Two leading congressmen are calling on the Obama administration to use its leverage in international financial institutions to press for greater fiscal transparency in Burma, formally known as Myanmar, and ensure progress in the human rights situation in the Southeast Asian country as it emerges from decades of isolation.

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The two leaders of the House Committee on Financial Services, Chairman Spencer Bachus (R-AL), and ranking Democrat Barney Frank (D-MA) wrote a letter Aug. 22, obtained by The Cable, to Treasury Secretary Timothy Geithner asking him to safeguard the fragile reform process in Burma and ensure that Burma's opening to the world is done according to international financial management standards and with respect to the welfare of the Burmese people. Today Burmese President Thein Sein reshuffled his cabinet, replacing key ministers with reform minded appointees.

The lawmakers specifically called out the Myanmar Oil and Gas Enterprise (MOGE), which saw sanctions relief from the U.S. government despite suspected corruption and ties the Burmese military. Obama lifted the ban on U.S. companies doing business with MOGE in July, over the objections of Nobel Peace Prize winner Aung San Suu Kyi, now a member of the circumscribed Burmese legislature.

"We are cautiously optimistic that Burma will continue to implement necessary reforms, but we believe vigilance on questions of government transparency and human rights remain critical," the lawmakers wrote. "We urge the administration to use its leadership at the IFIs [international financial institutions] to emphasize fiscal transparency, systems of accountability and respect for human rights and to insist that the institutions pay close attention to the urgent social needs of the Burmese people."

They want the IMF's Code of Good Practice on Fiscal Transparency enforced on all branches of the Burmese government, including the military and MOGE. The code would require the government and its state enterprises (including MOGE), in essence, to publish their revenues and expenditures and subject them to public and parliamentary oversight, as well as an independent auditing process.

"Such transparency is necessary is necessary not only to allow the IFIs to properly supervise the use of multilateral aid but also to help end corruption and the off budget funding of the Burmese military," the letter states.

Burma is a resource-rich county that could provide for its people but remains mired in corruption and mismanagement, Tom Malinowski, Washington director of Human Rights Watch, told The Cable.

He said that IFI lending for big infrastructure projects, absent fiscal transparency reforms, could reinforce those bad habits, making the promotion of fiscal transparency central to the IFIs' mission. The IFIs hold good leverage over the Burmese government because infrastructure development is one of the regime's key goals.

"The key question in Burma's reform process is whether elected civilians will wrest full control over the country from the military establishment, including control of revenues from Burma's lucrative oil and gas and mineral exports.  It's not just Aung San Suu Kyi who wants this - Burma's reformist president and its new parliament also have a huge stake in figuring out where the money is and asserting their authority to oversee how it's spent," Malinowski said. "It would help them if the IFI's prioritized fiscal transparency - providing technical assistance to help the Burmese get there, and holding up lending for big infrastructure projects until they do."

The Senate approved a bill on Thursday that includes a provision reauthorizing the U.S. ban on imports from Burma by a unanimous vote.

The bill reauthorizes the ban on U.S. imports from Burma for three years, with a caveat whereby the president or his delegee, the secretary of state, could decide to wave that prohibition for one year.

Undersecretary of State Robert Hormats, who was in favor of the legislation, said on Tuesday during a speech in Washington that he expected the bill to pass and that it would provide an incentive to the Burmese government to continue with its democratic reforms.

"What we have said all long is that it's action for action," Hormats said about the process of easing sanctions on Burma, which began when President Barack Obama lifted the ban on investing in the country.

Hormats added that he expects the congressional opposition to the recent lifting of sanctions on U.S. investment in Burma, particularly including in the energy sector, will not result in a repeal.

"I would find it very surprising if Aung San Suu Kyi and the other reformers thought this was a good idea and Congress got much support for repealing [the lifting of sanctions]," said Hormats.

Senate leaders such as John McCain (R-AZ) are concerned that the state-run Myanmar Oil and Gas Enterprise (MOGE), which controls all of Burma's oil and gas assets, is notoriously opaque and is known to funnel money to a select few people. In order to increase transparency and reduce corruption, Hormats noted that Burma has agreed to join the Extraction Industries Transparency Initiative, which monitors industry practices and revenue flow. Suu Kyi has frequently cautioned the United States against cooperating with MOGE.

If the Burmese government wants more sanctions lifted, it will have to resolve issues related to the treatment of cultural minorities and release more political prisoners, said Hormats.

"They've released 500," Hormats said. "But there are more."

The undersecretary, who returned from a trip to Burma just over a week ago, emphasized that he saw much cause for optimism about the country's democratic transition.

"The members of the junta who previously ran Burma in a very authoritarian way are now for the most part the vanguard of the reform effort," he explained. "This time, the old guard is the new guard."

Still, there are no guarantees. Escalating tensions and recent violence between Rohingya Muslims and Buddhists in Burma's Rakhine state has displaced about 80,000 people and killed 78.

"As the president and secretary have said, this is still fragile -- there's no guarantee it's going to continue, but ... we got quite a good feeling that they are committed to doing this," Hormats said about Burma's transition process.

Secretary of State Hillary Clinton is traveling to Senegal, South Sudan, Uganda, Kenya, Malawi, and South Africa through August 10. Wednesday, the Secretary met with Senegal President Macky Sall in Dakar. She is accompanied by Director of Policy Planning Jake Sullivan, Assistnat Secretary for African Affairs Johnnie Carson, and Counselor and Chief of Staff Cheryl Mills.

Elsewhere:

• Under Secretary for Economic Growth, Energy, and the Environment Robert Hormats is traveling to Botswana, Namibia, and South Africa through August 12, where he will meet with representatives from relevant government ministries, the business community, and local conservation leaders.

• Assistant Secretary of State for Population, Refugees, and Migration Anne Richard is traveling to Burkina Faso and Geneva through August 4. In Burkina Faso, Richard will visit Damba refugee camp with U.N. High Commissioner for Refugees Antonio Guterres and meet with First Lady Chantal Campaoré. In Geneva, Assistant Secretary Richards will meet with donors to increase support for relief operations in the Sahel.

• Special Representative for Global Partnerships Kris Balderston is in Guatemala through Wednesday to lead a Clean Cookstoves Delegation, which will meet with high-level representatives from government, private sector, and non-governmental organizations to discuss new opportunities for cooperation in the Global Alliance for Clean Cookstoves.

• Special Representative Farah Pandith is in Burma and Cambodia through August 3 to meet with civil society groups, government officials, youth, and participate in Ramadan activities.

• Special Represenative for Global Intergovernmental Affairs Reta Jo Lewis is in Koror, Palau, through August 4 to participate in the inaugural Micronesia Women's Summit.

• Assistant Secretary for East Asian and Pacific Affairs Kurt Campbell is traveling to the Pacific Islands through August 7.

• Assistant Secretary of State for Economic and Business Affairs Jose Fernandez is traveling to Hong Kong, Taiwan, and Indonesia through August 9.

• In Bujumbura, Burundi, Office of Global Criminal Justice Ambassador-at-Large Stephen Rapp will participate in official meeting on global criminal justice issues.

• Global AIDS Coordinator Ambassador Eric Goosby is in London for the Global Health Policy Forum.

Now that China has announced it intends to build a military garrison on disputed islands in the South China Sea, raising fears about the outbreak of conflict in the contested maritime region, several top U.S. senators are urging China and Southeast Asian countries to return to the negotiating table and solve their disputes peacefully.

Sens. John Kerry (D-MA), Richard Lugar (R-IN), John McCain (R-AZ), Jim Webb (D-VA), James Inhofe (R-OK), and Joe Lieberman (I-CT), introduced a resolution this week to urge China and ASEAN to complete work on a code of conduct for settling disputes in the South China Sea and other maritime domains before tensions rise any further.

The resolution "strongly urges that, pending adoption of a code of conduct, all parties, consistent with commitments under the declaration of conduct, ‘exercise self-restraint in the conduct of activities that would complicate or escalate disputes and stability, including, among others, refraining from action of inhabiting presently uninhabited islands, reefs, shoals and other features and to handle their differences in a constructive manner.'"

The Obama administration has been working quietly but in a determined fashion to press Southeast Asian countries to settle their internal disputes and come up with a unified negotiating position for how to complete a code of conduct for settling maritime disputes, as all of the countries of the region agreed to do in 2002.

"We have seen worrisome instances of economic coercion and the problematic use of military and government vessels in connection with disputes among fisherman. So we look to ASEAN and China to make meaningful progress toward finalizing a code of conduct for the South China Sea that is based on international law and agreements," Secretary of State Hillary Clinton said July 12 in Cambodia when attending the ASEAN Regional Forum. "As I told my colleagues, this will take leadership, and ASEAN is at its best when it meets its own goals and standards and is able to speak with one voice on issues facing the region."

The senators' resolution supports that process but also reaffirms the U.S. commitment to assist ASEAN countries in remaining strong and independent and pledges to deepen the U.S. partnership with ASEAN nations. The resolution also "supports enhanced operations by the United States armed forces in the Western Pacific, including in the South China Sea, including in partnership with the armed forces of others countries in the region, in support of freedom of navigation, the maintenance of peace and stability, respect for international law, including the peaceful resolution of issues of sovereignty, and unimpeded lawful commerce."

In a statement given to The Cable, Kerry said that ASEAN's failure to agree on a joint statement regarding the code of conduct at the Cambodia summit added to the rising tensions between China and its neighbors over the issues and convinced senators it was time to weigh in.

"These disputes are real and they're getting more serious. I'd think the least the Senate can do is to go on the record clearly and unequivocally in favor of ASEAN efforts to develop a code of conduct in the South China Sea," Kerry said.

"There should be no doubt that the United States is committed to an enduring presence and deepening partnerships in the region. We have a clear interest in safe and lawful behavior by everyone operating in Asia's maritime commons. We have a huge interest also in the peaceful resolution of all the issues in the South China Sea, consistent with international law and through a multilateral diplomatic process," Kerry continued. "We've got big worries about freedom of navigation and free commerce. Those are principles all states in the region should be able to support, and this resolution makes clear that the Senate's watching and we're focused appropriately."

On Tuesday, Secretary of State Hillary Clinton met with Vietnamese Prime Minister Nguyen Tan Dung and Vietnamese Communist Party Secretary General Nguyen Phu Trong in Hanoi, and discussed issues including Agent Orange, soldiers missing in action, and deepening cultural and economic bilateral ties with Foreign Minister Pham Binh Minh. "The United States greatly appreciates Vietnam's contributions to a collaborative, diplomatic resolution of disputes and a reduction of tensions in the South China Sea," said the secretary, who is accompanied by Under Secretary for Economic Growth, Energy, and the Environment Robert Hormats, Chief of Protocol Ambassador Capricia Penavic Marshall, Assistant Secretary for East Asian and Pacific Affairs Kurt Campbell, and Director of Policy Planning Jake Sullivan. Tomorrow Clinton will arrive in Vientiane, Laos, for meetings with Prime Minister Thonsing Thammavong and other senior government officials, making her the first secretary of state to visit the country in 57 years.

Elsewhere:

• Deputy Secretary of State Bill Burns is traveling to Yemen, Israel, the West Bank, and Lebanon through July 13. In Sanaa, Yemen, the deputy secretary is meeting with political leaders and civil society representatives to discuss bilateral security interests and Yemen's ongoing humanitarian crisis. From Sanaa, Burns will travel to Jerusalem and Ramallah to meet with senior Israeli officials as well as Palestinian President Mahmoud Abbas and Prime Minister Salaam Fayyad.

• In Ulaanbaatar, Mongolia, Ambassador-At-Large for Global Women's Issues Melanne Verveer will participate in the Women's Leadership Forum and the Community of Democracies' Governing Council Meeting. She will also meet with female leaders from government and civil society. She then travels to Siem Reap, Cambodia, with Special Representative for Global Partnerships Kris Balderston for the Gender Equality and Women's Empowerment Policy Dialogue for the Lower Mekong Initiative.

• In Turkey, Under Secretary of State for Civilian Security, Democracy, and Human Rights Maria Otero will meet with government officials, human rights activists, youth, and non-governmental and international organizations to discuss human rights issues.

• Assistant Secretary of State for European and Eurasian Affairs Phil Gordon is traveling to Croatia, Serbia, Kosovo, and Cyprus to meet with senior government officials and EU political directors.

• In London, USAID Administrator Raj Shah will participate in the London Summit on Family Planning.

• Assistant Secretary for Democracy, human Rights, and Labor Michael Posner is traveling to Cambodia, Vietnam, and Egypt through July 16.

• Special Envoy to Monitor and Combat Anti-Semitism Hannah Rosenthal is traveling in Germany and Poland through July 15.

U.S. senators grilled Derek Mitchell, nominated by President Barack Obama on May 17 as the first U.S. ambassador to Burma in two decades, in a confirmation hearing Wednesday, but they used the session primarily to urge the administration to allow American investment in the country's oil and gas sectors.

Mitchell has served as special coordinator for Burma policy since last year, but democratic reforms and the election of opposition leader and Nobel Peace Prize winner Aung San Suu Kyi to parliament have prompted the Obama administration to step up its diplomatic engagement with the Burmese government.

Although the State Department has proposed a "sector by sector" plan to renewing private sector relations, the White House has not decided if it will lift sanctions on Burma's notoriously opaque and abusive energy industry.

"There's nothing I can say here definitively on this, because it is an ongoing internal, interagency discussion," Mitchell told the Senate Foreign Relations Committee. "But ... we are not looking to exclude any sectors from this."

Senator James Inhofe (R-OK), addressing "rumors" that the administration plans to "exclude oil firms from new rules allowing U.S. investment in the country," argued that such a policy would be detrimental to U.S. companies as foreign firms continue to sign oil and gas exploration agreements with Burma.

"This or any other ‘carve-out strategy' would be a strategic mistake," he said. "I believe that U.S. companies including the oil and gas companies can play a positive role in the effort by demonstrating high standards or responsibility, responsible business conduct, and transparency -- including respect for human rights in Burma."

Suu Kyi, on the other hand, is not as optimistic, and cautioned foreign firms against partnering with the state-owned Myanmar Oil and Gas Enterprise earlier this month during a speech in Geneva.

In January, Burma's Energy Ministry estimated its natural gas reserves at 22.5 trillion cubic feet, and the international bidding process for 25 offshore oil and gas blocks is scheduled to take place within two to three months.

Secretary of State Hillary Clinton and Director of Policy Planning Jake Sullivan will depart for Rio de Janiero, Brazil, this afternoon to attend the Rio+20 sustainability summit. Assistant Secretary for Oceans and International Environmental and Scientific Affairs Kerri-Ann Jones, also in Rio de Janeiro for the conference, is slated to participate in a USAID panel about women and natural resources. Special Representative for Global Intergovernmental Affairs Reta Jo Lewis is scheduled to meet with the deputy mayor of Jerusalem Naomi Tsur and attend the Rio+20 plenary session.

Elsewhere:

• Deputy Secretary Tom Nides is in Istanbul, Turkey, through June 22, where he will focus on bilateral economic cooperation. His agenda includes meetings with the American Business Forum in Turkey and the Turkish Industry and Business Association.

• In Brunei, Assistant Secretary of State for Political-Military Affairs Andrew J. Shapiro is discussing bilateral relations, defense trade issues, and other political-military topics with senior military and civilian officials.

• Assistant Secretary for African Affairs Johnnie Carson will participate in the U.S.-Africa Business Conference in Cincinnati, Ohio.

Under Secretary for Political Affairs Wendy Sherman and Assistant Secretary for Public Affairs Mike Hammer are in Moscow for the final day of P5+1 talks with Iran. The talks "broke no new ground" as of Monday evening, the New York Times reported, and sanctions imposed on Iranian oil by the United States and the European Union are set to begin in July. One Iranian diplomat described Monday's atmosphere as "not positive at all," and many consider the talks deadlocked, but Tehran is reportedly willing to discuss the production of high-grade uranium, which the six powers want to negotiate down to a lower level of purity.

Elsewhere

• Under Secretary of Economic Growth, Energy, and the Environment Robert Hormats and Chief of Protocol Ambassador Capricia Penavic Marshall are in Los Cabos, Mexico, with President Barack Obama for the G-20 meetings, where he will participate in plenary sessions about financial issues, development, and trade. Hormats will participate in President Obama's bilateral meeting with Chinese President Hu Jintao this afternoon. Secretary of State Hillary Clinton and Director of Policy Planning Jake Sullivan return from Los Cabos later today.

• In Rio de Janeiro, Brazil, Assistant Secretary for Oceans and International Environmental and Scientific Affairs Kerri-Ann Jones, Special Representative for Global Partnerships Kris Balderston, and Special Representative for Global Intergovernmental Affairs Reta Jo Lewis will attend Rio+20. Today, Jones is slated to participate in a panel discussion about Global Health Observations, and Balderston will launch the Sustainable Supply Chain Partnership. Lewis is scheduled to attend an event about mayors taking action on climate change.

• Assistant Secretary of State for Political-Military Affairs Andrew J. Shapiro will travel to Vietnam, Brunei, and Thailand through June 22. His agenda includes leading the fifth iteration of the U.S.-Vietnam Political, Security, and Defense Dialogue; meeting with civilian and military officials in Brunei; and holding consultations about counterterrorism, security cooperation, and joint military exercises in Bangkok.

• In Brussels, Special Representative to Muslim Communities Farah Pandith will meet with civil society, NATO, and EU representatives.

Singapore - Security in the South China Sea, tensions in North Korea, and the changing nature of Asian security will top the agenda this weekend at the Shangri-la Security Dialogue, the largest annual gathering of Asian and Pacific defense officials and experts in the world.

Your humble Cable guy is already on the ground as the top delegations from 28 countries, including 16 defense ministers, convene on the island city-state this weekend for the 12th annual iteration of the conference, run by the International Institute for Strategic Studies (IISS) out of London. Last year's event was packed with news, as when then Defense Secretary Robert Gates unveiled a new U.S. plan to increase the U.S. military commitment to Southeast Asia.

Gates met with Chinese Defense Minister Liang Guanglie at last year's event and Liang fought off verbal attacks from several regional powers on China's aggressive activities in the maritime domain. He even answered several questions posed by The Cable. Although the United States and China tried to portray an image of improving U.S.-China military ties, last year's event highlighted the deep disparity between the two country's visions for the region.

This year, the United States is sending a large, high-level delegation led by Defense Secretary Leon Panetta and including Joint Chiefs Chairman Gen. Martin Dempsey, Deputy Secretary of State Bill Burns, Pacific Command chief Adm. Samuel Locklear, and Assistant Secretary of Defense for Asian and Pacific Affairs Mark Lippert.

There will also be a hefty U.S. congressional delegation here in Singapore, including Senate Armed Services ranking Republican John McCain (R-AZ), Sen. Joe Lieberman (I-CT), and Rep. Eni Faleomavaega (D-Samoa), the ranking Democrat on the House Foreign Affairs Committee.

Panetta, who is also traveling to Vietnam and India on the trip, will focus his speech in Singapore on the U.S. military shift toward Asia. He previewed those remarks in a May 29 speech at the U.S. Naval Academy in Maryland.

"America is a maritime nation, and we are returning to our maritime roots," Panetta said. "America's future prosperity and security are tied to our ability to advance peace and security along the arc extending from the Western Pacific and East Asia into the Indian Ocean and South Asia. That reality is inescapable for our country and for our military, which has already begun broadening and deepening our engagement throughout the Asia-Pacific." 

Panetta will travel to China for the first time as Defense Secretary later this year. For Washington, the conference is a chance to drive home its commitment to Asian security, said John Chipman, director-general and chief executive of IISS. For China, the conference is an opportunity to defend its actions and intentions toward its neighbors.

"This year the U.S. will reaffirm its rebalancing to Asia, what they earlier called the ‘pivot' to Asia that they are now calling ‘the rebalancing,'" Chipman said. "China has had a challenging year with the region, which is simultaneously attracted and intimidated by Chinese power."

In a change from last year, China won't be sending an official at the defense-minister level. Sources familiar with the discussions said that due to the sensitive nature of China's impending leadership transition, the Chinese government is being unusually cautious about its public interactions.

That will shift some of the attention to the other regional powers, such as Indonesia, Vietnam, Thailand, the Philippines, Australia, and Malaysia. For example, Indonesian President Susilo Bambang Yudhoyono will give the opening keynote address. Thai defense minister Air Chief Marshal Sukumpol Suwanatat will attend for the first time, as will the defense minister of Myanmar, Lt. Gen. Hla Min. Indian defense minister A K Antony will deliver another one of the keynote speeches.

"We know what the U.S. and China think. It will be interesting to see how the medium powers seek to frame the discussion," Chipman said. "Indonesia sees itself now not just as a leading country in Southeast Asia but as a G-20 power. It wants to play a larger role in defining the security agenda in the region."

As with many of these conferences, much of the real action will take place on the sidelines -- in a series of bilateral, small group, and off the record meetings that will occur alongside the official festivities. This year there will be an off-the-record session on tensions in the South China Sea in which Chinese and Filipino officials will participate.

Other special sessions will cover the role of armed forces in international emergencies, the evolution of submarine warfare, cyberwarfare, and the emergence of new military systems such as unmanned vehicles.

The United States, Japan, and South Korea will use the opportunity of the conference to hold a trilateral side meeting, where the North Korea nuclear issue is expected to be discussed. Indonesia, Australia, and India will hold another small multilateral meeting, possibly including Japan.

There will be more than 200 bilateral meetings in Singapore as well, in addition to the dozen or so small multilateral gatherings. That's the whole idea of bringing these officials to Singapore for three days, Chipman said.

"Almost all the defense ministers refer to it as ‘the indispensable forum' for defense discussions," he said. "It really allows for a larger variety of discussions that no other forum in Asia -- official or unofficial -- permits."

We'll be blogging and tweeting (@joshrogin) the entire time. Watch this space.

Acting Under Secretary of Defense for Policy James Miller announced to his staff last Friday that Vikram Singh is the new deputy assistant secretary of defense for South and Southeast Asia (SSEA).

"Vikram will be responsible for overseeing the development of policy for South and Southeast Asia, to include key relationships with Allies such as Australia, Thailand, Philippines and strategic partners such as India and Singapore," Miller wrote in the note, obtained by The Cable. "Vikram will play a critical role in leading defense engagement with multilateral institutions in the Asia-Pacific region."

Singh is already hitting the ground running. This week he is leading the U.S. delegation to the ASEAN defense senior officials meeting (ADSOM+) in Cambodia.

Since October 2011, Singh served in the Pentagon policy shop as a senior advisor for Asian and Pacific security affairs, where he led an internal review on the wars in Afghanistan and Pakistan. Prior to that, he had been detailed from the Pentagon to the State Department as a deputy special representative on Afghanistan and Pakistan, serving under ambassadors Richard Holbrooke and Marc Grossman.  Brig. Gen. Rich Simcock, who had been the acting DASD for SSEA since Bob Scher moved over to be DASD for Plans, will return to his role as principal director for SSEA, now under Singh.

Before joining the Obama administration in 2009, Singh was a fellow at the Center for a New American Security, the think tank founded by former Under Secretary of Defense for Policy Michèle Flournoy and Assistant Secretary of State Kurt Campbell. His other jobs have included a stint managing a Ford Foundation project on South Asian minority rights at International Center for Ethnic Studies in Colombo and as a reporter in Sri Lanka and South Africa for Voice of America.

The Singh appointment fills one of the many vacancies atop the Pentagon's Asia policy shop. The office is still led by Peter Lavoy, the principal deputy assistant secretary of defense (PDAS) for Asian and Pacific affairs, while the confirmation of Mark Lippert to be assistant secretary remains held up by Sen. John Cornyn (R-TX) over the issue of F-16 sales to Taiwan. We're told by Hill sources that the White House has finally reached out to Cornyn to negotiate over the hold, but that the administration's initial offer of sending a mid-level Air Force official to Taiwan for a short visit fell far short of what Cornyn wanted.

There's also still no DASD for East Asia, following Michael Schiffer's move to the Senate Foreign Relations Committee. Principal Director Dave Helvey is the acting in that capacity.

"I am very pleased to have Vikram on the policy team as the deputy assistant secretary for South and Southeast Asia.  He brings a wealth of Asia policy experience -- both in and out of government -- to this position," Miller said in a statement to The Cable.

Over the winter break, several senators from both parties went to Myanmar. They all came back cautiously optimistic about reforms there, and ready to consider lifting some of the sanctions on the country.

Sens. John McCain (R-AZ), Joe Lieberman (I-CT), Kelly Ayotte (R-NH), and Sheldon Whitehouse (D-RI) visited Myanmar earlier this month as part of their whirlwind tour around Southeast Asia, which included stops in the Philippines, Thailand, and the Hanoi Hilton in Vietnam, the POW camp where McCain was held during the Vietnam War. Senate Minority Leader Mitch McConnell (R-KY) and Rep. Joe Crowley (D-NY) also visited Myanmar over the winter break on separate trips.

The Cable caught up with McCain and Ayotte in the hallways of the Capitol building this week to get their take on developments in Myanmar. Both said they were genuinely impressed by what they saw as the progress toward reform made by President Thein Sein and his administration.

"There's been significant progress, particularly in the release of political prisoners. There are still some more political prisoners but that was a huge step forward," said McCain, comparing his latest visit favorably to his trip to the country last May.

McCain also noted the increasingly positive and constructive relationship between Myanmar's president and Nobel Peace Prize winner Aung San Suu Kyi, who will take part of the parliamentary elections in April.

"I'm guardedly optimistic that we are seeing a significant change there," McCain said.

In his statement to the press upon returning to Washington, McCain said the U.S. Congress was committed to begin easing and lifting U.S. sanctions as conditions warrant.

"If you had asked me during my last visit here whether I could envision the Congress lifting all sanctions against this country, I would have said that such a scenario seemed faint and distant. Today, however, it appears increasingly possible," he said. "It is our hope that, with further concrete steps toward democratic and economic reform by the government and people of this great country, our nations will be able to open an entirely new and promising chapter in our relationship."

This was Ayotte's first trip to Myanmar, part of her increasing involvement in foreign policy matters as one of the newest members of the Senate Armed Services Committee.

"I'm increasingly encouraged by the recent progress that they've made," Ayotte told The Cable. The delegation met with Thein Sein and Aung San Suu Kyi.

"What we talked about was a roadmap looking forward, if they continue to make progress, of both the Congress and the administration making a roadmap of when we would lift sanctions," she said.

The elections in April need to free and fair, preferably with international monitors, and there needs to be more legislation that institutionalizes the changes in Myanmar, particularly laws that ensure the freedom of assembly, Ayotte said. Also, she said, the rest of the political prisoners need to be released.

Ayotte said Congress must consult with the State Department to coordinate whether lifting congressionally mandated sanctions or executive branch-driven sanctions should be considered first. She also said the new capital city of Naypyidaw was huge and empty.

"When you go up to the new capital, it's surreal, because you've got two ten-lane highways both ways and we were the only car on the highway," she said.

She also said that parliamentary committees in Myanmar have a lot nicer digs than the congressional committees in Washington.

"Every committee would have its own huge building just for the committee. So they've built capacity in the capital that doesn't quite match where they are right now, so that was interesting," she said.

"We're a counterbalance to China," she added. "That's what we heard from the leaders in these countries."

McConnell also praised the progress in Burma in a floor speech this week

""It appears that Burma has made more progress toward democracy in the past six months than it has in decades," he said. "As one who has taken a strong interest in Burma for over 20 years, and as the lead author in this chamber of an annual sanctions bill aimed at encouraging the Burmese government to reform, this is welcome news."

The United States is planning to send an ambassador back to Burma as President Barack Obama's administration carefully ramps up its engagement with the Burmese junta in the hope of encouraging greater reform there.

"In Indonesia, I spoke about the flickers of progress that were emerging in Burma. Today, that light burns a bit brighter, as prisoners are reunited with their families and people can see a democratic path forward," Obama said in a Friday statement, following the junta's announcement that it would release 651 of the estimated 2,000 political prisoners in the country. "Much more remains to be done to meet the aspirations of the Burmese people, but the United States is committed to continuing our engagement with the government in Nay Pyi Taw."

"I have directed Secretary [of State Hillary] Clinton and my administration to take additional steps to build confidence with the government and people of Burma so that we seize this historic and hopeful opportunity," Obama said.

Clinton became the first secretary of State in over 50 years to visit Burma when she traveled there in December. In her own statement, she said she has seen progress in the country on several fronts, and emphasized that Nobel Peace Prize winner Aung San Suu Kyi also welcomed the junta's recent steps as a sign of the government's commitment to reform. Clinton also noted the ceasefire announced Thursday between the Junta and the Karen National Union, an opposition ethnic group that has been fighting the regime for decades.

Clinton noted several indications of progress in Burma, including the government's easing of restrictions on media and civil society, engaging Suu Kyi in a substantive dialogue, amending electoral laws to pave the way for her party to participate in the political process, setting a date for the by-elections this year, passing new legislation to protect the right of assembly and the rights of workers, beginning to provide humanitarian access for the United Nations and NGOs to conflict areas, and establishing its own national Human Rights Commission.

"As I said last December, the United States will meet action with action. Based on the steps taken so far, we will now begin," she said. "An American ambassador will help strengthen our efforts to support the historic and promising steps that are now unfolding."

These steps and optimistic rhetoric is being accompanied by a whole slew of high-level U.S. delegations to Burma. The State Department's Special Representative for Burma Derek Mitchell visited this week, as did the State Department's Ambassador at Large to Monitor and Combat Trafficking in Persons Luis CdeBaca. A senior State Department official said that Assistant Secretary for International Security and Nonproliferation Tom Countryman will travel to Burma next week.

There are also a series of congressional visits to Burma in the pipeline. Rep. Joe Crowley (D-NY) was in Burma this week. Senate Minority Leader Mitch McConnell (R-KY) will be there next week. And more lawmakers are planning visits soon after, we're told. Sens. Jim Webb (D-VA) and John McCain (R-AZ) were the only U.S. lawmakers to visit Burma in the past three years.

The United States had an ambassador in Burma from 1947 until 1990, when career Foreign Service officer Burton Levin left the post but was not replaced. Since 1990, the U.S. mission in Burma has been led by a chargé d'affaires, currently Michael Thurston.

A senior State Department official, speaking with reporters Friday, warned that it might take a while to actually place an ambassador in Burma. The nominee has to be selected, vetted, and then confirmed. Confirmations this year could be difficult due to the GOP fight with Obama over his recess appointment of Consumer Financial Protection Bureau Director Richard Cordray, which Republicans believe is legally suspect.

Two names that were floated in the past for Mitchell's job -- and now therefore may be up for the ambassador's position -- were former NSC Senior Director for Asia Mike Green, now with CSIS and Georgetown, and Human Rights Watch Washington Executive Director Tom Malinowski, a leading writer on Burma. Green is close to Assistant Secretary of State for East Asian and Pacific affair Kurt Campbell, the architect of the administration's Burma policy, as is Mitchell. Malinowski is set to travel to Burma next week.

In October, The Cable reported on the details of the State Department's plan for engaging Burma through "step for step" actions that could lead to a relaxing of international and U.S. sanctions. The conventional wisdom is that the administration would first focus on relaxing those sanctions that don't require going through Congress, such as executive orders against Burmese individuals and restrictions on lending to Burma through international financial institutions.

The State Department official emphasized that Congress would be consulted every step of the way and he singled out Webb for special recognition.

"He has pioneered many of these actions. He was one of the first senators on the ground, pushing for the release of prisoners, asking the United States to engage actively. And the secretary wanted me to underscore his service ... basically as a diplomat in the Senate," the official said.

Campbell clashed with Webb early in the administration because Webb was out ahead of the administration's Burma policy, pushing for more robust engagement. Webb also gave Campbell grief during Campbell's confirmation process, but the two have made up now and, more significantly, their approaches to Burma are now in alignment.

The Burmese government has also signed a ceasefire with ethnic Karen rebels, and is reportedly pursuing deals with other rebel groups. The Cable asked the official if there are signs that the junta has actually halted its violence against ethnic minorities, considering that it has broken ceasefires in the past and reports on the ground point to continued and widespread violations of human rights.

"It's difficult to fully ascertain whether or not there's been a diminution of violence in ethnic areas ... but there still are unacceptable levels of violence in ethnic areas and that continues," the official said.

CNN wanted to know when the U.S. government will stop calling the country "Burma" and start using the junta's preferred name, "Myanmar." The official said the United States would discuss that with stakeholders both inside and outside Burma.

"There are many factors that go into that," the official said. "We adhere to the reference of the country as Burma. The secretary and Aung San Suu Kyi discussed this when they were together and this is an issue that will be addressed in due course."

The Obama administration is cautiously optimistic about the prospect of reengagement with Burma, and the State Department is busily preparing a host of new rewards for the ruling junta if and when their promises of reform ever become a reality.

"We're going to meet their action with action," Derek Mitchell, the new special representative and policy coordinator for Burma, told The New York Times. "If they take steps, we will take steps to demonstrate that we are supportive of the path to reform."

But is Burma actually on the path to reform? The main pieces of evidence that change is afoot are that the new government, led by President Thein Sein, paused construction of a huge dam being built with China, which would have displaced thousands and wrecked the local environment, released 220 prisoners, and promised to release thousands more. But those changes alone aren't going to convince anyone in the administration -- or Congress, for that matter -- that the government is really committed to wholesale reform.

While the Obama administration sees some signs of change in Burma, it has no idea why they are occurring and has communicated that the United States will only ease sanctions after Burmese reforms. Administration officials are also trying their best to be clear eyed about the possibility that the junta is only trying to appease the international community, and has no intention of instituting real, actual change.

The Cable sat down with a senior State Department official to flesh out the administration's new approach to Burma, and gauge whether the Obama team really thinks that the Burmese junta is changing its tune.The official said that State has  actually taken several steps in planning exactly what the United States is prepared to do if and when the junta takes steps to increase democracy and respect for human rights.

"We're far along," said the State Department official. "We're thinking about it very actively and we have some ideas of things we might do if we see the concrete steps."

The administration's strategy is to focus on steps the administration can take without needing to go through Congress, which is always skeptical of the Junta and never eager to loosen sanctions. For example, a ban on Burmese imports was implemented through a legislative maneuver, and would therefore need congressional action to remove. A ban on investment in Burma, however, was made by executive order, so the administration could remove that on its own.

"We would be consulting with Congress on the ideas that we have," the official said. "You can't have a perfect roadmap because there are many different scenarios to their actions and we'll calibrate it accordingly. So that's the art rather than the science to all of this."

Banking sanctions on Burma were authorized through Congress, but the sanctions placed on individual Burmese officials are an executive prerogative, so the administration could remove holds on specific Burmese officials who make positive steps.  

The administration is still grappling with what it can do about removing restrictions on lending to Burma by international financial institutions, a key aspiration of the Burmese government. The New York Times reported that the administration is "considering waiving some restrictions on trade and financial assistance and lifting prohibitions on assistance by global financial institutions, like the World Bank and the International Monetary Fund."

We're told that the administration isn't quite there yet. Rather, officials are conducting an assessment of the conditions on the ground as to what would be needed as a precursor to considering waiving restrictions. For close observers of the Burma issue, that's a small but important distinction.

The administration is also being careful not to get ahead of reformers on the ground, specifically Nobel Peace Prize winner Aung San Suu Kyi.

The official noted that the administration has already provided some carrots to the Burmese. It invited Burma to be an observer in the Lower Mekong Initiative, which is the U.S. effort to deepen ties with certain Southeast Asian countries. It eased travel restrictions on Burmese officials so that Foreign Minister Wunna Maung Lwin could come to Washington last month and visit the State Department.

There is a short and clear list of things the Obama administration has told junta leaders would constitute action deserving of reciprocal action on the part of the United States. They are to release political prisoners, amend the political party law to allow Aung San Suu Kyi's NLD party to run in the next elections, and stop violence against ethnic minorities in Burma's rural areas.

The official said that, despite a feeling of political change in the urban areas of Burma, government violence against civilians near Burma's borders is actually getting worse. And there is still the unresolved issue of Burma's relationship with North Korea, which may include missile transfers and nuclear weapons cooperation.

"The ceasefires have been violated and there is continued military aggression and credible reports of abuses, including against women and children, that come out, which is typical of the past in Burma," the official said.

And what if the Burmese don't actually reform or even backslide on their progress? Is the administration willing to use the sticks -- including additional sanctions?

"We would look at everything.... It's fair to say we would be looking at that if things reverse," the official said.

Special Representative Mitchell's office, created in this year, is made up of just him and one assistant. He sits inside the offices of the East Asian and Pacific Bureau at State, but he reports directly up to Secretary of State Hillary Clinton and has responsibility for coordinating the entire interagency policy on Burma.

Burma experts believe the new office is useful, and see Mitchell as the right man for the job. But Burma watchers are also wary that the cautious optimism of the administration doesn't turn into naiveté.

"There's a lot of hype right now about everything is changing in Burma," said Tom Malinowski, Washington director of Human Rights Watch. "There's always a bureaucratic impulse to believe that positive change is happening in situations where a lot of U.S. diplomatic effort has been expended."

"That's the danger that there's so much positive rhetoric out there that the Burmese will think, aha, we don't actually have to do these things, all we have to do is talk about them," Malinowski said.

The State Department official said the administration was well aware of that risk, and was making sure the Burmese knew that they would have to implement real reforms to renew their relationship with the United States.

"I think [Burmese leaders] recognize that folks are waiting and see what's going to happen. People are restraining themselves from assuming that individual moves are somehow representative of something fundamentally different," the official said.

The other main administration officials involved in U.S. Burma policy are Adam Szubin, director of Treasury's Office of Foreign Assets Control, Senior Director Dan Russel and Director Colin Willet in the NSC's Asia team, NSC's Senior Director Samantha Power on human rights, East Asia Pacific Assistant Secretary Kurt Campbell and Deputy Assistant Secretary Joe Yun, and Southeast Asia Office Director Patrick Murphy at State.

Thirteen U.S. senators, all women, are calling on Secretary of State Hillary Clinton to take concrete action to address the Burmese junta's use of rape as a weapon of war.

"Given the Burmese regime's unabated use of rape as a weapon of war, we urge you to call on the regime to end this practice and pursue our shared goal of establishing an international Commission of Inquiry into war crimes and crimes against humanity," the senators wrote in an Aug. 10 letter, obtained by The Cable.

The signers on the letter were Sens. Dianne Feinstein (D-CA), Kay Bailey Hutchison (R-TX), Susan Collins (R-ME), Barbara Boxer (D-CA), Kay Hagan (D-NC), Amy Klobuchar (D-MN), Mary Landrieu (D-LA), Barbara Mikulski (D-MD), Lisa Murkowski (R-AK), Patty Murray (D-WA), Jeanne Shaheen (D-NH), and Kelly Ayotte (R-NH).

The senators cited several reports that the Burmese army has been using gang rape in its conflicts with ethnic minorities along its borders recently. For example, the Kachin Women's Association of Thailand  reported that dozens of women have been gang raped since the truce between Burma and the Kachin Independence Army broke down in June, and that Burmese soldiers claim they have "orders to rape women."

The Shan Women's Action Network (SWAN) has also been documenting all known cases of rape during the Burmese government's new offensive against the Shan State Army following the collapse of a 22-year ceasefire.

"Burma Army troops are being given free rein to rape children, the pregnant and the elderly," said SWAN coordinator Hseng Moon in a press release. "We strongly condemn these war crimes."

Since 2003, groups such as Refugees International, Amnesty International, and Human Rights Watch have all detailed atrocities committed by the Burmese army.

In late May, the UN's special rapporteur on human rights in Burma, Tomas Quintana, highlighted the Burmese army's actions, saying, "Systematic militarisation contributes to human rights abuses. These abuses include land confiscation, forced labour, internal displacement, extrajudicial killings and sexual violence."

 The senators also referred in their letter to the June testimony of Nobel Peace Prize winner Aung San Suu Kyi, who called for the U.N. human rights rapporteur to visit Burma and for the establishment of a commission of inquiry into the human rights situation in Burma.

"We must not allow this regime to continue to commit such dire crimes while the people of Burma continue to suffer," the senators wrote.

Add this issue to the list of challenges that new U.S. Special Envoy to Burma Derek Mitchell now faces. Mitchell was confirmed by the Senate last week and is now in charge of coordinating the State Department's new Burma policy, which is meant to mix pressures with engagement of the Burmese regime.

"Overall, the average Burmese citizen lacks fundamental freedoms and civil rights," Mitchell said at his June 29 confirmation hearing. "I am encouraged that the new President of Burma speaks of reform and change, but the pathway to real national reconciliation, unity among its diverse peoples, and sustainable development requires concrete action to protect human rights and to promote representative and responsive governance."