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Thursday April 24 11:25 AM EDT 

New Warning on Burma Sanctions

RANGOON, Burma (Reuter) - The top U.S. diplomat in Rangoon Thursday warned that
Washington's decision to impose sanctions against Burma could have
implications for other foreign
investors in the Southeast Asian country. 

Kent Wiedemann, U.S. Charge d'Affaires to Burma, told Reuters in an
interview that while the initial
economic impact of the move might be small, shockwaves would go much further. 

"It's a powerful message to United States and other (foreign) companies that
this is not a good place
to do business if you do so in the United States," he said. 

Wiedemann added that consumers in the United States -- the world's biggest
economy -- had
already begun rejecting goods made in Burma because of concern over the
human rights record of
its military rulers, the State Law and Order Restoration Council (SLORC). 

"These are spontaneous, or popularity-driven, actions," he said. "It's a
reaction to the negative
impact of the human rights situation here." 

Several major U.S. cities and two states -- Massachusetts and Connecticut --
have approved
selective purchasing laws that prohibit their governments from buying goods
and services from
companies doing business in Burma. 

A U.S. ban on new investment in Burma was announced in Washington Tuesday,
but diplomats
accompanying a rare government-arranged trip to eastern Shan state at the
time of the
announcement said the impact would be small. 

The United States ranks as the fourth largest investor in Burma and had
committed $582.07 million
across 16 projects, mainly in the gas and oil sectors, as of the end of
March, according to official

However a number of U.S. firms and other multinationals, including PepsiCo
Inc, Liz Claiborne,
Heineken NV and Carlsberg have pulled out because of rights concerns and
pressure from
shareholders or lobby groups. 

Despite that, bottles of Pepsi are still widely available on the streets of
Rangoon along with similar
profile western brand-name products. 

"I wonder if that's really relevant," Wiedemann said. "What matters is
whether Burma will receive
large capital in aid or overseas investment." 

Most global aid agencies and western nations stopped aid to Burma when the
current military regime
seized power in a bloody crackdown on the democracy movement in 1988. 

Wiedemann said Washington might be prepared to reverse its decision if
Rangoon takes steps to
improve human rights. 

He denied Burmese government allegations made earlier that the sanctions
were intended to derail
Burma's hopes of joining the Association of South East Asian Nations. 

"Clearly it will be awkward for us dealing with a body of nations which
includes a member with
which we have such sharp differences," he said. "Eventually Burma must be
part of ASEAN, but
whether it's this year is something ASEAN has to decide for itself." 

ASEAN comprises Brunei, Indonesia, Malaysia, the Philippines, Singapore,
Thailand and Vietnam.
It is expected to admit Burma along with Cambodia and Laos later this year. 

Singapore said Thursday constructive engagement, not sanctions, was the best
way to bring about
economic liberalisation in Burma. 

Both the Thai and Malaysian prime ministers have said the U.S. sanctions
would not delay Burma's
ASEAN entry.