YANGON EU Foreign Policy chief Catherine Ashton was in Myanmar on Saturday to open a "new chapter" of relations following an easing of sanctions that could prompt a surge of investor interest in the long-isolated state.
Her visit is the most high-profile by the European Union since the military's brutal five-decade rule of Myanmar came to an end last year, ushering in a quasi-civilian government with a reform agenda that has stunned the world and convinced the bloc to suspend most of its punitive measures.
Ashton met newly elected lawmaker and Nobel laureate Aung San Suu Kyi but made no comment on the tense standoff centered on her National League for Democracy (NLD) party's much-criticized refusal to take its parliamentary seats, which has left Myanmar in a political quagmire with no clear way out.
The sanctions suspension, which Suu Kyi supports, was intended to allow aid and investment in the resource rich but impoverished country to reward the government for its political and economic concessions, while reserving the right to re-impose them if the reform process stalls.
Ashton acknowledged there was big interest from European investors but said firms were taking a cautious approach.
"We recognize this is a journey that's not finished. There's been a lot of interest from the business community, and rightly so," she told a news conference alongside Suu Kyi at the NLD's dilapidated headquarters, shouting over malfunctioning microphones during intermittent power outages typical in the underdeveloped country.
"They won't make their decisions today, they'll look at the investment potential and opportunities and that needs to be done properly. I hope we'll see all the elements come into place and make it an irreversible process that can move forward. Much needs to be done."
The trip comes at a time when the EU is vying with Western powers to capture influence and strengthen commercial ties with Southeast Asia, a region with a combined economy of more than $2 trillion dollars that plans to establish an EU-style economic community by 2015.
European firms now have the green light to compete with Asian companies for a share in Myanmar's vast untapped natural resources and take advantage of its strategic location, sandwiched between heavyweights China and India and a gateway to the fast growing economies of ASEAN.
While investment in the former British colony is still seen as risky, it is rich in oil, gas, teak and gemstones, with huge tourism potential and urgent needs for financial services, new roads, hotels and railways and a proper telecoms infrastructure.
Suu Kyi was also tight-lipped about the impasse between the NLD, the government and the fledgling parliament over a vow lawmakers must take to "safeguard" the constitution, which also contains amendment provisions.
The NLD plans to amend the charter to reduce the military's guaranteed political stake and wants the oath changed, but what started as a quibble over a word has mushroomed into what European diplomats say could become a protracted stalemate that no one wants, and no one quite knows how to resolve.
Suu Kyi refused to say what the NLD's next move would be and appeared to play down the urgency of the situation.
"We will solve it in the best way possible," she said. "We're not at the point yet, it's a bit premature to start this kind of discussion."
The standoff does not bode well for Western countries keen for stability in Myanmar as its inexperienced rulers try to navigate through huge challenges ahead and maintain the pace of reforms, of which parliament is seen as a crucial driver.
Ashton is expected to raise the issue during talks on Monday with Htay Oo, the secretary-general of the ruling, army-backed Union Solidarity and Development Party (USDP), which dominates parliament. He last week told Reuters the USDP would not support the NLD's demand.
She will open an EU office in Yangon on Saturday, the bloc's first diplomatic presence in the country, then spend the next two days in the remote capital Naypyitaw, meeting President Thein Sein and other moderates seen behind the reforms, including lower house speaker and power-broker Thura Shwe Mann and Railways Minister Aung Min, who has negotiated ceasefires with numerous ethnic rebel armies.
(Additional reporting by Justyna Pawlak in Brussels; Editing by Jonathan Thatcher)