By Andrew Quinn
NAYPYITAW (Reuters) - Secretary of State Hillary Clinton began her first substantive talks with Myanmar's new leaders on Thursday in a meeting Washington hopes will embolden reformers in the reclusive country where entrenched military interests still loom large.
Clinton, whose landmark visit to the country also known as Burma marks a tentative rapprochement after more than 50 years of estrangement with the West, began a series of meetings with President Thein Sein, Foreign Minister Wunna Maung Lwin and top officials from parliament in Naypyitaw, Myanmar's new capital.
"I am here today because President Obama and myself are encouraged by the steps that you and your government have taken to provide for your people," Clinton told Thein Sein as the two sat down for talks in Myanmar's ornate presidential palace.
Thein Sein welcomed Clinton on a visit he said would be a "milestone." "Your excellency's visit will be historic and a new chapter in relations," he said before the start of the closed-door meeting.
Clinton will head to the main city of Yangon later in the day for a private dinner with Aung San Suu Kyi, her first face-to-face meeting with the veteran pro-democracy leader.
Suu Kyi told reporters on Wednesday she fully backed Washington's effort to gauge reforms that Myanmar had enacted since the military nominally gave up power to civilian leaders following elections last year.
"I think we have to be prepared to take risk. Nothing is guaranteed," Suu Kyi told reporters in Washington in a rare public video call from her home in Yangon, where she was held in detention for 15 of the last 21 years before being released in November last year.
But Suu Kyi - a Nobel peace laureate and towering figure for Myanmar's embattled democracy movement - said the United States must remain watchful that the new army-backed civilian government does not halt or roll back political and economic reforms which have gained pace in recent months.
"If there are again arrests of those who are engaging in politics, then I think you would need to speak out loud and clear," she said.
Suu Kyi confirmed she would run in upcoming by-elections. Her National League for Democracy swept elections in 1990 but the military ignored the result.
The party boycotted last year's polls but will contest the by-elections - another sign of the rapid change unfolding -- and hopes to open offices across the country and start a newspaper, she said.
U.S. EXPECTATIONS, CHINESE FEARS
Clinton - the first U.S. secretary of state to visit Myanmar since 1955 - is expected to lay out clear U.S. expectations for the future of reforms.
Analysts say the process could eventually lead Washington to ease sanctions which have strangled the country's economy and driven it closer to China, its main political backer and the regional economic powerhouse which is watching warily as the United States steps up its Asian engagement.
Clinton is also considering what reciprocal steps the United States may take to encourage the reform process, which could include upgrading its representation in Myanmar to full ambassador or supporting more international aid.
Among the U.S. benchmarks will be further releases of political prisoners and genuine government efforts to resolve conflicts between the military and rebellious border-area ethnic minority groups, which rights groups say have spurred some of the country's worst human rights abuses.
Clinton will also urge Myanmar to halt what U.S. officials say are illicit contacts with North Korea.
The United States is concerned about Myanmar's efforts to acquire North Korean missile technology, and have also voiced fears of fledgling nuclear ties between Myanmar and North Korea, whose own nuclear program has drawn international sanctions and led to fears across Northeast Asia.
Among its demands, the United States wants Myanmar to sign additional protocols with the International Atomic Energy Agency (IAEA) that will expand the nuclear watchdog's ability to monitor and inspect in the country, U.S. officials said.
Following her meeting with Thein Sein, who like many of Myanmar's new civilian leaders is a former army general, Clinton will meet parliamentary leaders, some of whom represent military hardliners skeptical of both the pace and scope of the reforms.
"There are elements that are more interested in certain aspects of reform, others that are considered to be corrupt or have ties to other countries that cause some concern," one senior U.S. official said, saying Clinton would make a clear case for the economic and political benefits of greater engagement with the West.
Clinton has said it is too early to discuss removing U.S. sanctions, which in many cases would require approval by Congress where many lawmakers remain deeply suspicious of Myanmar and alarmed by persistent reports of human rights and other abuses.
Clinton's trip follows a decision by President Barack Obama last month to open the door to expanded ties, saying he saw "flickers of progress."
Officials said the United States - which dismissed last year's election as a sham - was increasingly persuaded that the changes on the ground are real.
"Even though the election itself we felt was deeply and fundamentally flawed, we have seen at least the beginning of debate and divisions much more openly expressed among key players around a whole host of issues," the U.S. official said.
(Additional reporting by Susan Cornwell in WASHINGTON; Editing by Robert Birsel)