By Paul Eckert and Arshad Mohammed
WASHINGTON (Reuters) - The United States said on Wednesday it was ready to relax some sanctions on Myanmar to recognize its fledgling democratic transition, including a ban on U.S. companies investing in or offering financial services to the country.
However, U.S. Secretary of State Hillary Clinton stressed the Obama administration wanted to move cautiously, saying that the resource-rich Southeast Asian country has a long way to go to shake off decades of military rule.
Clinton hailed as a "dramatic demonstration of popular will" Nobel Peace Prize laureate Aung San Suu Kyi's gaining of a seat in the lower house in a parliamentary by-election on Sunday which yielded a landslide victory for other members of her party.
"We fully recognize and embrace the progress that has taken place and we will continue our policy of engagement," Clinton said in a brief appearance before reporters.
U.S. analysts, however, praised the administration for not moving too quickly to remove sanctions that could give U.S. companies access to its rich mineral, timber and gemstone resources.
The package Clinton unveiled on Wednesday reflected a modest first step toward lifting the complex web of U.S. sanctions that have kept the country isolated for decades.
Clinton said the United States would seek to name a new U.S. ambassador to Myanmar after an absence of two decades, to set up an office of the U.S. Agency for International Development there and to support a regular U.N. Development Program operation in the country.
She said the United States was committed to "beginning the process of a targeted easing of our ban on the export of U.S. financial services and investment as part of a broader effort to help accelerate economic modernization and political reform." She provided no details.
Clinton said the United States was also ready to allow private U.S. aid groups to pursue a broad range of non-profit activities on projects such as democracy building, health and education and to give select Myanmar officials and lawmakers permission to visit the United States, relaxing long-standing visa bans.
DRAMATIC POLITICAL REFORMS
President Thein Sein, a general in the former military junta, has surprised the world with the most dramatic political reforms since the military took power in a 1962 coup in the former British colony then known as Burma.
Walter Lohman, director of the Asian Studies Center at the Heritage Foundation, a conservative think tank, welcomed the cautious U.S. approach, saying some steps should wait until after a 2015 election in which 75 percent of parliamentary seats in Myanmar will be contested.
"We need to reserve some ammunition for the real goal - the 2015 general election. Let's not give it away too quickly," Lohman said.
"Relaxing the visa ban on select officials makes sense. Sending an ambassador makes sense. I'm OK with a USAID office opening. I reserve judgment on the financial sanctions until there is more detail," Lohman added.
Economic analysts say that it will take time for the United States to unravel the full scope of its sanctions on Myanmar, first imposed in 1988 and subsequently expanded by five laws and four presidential directives.
While some sanctions can be lifted by fiat, others are tied to specific progress on issues ranging from drug trafficking and money laundering to preventing the use of child soldiers - making them more difficult to remove.
Clinton, who visited Myanmar in December, said the government's continued efforts toward political reform were "precisely the kind of step" that the Obama administration hoped to encourage when it began its outreach to Myanmar last year.
"The United States is committed to taking steps alongside the Burmese government and people as they move down the road of reform and development," Clinton said.
A U.S. congressional aide who spoke on condition of anonymity said Clinton's announcement reflected a very careful balance of encouraging Myanmar's nascent democratic reforms while maintaining many sanctions for now.
"On one hand, (the administration is) acknowledging steps forward within Burma but on the other hand acknowledging that there are many on the Hill (Capitol Hill), and elsewhere, who are encouraging the administration to move with caution given apprehension about a different turn of events, whether that be some kind of military intervention or otherwise at some point," he said.
(Reporting By Andrew Quinn and Arshad Mohammed; Editing by Will Dunham)
