Freeing Suu Kyi 'will not end sanctions'

If Burma's military leaders believes that releasing Aung San Suu Kyi will allow them to engineer a rapid lifting of economic sanctions, they are in for a disappointment.

That was the message emerging yesterday after Suu Kyi, the leader of Burma's democrats, spent her second day of freedom after 19 months under house arrest in discussions with foreign diplomats and party colleagues.

Burma is one of the poorest countries in Asia. Bilateral aid, which amounted to about $530m (£360m) a year in the 1980s, has been slashed to practically nothing as Western governments have tried to persuade it to make democratic concessions.

Inflation is running at 60 per cent, investment has dried up and the value of the kyat has halved against the dollar. Malnutrition is rampant. Across the nation, power shortages mean that in some parts electricity is only available for a few hours each day.

The economic crisis is believed to be the biggest factor behind the regime's decision to free Suu Kyi, whose National League for Democracywon a general election victory in 1990 that the military refused to acknowledge.

But merely releasing the Lady, as she is universally known, will be no magic bullet. Foreign diplomats confirmed privately yesterday that the regime must do much more.

"The key will be if [her release] leads to a genuine process of democratisation, of genuine national reconciliation," one diplomat said. "But as things stand now, restoring aid just wouldn't work." Another said: "This is an unseemly government. It's not appropriate to deal directly with them."

Whether the regime is braced for the groundswell that may result when Suu Kyi resumes addressing political meetings remains to be seen. One diplomat said: "It's like being in a dark room and not knowing where the walls are."