Burma at crossroads: culture thrives, but political system wavers. Years of isolation and socialism have taken a toll on people and economy

After more than 25 years of toying with socialism and languishing under military rule, Burma is at a turning point. Public discontent with the government is widespread and the economy has virtually collapsed. Burma's leader, Gen. Ne Win, has been forced to reconsider his socialist program and to find a new face for his tightly run one-party state.

``When you arrive in Rangoon, set your watch back 30 years.'' The popular saying is almost literally true. More than any other nation in Southeast Asia, Burma is a place time has forgotten. The government's policy of isolation from the outside world and its meager efforts at economic development have yielded few signs of progress. This fact is made all the more poignant by the beauty of the country and its people.

Cars from the 1950s and '60s cruise the streets, kept running on homemade spare parts. Buildings stand in advanced stages of disrepair, decrepit but often graceful reminders of the British colonial era (1886-1948).

Shortcomings of the state-run economy are obvious. Personal income has quadrupled since the military came to power in 1962, but consumer prices are 12 times what they were. Rangoon residents say wealth was once more or less evenly distributed, but now there is a large gap between the privileged rich and the masses of the poor.

The ``black market'' flourishes - from backdoor dealings for daily necessities to the smuggling of consumer goods. According to some estimates, the country's ``black market'' trade is equal to the total value of legal retail commerce.

The bright side to Burma's isolation is that traditional culture is prospering. Thanks to a modest flow of tourists and extensive smuggling abroad, the handicraft industry is booming. Many talented young people are drawn to the performing arts as dancers, musicians, and puppeteers, since traditional festivals are popular rural entertainment.

``Burmese culture is thriving,'' says a Mandalay resident. ``It's the only thing people have to hang on to in troubled times.''

Some outsiders have romanticized Burma's plight.

``We like Burma just the way it is,'' crooned a couple from Wisconsin writing in the guest book of Rangoon's Strand Hotel (built in 1904). ``We've been to paradise!,'' gushed a group of French tourists.

But most visitors see no paradise. With the economy in deep crisis, some Burmese say a political crisis can't be far behind.

In August this year, General Ne Win for the first time spoke of the failures of the ``Burmese way to socialism'' at an unprecedented meeting of party and government leaders. He called for changes ``to keep in harmony with the times.''

Adjustments to his 25-year-old policies are expected at a congress of the Burma Socialist Program Party next year. But observers question how constructive the changes will be, especially since there is a lack of economic expertise at the top.

Ne Win was stirred to action, say Rangoon observers, by fears that the food-supply system would break down completely, bringing widespread rice shortages and social unrest. In September, ``our dictator,'' as Burmese intellectuals often refer to him, lifted state controls on the retail trade and permitted private traders to deal in rice and other basic food commodities.

This was significant evidence Ne Win has been forced to reexamine his socialist policies, since he has long opposed private enterprise, say Burmese critics. But the food distribution system is in such disarray, and the rice harvest so poor this year, that a weak private sector appeared unlikely to offer much relief, given bureaucratic mismanagement and inadequate incentives for farmers. Cynics conclude this is just what the general intended so he could later impose a ``reformed'' socialist order.

What credit Ne Win may have received for easing up on the state-run economy was quickly undone by a surprise decision on Sept. 5 to demonetize large denomination currency notes, invalidating some 60 percent of the currency in circulation. This was the third such demonetization (the last being in 1985), but the first time no compensation was offered.

Since most Burmese keep savings at home, almost everyone lost sizable sums, often their life savings. One angry Burmese described it as ``sheer robbery.'' The government has still not explained the decision, which Ne Win reportedly made with little or no consultation with advisers.

Some observers say this was his simplistic way of dealing with inflation while delivering a blow to smugglers, black marketeers, including ethnic armies in the northeast which are stalemated in their war with the central government. But the decision has alienated nearly everyone. The day after the demonetization was announced, there were violent confrontations between security forces and university students, who suddenly found themselves without money to buy food. These were the first antigovernment demonstrations since 1974.

``Systematic repression over the past 25 years has silenced the people,'' laments a retired senior government official.

To relieve a foreign debt of $3.9 billion, Burma recently applied to the United Nations for official status as a lesser developed country. This will make the country eligible for low-cost loans and grants. But the move is a conspicuous sign of failure for the government and a source of humiliation.

``The net achievement of Ne Win's 25 years is having our country declared an LDC [lesser developed country],'' the retired official says. ``This is a very shameful thing.''