The hardliners of Burma’s former military regime are being offered lucrative financial incentives to step down and allow the government’s reform process to continue, says a Rangoon-based foreign analyst.

The analyst, who spoke on a condition of anonymity, says Burma’s Vice President Tin Aung Myint Oo pocketed a sizeable chunk of the commission from the controversial $US3.6 billion Myitsone dam project in exchange for his resignation.

Sources close to the government say Tin Aung Myint Oo claimed around $US300 million in official and unofficial commission payments, which include three percent of the commission from the $US3.6 billion project plus additional payments valued at about $US50 million.

The analyst says the trade-off for Tin Aung Myint Oo’s resignation is retaining the spoils he plundered from the resource-rich country.

“He was a very corrupt person and he took money out of the Myitsone project,” the analyst said, adding President Thein Sein’s decision to stop the controversial dam project was a serious setback for the vice president.

“There was really no space for him in the new Myanmar [Burma] that is being built, so he’s resigned,” the analyst says.

“It’s not just Tin Aung Myint Oo who has lost, it’s an entire class of people who refused to change and have been forced to change, or jump from the boat.”

Australia economist and Burmese expert Sean Turnell said offering financial incentives to hardliners was a common strategy throughout Asia.

“In a sense you buy out the old regime players and that’s less damaging than some sort of fight,” says Turnell.

However, Turnell said the Burmese government still suffered from systemic corruption.

“More problematic is the way all the way down the chain and the extent in which the military still remain very hands on within the ministries and within those enterprises,” said the economist.

A notoriously corrupt and brutal political figure, Tin Aung Myint Oo built substantial personal wealth through his connections with Chinese and Burmese tycoons.

Sources close to the government say he pocketed over 75 per cent of the commission, which is usually three percent, pledged for the $US3.6 billion pledged to the Myitsone dam project.

The vice president was a former chief of the Trade Council, which oversaw export and import licences, and was the former chairman of the Myanmar Economic Corporation (MEC) — the military’s economic arm.

Sources close to the Burmese government say the former hardliner was pushed out of government for his resistance to reforms and overt corruption, including support for controversial deals with the Chinese.

Sources claim Tin Aung Myint Oo has clashed with the president by continuing to support the Myitsone prjoect, despite President Thein Sein ordering a stop to the dam’s construction in response to public outcry over the potential environmental impact.

The Myitsone dam is a US$ 3.6 billion joint project of the Myanmar Industry Ministry, Asia World and the China Power Investment Corporation (CPI) to build a 3,600 megawatt-dam in Burma’s northern Kachin state to supply power to the Chinese province of Yunnan.

Former military general Than Shwe’s notorious second-in-command is just one of the hardliners from the country’s former junta who are being told to reform or leave the government, the analyst said.

“Over the past two years, everyone who was closer to the moderates has gone up and everyone who was close to the hardliners has gone down, or they have transformed into moderates,” the analyst says.

However, the hardliners will get to keep their share of the spoils plundered from the resource-rich country if they agree to step down and make way for a new wave of moderate reformists headed by President Thein Sein, say sources close to the Burmese government.

“As frustrating as it is, if those people have to keep their money in order for the reform process to continue, then so be it,” the analyst says.

Chairman of the National League for Democracy (NLD) U Tin Oo said he had heard rumours that Tin Aung Myint Oo was among over members of the former military regime who would be dropped from President Thein Sein’s government as part of a cabinet reshuffle.

“We have heard rumours that former hardliners will no longer be taking part in coming activities in their administration,” Tin Oo told reporters in Rangoon.

According to a report in the AFP, the former vice president is said be staying in a monastery for the time being; however, the government has yet to officially confirm Tin Aung Myint Oo’s resignation.

Sources in Rangoon say retiring to a monastery is a tactic frequently used by former politicians who want to stay out of the public eye.

Business sources in Rangoon say overt corruption, controversial business deals and resistance to reforms, including the decision to allow Nobel peace prize laureate Aung San Suu Kyi to enter parliament all led to the political demise of Tin Aung Myint Oo.

Tin Oo said the vice president was deeply involved with former ruling general Than Shwe’s military regime.

“Most of the former generals are very much corrupt and involved in rampant corruption and bribery, that’s why they’re trying to save their skins and not expose it,” he said.

Burma watchers say Tin Aung Myint Oo was considered to be one of the most corrupt of the ex-generals serving in the current administration and the government hopes his removal will appease the international community and encourage the removal of more western sanctions.

Tin Oo said the government was delaying announcing the formal retirement of the vice president while it decided who would take his place. In the event of his resignation, the vice president’s replacement would be chosen by unelected military personnel, who make up one quarter of the Burmese parliament.

Sources close to the Burmese government say this is the start of a major reshuffle inside Burma’s government, as President Thein Sein’s cabinet seeks to remove members with controversial links to the former military regime from power.

Tin Oo said another possible casualty of a cabinet reshuffled could be ruling Union Solidarity and Development Party (USDP) member, U Aung Thaung.

While the government has still not made an official announcement about his position, Burmese media organisations have reportedly been banned from reporting the speculation.

The NLD chairman said the government would most likely delay announcing the resignation of the vice president until parliament reconvened in July.

Editor’s note: A version of this story was temporarily published on the DVB website on May 24th; however, the draft had not been the most recent copy sent by the reporter inside Burma. The article has since been updated.

-Victoria Heather is a pseudonym for a journalist working in Burma.