US embassy cable - 02RANGOON1366

C O N F I D E N T I A L RANGOON 001366 
 
SIPDIS 
 
STATE FOR EAP, EB 
COMMERCE FOR ITA JEAN KELLY 
TREASURY FOR OASIA JEFF NEIL 
CINCPAC FOR FPA 
 
E.O. 12958: DECL: 10/22/2012 
TAGS: ECIN, ECON, BM 
SUBJECT: BURMA: JAPANESE UNLIKELY TO PUSH REFORM FINANCING 
 
REF: A. TOKYO 6905 
 
     B. SECSTATE 192276 
     C. RANGOON 1274 
     D. RANGOON 1253 
 
Classified By: COM CARMEN MARTINEZ FOR REASONS 1.5 (B,D) 
 
1. (C) Summary:  Japanese experts say that Japan plans to 
discuss economic reform during Prime Minister Koizumi's 
meeting with Senior General Than Shwe at the November ASEAN 
3 meeting in Phnom Penh.  They have also promised to share 
with us a copy of their proposed program for Burmese 
structural adjustment.  End summary. 
 
Economic Aid Plan? Not Yet. 
 
2. (C)  Professor Masahiko Ebashi, one of the leaders of a 
Japanese government-sponsored team here to work with the 
Burmese government on structural reform, told the Chief of 
Mission that the Japanese government is eager to get economic 
reform started in Burma, and is willing to pay for it.  The 
team of Japanese experts will complete its work here soon, 
expecting to finalize a report by December for publication 
next March. 
 
3. (C) Professor Ebashi was discouraged by the complete 
disinterest of the Ministers with whom his team was supposed 
to be working.  Only Brigadier General David Abel, the 
regime's sole competent economic mind, has worked closely 
with the group.  However, Ebashi was encouraged that 
technocrats in the Central Bank and other agencies had shown 
a "genuine" interest in reform.  He said his group had 
concluded that it was essential to build capacity now within 
the GOB through engagement and promotion of economic reform. 
It will be too late if the international community waits 
until the political situation changes.  Further sanctions 
and/or continued economic isolation, he fears, will destroy 
whatever influence these nascent reformers have. 
 
4. (C) The leadership of Burma has made it clear, however, 
that they will not implement any reforms unless there is 
accompanying finance.  Ebashi said that he believed the IMF 
had made a mistake by issuing reform instructions with no aid 
to back it up (see Ref D).  To avoid similar problems, his 
team was designing a program of incremental economic 
structural adjustment aid, each tranche of which would be 
tied to specific economic reforms.  This model had worked 
before in Vietnam, he said.  However, Burma could not be 
subjected to the same strict conditionality as Vietnam, 
Ebashi argued.  Ebashi said that he hopes a reform package 
for Burma could be developed in time for the bilateral 
meeting scheduled between Japanese Prime Minister Koizumi and 
Burma's Senior General Than Shwe at the November ASEAN   3 
Summit in Phnom Penh. 
 
Comment 
 
5. (C) Ebashi may be the only one thinking along these lines, 
however.  Japanese Embassy officials here tell us that while 
a bilateral meeting at the ASEAN   3 is in the works, nothing 
is finalized yet.  If this meeting is arranged, one official 
said, economic reform will certainly be a topic for 
discussion, but there will not be talk of structural 
assistance.  The Japanese government, he said, recognizes 
that any talk of financial assistance for structural reform 
would be premature, pending further motion on political 
transition in Burma.  He also said that the GOJ would share 
with us a copy of its report on structural adjustment here 
when it is ready, and would consult with the United States, 
the IMF, and the World Bank before taking any significant 
steps in Burma.  End comment. 
Martinez