Suu Kyi's party wins Myanmar by-election

YANGON (Reuters) - Aung San Suu Kyi's party won Myanmar's by-elections in a landslide, the country's Election Commission said on Monday, a victory she hoped would mark the start of a new era after a historic vote that could prompt the West to ease sanctions.

Suu Kyi's National League for Democracy (NLD) secured 40 of the 45 available legislative seats in Sunday's poll, the Union Election Commission (UEC) said in an announcement read on state-run MRTV - four fewer than the party had earlier claimed.

The charismatic Suu Kyi, a Nobel Peace Prize laureate who led the struggle against military rule in the former Burma for two decades, will take a seat in the lower house of parliament.

The by-elections followed a year of astonishing change in a country that was under the grip of military rule for decades: the government has freed hundreds of political prisoners, held talks with ethnic minority rebels, relaxed media censorship, allowed trade unions and showed signs of pulling back from the economic and political orbit of giant neighbor China.

"It is not so much our triumph as a triumph of the people, who have decided that they must be involved in the political process of this country," Suu Kyi told cheering supporters at the NLD's headquarters in Yangon.

"We hope that this will be the beginning of a new era, when there will be more emphasis on the role of the people in the everyday politics of our country. We hope that all other parties that took part in the elections will be in a position to cooperate with us to create a genuinely democratic atmosphere."

Despite the resounding win, the NLD will be a minority in Myanmar's national legislature. Its 35 lower house and 3 senate seats represent under 6 percent of the 664 seats in both chambers, although Suu Kyi is expected to play a prominent role.

Its two other seats were in regional assemblies. The UEC did not announce the winners of the remaining five seats.

Sunday's polls were the NLD's first since 1990, when it trounced the military's proxy party in an election for a constitution-drafting assembly. The junta ignored the result.

On Monday, there was no reaction to the NLD's success from the Union Solidarity and Development Party (USDP), which was formed by the military junta that ceded power a year ago and will remain the biggest party in parliament.

"Nothing to comment on," said one party official. Other officials had switched off their phones.

The NLD even won four seats in the capital, Naypyitaw, a new city built by the former junta where most of the residents are government employees and military personnel. They had been expected to back the USDP, the party of the president and most cabinet ministers.

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Video story http://link.reuters.com/bur37s

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The United States and European Union had hinted they could lift some sanctions - imposed over the past two decades in response to human rights abuses - if the election was free and fair. Lifting sanctions could unleash a wave of investment in the resource-rich country bordering India and China.

But to be regarded as credible, the vote needs the blessing of Suu Kyi, who was freed from house arrest in November 2010.

She agreed last November to end the NLD's boycott of a quasi-democratic system created and dominated by the same ex-generals who persecuted the pro-democracy camp.

That represented a giant leap of faith for Suu Kyi, who has found common ground with President Thein Sein, a former junta heavyweight who has surprised the world with the most dramatic political reforms since the military took power in a 1962 coup.

Western governments are waiting for Suu Kyi's endorsement of the poll before they start reviewing sanctions, but on Monday, that was not forthcoming, although her criticism was restrained.

She said there were flaws in the election, which would not be overlooked. "We will point out all the irregularities that took place, not in any spirit of vengeance or anger, but because we do not think that these should be overlooked ... with the intention of making sure that things improve in future."

HUNTING BUSINESS

Business executives, mostly from Asia but also from Europe and the United States, have swarmed into Yangon in recent months to hunt for investment opportunities in the country of 60 million people, one of the last frontier markets in Asia.

A small number of officials from Western countries and the Association of South East Asian Nations (ASEAN) were invited to attend the polls but were given only a few days to prepare. They privately called themselves "visitors" rather than observers.

ASEAN issued a statement on Monday saying it believed the election "was conducted in a free and fair and transparent manner" and urged the West to consider lifting sanctions.

Observers who spoke to Reuters said they saw no mass fraud. The 2010 election was condemned as rigged to favor the USDP.

The NLD boycotted that vote. But just as Myanmar is changing, so too is Suu Kyi. Many see her now, at 66, as more politically astute, more realistic and ready to compromise. She has described Thein Sein as honest and sincere and accepted his appeal for the NLD to take part.

Her priorities, she says, are introducing the rule of law, ending festering insurgencies and amending the 2008 constitution that ensures the military retains a big political stake.

Many expect Suu Kyi to exert considerable influence and some question whether conservative members of parliament would dare oppose her, given her popularity, especially ahead of a general election in 2015.

Some critics say Suu Kyi has got too close to the ex-generals and fear she is being exploited to persuade the West to end sanctions and make parliament appear effective.

Some have almost impossibly high hopes of what she can achieve. "Too many expectations are dangerous," said Ko Ko Gyi, a former political prisoner. "She is not a magician."

Win Min, a political scientist at Harvard University, said it was likely Suu Kyi would push for changes that raised living standards before tackling the contentious issue of the military's political power.

"She can be effective in galvanizing the parliamentarians. She is likely to be more realistic in focusing more on making easier constitutional amendments that won't reduce so much of the military power," he said.

Some U.S. restrictions such as visa bans and asset freezes could be lifted quickly if the election goes smoothly, diplomats say, while the European Union may end its ban on investment in timber and the mining of gemstones and metals.

But some critics say the restrictions should remain in place to encourage more reforms.

"Now is not the time for the international community to rush toward lifting pressure on Burma," said U.S. congressman Joe Crowley, who visited Myanmar in January.

(Additional reporting by Paul Eckert in Washington; Writing and additional reporting by Martin Petty; Editing by Alan Raybould, Robert Birsel and Daniel Magnowski)

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