more than 36,000 million US$ which rose by about 20 per cent compared to 2007 but the global economic meltdown resulted in a significant drop early this year.

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Foreign Weapons Kill the Blockade on Burma

by Richard S. Ehrlich

BANGKOK, Thailand (Scoop)-- Demands for an international blockade against weapons sales to Burma, in response to the military regime's detention of Aung San Suu Kyi, will face difficult challenges from defiant Chinese, Russian, East European and North Korean arms dealers.

"Nothing less than a worldwide ban on the sale of arms to the regime will do, as a first step," said British Prime Minister Gordon Brown after Burmese authorities sentenced Mrs. Suu Kyi on August 11 to an additional 18 months house arrest.

A court also sentenced an American, John Yettaw, to seven years hard labor for illegal activity when he secretly swam to Mrs. Suu Kyi's villa and stayed for two nights.

Mrs. Suu Kyi, a Nobel Peace Prize laureate, admitted to sheltering Mr. Yettaw so he could dodge arrest for his crimes.

"I acted without malice, simply with intent to ensure that the one concerned should not suffer any adverse consequences," Mrs. Suu Kyi, 64, told the court in her closing statement.

Calls to punish Burma's military regime by widening an American and European Union ban on weapon sales, however, would mean targeting the Southeast Asian nation's wealthy, giant northern neighbor, China, which provides most of Burma's deadliest equipment.

"Burmese soldiers have used not only Chinese-made military equipment such as helmets, uniforms, boots and bayonets, but also munitions, tanks, small arms, artillery, surface-to-surface missiles, surface-to-air missiles, jet fighters, naval vessels," and other items, said a report published by the respected Norway-based Burmese dissident group, Democratic Voice of Burma.

Burma, a country also known as Myanmar, is considered to be suffering one of the world's most brutal regimes.

"China has been the principal source of arms supplies to the Myanmar forces, followed by India, Serbia, Russia, Ukraine and other countries," said London-based Amnesty International.

During the past 20 years, China supplied Burma with "tanks, armored personnel carriers, military aircraft and artillery pieces such as howitzers, anti-tank guns and anti-aircraft guns," Amnesty said.

Serbia and Montenegro sold dozens of howitzers during 2004-2006, while Ukraine signed a contract in 2004 to supply 1,000 armored personnel carriers, after a 2002 deal to the export 14 T-72C tanks, Amnesty said.

Burma's weapons purchases remain mostly shrouded, and many agreements are difficult to confirm.

Some details appear in a 2009 book by Burmese defence analyst Maung Aung Myoe, titled, "Building the Tatmadaw," which is the Burmese junta's name for its military.

Other descriptions filter through pro-democracy Burmese media, including Irrawaddy magazine which is based in Thailand.

"Burma has bought more than 100 jet fighters and aircraft from China since 1990," Irrawaddy reported in its August issue.

"Burma has also bought smaller numbers of jet fighters, helicopters and military transport planes from Yugoslavia, Poland and Russia.

"Russian, Ukrainian and Polish MI-12, MI-17, G-4 and Sokol helicopters now dominate Burma's air force," Irrawaddy said.

Burma, however, reportedly lacks enough skilled pilots.

During the past several years, Burma bought a dozen MiG-29 jet fighters, apparently to square off against its eastern neighbor, Thailand which boasts U.S.-built F-16s and other aircraft.

The two Buddhist nations were historic enemies, and have continued to squabble along their border, though Thailand purchases much of its natural gas from Burma and is widely seen as economically dependent on smooth relations.

America's California-based Chevron, France's Total, and Thailand's PTT own much of the Yadana natural gas pipeline from Burma to Thailand, providing the regime with its largest source of income.

On Burma's side of the frontier, however, rival groups of minority ethnic guerrillas have fought for the past six decades for independence or autonomy.

Much to the dismay of Burma's military, the guerrillas have repeatedly tried to enjoy sanctuary in Thailand where they have resupplied, tended to their wounded, and campaigned for foreign support.

Thailand is bolstered by strong U.S. and other Western backing, and is a non-NATO military ally of Washington, which has sparked fears in Burma that the smoldering guerrilla skirmishes could evolve into a proxy war to destabilize the resource-rich hermit nation.

Norway's Finance Ministry meanwhile has lashed out against China's military aid to Burma.

"The Ministry of Finance has excluded the Chinese company Dongfeng Motor Group Co. Ltd from the Government Pension Fund -- Global -- based on advice from the Council on Ethics," Norway's Finance Ministry said earlier this year.

"A large number of military trucks manufactured by Dongfeng have been observed at the border crossing between China and Burma. Norges Bank has written to the company about this. The response from Dongfeng revealed that a subsidiary company sold 900 trucks to Burma during the first half of 2008," a ministry statement said.

"The trucks have been adapted for military purposes and moreover have significant military applications," Norway's Finance Ministry said.

Burma's military seized power in a 1962 coup.

Extensive U.S. and European economic embargoes against Burma, along with the regime's widespread corruption and disastrous financial polices, have impoverished the nation and forced it to rely on sanction-busting allies.

Mrs. Suu Kyi's National League for Democracy party won a landslide victory in a 1990 nationwide election, but the military cancelled the results, refused to allow her to rule, and has kept her under house arrest for about 14 of the past 20 years.

*************

Richard S Ehrlich is a Bangkok-based journalist who has reported news from Asia since 1978. He is co-author of "Hello My Big Big Honey!", a non-fiction book of investigative journalism, and his web page is http://www.asia-correspondent.110mb.com

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Does Myanmar Want Nuclear Weapons?

by Michael Sullivan
National Public Radio - Transcript

There is no doubt Myanmar has a nuclear program. It sent scientists, technicians and army officers to Russia for training in recent years. And Moscow has agreed to supply Myanmar, formerly Burma, with a small nuclear reactor for civilian use. The question is, do the Burmese generals want a nuclear weapon, too?

STEVE INSKEEP, host:

Even as he tries to keep his domestic program from falling apart, the president has to pay attention to threats abroad. And this morning, we have a hint why the U.S. may need to pay attention to Myanmar. Last week, we heard from a Virginia senator, who visited that country. Here's one reason why that engagement matters. Myanmar, like Iran, has a nuclear program.

Here's NPR's Michael Sullivan.

MICHAEL SULLIVAN: There is no doubt Myanmar has a nuclear program. It sent scientists, technicians and army officers to Russia for training in recent years. And Moscow has agreed to supply Myanmar with a small nuclear reactor for civilian use. None of this is disputed. The question is do the Burmese generals want a nuclear weapon too.

Mr. BERTIL LINTNER (Yale Global Online): It is quite clear, I think, that although the Burmese may not have a bomb or even a nuclear capability - no, not yet - they're certainly interested in acquiring one.

SULLIVAN: That's Bertil Lintner. He has written extensively about both Myanmar and North Korea from his base in Thailand.

Mr. LINTNER: And they're seeing how the North Koreans have been able to stand up against the Damascus and the rest of the world because they are nuclear armed. And they would like to have the same kind of negotiating positions.

SULLIVAN: Lintner's recent piece in Yale Global Online detailed the growing defense ties between the two countries and the elaborate underground complexes Myanmar's generals are building with help from North Korea. The tunnels, and the reports this summer - ships from North Korea with mysterious cargos bound for Myanmar - have many countries concerned, including the U.S.

Secretary of State Clinton speaking last month in Thailand.

Secretary HILLARY CLINTON (Department of State): We know that there are also growing concerns about military cooperation between North Korea and Burma, which we take very seriously. It would be destabilizing for the region, it would pose a direct threat to Burma's neighbors and it is something as a treaty ally of Thailand that we are taking very seriously.

SULLIVAN: But the ship may have already sailed. Interviews with defectors, done by Professor Desmond Ball of the Australia National University's Defense Study Center and journalist Phil Thornton, suggest Myanmar is already well on its way with two reactors already in place.

One of the defectors who worked for a prominent Burmese businessman with close ties to the military, says his former boss helped transport materials from North Korean ships to the remote nuclear sites.

Unidentified Man: Their first intention is with the help of North Korea, they produce U235. If they get U235, (unintelligible) not so difficult. If they can arrange UF6, they can make the nuclear bomb.

SULLIVAN: Phil Thornton says he believes the defector's story to be both credible and worrisome, since it matches what other defectors interviewed in Thailand has said.

Mr. PHIL THORNTON (Journalist): Professor Ball has estimated, based on the defector's testimonies, that it could be about 2014 that may have enough nuclear material to start thinking about a weapon.

SULLIVAN: Myanmar, of course, denies any weapons program exists, but seems unusually sensitive to the recent publicity about the issue. Virginia Senator Jim Webb says it came up during his meetings with Myanmar's leadership ten days ago.

Senator JIM WEBB (Democrat, Virginia): I did not directly raise the issue of the nuclear program. It was raised to me by a high governmental official, basically saying, you know, we would never move toward a nuclear weapons program.

SULLIVAN: These denials, of course, are met with a great deal of skepticism by those who follow the growing relationship between North Korea and Myanmar. But analyst Bertil Lintner still isn't convinced Myanmar has even one reactor, let alone two. There is no concrete evidence, he says, that the Russians have delivered the reactor they promised, nor, he says, is there any hard evidence the North Koreans have either - though satellite images do show construction around Myanmar's suspected nuclear sites.

What is clear, Lintner says, is that Myanmar's main ally, China, is well aware of Myanmar's nuclear ambitions. Last year's clandestine visit to North Korea but a senior Burmese general, he says, proves it.

Mr. LINTNER: He passed through China on his way to North Korea, back again. On his way back from North Korea, Shwe Mann and his entourage had meetings with high-level officials. It was almost as the Chinese were, not only aware of what this trip through North Korea, but they were closely involved in it. See, it's very convenient for the Chinese to be able to say, we're not doing this. This is the North Koreans. We can't control them. It's kind of a sort of plausible deniability. But there's definitely Chinese complicity in this new corporation between North Korea and Burma.

SULLIVAN: Something else for the U.S. to think about as it considers a review of its policy toward Myanmar, amid the ongoing tug-of-war with North Korea over its nuclear program.

Michael Sullivan, NPR News.

INSKEEP: This is NPR News.

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Shock and Ore

(SMH) -Secret agents are shadowing Australian executives as the Communist Party's hardliners gain the upper hand. Now Rio Tinto must play by China's rules, writes John Garnaut in Beijing.

When China tracks the conversations and email traffic of foreign executives, it normally does so covertly. These days, with Rio Tinto, surveillance can take the form of overt intimidation.

Three weeks ago, Rio's global strategy chief, Doug Ritchie, checked into Shanghai's downtown Four Seasons Hotel to find the entire floor had been cleared of other guests. His only companion was Ian Bauert, Rio's global head of iron ore marketing, who had arrived before him. Plain-clothed officers proceeded to shadow their every move across the town.

For Ritchie, the treatment might have smacked of revenge. He was the architect, negotiator and driver of Rio's $US19.5 billion ($24.3 billion) Chinalco investment deal which collapsed in June, staining the business reputations of Rio Tinto and Australia in China. China's Chinalco bid was a response to Australia's iron ore duopoly and an effort to ease China's resource constraints by playing by global rules. It didn't work, so now Rio would be asked to play by China's rules.

For Bauert, it was personal. Bauert is the low-profile, Chinese-speaking power behind Rio's iron ore sales and negotiating team. He opened Rio's China office in the 1970s. It is his men - Stern Hu, Liu Caikui, Wang Yong and Ge Minqiang - who are in a Shanghai jail. He caught a plane to China the moment he learnt his team had failed to turn up to work on Monday, July 6, and has been there ever since.

Efforts by Bauert and Ritchie to see their employees in Shanghai were obstructed at every turn. And if Hu, Liu, Wang and Ge were detained for alleged serious crimes on behalf of their company, then there was an outside chance that their bosses might be told to join them.

A statement on an official Government website said the Shanghai State Security Bureau had found Hu and his colleagues had stolen and obtained secrets by "bribing internal staff of Chinese steel companies". "This has caused huge loss to China's national economic security and interests,'' it said.

China's Ministry of State Security does not concern itself with ordinary crimes, such as bribery or theft. Its tens of thousands of analysts and intelligence operatives have the job of protecting the Communist Party from perceived threats to its existence, such as Tibetan or Xinjiang ethnic separatists, foreign spies, political dissidents and activist lawyers.

According to some analysts, that executives at the world's third-largest mining company were being treated as threats to China's national security signalled that conservative, hard-line and less economically literate forces were getting the upper hand in Beijing.

The detentions were endorsed by the Communist Party's Standing Committee, chaired by the President, Hu Jintao, according to sources in a Chinese security agency.

Stern Hu and his three Chinese colleagues have now been charged with receiving bribes and commercial secrets. People close to the case note the opportunities for bribery that can present themselves in a climate of iron ore shortage and large price differences between contract and spot market purchases. Many say the Chinese Government is unlikely to have gone as far as it has without what it considers to be sound evidence that is prepared to publicly present. A trial is likely to proceed by early next year.

But the Chinese Government's initial framing of the case as one of "national security" suggests Rio and Australia may also have been caught up in a larger struggle for influence over China's 540 private and state-owned companies, which together produce more steel than the rest of the world put together. Steel, with its central, visceral place in China's modernisation and national mythology, can provide a proxy battleground for the path of Chinese development.

"This is about: do you let the market determine prices domestically and internationally or do you insist on political intervention? " David Goodman, a professor of Chinese studies at the University of Sydney, says. "How do you allocate resources, politically or economically? Within the leadership you can imagine the arguments going on between those calling for a more open political and economic system and others saying, 'You must not rock the boat.' ''

The stakes at play in China's steel industry were illustrated in an investigative story this week about how the new manager at the Tonggang steel factory in north-eastern China was recently beaten and thrown from a building to his death. The manager had been appointed by China's richest steel entrepreneur, Zhang Zhixiang, who had been attempting to take over the inefficient state-owned company in line with a provincial government reform drive. But the old guard managers and their local supporters fought back. Would the disgruntled managers of a local state-owned company resort to murder in order to keep their jobs?

Rio Tinto's immediate problems began with BHP Billiton's takeover bid in November 2007. The event immediately steeled Chinese leaders to push back against what they saw as an Australian iron ore monopoly. And Rio responded to BHP's aggression with new aggressive marketing strategies, including diverting iron ore from long-term contracts to the more lucrative spot market.

Chinese steel mills were furious. Rio itself was divided on the long-term wisdom of hurting its considerable standing in China. ''We acted in accordance with the letter of the contracts, but not the spirit,'' Stern Hu conceded in conversation with BusinessDay at the time.

The incarceration of Hu suggests Rio and the Australia Government may have under-estimated the humiliation and legitimate economic anxieties that could be generated in a country that is so dependent on steel.

If there was a single turning point, it probably occurred at a conference room at Baosteel's sprawling factory and corporate headquarters in north-eastern Shanghai, on June 23 last year. It was there that the lead negotiator, Will Malaney, and his negotiating assistant and translator, Stern Hu - with Bauert giving instructions from backstage - secured a jaw-dropping 79 per cent price rise for iron ore ''fines'' and 96.5 per cent rise for ''lump''.

At 6pm, after four months of deadlocked negotiations and a tense four-hour stand-off in that room, Malaney and Hu jumped up and clasped hands with Baosteel's Ding Shouhu and the three members of Ding's team. They cracked a bottle of fine champagne.

For Ding, the spontaneous joy was borne of relief that his torture was finally over, seven days before the majority of China's iron ore contracts would technically expire. But Baosteel's public and political standing had crumbled because the costs of Chinese steel production, the nation's inflation problem and its nationalistic sensitivities had all been raised.

The initial relief and exhilaration at Baosteel headquarters subsided as one of the four Baosteel representatives in the room phoned both the China Iron & Steel Association and the Ministry of Commerce to get final authorisation. News leaked out between the cracks of China's political bureaucracy before Rio had a chance to tell the stock exchange.

It was an ominous interregnum that hinted at the turf wars to follow. Steel officials saw the opportunity to secure new political patrons and try to balance Australia's iron ore "monopoly" by marshalling China's buying power - something that Japan had done successfully in the past, if not in such heavy-handed terms.

It is not just the Ministry of State Security that has intruded in this year's iron ore wars. A new super-ministry of industry and information technology has supplanted the Ministry of Commerce. And Baosteel, the innovative national champion that understands how both politics and markets work, has been pushed out by the retired steel mill officials and bureaucrats who run the China Iron & Steel Association (CISA).

Steel executives and industry analysts enjoy nothing better than belittling association officials behind their backs. But influential Chinese analysts, such as the steel consultant and academic Xu Zhongbo, are now prepared to do it publicly. This is his appraisal of the association's secretary-general, Shan Shanghua, its deputy president, Luo Bingsheng, and its director of iron ore, Chen Xianwen:

"Shan was a director of steel planning initiatives in the past, when he was part of the Ministry of Metallurgy [now disbanded]. He has good experience for planning economics but not for international co-operation and business," Xu says.

"Luo is also a very stupid guy. If someone has a higher position than him, then he will always follow that position. And he can change his position very quickly. He did very poor work when chairman of Shougang [Capital Steel].

''And Chen Xianwen was director of iron ore purchasing at Wisco [Wuhan Iron & Steel Company]. But iron ore purchasing was an easy task five years ago; every iron ore miner wanted to make friends with him."

These three men, masters of a different era, have been endorsed this year to harness China's hugely fragmented steel industry and leverage their buying power. So far, the experiment has not worked.

Malaney, Hu and their boss, Ian Bauert, were no doubt bemused at the association's negotiating tactics. Rio would refer to what was happening in the underlying data about profits and production in the Chinese steel and iron ore mining industries. But negotiators across the table, including Chen Xianwen, would reply with political diatribes.

CISA seemed to think that asserting steel production would slip would ensure that iron ore prices would also fall. These days Rio thinks China will produce about 570 million tonnes of steel this year, based on Chinese steel production and iron ore imports rising to new records almost every month.

But CISA has gone out of its way to ignore official public information - including the People's Bank of China's estimate that GDP grew 4 percentage points between the March and June quarters - to forecast 2009 production at just 500 million tonnes. CISA persists in arguing that this time, unlike every other year, it will be able to "control" the steel industry in accordance with Government directives by closing down small and allegedly inefficient mills and preventing new capacity from being installed.

In May the association missed its chance to follow Nippon Steel in agreeing to a 33 per cent cut in the benchmark contract price. The June 30 negotiating deadline came and went, and spot market prices soared higher.

Ironically, on July 6 the steel association held an internal meeting where it agreed to accept the Nippon Steel benchmark price subject to face-saving clauses that would allow them to renegotiate later if spot prices fell, according to senior Chinese journalists who spoke with the association's president, Shan Shanghua, that evening.

But news of the detention of Rio's Stern Hu broke the following day, July 7, before the association had an opportunity to inform the Anglo-Australian miner of its change of heart. Shan must have known about the Ministry of State Security's ongoing investigation - Rio's iron ore tendering results were being covertly supplied to CISA - but he evidently had no idea that Mr Hu and his colleagues had been detained.

If the detention of Rio's China iron ore team on national security grounds was a sign that China was drifting back towards central planning and tighter political control, then the downgrading of the Rio charges to stealing commercial secrets and receiving bribes may indicate the tide has since turned the other way.

China's leadership appeared to form the view that heavy-handed attempts to impose its will on the country's iron ore market was not working and not worth the costs to its international reputation.

Zhang Peihong, the lawyer for Rio Tinto's Wang Yong,said this week that China's top intelligence agency has handed the case to criminal authorities.

"The Ministry of State Security has handed the case to the Public Security Bureau," he said.

The politics of the Stern Hu case have largely been defused ahead of what may turn out to be relatively transparent legal proceedings. Rio Tinto's chief executive, Tom Albanese, said yesterday that "the grounds for [Hu and the others'] arrest do not seem to be as serious as first reported".

But Fortescue's Andrew Forrest gambled this week that the political winds continue to favour the steel association and its attempts to control the market.

"CISA was once viewed as a dog with a lot of bark. I think it is now viewed across China as a dog with a lot of bark and bite," Forrest told Australian journalists in China, after agreeing to a slightly larger price cut of 35 per cent on the condition of up to $US6 billion ($7 billion) in finance from an as yet undetermined Chinese institution.

Forrest said CISA has the political leverage to enforce the Fortescue price as the new benchmark price for all imported iron ore.

"There have been hundreds of other contacts and actions taken where there is a discipline being asked of steel companies to cease short-term profit-taking and encourage long-term price stability and move towards a uniform price," Forrest said.

"China's actions have gone way, way beyond Stern Hu."

But so far the big miners, led publicly by Rio, have ignored the Fortescue settlement and continued selling ore into China at the slightly higher price set with Nippon Steel.

This year's price negotiations are being seen as a costly debacle in Chinese industry circles, with the steel association wearing most of the blame. The drumbeat of discontent is getting louder.

A report this week by a Shanghai steel consultancy, Umetal.com, slammed the association's inability to comprehend economics. It pointed out that its 2 percentage point face-saving price deal with Fortescue would save China $US35 million, based on Fortescue's 10 per cent import market share, and contrasted this with the $US6 billion that the association had agreed to arrange to pump into Fortescue.

"The iron ore negotiations turned into a political struggle which China must win and cannot lose," the report said. "It is about the credibility of [CISA] in the whole industry. This is no longer about the simple issue of dozens of steel mills signs agreements with miners when prices are acceptable."

The Umetal report said that the Fortescue deal was an irrelevant face-saving deal for the association, as the big miners and Chinese steel mills were buying ore at the Nippon Steel price regardless.

"What is not important is that China gets the final say," it said.

Xu Zhongbo, the steel consultant, supports efforts to resist Australia's dominant market power. But he also believes the association has dealt itself out of play.

"This year CISA has lost power, it took too long to reach an agreement," he says. "Maybe next year Baosteel will have the power again."

Some reports say the decision has already been made to restore Baosteel's role as China's lead negotiator and boot aside CISA.

But CISA fought back this week and revealed the existence of "the State Council's No. 6 document", by which the cabinet-like body had empowered it to "prevent" speculative iron ore trading and "reasonably unify the price".

"It's not true that Baosteel will lead negotiations," a senior association source said yesterday. "Like this year, Baosteel will represent China to talk, under the lead of CISA, also with a group of China's 16 largest steel mills formed to make decisions."

But the iron ore wars are far from over and CISA is sticking to its guns.

READ MORE---> Shock and Ore...

In this Chinese fable the chicken upsets the fox in his lair

The Powerful Right of Sovereignty, Business plus Values
a lesson for Burma

Illustration: Rocco Fazzari
By Peter Hartcher

(SMH) -Kevin Rudd studied China's most famous political prisoner, Wei Jingsheng, for his university thesis. Today Wei Jingsheng studies Kevin Rudd.

"The Chinese Government is putting the Australian Government through a trial with the arrest of Stern Hu," Wei said this week through an interpreter.

Wei has a bit of experience with the Chinese justice system - he spent 18 years in jail and now lives in exile in the US. Stern Hu, an iron ore negotiator for Rio Tinto, was arrested for allegedly stealing state secrets. So was Wei, an electrician at the Beijing Zoo at the time.

"I was locked up because I offended Deng Xiaoping [China's leader at the time]. But of course they fabricated a charge that I stole state secrets - this is the approach the Chinese Government likes to take with people to put them down."

And under the Chinese Communist Party the state can classify anything it likes as a "state secret", even the most innocuous information, at any time and on any whim.

"It's obvious now the Chinese Government is attempting to put down the Australian Government, not Stern Hu. And it's quite evident that it is putting down the Australian Government as a precedent for other governments around the world."

Wei, who is visiting Australia, embraces the metaphor in the old Chinese folk saying - kill the chicken to frighten the monkey. Australia is the chicken. Who is the monkey?

"The first monkey is Europe," targeted after Nicolas Sarkozy, president of France and chair of the European Union at the time, decided to meet the Dalai Lama last year. China reacted with the fury it always employs when heads of government recognise the exiled leader of the Tibetan campaign for autonomy from China.

"And the biggest monkey is the US."

But if China wants to make an example of someone, why choose Australia? Wei lists three reasons: "Australia has a prime minister who thinks he knows a lot about China, when actually he doesn't. Because Kevin Rudd has many relationships with China, the Chinese Government is hoping that because of these ties he will not make a strong reaction.

"Second, historically, Australia is one of the weakest countries in dealing with China. Third, Australia is just a small place."

Wei wants Australia to understand that it is engaged in a high-stakes struggle. "The chicken and the fox" - his animal metaphor for China because it is cunning and invasive - "have co-existed peacefully for years, but now the situation has changed. I think the chicken is in shock. It's still deciding whether it wants to put up a fight. If it doesn't fight it will be killed. But it may not realise it has a sharp beak and it can fight back."

Wei is wrong on these assertions. Rudd and his senior ministers set out very deliberately to change Australia's policy in dealing with China. The Rudd Government understands very well that it is the target of Chinese anger. And the Government is keenly aware that Australia has serious leverage in the relationship - it knows it has a sharp beak.

But Wei's misapprehension is quite understandable. Rudd has never articulated an overall Australian approach. The Foreign Minister, Stephen Smith, really only started to speak about the dispute openly this week.

What has changed?

John Howard had an early clash with China. It was inadvertent, not intentional. And it shook him.

As Howard took office in 1996, China was in an angry confrontation with Taiwan. The US deployed two aircraft carriers to the Taiwan Straits in a clear warning to China.

Within days Australia made a strong but lonely public statement of support for the US deployment. Four months later the Howard Government announced the ''reinvigoration'' of the Australian security alliance with the US.

"China feels that the new Government in Australia last year shifted to the US," said a leading Chinese strategic thinker, Dr Yan Xuetong, head of the Centre for China's Foreign Policy Studies, at the time.

"The Chinese interpretation was that Australia had decided to join a US policy of containing China.''

Beijing put Australia into deep diplomatic freeze for almost a year. Howard got the message. He changed China policy dramatically. This is how he phrased it in 1997: "Australia and China are very different societies, our histories have been very different, our political systems have been very different, but our relationship has always been at its very best. Each of us has fully understood the depth of those differences yet resolved to work together to capitalise on the areas of mutual benefit and common interest. It is always important in a relationship between two very different societies that you put aside those differences and you focus on those areas of common agreement."

It became a briskly "business first'' approach. Sometimes it verged on being "business only." Howard put human rights issues into a tank called a human rights dialogue, a lower-level dialogue of the deaf, from which they never emerged.

Rudd made a dramatic departure from this policy. On his first visit to China as prime minister, he addressed Chinese students in Beijing University in their own language. On Chinese soil, and very deliberately, he said the unspeakable. In April last year he said that while Australia recognised Chinese sovereignty over Tibet, "we also believe it is necessary to recognise there are significant human rights problems in Tibet".

He called for dialogue between China and the Dalai Lama to broker a long-term solution to the administration of Tibet. China protested. Rudd stood firm: ''I think this relationship is broad enough to tolerate disagreement, and on these questions I'll be putting my views forthrightly."

Instead of "business first" or "business only", Australia's policy shifted to being "business plus values". It became very clear that this was not a one-off when Smith defied China and granted a visa to the exiled Uighur activist Rebiya Kadeer.

Smith told Parliament quite forthrightly this week: "The Chinese authorities at a range of levels, including my counterpart, Foreign Minister Yang, made very strong representations to Australia about the proposed visit to Australia of Rebiya Kadeer and made representations to us that we should prevent her visit. I considered those representations and came to the conclusion that there was no basis for denying her entry to Australia."

China accuses her of being a "separatist terrorist". Smith said that "exhaustive" research showed she was not a terrorist but merely someone with whom China's government disagreed. China protested by cancelling a ministerial visit to Australia.

Smith added: "I vaguely remember the Leader of the Opposition saying to the Government some time ago that we should stand up to China. We did on the Rebiya Kadeer issue."

It was a clear message to China - we will not allow you to veto our sovereign right to set immigration policy. Smith also gave a spirited defence of the principle of freedom of speech. The chicken has decided to put up a fight.

Senior officials in the Australian Government believe that Beijing has four principal grievances against Australia at the moment. First was Rudd's speech on Tibet.

Second was the collapse of the bid by China's state-owned Chinalco to buy a bigger stake in Rio Tinto. It was a rebuff to China's ambitions, and it stung.

Stern Hu was duly arrested. Since then, Beijing has downgraded the charge against him from stealing state secrets to stealing trade secrets. That reduces the potential punishment from the death penalty to a seven-year jail term. But the vengeful anger smoulders still.

Third was Australia's defence white paper, which nominated China as potentially the biggest source of instability in the Asia-Pacific.

Fourth was the visa for Rebiya Kadeer. Taken together, it's enough for Chinese state-controlled media to denounce the "sinophobic government" of Kevin Rudd, as it did this week.

Yet despite the rage in Beijing, the economic relationship is thriving, utterly untouched by the diplomatic storm. This week's gas deal was stunning. China invited the Resources Minister, Martin Ferguson, for the ceremonial signing of the biggest business deal in Australian history, the $50 billion, 20-year deal to buy liquefied natural gas from the Gorgon field. Ferguson also met a senior Chinese minister, Zhang Ping, chairman of the National Development and Reform Commission.

At the same time, China's Commerce Minister, Chen Deming, has agreed to a new round of negotiations for a free trade agreement with Australia. In talks with the Trade Minister, Simon Crean, Chen even proposed a new formula for making progress in the stalled talks.

This is Australia's leverage. For China's successful rise it needs ever-growing quantities of food and fuel in a world that will be increasingly short of both. The chicken has a sharp beak and strong claws.

The Rudd policy of "business plus values" is drawing a lot of noise from Beijing but no real price. Not yet, at least. The next big test will be the Dalai Lama's proposed visit to Australia in November.

As for Wei Jingsheng, asked whether he planned to meet Rudd during his visit to Australia, he said: "I am close to Kevin Rudd, but given his position now I will not make trouble for him." The Dalai Lama will make trouble enough. Wei laughed: "The Dalai Lama and Rebiya Kadeer are good friends of mine. We take it in turns to visit to make trouble." The fox will not be amused. More tests lie ahead.

Peter Hartcher is the Herald's international editor.

READ MORE---> In this Chinese fable the chicken upsets the fox in his lair...

Suu Kyi Remains Upbeat Says Her Lawyer

By AUNG ZAW
The Irrawaddy News

Nobel Peace Prize laureate Aung San Suu Kyi was positive and cheerful after returning to her Inya Lake residence, one of her lawyers, Kyi Wynn, told The Irrawaddy on Friday.

“She was not dejected and I was surprised to see that, on the contrary, she appeared cheerful and was laughing,” the lawyer said.

Suu Kyi met with her lawyers on Wednesday around the dining table in her lakeside house, he said, adding that Suu Kyi appeared upbeat as she spoke of the trial.

Suu Kyi knew the verdict would be “guilty,” but was not upset and showed no signs of bitterness, Kyi Wynn said.

However, the Burmese pro-democracy leader had expressed surprise that the regime had revived a “dead constitution” in order to implicate her, he said, in reference to the 1974 constitution which is officially invalid since a new constitution was approved last year.

Kyi Wynn previously said that Suu Kyi had privately told him that the charges against her were invalid as she was charged under the 1975 State Security law, which was annulled by the 2008 constitution.

During the trial, Suu Kyi told her lawyers that she and her defense team were facing a “crisis of constitution.” Suu Kyi was referring to a 1975 law enacted under the 1974 constitution, which became invalidated when the military seized power in 1988.

In addition, under the junta’s “seven-step road map,” the country approved a new constitution in May 2008 by national referendum, which would also invalidate the 1975 act.

Kyi Wynn said that the regime had revived the 1974 constitution in order to charge Suu Kyi, and claimed that the old constitution was null and void.

The lawyer also said that the defense team was surprised to learn that Snr-Gen Than Shwe’s letter to the court was dated and issued on the August 10th and not on August 11th, the day the judge read out the final verdict.

Suu Kyi initially received a three-year prison sentence, but that was immediately commuted to 18 months under house arrest when Home Affairs Minister Maung Oo read out Than Shwe’s letter to the courtroom announcing his decision to cut her three-year sentence in half.

The suspended sentence was also applied to the verdict against Suu Kyi’s two companions, Win Ma Ma and Khin Khin Win.

Suu Kyi is now a prisoner again in her own house, but her lawyer said that she is preparing to appeal.

“Suu Kyi wants to appeal and she is correct,” he said. “But the chances of success are very slim—she was convicted even before she was arrested.”

Kyi Wynn likened the house arrest restrictions imposed on Suu Kyi to keeping a child in a boarding school.

The restrictions against the opposition leader and her two companions are:

-*- they must only live in Suu Kyi’s residence located on University Avenue;
-*- they are only allowed to go out into the house’s yard;
-*- they can get access to doctors and nurses for health reasons;
-*- Suu Kyi can meet guests in accordance with permission from the authorities concerned;
-*- she can watch local TV channels such as Myawaddy and MRTV (Myanmar Radio and Television),
-*- as well as local newspapers and journals;
-*- and she can request paper if she needs to write something.

“Suu Kyi doesn’t usually watch television, but is an avid reader and spends most of her time reading books during her house arrest,” the lawyer said.

When asked whether they could bring her foreign newspapers and magazines, her lawyers were told that all materials must be submitted to the authorities for screening.

Her lawyers have also noticed that local security forces and the police have elevated the watchtower which overlooks Suu Kyi’s compound. Another noticeable change at her home since she was detained in May is that all the bushes have been cleared.

Suu Kyi is aware of the outpouring of support and the international reaction to the verdict against her, said the lawyer.

“But she is always looking forward to a dialogue,” Kyi Wynn added.

When asked about China’s stance toward Burma and Suu Kyi, the lawyer warned that China is playing with fire.

Political observers have said that because of the highly publicized trial and the international attention that she received during the trial, Suu Kyi’s status is strengthened both inside and outside Burma and that she has gained a stronger position in Burmese politics than before.

“She was almost forgotten [before the trial],” a diplomat in Rangoon said, adding that the irony is the regime has promoted her status and international standing.

Suu Kyi has already spent nearly 14 of the past 20 years under house arrest, although Tuesday’s conviction was the first time she has been found guilty of any offense.

READ MORE---> Suu Kyi Remains Upbeat Says Her Lawyer...

US Senator Meets Than Shwe, Suu Kyi

In this photo released by the office of U.S. Sen. Jim Webb, D-Va., Webb, right, meets with Myanmar's detained democracy leader Aung San Suu Kyi in Yangon, Myanmar, Saturday, Aug. 15, 2009. Sen. Webb's office says he has won the release of an American prisoner in Myanmar. A statement Saturday said John Yettaw will be officially deported on Sunday afternoon when he will travel with Webb to Bangkok. Yettaw was convicted Tuesday of helping Suu Kyi violate the terms of her house arrest. (AP Photo/Office of Senator Jim Webb)

By WAI MOE
The Irrawaddy News

The head of the Burmese military junta, Snr-Gen Than Shwe, met with pro-engagement American Senator Jim Webb in Naypyidaw today and allowed the senator to meet with pro-democracy leader Aung San Suu Kyi.

Reports said that Than Shwe met with the Democratic senator in the Burmese capital on Saturday morning. No further details were released by either Burmese or US officials. Webb is scheduled to hold a press conference at Rangoon’s international airport on Sunday, according to his official Web site.

On Saturday afternoon, Webb flew from Naypyidaw to Rangoon to meet with Suu Kyi. Sources in Rangoon said Suu Kyi was taken from her lakeside residence to a government guesthouse to meet with Webb.

Khin Maung Swe, a spokesperson for Suu Kyi’s National League for Democracy, told The Irrawaddy that the party had been informed of the meeting between Suu Kyi and Webb, but declined to provide any further information.

He added that the party did not expect Webb’s visit to bring any big changes. “It’s too early to say if Mr. Webb’s visit will have a major impact on Burma or Washington’s Burma policy,” he said.

A journalist in Rangoon who spoke on condition of anonymity said that security has been tight on Rangoon’s University Avenue, where Suu Kyi lives, since this morning.

During his meeting with Than Shwe, Webb likely discussed next year’s planned elections, the fate of detained pro-democracy leader Aung San Suu Kyi and other political prisoners, and US sanctions on Burma. Observers and diplomats said China’s growing influence in Burma was probably another topic of discussion.

At a senate hearing in July, Webb hinted that the new US administration of President Barack Obama was considering a different approach to Burma from that of his predecessor, but emphasized that Washington’s policy would continue to be based on developments in Burma.

“[W]e are in a situation right now where I think what they have recently done with Aung San Suu Kyi has dramatically hurt their ability to reach out and perhaps see a different type of treatment from the United States,” Webb said.

Burma’s state-run-newspapers reported a meeting between Webb and Burmese Prime Minister Gen Thein Sein on Friday as the front-page story on Saturday. The meeting was also attended by Foreign Minister Nyan Win, Information Minister Brig-Gen Kyaw Hsan, Minister for Culture Maj-Gen Khin Aung Myint, Science and Technology Minister U Thaung—who formerly served as Burma’s ambassador to the US—and Aung Toe, the chairman of the Commission of Drafting the State Constitution.

Webb also held a separate meeting on the military-backed 2008 constitution with Aung Toe and three other members of the constitution-drafting committee on Friday. Prior to his visit, he expressed an interest in the constitution, which was approved last year in a referendum widely dismissed as a sham.

“Assuming that Burma would honor the items that are in its proposed constitution, which move, however imperfectly, toward a multi-party systems and elections—open elections—I assume that would be supported,” Webb said in the US senate in July.

Webb probably also expressed concern about China’s growing clout in Burma when he met with Than Shwe, according to diplomatic sources.

A critic of US sanctions on Burma, Webb has previously noted that “As the United States continues its attempt to isolate Burma due to the human rights policies of its military regime, China’s influence has grown exponentially.”

Note: Photo comes from article: Yettaw's Family `ecstatic' after word Mo. man will be freed

READ MORE---> US Senator Meets Than Shwe, Suu Kyi...

Junta’s ploy: Push Kokang to shoot first

S.H.A.N. - Knowing the ceasefire groups’ major concern is the border closure imposed by China, Burma’s military leaders are pushing the Laogai-based Kokang army to the limit until it sees no choice but to shoot thereby incurring the wrath of Burma’s giant neighbor, according to reports coming from the Sino-Burma border.

For example, says one, the Burmese military is crowding Kokang positions on the strategic mountain northeast of Qingxuehe (Chinshwehaw). While the Myanmar National Democratic Alliance Army (MNDAA), as the Kokang Army prefers to be known, still occupies the higher peaks, lower peaks are being taken one by one by the Burma Army. “They stopped shoving us only when we told them we didn’t want them to stray into minefields surroundings our places,” a Kokang officer was quoted as saying.

China has reportedly warned both sides not to fire first. Accordingly, the Peace and Democracy Front (PDF), of which Kokang, Wa, Mongla and the New Democratic Army-Kachin (NDAK) are members, has long adopted at least two principles that they believe China would approve:

• Not to shoot first
• Not to secede from Burma

“Laogai is now a ghost town,” said a local, “because nine out of ten of its population has left.”

The current crisis that arose amid Naypyitaw’s demand that all the ceasefire armies transform themselves into Border Guard Forces is said have started when 3 of the top members informed earlier to Naypyitaw that their top leader Peng Jiahseng was involved in the production of drugs and arms.

The three had also accused Peng of favoring kinfolks over the others. The upshot of it was the demand by Naypyitaw to send on investigation team to Kokang and when the latter had tried to stall the move, the former arrived in the territory in force on 8 August which sparked the present stand-off.

Sources in Wa, so far left strictly alone by the junta since June, say attack on any member organization of the PDF will be regarded as one against the grouping and as such will retaliate accordingly.

The new constitution, drafted and approved by Naypyitaw, has promised both Wa and Kokang self-administrative status.

Kokang declared opium free in 2003 followed by Wa two years later. But both are still reported in drug-related news stories.

READ MORE---> Junta’s ploy: Push Kokang to shoot first...