Democracy Lab

16 Ways to Fix Burma

On the eve of the country's historic elections, 16 experts give us their prescriptions for the future.

On April 1, citizens of Burma will head to the polls to vote in a parliamentary by-election. Normally, this isn't the sort of thing that would attract a lot of headlines, since only a small number of seats in the National Assembly are actually at stake.

But these are no ordinary elections. President Thein Sein has actively invited the participation of the National League of Democracy, Burma's main opposition party -- the first time the NLD has participated in an election since the national vote in 1990 that it won in a landslide. (Burma's military dictatorship subsequently annulled the result.) Given her immense popularity, NLD leader and Nobel Peace Prize laureate Aung San Suu Kyi is almost certain to win a seat. That, in itself, will amount to a crucial watershed in Burma's recent history. For the first time in some 60 years, the opposition will have a chance to voice its views from within the government.

How this will work out in practice remains unclear. Skeptics are right to worry that the game is rigged against the NLD. Even if it wins all of the 47 seats it is contesting, that is far short of anything like the kind of majority that will be needed for meaningful change. Yet the prospect of a real parliamentary opposition, however small, is not to be dismissed. NLD lawmakers and their allies will have the power to call the government to public account.

Of course, that doesn't meant any of Burma's myriad problems will be easy to fix. So we here at Foreign Policy decided to make our own contribution to the debates that are to come, inviting a cohort of experts from within Burma and abroad to suggest some innovative solutions. These "Ideas for Burma" will, we hope, serve as useful benchmarks for discussion -- however utopian some of them might seem at first glance. For it is vital to acknowledge that the forces of the old regime -- the same generals and ex-generals who have, over the past 60 years, brutalized and impoverished their own people -- still reign over Burma's current political and economic system today. In any case, helping Burma to overcome its difficult past will be impossible without frank discussion of the challenges ahead. It is in that spirit that we offer the following suggestions.

Brian Joseph: Create a multi-ethnic state

Tom Kramer and Martin Jelsma: Tackle Burma's drugs problem

Christina Fink: End the civil war

Ronald Findlay: Export or die

Francis Wade: Invite investment -- but with protections

Muang Wuntha: Support press freedom

Myat Htoo Razak: Health is wealth

Timothy Ryan: Let workers unionize freely

Sean Turnell: Cut the bloated military budget

Soe Thinn: Train Burma's new diplomats

Dr. Thein Lwin: Teach the children well

Tin Muang Muan Than: Unleash grassroots entrepreneurship

Andreas Valentin: Come visit, sustainably

David Steinberg: Promote the rule of law

Hanna Hindstrom: Make extractive industries more transparent

Ko Tar: Let the monks lead the way

Brian Joseph: Create a multi-ethnic state

Burma's transition to democracy will be long and difficult. There is virtually no sector that doesn't require massive and essential investment. Yet, one priority trumps all others -- building a truly multi-ethnic state. For 50 years, the military has ensured the territorial integrity of the state through a combination of violence, repression, and political opportunism. As the military recedes from power and democracy begins to take hold, resolving the political divide between the ethnic nationality periphery and the ethnically Burman center will take on a new urgency.

Among their first priorities, the Burmese political leadership -- including the current government, the military, the National League for Democracy, and ethnic nationality leaders -- must address the structural and political issues that have eroded any sense of national unity or identity and which have led to a highly contested state. Failure to address the question of the fundamental nature of the state (is it a Burmese-speaking Buddhist country with a large minority population, or a multi-ethnic country with equal claims to what it means to be Burmese?) will not only lead to more human rights violations in the ethnic areas, but will undermine efforts to a lasting and just democratic state. As part of this effort, the Burmese must commit to a serious effort to rewrite its new constitution, which neither advances democracy nor protects ethnic rights. According to most constitutional experts, Burma should adopt a federal constitution that ensures equality and protects ethnic rights, among the most important of which are language and religion.

Although the challenge of redefining Burma as a multi-ethnic state is principally the prerogative of the Burmese themselves, the international community can play an important role in facilitating this transformation. Politically, the international community should ensure that not only do all parties understand the centrality and importance of the issue, but that it includes ethnic nationality leaders as equal partners in all of its deliberations. Diplomatically, it should tie increased engagement and closer cooperation with the Burmese government to concrete initiatives and measurable outcomes to address the ongoing violence in the ethnic areas, in Kachin and Shan State in particular. And, through development assistance, it should work with the ethnic political leadership and emerging civil society to identify priorities and begin to address the yawning gap between the ethnic nationalities and the majority Burman in education, health, infrastructure, and economic prosperity. Yet, it is a mistake to understand these development efforts, no matter how important, as a substitute for addressing the structural and political issues that led to the problems in the first place.

A part of the effort at rebuilding Burma as a multi-ethnic state will be dealing with the challenge of managing Burma's ample natural resources. Like other resource-rich countries, without careful and thoughtful planning, Burma's natural wealth can be more of a source of division than a catalyst for unity. This is particularly important in Burma where much of the country's wealth -- timber, gems, minerals, gas, etc. -- is located in the ethnic areas.

In short, 50 years of military rule have left the country poor, uneducated and divided. To support Burma's transition to democracy, Burma must begin the difficult task of building a truly multi-ethnic state, and this effort must begin by acknowledging that to be Burmese does not necessarily mean to be Burman, speak Burmese, or practice Buddhism.

Brian Joseph is the senior director of the Asia and Global Programs at the National Endowment for Democracy.

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Tom Kramer and Martin Jelsma: Tackle Burma's Drugs Problem

Burma/Myanmar is the world's second largest producer of opium after Afghanistan. Following a decade of steady decline, opium cultivation in Burma has doubled again since 2006, from an estimated 21,500 hectares in 2006 to 43,600 hectares in 2011. It is mostly cultivated by marginalized farmers in isolated mountainous areas in the Shan and Kachin States of northern Burma. Most of them grow it as a cash crop to buy food, clothes, and access to health and education. The decades-old civil war in Burma, and the failure of the government to address ethnic conflict, has also greatly contributed to opium cultivation in the country. All conflict actors in drug-producing areas are to some extent involved in the drugs trade.

National and local authorities have aggressively implemented opium bans and eradicated opium fields in response to international political pressure. The main underlying reasons, however -- poverty and insecurity -- have not been properly addressed. Development interventions by international NGOs and U.N. agencies to provide farmers with sustainable, alternative livelihood options to offset the impact of opium bans have been grossly insufficient, and are merely emergency responses to prevent a humanitarian crisis. As well, the large-scale opium substitution program that China has initiated across its borders does not offer real solutions. The main beneficiaries of the subsidy scheme, tax waivers, and import quotas for agricultural concessions -- mostly rubber -- in former opium-growing regions, are Chinese businessmen and local authorities.

Experience elsewhere has shown that "alternative development" can address the needs of communities in opium-growing areas, while also contributing to a reduction in illicit cultivation under certain market conditions. Since the cultivation of opium often takes places in areas plagued by conflict, insecurity, and vulnerability, interventions should aim to enhance human rights protection, conflict resolution, poverty alleviation, and human security. They should also have a participatory approach and respect for traditional culture and values. Another lesson learned is the importance of proper sequencing: There should be no eradication or strict enforcement of opium bans unless viable and sustainable livelihoods are sufficiently in place. Aid should not be made conditional on reductions in opium cultivation. Instead, indicators for a successful policy should focus more on progress in human development.

Burma also confronts serious problems related to drug use. The number of drug users has grown dramatically, and consumption practices over time have changed from traditional opium use to smoking and injecting heroin. The increasing number of injecting drug users and the related expansion of the HIV/AIDS epidemic in Burma present one of the most serious health threats to the population in the country and the region at large. Infection rates among drug users in Burma are among the highest in the world. The problematic use of methamphetamine has also become associated with a range of communicable diseases such as HIV/AIDS, hepatitis B and C infections, and tuberculosis -- as well as mental health problems, in particular among vulnerable groups such as female sex workers. There is an urgent need to scale up quality prevention, treatment and harm reduction services for drug users and people living with HIV, who should be properly consulted in the decision-making.

Drug laws in Burma -- as in the region -- are harsh and penalties are disproportionately high. The main victims of these repressive drug control policies are the most vulnerable in the chain: opium farmers, micro-traders, and drug users. Meanwhile, law enforcement agencies, the justice system, and prisons are overburdened by the criminalization of people who instead need health care and social support. The overly punitive approach has even caused a dramatic scarcity of opiate medicines essential for pain relief, an absurd situation in a major opium producing country.

Legislative reforms, such as the decriminalization of possession for personal use and alternative sentences for low-level drug offences, would make drug policies more consistent with human rights principles. It would also relieve the burden on the criminal justice system and free up resources to scale up quality services. Authorities in the region are still pursuing the illusionary goal of a "drug free ASEAN by 2015." Instead, policy priorities should focus on how best to manage and reduce the many health and social harms associated with the reality of a persistent and ever changing drugs market.

Tom Kramer is a researcher and Martin Jelsma is program coordinator for Transnational Institute's Drugs & Democracy Program.

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Christina Fink: End the civil war

The civil war in Burma has persisted for over 60 years. During that time, the national army has steadily gained ground, but the resistance has continued. Since ex-general Thein Sein became president last year, he has taken a new tack, setting out a roadmap for peace based on ceasefires, political talks, and potential amendments to the 2008 constitution.

Most of the ethnic groups that were at odds with the government (with the exception of the Kachin) have signed ceasefire agreements in recent months. Yet now the real challenge will be reconciliation. Some fundamental compromises regarding the devolution of power and the integration of the ethnic armed groups into the national army will have to be made, however hard such things might be to imagine. For trust to be restored, abuse of civilians by the army must stop as well.

As difficult as it will be to establish a durable peace, there is a greater sense of urgency now than ever before. Aung San Suu Kyi and other key leaders in the democracy movement have repeatedly called for a political settlement. To build the highways, railroads, and pipelines that can connect Burma to its neighbors and enable economic growth, peace must be restored. In order for U.S. sanctions to be fully lifted, there must be demonstrable progress towards a lasting peace in Burma.

What role can the United States and other countries play? They can help move the process forward through a combination of sustained positive pressure, financial assistance for peace-building initiatives, and technical advice. Through private meetings, public statements, and aid policies, the U.S. and other governments must make clear the importance that they place on genuine peace in areas populated by ethnic minorities.

The military, politicians from all of Burma's parties, civil society groups, and the public at large need to have a better understanding of ethnic grievances, peace-building processes, and options for devolving power to lower levels of government. For 50 years, federalism (the division of power between a national government and various regional governments) has been portrayed as a risk to the nation of Burma itself; thus it's not surprising many Burmese find it difficult to envision how devolution of power could work. Providing financial and technical support to enable Burmese journalists to write sensitively and knowledgeably about the issues and the options is one important way to facilitate informed discussions and potential solutions. Another is to provide grants for peace-related educational and awareness-raising initiatives run by Burmese civil society groups.

Assuming substantive political talks take place, all involved in the negotiations would benefit greatly from having access to specific technical assistance based on the experiences of other countries which have successfully transitioned from civil war to peace, such as Burundi and Mozambique. Understanding the various mechanisms that have been successfully employed to ease transitions, such as power sharing and third-party intervention, could also help allay fears and make the process seem more palatable. The U.S. and other countries could assist in identifying and supporting key advisors on reconciliation.

With sustained focus and support for the peace process both inside and outside the country, perhaps a breakthrough is possible.

Christina Fink is a professor at the Elliott School of International Affairs, George Washington University.

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Ronald Findlay: Export or die

It is now exactly 50 years since the March 1962 coup d'etat led by General Ne Win brought the Burmese military to power. During this time, Burma has fallen increasingly behind the other Southeast Asian countries in all dimensions of economic and social progress. In 1940, colonial Burma was the world's leading rice exporter with over three million tons exported annually. By 1962 it was recovering rapidly from the devastation of being fought over twice in World War II, and considerable progress was being made in education and public health as well as agricultural and industrial production. All this changed when the Ne Win regime instituted a disastrous extension of state control over all sectors of the economy -- just at the same time as Korea, Taiwan, Hong Kong, and Singapore were launching their spectacularly successful export-oriented development strategies, soon to be followed by Thailand, Malaysia, Indonesia, and the Philippines. The military attempted to change course during the 1990s with an apparent reduction in state control, but instead there was an actual rise in rent-seeking and "crony capitalism." Discovery of natural gas compensated somewhat for the failure of agricultural exports to expand sufficiently, but the regime became increasingly dependent upon Chinese support to maintain itself in the face of extensive sanctions imposed by the United States and Europe.

The new "civilian" regime of President Thein Sein and other former army officers has made encouraging moves towards national reconciliation with the ethnic minority insurgencies and with the democratic opposition led by Aung San Suu Kyi. In turn this has led to improved relations with the international community, raising the hope of a lifting of sanctions and normalizing economic and financial ties with the outside world as a whole, thus reducing dependency on China. It is not yet clear, however, exactly what sort of economic policy the government intends to follow.

It is imperative not only for the regime but for the nation as a whole to single-mindedly focus on the need to catch up, as rapidly as possible, with the achievements of its Southeast Asian neighbors. The key to this is an export-oriented development strategy. Thailand and Burma are closely comparable in geography, population size (around 60 million), Theravada Buddhist culture, and the historical experience of recent statehood. Yet Thailand exports about $25 worth of products for every $1 exported by Burma, only because of the economic opportunities Burma missed over the last 50 years as a result of its disastrous economic policies. A unified and realistic exchange rate for all exports is thus essential if the country is to take advantage of its low wages to restore competitiveness in rice and other agricultural products, as well as in the crucial area of labor-intensive manufactured exports, where almost nothing has been achieved despite considerable potential. Ironically, a major threat to the possibility of a successful export-oriented strategy is the appreciation of the unofficial exchange rate from about 1300 to 800 kyats to the U.S. dollar, as a result of the influx of capital induced by the optimism over prospects for a better economic future. Measures will need to be taken to contain this.

Two other important constrains on export expansion are lack of the right infrastructure, such as harbor facilities, and lack of "human capital" due to prolonged neglect in education. However, the extensive Burmese diasporas could alleviate the latter problem substantially, if given the opportunity and incentive to return in sufficient numbers. And, of course, lifting sanctions, in return for continued efforts at political liberalization, would be necessary for the export-oriented development strategy to succeed.

Ronald Findlay is a professor at Columbia University and an economist focusing on trade. He is originally from Burma.

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Francis Wade: Invite investment -- but with protections

A new investment law is being considered by Burma's parliament, which aims to lure companies in with five-year tax holidays and other tantalizing perks. The revised regulations would turn around stringent rules surrounding foreign ownership of enterprises, and if passed by parliament, Burma will take a giant step towards joining world markets.

Suitors are already lining up at the door: banks, energy firms, and construction giants from North America and Europe want to set up shop in the country, having spent years sidelined by sanctions while companies from Thailand, Singapore, South Korea, and China were allowed almost unfettered access to its resources.

But amid the excitement over Burma's business future, there has been little pressure on the government to implement social and environmental accountability mechanisms to govern the influx of investment. The law contains scant mention of any binding agreements that would enable investment to spur human development in Burma. Nor does it suggest that the military will relinquish the clout it wields over the economy, particularly the military-owned companies known to net millions of dollars in gas revenue, which is then used to purchase weaponry.

Burma has a proven susceptibility to the "resource curse," and current legislation does little to negate this. Foreign businesses should be warned against investing in projects that support the army, and rules should be tightened to stem the human cost of Burma's drive towards a market-oriented nation. Proper governance of megaprojects, including rules that bar investment in areas cleansed of their inhabitants (mining, plantations, and hydropower projects have historically been accompanied by large-scale displacement, land theft, and militarization), would be a giant step towards realizing corporate responsibility.

Whether the government acknowledges this is questionable. A draft "land act" being debated does little to allay this issues of theft and corruption -- if enacted it will confer ownership of the millions of acres of farmland stolen by the army on powerful, often government or military-aligned, companies. With 70 percent of Burma's population dependent on agriculture as a primary source of income, confiscation of arable land often uproots families and becomes a major impediment to small-scale growth. Investors will be judged to have profited from displacement of civilians if they move in on this land.

Burma's war-torn border regions, where the government is pushing ethnic armies to sign ceasefires, will feel a weak regulatory environment most painfully. The prospect of an end to decades-long conflict is certainly alluring, but with many rebel groups occupying terrain close to sites of immense potential wealth, Naypyidaw's overtures are best seen as an effort to secure these regions for commercial exploitation. So while armed conflict may soon cease, the abuse of civilians could escalate as companies swoop in to mine the countryside.

The onus for human development in Burma is on both the government and investors, but as things stand, neither offer much hope. Campaigners want the progressive forces in parliament to ensure that rule of law, and not militarization, governs future project security. Moreover, officials must not be allowed to siphon funds generated from energy projects into offshore accounts, as they have been found to do.

Financial transparency will force the government to channel more money to the undernourished health and education sectors and away from the military. This will only happen when policymakers implement participatory planning and finally draw on the voices of the Burmese public.

Francis Wade is a freelance journalist and analyst covering Burma and Southeast Asia.

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Maung Wuntha: Support press freedom

"We must respect the role of the media as a fourth estate," said Burmese President Thein Sein during his inaugural address to parliament on March 30, 2011. Modern democracies are described as having three estates, or branches: executive, legislative, and judicial. The fourth estate, of course, is the press -- the unofficial watchdog that ensures that the other three estates of government function with integrity. Burma used to have this fourth estate, and must have it again.

In the 1950s, under the rule of the elected civilian government, the Constitution of the Union of Burma (1947) guaranteed freedom of expression and liberty of thought. At the time, Burma had the freest media in Asia, publishing 30 daily newspapers in several languages, including: Myanmar, Chinese, English, and Indian languages.

After the military coup d'état by General Ne Win in 1962, the Printers and Publishers Registration Law was enacted. This law, still in existence, requires all printers and publishers to register and submit copies of their publications to the Press Scrutiny Board, a division of the Ministry of Information. In 1974, the Constitution and the laws on freedom of expression changed -- ensuring that opinions spoken or published were not contrary to the interests of socialism. That same year, the State Protection Law was issued, allowing authorities to imprison any persons suspected of being a threat to national peace. Many journalists and writers, including myself, have been arrested for infringement of this edict. This clamp down on press freedom has had a detrimental effect on the publishing industry -- so much so that Burma currently has no private daily papers because the Ministry of Information makes publishing extremely difficult through restricting licenses and censorship.

In his opening address at the Conference on Media Development in March 2012 (joint sponsored by the UNESCO and the Burmese government), Minister of Information Kyaw Hsan said that the government has been relaxing restrictions on the press, step by step. This is a hopeful sign. The relaxation of restrictions should pave the way for domestic periodicals to have increased freedom, as long as it is practiced with responsibility and accountability.

The minister also announced that the government is drafting a new media law. Burmese journalists are concerned -- they want a press law that would protect the rights of journalists and prevent threats to media personnel, particularly when it comes to publishing on sensitive issues, such as corruption by government cronies. Without protections like these, Burma will never have a robust fourth estate.

Soe Thein, better known under his pen name Maung Wuntha, is a veteran journalist and the chairman of the National Press Award Committee.


Myat Htoo Razak: Health is wealth

Imagine a family in a town in Shan State: Their four-year old child has had severe diarrhea and a high fever for two days. The parents are day laborers with three other children and they barely survive on the daily incomes of the two parents. If one parent takes time off to take the child to a clinic, they won't have enough money to buy food for the family that day. In fact, they won't even be able to afford the medicine if the clinic doesn't give it for free. How would Burma's new government help that family?

The health of its citizens is one of the most essential foundations of a country. While a good healthcare system may not solve every problem, it can greatly help families such as the one imagined above. Aung San Suu Kyi and the new leadership of Burma must make it their priority to improve the health, education, and social services accessible to regular families in both urban and rural areas.

They must take immediate action to improve health service delivery for the most common diseases, such as HIV/AIDS, tuberculosis, and malaria, as well as maternal and child health problems and other chronic non-communicable diseases. Local and national organizations can implement these services with participation from communities, private clinics, and international donors through re-structuring existing programs and increasing the current budget of the Ministry of Health. They must provide on-the-job training for healthcare workers that addresses the actual medical needs of the population. And finally, the new government must also strengthen long-term structural support, such as increasing healthcare financing, providing better education systems for healthcare workers, and providing health equity for all groups -- as well as guarantee timely distribution of safe, quality medical products, clean water, food, and sanitation.

It will take steady and unwavering support, energy, resources, expertise, and participation from everyone to improve the health system, neglected for many decades. International support is needed in all facets, though with a clear goal of supporting country ownership and equity of access to essential health services. There is no easy way to improve the health system overnight, but a simplified and collaborative approach will help lead Burma along a healthier path.

Dr. Myat Htoo Razak is a Burmese physician who provided clinical services to wounded protesters during 1988 democratic movements in Burma. He has worked with international health organizations on HIV/AIDS research, prevention and care, and capacity building of health workers in Asia and Africa. He now lives in the United States and works on strengthening global health.

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Timothy Ryan: Let workers unionize freely

Aside from the elections in April, some of the highest-profile changes the Burmese government has introduced in the recent thaw have come in the labor sector. In October 2011, a new law allowing trade unions to organize and register was passed. March 2012 saw the passage in the legislature of implementing regulations to ostensibly implement this law and actually register unions.

The question today is whether the government will follow through.

The Labor Organization Law has many defects. As Earl Brown, the Solidarity Center's rule of law adviser and an expert on Burmese law, points out, "it allows for the complete suppression of strike activity for wages, hours and working conditions. It is poorly drafted and not harmonized with other Burmese laws or the new Burmese Constitution."

Nonetheless, the industrial workers, farmers, textile workers, and journalists I met with in Burma in January are eager to test the law. They've already organized independent unions and applied for registration, although none have yet gained recognition.

For two decades, the Federation of Trade Unions-Burma (FTUB) has been training labor activists both inside and outside the country, and these activists are forming unions to test the new law. One of the first things the government must do is allow for the registration of the FTUB under the new law and drop all the bogus charges of "terrorism" against U Maung Maung, the FTUB's general secretary.

Next, comprehensive legal reform of all labor and freedom of assembly laws to allow true freedom of association and collective bargaining must be enacted.

In addition, alternative dispute resolution mechanisms to address industrial conflicts between labor and management in a fair and timely manner should be established.

Finally, since the Burmese labor movement is starting almost from scratch, workers and their unions need the opportunity to learn and connect with their counterparts in the international labor movement from all over the world, including ASEAN countries, Europe, and the United States. Burmese authorities should encourage rather than limit the ability of labor unions around the world to connect with and help educate young Burmese workers about self-representation and democracy.

When I met with Aung San Suu Kyi in January, she told me what she thought a future Burma labor movement and economy should look like. Her vision of Burma is not a low-wage garment manufacturer like Bangladesh. She told me it was important for unions to be responsible and to work for their members, and that the new unions should not be tools or fronts for any political parties, including her own National League for Democracy. She argued that political parties and the government should not create unions and made clear that the NLD had no desire or intent to do so.

Ultimately, the way for Aung San Suu Kyi's vision of a vibrant labor movement to become a reality is for the government to just leave it alone -- and let workers have the freedom to develop their own organizations.

Timothy Ryan is the Asia director of the AFL-CIO's Solidarity Center.

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Sean Turnell: Cut the bloated military budget

One of the dangers facing the Burmese government on its reform path comes from the contrast between rising expectations and the sad reality of the country's flagging economy. Fifty years of military rule in Burma have created the poorest country in Southeast Asia, so the need for economic reform is just as pressing as that which finally seems to be taking place politically.

So what are the economic reforms that Burma needs to make to turn things around?

First out of the block is the need to reduce spending on the military. Currently absorbing over a quarter of all government spending, Burma's military budget funds a vast standing army and a host of sophisticated hardware, much of it bought new from China and Russia. With no real military threats to Burma from abroad, this army has, of course, been configured primarily to fight internal dissent.

Reducing military spending should allow spending in areas of desperate need in Burma, such as health and education. Currently Burma spends less on these critical determinants of human capital than any comparable nation, and it is among a tiny cohort of countries that spends more on its military than these two items combined.

In recent years, Burma has emerged as a significant exporter of natural gas. The revenues from these exports should provide the funds necessary for genuine nation-building. Under the previous military regime, however, these revenues were siphoned-off into special accounts (some offshore) for the exclusive use of the military and the leadership. Accordingly, what Burma's new government needs to do is to ensure full transparency in all of its overseas earnings, amidst a general program of budgetary accountability.

Burma currently has in place an array of restrictions on routine economic activity that are a hangover from the years of military rule, and which need to be rescinded if the country is to progress. Some of these can be more or less immediately removed and thus constitute the "low-hanging fruit" in the reform process: include the range of licences and taxes that are imposed upon Burma's exporters, the prohibition against banks lending to farmers, the restrictions on telecommunications providers (which makes mobile phones in Burma amongst the most expensive in the world, despite the huge benefits these simple devices can yield in making for better living standards), and simplifying the byzantine (and corruption-provoking) procedures for registering a business. Meanwhile, allowing farmers to own the land they cultivate (presently the state owns all agricultural land), would do much to enhance agricultural productivity, while bringing a certain economic security that has long been lacking.

Burma's new government has made promising steps on the path of reform, but in the economic sphere, these are now badly lagging behind political developments. Putting in place some of the measures above, along with what must be a broad presumption of the primacy of the rule of law and sound property rights, might return Burma to the prosperity it once enjoyed, and can attain again.

Sean Turnell is associate professor of economics at Australia's Macquarie University.


Soe Thinn: Train Burma's new diplomats

In the 1970s, a Burmese cabinet minister paid an official visit to a Western country. There he met with the host country's prime minister, who asked what kind of assistance Burma wanted. The minister responded simply: "How much can you give?"

Such awkwardness is more common than you might think among Burmese diplomats. Yes, that was decades ago -- but one must understand that since the 1988 popular uprising, and the consequent rule by the military in the country, sanctions have prevented practically any kind of assistance being offered to Burma. Now that is changing. Positive signals from the government, including the return to the political scene of Aung San Suu Kyi, are prompting donor countries and international organizations to consider how they might assist Burma's development. Such opportunities must not go untapped.

In the past, Burmese diplomats have embraced "reactive" or "defensive" diplomacy when defending their government in international forums from allegations by the international community for violating human rights, using forced labor, and recruiting child soldiers. Today, Burmese diplomats are looking out on a new diplomatic landscape. Their job will now consist primarily of interacting with foreign counterparts, so that badly needed development assistance for Burma may be acquired from external donors. This challenge calls for a more "proactive" or "offensive" diplomacy.

Burmese diplomats must develop skills and acumen to exploit this unprecedented chance to help in developing the country. This effort should include grasping the fundamentals of development economics, properly assessing Burma's own resources to maximize the impact of foreign support, learning the mechanics of how development assistance is processed by donor countries, and, last but not least, gaining a familiarity with the specific kinds of development aid each country or international institution can provide. No doubt this will be a considerable endeavor for a country whose diplomats are rarely comfortable with speaking foreign languages. This needs to change, and the sooner, the better. Burma should be in a position to make the most of opportunities when they present themselves.

Soe Thinn, an ex-director of the Burmese Service of Radio Free Asia, worked for Burma's Ministry of Foreign Affairs from 1969 to 1988.


Dr. Thein Lwin: Teach the children well

A system of "decentralized education" should be instituted in Burma. Since 1962, teachers have not been in a position to determine how they teach children but, rather, have been required by the government to deliver prescribed texts to their students. Education reform should reach the areas of higher education, vocational education, non-formal education and teacher education. And universal, compulsory nine-year education (of children, age 5 to 14) must be launched throughout Burma.

It is often said that schools should focus on child-centered education rather than teacher-centered. However, for decades, the Burmese education system has not encouraged either a teacher-centered or a child-centered approach, rather parroting government-approved readers in preparation for strict examinations. The current system of pass-fail examinations, plus the selection of science and art routes by 8th grade (student age 14) and university entrance by 10th grade (student age 16), affects students' autonomy, competence, and attitudes to learning. As part of education reform in Burma, the examination system should be changed in favor of a "formative assessment" system that encourages continuous assessment for learning. University entrance should be based on student's aptitude and ability -- rather than 10th grade examination marks. Students should have to meet the requirements of the university course that they wish to study.

Burma is a geographically, as well as an ethnically, diverse nation. Decentralization of education could guarantee a space for ethnic nationality states to run their own schools, allowing each state enough room to create a curriculum incorporating their own priorities and values within a nationally agreed minimum standard. There may be different theoretical orientations to curriculum considerations, but the task before us is to draw upon all curriculum traditions -- serving the interests of students and meeting the needs of society.

Multilingual education must be considered based on the linguistic diversity that exists in Burma. This diversity is a positive characteristic of the country, and safeguarding it is an important task for its citizens. The major ethnic nationality languages (Burmese, Chin, Kachin, Karen, Karenni, Mon, Rakhaing, and Shan) should be recognized as the official languages in their respective states, with Burmese as the national language. Many other countries have chosen more than one official language: India has 19 official languages; South Africa has 11.

Decentralized education would see universal education to the age of 14 and remove government-prescribed texts for students. The examination system should be revamped to allow for more autonomous study through a process of continuous assessment, rather than pass/fail exams. Decentralized education will also allow ethnic nationality states to run their own schools in their own languages. A "learning-centered approach" is the way forward. This approach guarantees a role for the teacher to provide guidance and enables students to become independent, life-long learners.

Dr. Thein Lwin is the director of Thinking Classroom Foundation based in Chiang Mai, Thailand, which provides teacher trainings for Burmese teachers.

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Tin Maung Maung Than: Unleash grassroots entrepreneurship

No sooner was it sworn in, just under one year ago, than the current government in Burma vowed to transform the country into a modern developed state through industrialization. Special economic zones and industrial zones are part of the government's plan to boost industrial production. The assumption seems to be that state-sponsored mega-projects will stand at the forefront of this effort. On the other hand, the parliament has been exercising its newfound power to throttle back large-scale, state-funded projects by cutting budget allocations. "Enhancing private sector participation," "developing public-private partnership," and "plugging into the international supply chain" all appear to be new buzzwords in the economic reform agenda.

Such buzzwords, however, are alien to most of the small and medium-size industrial enterprises (SME) that represent the bulk of the country's industrial production and employment. The current debate over the environmental and economic impact of industrial projects has overshadowed the role and importance of SMEs. These private sector businesses barely survived the deprivations of the socialist era (1964-1988), and now they are struggling to make the transition towards a "market" economy. The number of companies registered with the Ministry of Industry -- almost all of them SMEs -- rose from less than 24,000 in 1991, to over 43,000 in 2004. Since then, their growth appears to have reached a plateau. These numbers apparently do not include other industrial SMEs under the supervision of other ministries, such as businesses processing agriculture and marine products. It is likely that the number of unregistered SMEs is much larger than the official figure.

The list of constraints faced by most SMEs is long. Lack of credit prevents new entries to the market and starves existing companies of capital. State-owned enterprises, which enjoy many unfair advantages, tend to crowd out private ones. Small companies also face problems when it comes to buying or leasing buildings and land. Deficient and unreliable infrastructure, bureaucratic red tape, and a lack of human capital are additional challenges. Of all of these problems, high transaction costs and the credit crunch seem to be the most significant constraints holding back the development of SMEs.

Yet possible remedies to these problems are clear. A bank dedicated to financing small firms should be established. Regulation and registration procedures can be streamlined into a one-stop process. Technology transfer and human resources must be improved. The development of rural SMEs can be integrated into a larger poverty alleviation strategy. This last item is especially important: Creating a more prosperous countryside through rural industrialization can promote growth of the industrial sector, and greater prosperity throughout the country as a whole.

Tin Maung Maung Than is a visiting senior research fellow at the Institute of Southeast Asian Studies, Singapore.

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Andrea Valentin: Come visit, sustainably

Imagine the good if Burma could learn from its neighbors' tourism development mistakes, leapfrog these errors, and develop sustainable tourism. Imagine the government adapts multi-stakeholder destination-planning procedures, develops sustainable tourism policies, writes a legislative framework from which sustainable tourism can occur, and collaborates with poor communities to ensure they benefit from tourism.

Given the massive impact that tourism has on the world's poor, the development of Burma's tourist industry could have a massive impact on the country's future - if it's done right. Burma's Ministry of Hotels and Tourism has repeatedly stated its commitment to uphold the principles of responsible tourism. They know sustainable tourism will not happen by itself, and are acutely aware that many people are watching their actions closely.

The scope for changing tourism policy to enhance livelihood benefits for the poor is immense. Pro-poor tourism, which generates net benefits for the poor, can stimulate Burma's economic development, helping marginal areas that have few other exports and diversification options.

The success of pro-poor tourism depends on whether the government will explicitly focus on expanding the benefits for the poor in the reformed tourism law, or whether they will just assume the poor will benefit from tourism through the trickle-down effect.

Interventions could be taken at three levels. At the destination level, partnerships can be developed between operators, residents, NGOs, and local authorities. At the national policy level, policy reforms are needed on a wide range of tourism and non-tourism issues, and at the international level, responsible consumer and business behavior should be encouraged.

The government and the private sector can take several steps to strengthen the pro-poor benefits of tourism. Companies can develop stronger economic linkages with the poor by adapting their supply chain. The government can boost opportunities for participation by the poor. They could offer stipends to develop tourism and hospitality skills, provide small business support schemes, and build basic infrastructure for tourist services in poor areas. By reforming Burma's licensing and concession policies, the government could create incentives for companies to invest and operate in pro-poor ways.

As a form of poverty intervention, pro-poor tourism does not compare with development methods such as investments in health, education, and agriculture. But as a strategy to promote broad-based growth, pro-poor tourism can do a lot of good. Donors have recognized that compared with other sectors, tourism has higher potential for linkage, is labor intensive, and provides many jobs for women and youth.

The long-term success for tourism depends on whether the government can develop civil society. Through pro-poor tourism, the government can show that the people of Burma are at the center of the development agenda, not the economic elite.

Dr. Andrea Valentin is the founder of Tourism Transparency, which campaigns to create a responsible and accountable tourism industry in Burma.

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David Steinberg: Promote the rule of law

The core problem facing all each successive Burmese government -- from the Union of Burma in 1948 to the Republic of the Union of Myanmar in 2011 -- is the deft management of majority-minority relations. No government has resolved this issue. The center fears dissolution of the union; the minorities fear cultural and economic domination. The just distribution of power and resources among the majority Burmans and the disparate minority groups will determine the future of that state. Cease-fires with some warring groups are a first step toward resolution, but they mark a beginning that must overcome generations of mistrust and discrimination. Provincial parliaments in minority and majority areas are welcome developments, but must be followed by greater local authority. Avenues of social mobility for all groups need opening and encouragement -- they are presently restricted and militarily controlled. Local cultures, languages, customs, and religions need respect and freedom in actuality -- beyond the fine hortative rhetoric of all the constitutions, including that of 2008, which have remained unimplemented.

In a state in which power has been highly personalized, the implementation of an independent judiciary is essential for progress in all fields. The talented and well-trained judiciary was destroyed by the military in 1962, and needs to be restored. The 2008 Constitution has called for such an autonomous governmental branch, President Thein Sein has established an organization directly under his authority to foster this change, and the opposition has pushed for the rule of law. Progress will be difficult after a half-century of authoritarian judicial control, but it is essential for the future of the country.

David Steinberg is distinguished professor of Asian studies at Georgetown University.

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Hanna Hindstrom: Make extractive industries more transparent

Despite abundant natural resource wealth, Burma is the poorest country in Southeast Asia. Exports of natural gas alone are expected to reach $4.1 billion annually by 2013, but the International Monetary Fund (IMF) estimates that less than 1 percent of these revenues ever enter the national budget. Instead, they are pumped into off-shore bank accounts owned by the military and its cronies.

Limited progress has been made on revenue transparency since Thein Sein became president. Although the budget was debated in parliament for the first time and the dual exchange rate has finally been abolished, revenue streams remain shielded in opacity. The military retains a tight grip on the country's economy, with only state or military-run enterprises permitted to partner with foreign firms on natural resource projects.

Research by the campaign group Arakan Oil Watch suggests that Burma's "resource curse" is set to worsen as new investors pour in. U.N. human rights expert Tomas Quintana also warned that we may see an increase in abuses, such as land-grabbing and forced labor, in ethnic minority areas as a consequence of Burma's reform program. Disputes over hydropower dams in Karen state are already threatening to unravel the fragile peace-process. Similarly, the ongoing conflict in Kachin state, which has displaced 75,000 people, re-opened in June of last year over a disputed area near a Chinese-backed mega dam.

Indeed, sustainable natural resource management will be a critical test for the new government, which now has an unprecedented opportunity to take action. A commitment to implement the Extractive Industries Transparency Initiative (EITI) -- the world's leading anti-corruption drive -- would be a significant step in this direction. It would require a public pledge to work with companies and communities to promote transparency and accountability in the natural resource sectors.

There is growing grassroots support for EITI in Burma, which is premised on the idea that governments publish payments received by companies, and companies report payments made. More importantly, it engages civil society from the start. In a country like Burma, it has the potential to stimulate a public dialogue on a subject that until recently was completely taboo.

On his February visit to Burma, leading economist Joseph Stiglitz threw his support behind the initiative. "It's very important [for Burma] to subscribe to EITI," he said. "It sets the framework for transparency and can make sure revenues that belong to the people, go to the people."

There even seems to be some nascent support within the military-backed government, notably the Resources and Environmental Conservation Committee, where local groups have been able to promote transparency concepts. References to accountability in the natural resource sector can also be found in Burma's 2009 national sustainable development strategy. Indeed, it would fit in nicely with the government's professed reformist approach.

The time seems ripe for rhetoric to be put into action. If Burma truly hopes to embrace democracy, let alone become the "next economic frontier of Asia," transparency must be placed at the heart of its agenda. The EITI both can, and must, form part of that process.

Hanna Hindstrom is a journalist with the Democratic Voice of Burma based in Thailand.

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Ko Tar: Let the monks lead the way

Burma has about 500,000 monks, equal to the number of soldiers. The traditional role of the Buddhist monks (Sangha) has been 1) to provide a higher purpose and meaning to human life, one that transcends limited self-interest; and 2) to provide a moral structure in which human beings act ethically.

But that is not enough for the socially engaged Buddhists. The role of the Sangha should also be to protect "the little ones" who are marginalized and oppressed within the established power schemes.

Historically, monks have always played a major role in society. They led the first anti-colonial activities in Burma, when the nation was still a colony in the British empire. In 1988 and again in 1990, monks helped lead the democracy movement.

In late September 2007, the world's eye turned toward Burma, toward tens of thousands of monks chanting "The Sutra of Loving Kindness" as they marched on rain-swept streets, turning their minds and prayers toward democracy and the nonviolent transformation of the military regime that had ruled the country for 45 years. The peaceful protest led by the monks was triggered by sudden and dramatic increases in fuel prices, which drastically affected people's ability to get to work or afford even basic foods. In Burma, where monks and nuns are deeply trained in meditation, scholarship, and in peaceful acceptance of life's sufferings, their protest was an extraordinary event, a true display of Ernest Hemingway's words that "courage is grace under pressure."

Burmese monastics live in a close relationship with the wider community. Their response to Burma's extreme economic hardship is, in a sense, logical. If the people cannot eat, monks and nuns cannot eat.

Engaged Buddhism seeks to apply the Buddhist ideals of wisdom and compassion to present-day social, political, and environmental issues. They have earned a space in society which cannot even be encroached upon by the regime. In the last six years, I collaborated with monks to embrace a number of poor village children who never enrolled in school. Over the years, we will prevent these youth -- almost one third of Burmese children -- from falling into illiteracy. Through this monks' "free" space, a collaborative movement between engaged monks and laity is unfolding, and introducing developmental innovations such as microcredit unions, sustainable agriculture, community forestry, and high energy stoves. We are hopeful. There is a possibility in the air that we can improve our conditions.

Ko Tar is a medical doctor, editor and publisher of the literary magazine Chindwin, and the author of over 20 books. He is also an engaged Buddhist and environmental activist in Burma.

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Israel's Secret Staging Ground

U.S. officials believe that the Israelis have gained access to airbases in Azerbaijan. Does this bring them one step closer to a war with Iran?

In 2009, the deputy chief of mission of the U.S. embassy in Baku, Donald Lu, sent a cable to the State Department's headquarters in Foggy Bottom titled "Azerbaijan's discreet symbiosis with Israel." The memo, later released by WikiLeaks, quotes Azerbaijan's President Ilham Aliyev as describing his country's relationship with the Jewish state as an iceberg: "nine-tenths of it is below the surface."

Why does it matter? Because Azerbaijan is strategically located on Iran's northern border and, according to several high-level sources I've spoken with inside the U.S. government, Obama administration officials now believe that the "submerged" aspect of the Israeli-Azerbaijani alliance -- the security cooperation between the two countries -- is heightening the risks of an Israeli strike on Iran.

In particular, four senior diplomats and military intelligence officers say that the United States has concluded that Israel has recently been granted access to airbases on Iran's northern border. To do what, exactly, is not clear. "The Israelis have bought an airfield," a senior administration official told me in early February, "and the airfield is called Azerbaijan."

Senior U.S. intelligence officials are increasingly concerned that Israel's military expansion into Azerbaijan complicates U.S. efforts to dampen Israeli-Iranian tensions, according to the sources. Military planners, I was told, must now plan not only for a war scenario that includes the Persian Gulf -- but one that could include the Caucasus. The burgeoning Israel-Azerbaijan relationship has also become a flashpoint in both countries' relationship with Turkey, a regional heavyweight that fears the economic and political fallout of a war with Iran. Turkey's most senior government officials have raised their concerns with their U.S. counterparts, as well as with the Azeris, the sources said.

The Israeli embassy in Washington, the Israel Defense Forces, and the Mossad, Israel's national intelligence agency, were all contacted for comment on this story but did not respond.

The Azeri embassy to the United States also did not respond to requests for information regarding Azerbaijan's security agreements with Israel. During a recent visit to Tehran, however, Azerbaijan's defense minister publicly ruled out the use of Azerbaijan for a strike on Iran. "The Republic of Azerbaijan, like always in the past, will never permit any country to take advantage of its land, or air, against the Islamic Republic of Iran, which we consider our brother and friend country," he said. (Following the publication of this article, an Azeri spokesman denied that his government had granted Israel access to Azeri airbases.)

But even if his government makes good on that promise, it could still provide Israel with essential support. A U.S. military intelligence officer noted that Azeri defense minister did not explicitly bar Israeli bombers from landing in the country after a strike. Nor did he rule out the basing of Israeli search-and-rescue units in the country. Proffering such landing rights -- and mounting search and rescue operations closer to Iran -- would make an Israeli attack on Iran easier.

"We're watching what Iran does closely," one of the U.S. sources, an intelligence officer engaged in assessing the ramifications of a prospective Israeli attack confirmed. "But we're now watching what Israel is doing in Azerbaijan. And we're not happy about it."

Israel's deepening relationship with the Baku government was cemented in February by a $1.6 billion arms agreement that provides Azerbaijan with sophisticated drones and missile-defense systems. At the same time, Baku's ties with Tehran have frayed: Iran presented a note to Azerbaijan's ambassador last month claiming that Baku has supported Israeli-trained assassination squads targeting Iranian scientists, an accusation the Azeri government called "a slander." In February, a member of Yeni Azerbadzhan -- the ruling party -- called on the government to change the country's name to "North Azerbaijan," implicitly suggesting that the 16 million Azeris who live in northern Iran ("South Azerbaijan") are in need of liberation.

And this month, Baku announced that 22 people had been arrested for spying on behalf of Iran, charging they had been tasked by the Islamic Revolutionary Guard Corps to "commit terrorist acts against the U.S., Israeli, and other Western states' embassies." The allegations prompted multiple angry denials from the Iranian government.

It's clear why the Israelis prize their ties to Azerbaijan -- and why the Iranians are infuriated by them. The Azeri military has four abandoned, Soviet-era airfields that would potentially be available to the Israelis, as well as four airbases for their own aircraft, according to the International Institute for Strategic Studies' Military Balance 2011.

The U.S. intelligence and diplomatic officials told me they believe that Israel has gained access to these airbases through a series of quiet political and military understandings. "I doubt that there's actually anything in writing," added a senior retired American diplomat who spent his career in the region. "But I don't think there's any doubt -- if Israeli jets want to land in Azerbaijan after an attack, they'd probably be allowed to do so. Israel is deeply embedded in Azerbaijan, and has been for the last two decades."

The prospect of Israel using Azerbaijan's airfields for an Iranian attack first became public in December 2006, when retired Israeli Brig. Gen. Oded Tira angrily denounced the George W. Bush administration's lack of action on the Iranian nuclear program. "For our part," he wrote in a widely cited commentary, "we should also coordinate with Azerbaijan the use of airbases in its territory and also enlist the support of the Azeri minority in Iran." The "coordination" that Tira spoke of is now a reality, the U.S. sources told me.

Access to such airfields is important for Israel, because it would mean that Israeli F-15I and F-16I fighter-bombers would not have to refuel midflight during a strike on Iran's nuclear facilities, but could simply continue north and land in Azerbaijan. Defense analyst David Isenberg describes the ability to use Azeri airfields as "a significant asset" to any Israel strike, calculating that the 2,200-mile trip from Israel to Iran and back again would stretch Israel's warplanes to their limits. "Even if they added extra fuel tanks, they'd be running on fumes," Isenberg told me, "so being allowed access to Azeri airfields would be crucial."

Former CENTCOM commander Gen. Joe Hoar simplified Israel's calculations: "They save themselves 800 miles of fuel," he told me in a recent telephone interview. "That doesn't guarantee that Israel will attack Iran, but it certainly makes it more doable."

Using airbases in Azerbaijan would ensure that Israel would not have to rely on its modest fleet of air refuelers or on its refueling expertise, which a senior U.S. military intelligence officer described as "pretty minimal." Military planners have monitored Israeli refueling exercises, he added, and are not impressed. "They're just not very good at it."

Retired Air Force Col. Sam Gardiner, who conducted a study for a think tank affiliated with the Swedish Ministry of Defense of likely Israeli attack scenarios in March 2010, said that Israel is capable of using its fleet of F-15I and F-16I warplanes in a strike on Iran without refueling after the initial top-off over Israel. "It's not weight that's a problem," he said, "but the numbers of weapons that are mounted on each aircraft." Put simply, the more distance a fighter-bomber is required to travel, the more fuel it will need and the fewer weapons it can carry. Shortening the distance adds firepower, and enhances the chances for a successful strike.

"The problem is the F-15s," Gardiner said, "who would go in as fighters to protect the F-16 bombers and stay over the target." In the likely event that Iran scrambled its fighters to intercept the Israeli jets, he continued, the F-15s would be used to engage them. "Those F-15s would burn up fuel over the target, and would need to land."

Could they land in Azerbaijan? "Well, it would have to be low profile, because of political sensitivities, so that means it would have to be outside of Baku and it would have to be highly developed." Azerbaijan has such a place: the Sitalcay airstrip, which is located just over 40 miles northwest of Baku and 340 miles from the Iranian border. Prior to the collapse of the Soviet Union, Sitalcay's two tarmacs and the adjacent facilities were used by a squadron of Soviet Sukhoi SU-25 jets -- perfect for Israeli fighters and bombers.  "Well then," Gardiner said, after the site was described to him, "that would be the place."

Even if Israeli jets did not land in Azerbaijan, access to Azeri airfields holds a number of advantages for the Israel Defense Forces. The airfields not only have facilities to service fighter-bombers, but a senior U.S. military intelligence officer said that Israel would likely base helicopter rescue units there in the days just prior to a strike for possible search and rescue missions.

This officer pointed to a July 2010 joint Israeli-Romanian exercise that tested Israeli air capabilities in mountainous areas -- like those the Israeli Air Force would face during a bombing mission against Iranian nuclear facilities that the Iranians have buried deep into mountainsides. U.S. military officers watched the exercises closely, not least because they objected to the large number of Israeli fighters operating from airbases of a NATO-member country, but also because 100 Israeli fighters overflew Greece as a part of a simulation of an attack on Iran. The Israelis eventually curtailed their Romanian military activities when the United States expressed discomfort with practicing the bombing of Iran from a NATO country, according to this senior military intelligence officer.

This same senior U.S. military intelligence officer speculated that the search and rescue component of those operations will be transferred to Azerbaijan -- "if they haven't been already." He added that Israel could also use Azerbaijan as a base for Israeli drones, either as part of a follow-on attack against Iran, or to mount aerial assessment missions in an attack's aftermath.

Azerbaijan clearly profits from its deepening relationship with Israel. The Jewish state is the second largest customer for Azeri oil - shipped through the Baku-Tibilisi-Ceyhan pipeline -- and its military trade allows Azerbaijan to upgrade its military after the Organization for Cooperation and Security in Europe (OSCE) slapped it with an arms embargo after its six-year undeclared war with Armenia over the disputed Nagorno-Karabakh region. Finally, modernizing the Azeri military sends a clear signal to Iran that interference in Azerbaijan could be costly.

"Azerbaijan has worries of its own," said Alexander Murinson, an Israeli-American scholar who wrote in an influential monograph on Israeli-Azeri ties for Tel Aviv's Begin-Sadat Center for Strategic Studies. "The Baku government has expelled Iranians preaching in their mosques, broken up pro-Iranian terrorist groups, and countered Iranian propaganda efforts among its population."

The deepening Azeri-Israeli relationship has also escalated Israel's dispute with Turkey, which began when Israeli commandos boarded a Turkish ship destined for Gaza in May 2010, killing nine Turkish citizens. When Turkey demanded an apology, Israel not only refused, it abruptly canceled a $150 million contract to develop and manufacture drones with the Turkish military -- then entered negotiations with Azerbaijan to jointly manufacture 60 Israeli drones of varying types. The $1.6 billion arms agreement between Israel and Azerbaijan also left Turkish Prime Minister Recep Tayyip Erdogan "sputtering in rage," according to a retired U.S. diplomat.

The centerpiece of the recent arms deal is Azerbaijan's acquisition of Israeli drones, which has only heightened Turkish anxieties further. In November 2011, the Turkish government retrieved the wreckage of an Israeli "Heron" drone in the Mediterranean, south of the city of Adana -- well inside its maritime borders. Erdogan's government believed the drone's flight had originated in the Kurdish areas of northern Iraq and demanded that Israel provide an explanation, but got none. "They lied; they told us the drone didn't belong to them," a former Turkish official told me last month. "But it had their markings."

Israel began cultivating strong relations with Baku in 1994, when Israeli telecommunications firm Bezeq bought a large share of the nationally controlled telephone operating system. By 1995, Azerbaijan's marketplace was awash with Israeli goods: "Strauss ice cream, cell phones produced by Motorola's Israeli division, Maccabee beer, and other Israeli imports are ubiquitous," an Israeli reporter wrote in the Jerusalem Post.

In March 1996, then-Health Minister Ephraim Sneh became the first senior Israeli official to visit Baku -- but not the last. Benjamin Netanyahu made the trip in 1997, a high-level Knesset delegation in 1998, Deputy Prime Minister Avigdor Lieberman and Foreign Minister Tzipi Livni in 2007, Israeli President Shimon Peres in 2009, and Lieberman again, as foreign minister, this last February. Accompanying Peres on his visit to Baku was Avi Leumi, the CEO of Israel's Aeronautics Defense Systems and a former Mossad official who paved the way for the drone agreement.

U.S. intelligence officials began to take Israel's courtship of Azerbaijan seriously in 2001, one of the senior U.S. military intelligence officers said. In 2001, Israeli arms manufacturer Elbit Systems contracted with Georgia's Tbilisi Aerospace Manufacturing to upgrade the Soviet SU-25 Scorpion, a close air-support fighter, and one of its first customers was Azerbaijan. More recently, Israel's Elta Systems has cooperated with Azerbaijan in building the TecSar reconnaissance satellite system and, in 2009, the two countries began negotiations over Azeri production of the Namer infantry fighting vehicle.

Israeli firms "built and guard the fence around Baku's international airport, monitor and help protect Azerbaijan's energy infrastructure, and even provide security for Azerbaijan's president on foreign visits," according to a study published by Ilya Bourtman in the Middle East Journal. Bourtman noted that Azerbaijan shares intelligence data on Iran with Israel, while Murinson raised the possibility that Israelis have set up electronic listening stations along Azerbaijan's Iranian border.

Israeli officials downplay their military cooperation with Baku, pointing out that Azerbaijan is one of the few Muslim nations that makes Israelis feel welcome. "I think that in the Caucasian region, Azerbaijan is an icon of progress and modernity," Sneh told an Azeri magazine in July 2010.

Many would beg to differ with that description. Sneh's claim "is laughable," the retired American diplomat said. "Azerbaijan is a thuggish family-run kleptocracy and one of the most corrupt regimes in the world." The U.S. embassy in Baku has also been scathing: A 2009 State Department cable described Aliyev, the son of the country's longtime ruler and former KGB general Heydar Aliyev, as a "mafia-like" figure, comparable to "Godfather" characters Sonny and Michael Corleone. On domestic issues in particular, the cable warned that Aliyev's policies had become "increasingly authoritarian and hostile to diversity of political views."

But the U.S. military is less concerned with Israel's business interests in Baku, which are well-known, than it is with how and if Israel will employ its influence in Azerbaijan, should its leaders decide to strike Iran's nuclear facilities. A State Department cable goes on to confirm that Israel is focused on Azerbaijan as a military ally -- "Israel's main goal is to preserve Azerbaijan as an ally against Iran, a platform for reconnaissance of that country and as a market for military hardware."

It is precisely what is not known about the relationship that keeps U.S. military planners up at night. One former CIA analyst doubted that Israel will launch an attack from Azerbaijan, describing it as "just too chancy, politically." However, he didn't rule out Israel's use of Azeri airfields to mount what he calls "follow-on or recovery operations." He then added: "Of course, if they do that, it widens the conflict, and complicates it. It's extremely dangerous."

One of the senior U.S. military officers familiar with U.S. war plans is not as circumspect. "We are studying every option, every variable, and every factor in a possible Israeli strike," he told me. Does that include Israel's use of Azerbaijan as a platform from which to launch a strike -- or to recover Israeli aircraft following one? There was only a moment's hesitation. "I think I've answered the question," he said.


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