Reforming Myanmar looks to India for enlightenment
* Myanmar looking to balance relations between India and China
* India needs to seize investment opportunities
* India concerned being encircled by Chinese "string of pearls"
NEW DELHI, Oct 15 (Reuters) - Traditional dress for men in Myanmar combines an Indian-influenced sarong with a Chinese-style coat -- fitting, perhaps, for a nation trying to balance ties with two giant neighbours as it looks outwards and relaxes decades of tightly buttoned rule.
Wedged between India to its west and China to its east, Myanmar will need to work hard on that balancing act as its military-backed government heads down the path of political reform to end the nation's pariah status and revive its economy.
Throttled by Western sanctions, Myanmar has long relied on Beijing to keep it afloat with weapons, loans and infrastructure projects. But it is now courting India, too, to reduce its dependence on China, which many in the country see as a semi-colonial power.
Myanmar is hoping competition between the two Asian rivals will earn it a better deal for resources such as gas and access to the Indian Ocean from its shores, for which China has so far paid bottom-dollar.
"There is an awareness they have a lot in common with two great nations, China and India, and they must learn to cooperate with both to derive the maximum benefit for themselves," said Lalit Mansingh, who was India's foreign secretary when relations with Myanmar began to warm in the late 1990s.
Broadly speaking, that seems to be the plan.
Two weeks ago, Thein Sein, a retired general who in February became Myanmar's first nominally civilian president in nearly 50 years, shocked Beijing by shelving a $3.6 billion dam project that would have supplied almost no domestic electricity and had come to epitomise the army's habit of kowtowing to China.
This week he visited India, the world's largest democracy, for a state visit that began with a pilgrimage to Bodh Gaya, the spot where the Buddha is said to have found enlightenment after meditating under a tree for three days and three nights.
OPPORTUNITY FOR INDIA
"When Myanmar's government suspended the dam and went to India, it showed that it should not be underestimated," said Christopher Roberts, an Asia expert at Australia's National Security College. "It knows it has resources that many countries want and it is using this to full advantage."
Myanmar's new assertiveness towards Beijing and desire to return to the fold of nations give India a rare chance to steal a march on China in the regional jostle for maritime power and energy supplies.
But red tape-bound India's slow decision making and bureaucratic tangles mean it may fail to seize the moment.
The $110 million Sittwe port and transport hub it is building on Myanmar's west coast is unfinished. Meanwhile, China plans to build a much larger deep-water port just a few miles away.
"Our ability to execute projects on time needs improvements," said a well-informed official in the Indian government who declined to be named, noting China's better record on delivering promised projects.
"It is the challenge, we lose out. We have a different political system, they have deep pockets," said the official.
Also known as Burma, Myanmar's links with India stretch back for centuries, and both countries became independent from the British empire within a year of each other after World War Two. As Myanmar retreated into authoritarianism, however, it was rejected by its democratic neighbour and moved closer to China.
"When India withdrew it caused a vacuum in Myanmar: others stepped in, especially China," said Mansingh.
India realised in the 1990s that Chinese investment in Myanmar's military and infrastructure was giving Beijing a strategic advantage in the Southeast Asian nation, which straddles busy Bay of Bengal shipping lanes and has large energy reserves.
So India put its concerns about human rights abuses there to one side. Once an ardent supporter of the democracy icon and Nobel peace laureate Aung San Suu Kyi, who went to school and university in India, New Delhi quietly dropped its backing for her opposition party and began to court Myanmar's junta.
Hungry for energy supplies to fuel one of the world's fastest-growing major economies and wary of China's military and maritime expansion, India has for several years sold Myanmar military equipment and promised it roads and railways.
Until now, Myanmar's response has been lukewarm. While it has clamped down on separatist militants seeking refuge from India's restive northeast, it has so far refused to send any natural gas.
India has a 30 percent stake in two gas blocks in the offshore Shwe fields, but in 2007 Myanmar chose to sell the gas produced there to China via two huge pipelines.
STRING OF PEARLS
Myanmar is vital for China's strategy of finding short cuts to pull energy into its populous south. Both countries will continue to work together, but maybe on a more balanced footing.
India worries China's "string of pearls" projects to build ports in Myanmar, Bangladesh, Sri Lanka and Pakistan could lead to its naval encirclement across the Indian Ocean and up to the Arabian Sea. Reports of listening stations on Myanmar's western coast and islands add to these fears.
Sein arrived in India hours after releasing about 200 political prisoners on Wednesday, part of a strategy aimed at ending Myanmar's status as an outcast and the sanctions imposed on it by the United States and Europe.
The retired general met officials on Friday in New Delhi, which opposes sanctions while being a major ally of Myanmar's fiercest critic, Washington.
"I think they will find India very helpful in projecting their national interest to the rest of the world," said Mansingh.
For its part, India is looking for a stake in any opening-up of Myanmar's gas fields and vast tracts of farmland.
"Energy cooperation is quite extensive and is expected to increase," Harsh Vardhan Shringla, joint secretary at the foreign ministry, said in a briefing. "The Myanmar government has put out tenders for additional onshore blocks for which Indian companies are also interested."
India may quietly take some of the credit for drawing Myanmar in from the cold. It says its policy of engagement and democracy promotion behind closed doors is more effective than Western governments' public admonishments.
"The last thing you want to do is wag your finger at a country publicly," said the government official. "Try doing that with your children, let alone a fellow nation."