WHEN US Secretary of State Hillary Rodham Clinton visits Myanmar this week, she'll see a country that has made some progress toward democracy, but has even farther to go to fix the corrupt economy and ethnic conflicts that stem from decades of military rule. After holding elections last November, Myanmar has begun to release political prisoners and work with opposition leader and Nobel Peace Prize laureate Aung San Suu Kyi. That has earned political rewards, such as Clinton's visit starting late Wednesday, the first by the top US diplomat in 56 years. But the new government, still dominated by the military, has scarcely begun to fix the mistakes made since the military took power in 1962, and fighting between the army and ethnic minorities who want more autonomy has intensified since the elections. While Myanmar's nascent political reforms hold promise, economic changes will be just as important to arrest the decline of what was once one of Southeast Asia's most prosperous countries but is now rated on a key UN index as the region's least developed. The military began opening the economy in the 1990s, after the 26-year socialist rule of the late dictator Ne Win, but the investment it has attracted has mostly been for its own benefit — including to build a remote and opulent new capital city where the government relocated to in 2005. Ne Win's eccentricities extended to issuing currency notes divisible by the supposedly auspicious number nine, and Myanmar retains a Byzantine exchange rate system. The official rate of the kyat currency is about 12,000 percent over market value. That has helped a kleptocracy to flourish. By using the official rate — which is largely ignored in day-to-day transactions — for accounting exports of natural gas and other resources, the government is believed to have underreported billions of dollars in revenues. In the past two years the government has accelerated its privatization of state enterprises and assets, but liberalization has not translated into a level playing field. Buyers of key holdings have been military-run corporations and government cronies.
