Myanmar opposition claims by-election win for Suu Kyi

YANGON (Reuters) - Pro-democracy leader Aung San Suu Kyi won a seat in parliament on Sunday, her party said, after a historic by-election that is testing Myanmar's nascent reform credentials and could convince the West to end sanctions.

Her National League for Democracy (NLD) party announced to loud cheers at its headquarters that the Nobel Peace Prize laureate had won in Kawhmu, southwest of the commercial capital Yangon, raising the prospect of her first role in government after a two decade struggle against dictatorship.

"Daw Aung San Suu Kyi has won," an NLD official announced, referring to Suu Kyi by her honorific title. Myanmar's Election Commission had yet to confirm any results from the by-elections for 45 legislative seats.

The United States and European Union have hinted that some sanctions - imposed over the past two decades in response to human rights abuses - may be lifted if the election is free and fair, unleashing a wave of investment in the impoverished but resource-rich country bordering rising powers India and China.

The charismatic and wildly popular Suu Kyi had complained last week of "irregularities", though none significant enough to derail her party's bid for 44 of the seats. Suu Kyi made no immediate comment on her victory.

From dawn, voters quietly filed into makeshift polling stations at schools, religious centers and community buildings, some gushing with excitement after casting ballots for the frail Suu Kyi, or "Aunty Suu" as she is affectionately known.

Among her supporters who voted early Sunday in Suu Kyi's rustic constituency of bamboo-thatched homes in Kawhmu, there was little doubt she would win. "My whole family voted for her and I am sure all relatives and friends of us will vote for her too," said Naw Ohn Kyi, 59, a farmer from Warthinkha.

"So far as my friends and I have checked, almost everyone we asked voted for Aunty Suu," added Ko Myint Aung, 27-year shop owner from Kawhmu.

To be regarded as credible, the vote needs the blessing of Suu Kyi, who was freed from house arrest in November 2010, six days after a widely criticized general election that paved the way for the end of 49 years of direct army rule and the opening of a parliament stacked with retired and serving military.

President Thein Sein, a general in the former military junta, has surprised the world with the most dramatic political reforms since the military took power in a 1962 coup in the former British colony then known as Burma.

In the span of a year, the government has freed hundreds of political prisoners, held peace talks with ethnic rebels, relaxed strict media censorship, allowed trade unions, and showed signs of pulling back from the powerful economic and political orbit of its giant neighbor China.

It was rewarded last November when Hillary Clinton made the first visit to the country by a U.S. secretary of state since 1955. Business executives, mostly from Asia but many from Europe, have swarmed to Yangon in recent weeks to hunt for investment opportunities in the country of 60 million people, one of the last frontier markets in Asia.

"IRREGULARITIES"

Voting took place under the watch of small team of delegates from the European Union and the Association of South East Asian Nations (ASEAN), who were given only a few days to prepare inside Myanmar. They called themselves "visitors" rather than observers.

"Whatever irregularities we saw in the polling stations we visited did not seem to be out of bad will or intentions," says EU delegate Malgorzata Wasilewska. "It was more lack of experience or knowledge."

She stressed, however, that the EU had only visited a small number of polling stations and that irregularities could still occur in the counting process.

The 2010 election was condemned as rigged to favor the military-backed Union Solidarity and Development Party (USDP), the biggest in parliament.

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

Her top priorities, she says, are introducing the rule of law, ending long-simmering ethnic insurgencies and amending the 2008 constitution ensuring the military retains a political stake and its strong influence over the country.

While her party might end up with only a small number of seats, many expect her to exert outsized influence.

Some Burmese wonder if conservatives would dare oppose her ideas in parliament given her popularity, especially ahead of a general election in 2015. Many MPs want to be seen aligned with her, basking in her popular support.

But the election has not gone smoothly. Suu Kyi has suffered from ill health and accused rivals of vandalizing NLD posters, padding electoral registers and "many, many cases of intimidation."

Some of these infractions, however, are quite minor compared to elections elsewhere in Southeast Asia, where vote-buying and even assassinations are commonplace.

The NLD on Friday said a betel nut had been catapulted at one of its candidates and a haystack had been set on fire close to where another was due to give a speech.

It made fresh claims of irregularities on Sunday and said some ballots papers had been covered in wax to make it tricky to write on. It accused the USDP of waiting outside some polling stations and telling voters to back their party.

Skeptics in the democracy movement say Suu Kyi is working too closely with a government stacked with the same former generals who persecuted dissidents, fearing she is being exploited to convince the West to end sanctions and make the legislature appear effective. Others have almost impossibly high hopes for her to accelerate reforms once she enters parliament.

"Too many expectations are dangerous," says Ko Ko Gyi, a former political prisoner and Suu Kyi loyalist. "She is not a magician."

It was not clear when the election results would be announced. The full result has been promised within one week.

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

But holding a credible and transparent election would not mean an automatic lifting of sanctions, stresses a visiting EU delegate. "We still note that there are several hundred political prisoners," says Robert Cooper, who counsels the EU's foreign policy chief Catherine Ashton. "There is still some unfinished business here."

(Writing by Martin Petty; Editing by Jason Szep and Jonathan Thatcher)

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