YANGON (Reuters) - The United States will support more aid for Myanmar and consider installing an ambassador after an absence of some two decades, Secretary of State Hillary Clinton said on Thursday, offering the first rewards for reform.
Clinton said she had "candid, productive" conversations with President Thein Sein and other Myanmar ministers and told them Washington stood ready to support further reforms and possibly lift sanctions.
But she also urged Myanmar, which is seeking to emerge from decades of authoritarian military rule, to take further steps to release political prisoners and end ethnic conflicts.
Better ties would be impossible unless Myanmar halted its dealings with North Korea, which has set alarm bells ringing across Asia with its renegade nuclear programme.
"The president told me he hopes to build on these steps, and I assured him that these reforms have our support," Clinton told a news conference after talks in the remote capital, Naypyitaw.
"I also made clear that, while the measures already taken may be unprecedented and welcomed, they are just the beginning."
Clinton's landmark visit to the country also known as Burma marks a tentative rapprochement after more than 50 years of estrangement from the West.
She later travelled to the commercial capital of Yangon where she went barefoot as part of Buddhist tradition at a revered shrine, the Shwedagon Pagoda. She then held the first of two meetings with pro-democracy leader Aung San Suu Kyi.
Clinton and Suu Kyi, a Nobel peace laureate, met at a U.S. diplomatic residence and posed for pictures before retiring to have a private dinner on a veranda overlooking a lake, dining on curry and Burmese delicacies.
Suu Kyi, who has indicated she intends to return to the political arena, quizzed Clinton on her experiences as a candidate, as senator and in the U.S. presidential race.
"She was asking the secretary for pointers about entering the public fray," one senior U.S. official said.
After the talks with Thein Sein and other officials, Clinton unveiled incremental steps to improve ties and said Washington would consider returning an ambassador to the country.
The United States downgraded its representation to a charge d'affaires after the military's 1988 crackdown on pro-democracy protests and voiding of 1990 elections swept by Suu Kyi's party.
"This could become an important channel to air concerns, monitor and support progress, and build trust," Clinton said. "These are beginning steps, and we are prepared to go further if reforms maintain momentum."
The United States would consider easing sanctions if it saw concrete reforms, she said.
"I told the leadership we will certainly consider the easing and elimination of sanctions as we go forward in this process together ... It has to be not theoretical or rhetorical, it has to be very real, on the ground, that can be evaluated."
Clinton also said the United States would support World Bank and International Monetary Fund assessment missions to help Myanmar jumpstart its economy, and new U.N. counter-narcotics and health cooperation programmes.
Seeking to pull Myanmar more closely into a region increasingly united by wariness over China, Clinton invited Myanmar to become an observer to the Lower Mekong Initiative, a U.S.-backed grouping discussing Southeast Asia's major waterway.
But she dismissed any suggestion that engagement with Myanmar was driven by competition with China.
"We are not about opposing any other country. We're about supporting this country," she said, adding that the United States regularly consulted China on its engagement in Asia.
Clinton also said the United States and Myanmar would discuss a joint effort to recover the remains of Americans killed during the building of the "Burma Road" during World War Two -- mirroring steps taken with Vietnam as Washington and Hanoi sought to put their differences behind them.
Rights groups and some lawmakers in Congress are concerned that Washington may be moving too swiftly to endorse the new leadership. Clinton made clear the United States needed to see more progress.
"It is encouraging that political prisoners have been released, but over 1,000 are still not free," Clinton said.
"Let me say publicly what I said privately earlier today: no person in any country should be detained for exercising universal freedoms of expression, assembly and conscience."
A U.S. official who sat in on the talks cited Thein Sein as saying the government considered the release of such prisoners "part of the effort of having an inclusive political process" and it was looking at the possibility of more releases.
Clinton also said it would "be difficult to begin a new chapter" until Myanmar began making peace with ethnic rebels.
Clinton pressed Myanmar to halt what U.S. officials say are illicit contacts with North Korea, including trade in missile technology, and to honour U.N. sanctions imposed on Pyongyang because of its nuclear programme.
"Better relations with the United States will only be possible if the entire government respects the international consensus against the spread of nuclear weapons," she said. "We look to Naypyitaw to honour U.N. Security Council Resolutions 1718 and 1874 and sever illicit ties with North Korea."
Clinton said she received "strong assurances" regarding Myanmar's commitments to U.N. Security Council resolutions on North Korea. U.S. officials have played down fear Myanmar's ties with North Korea had broadened to include a nuclear programme.
SUU KYI BACKS U.S. ENGAGEMENT
Suu Kyi says she backs Washington's effort to gauge Myanmar's reforms since the military nominally gave up power to civilian leaders following elections last year.
"Many people are asking whether what is happing in Burma is for real ... or whether this is just another piece of window-dressing," Suu Kyi said in a video message to Britain's Chatham House think-tank, which has awarded her a prize.
"I believe that there are elements within the government who are genuine in their desire to bring about reforms ... and it is worthwhile to take the risk; to accept that there is a possible opening."
But Suu Kyi said on Wednesday the United States must remain watchful that the army-backed government did not halt or roll back reforms, and "speak out loud and clear" if people engaging in politics were arrested.
Suu Kyi has confirmed she will run in upcoming by-elections, ending a boycott of Myanmar's political system.
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." Clinton said it was up to Myanmar's leaders to decide what came next.
"We know from history that flickers can die out. They can be stamped out," she said.