Where is Prime Minister Yoshihiko Noda’s foreign policy? A neighboring country that has suffered years of isolation and plunder by the misruling junta may be signaling that it wants to come in from the cold. Japan, which could offer the greatest help, seems to be asleep to the opportunity.

Myanmar (aka Burma) President Thein Sein’s announcement suspending the development of the controversial Chinese-built $3.6 billion Myitsone hydropower dam on the Irrawaddy River because it was “contrary to the will of the people” caught everyone by surprise and raises important questions.

Was this a gimmick or an important gesture towards democracy? Was it done on a passing whim or as part of a considered step in Myanmar’s efforts to abandon isolation and rejoin the 21st century world? Will leaders in the country, in China, India, Japan and the West have the imagination and courage to respond to the overtures from the new “civilian” president?

There is a lot of unfinished business. Thein Sein did not cancel or damn the dam (as newspapers said): he suspended work until at least the end of his term in office in 2015. That he made his announcement in parliament and cited the will of the people suggests that he is serious. On the other hand, loans have been signed and preparatory work started; China has protested that Myanmar will face legal consequences if it drops the plan; and this dam is merely the biggest of seven in a massive $20 billion scheme, so there is a lot of negotiating still to do.

Thein Sein has been more active than critics imagined since taking off his general’s uniform and becoming civilian president in March. In his opening speech to parliament, he called for political reconciliation, a fight against corruption and poverty and ending of the armed conflicts that have long bedeviled the country.

Mere words come cheaply, but the government has taken welcome economic relief measures, such as raising pensions, reducing taxes and revising the ludicrous foreign exchange rate system. It lifted some restrictions on the Internet, allowed independent newspapers, which have been permitted to feature opposition heroine Aung San Suu Kyi on their front pages, unheard of a year ago. Thein Sein invited Suu Kyi to the annual Martyrs’ Day ceremony in July commemorating the assassination of her father and Burma’s founding father Aung San.

In August, the president met independent civic groups and called for peace talks with Myanmar’s ethnic rebels. The next day he spent two hours alone with Aung Sang Suu Kyi. He has met her again subsequently. She said, appropriately, that she would like to judge the government by its results and, “I think I’d like to see a few more turns before I believe that the wheels are turning.” As another symbol, Aung San’s picture has been restored to pride of place in the president’s office.

Questions remain as to whether Thein Sein knows where he is going or whether he has considered the rocky road ahead. It could be that out of military uniform, he has a different perspective, or has been cut out of lucrative deals cut by the generals. It might be that he is playing a game with Suu Kyi to get her to lift Western sanctions. After my first visit to Burma in 1973, I wrote that a country keeping a lion for a pet — the military — must expect a heavy bill for its food. The expression, “the lion’s share” does not mean the odd 20 or even 40 percent, but all except what is left for the jackals.

As Thein Sein knows, the generals have done well as Burma has traveled a wretched road from being the most prosperous country of pre-war Asia to the most isolated and impoverished. So too has China and well-connected Thais. Persuading these beneficiaries that a smaller share each in a bigger more prosperous cake would be best for everyone will not be easy.

China’s investment in Myanmar is more than $12 billion and trade last year was $4.4 billion. Some officials in Myanmar fear that, as a former chief of mission at the country’s embassy in Washington put it, Myanmar has become “a semi-colony” of China. There is increasing resentment inside Myanmar at the growing army of Chinese, numbering up to two million, who have come to work on Chinese investment projects in the country. Besides the dams, China is involved in mining and timber, building oil and gas pipelines and a railway from Yunnan through Myanmar to a new deep-sea port.

Deals like the massive dams are clearly good for China, which takes 90 percent of the energy produced and gets to control the water flow, but less good for the farmers of Myanmar who have to wait for China to turn on the taps. Works threatening the Irrawaddy waters are especially sensitive because the river has been the source of most of the historic civilizations of Burma. They have also angered the Kachin people, often a fierce thorn in the side of the military rulers.

After Thein Sein’s announcement Beijing huffed and puffed like Big Brother. Lu Qizhou, president of China Power Investment, the main Chinese partner in the Myitsone project, told the China Daily that he found the decision “totally astonishing” and “very bewildering” and that a halt to construction would “lead to a series of legal issues” between the two countries. Beijing itself called on the Myanmar government to protect the legal and legitimate rights of the Chinese companies involved in the project, and warned about “damaging bilateral ties and friendship.”

China is Myanmar’s big neighbor as well as its biggest investor and cannot, nor should it be, wished away. When he visited Beijing in May, Thein Sein praised China as a trustworthy, selfless ally.

What is required is to broaden the basis of investment and make it more inclusive of the people. That means investing in education, manufacturing and tourism and opening up the country to other investors. Domestically, the president should release 2,000 political prisoners and try to involve Suu Kyi in re-creating her father’s “big tent” dream for the country.

But outside Myanmar is anyone listening, apart from aggrieved China? The United States and Europe are preoccupied with their own economic mess and Myanmar is faraway. Where is India, which before Oxford University offered Suu Kyi an education?

Where is Japan, which played a formative role in Aung San’s rise? The main foreign policy announcement from Tokyo was the resumption of whaling in the Antarctic with greater security protection, irrelevant to the economic and political problems that Japan faces.

Japan, especially if Suu Kyi gives her green light that Thein Sein has had a Damascene conversion and is serious about fulfilling his promises to his people, could play a vital part in rescuing Burma from its unnecessary isolation and poverty.

There is no point in opposing China directly, but a more people-centered aid, economic and investment policy would highlight China’s plundering. If Japan can help unlock the rich human and natural potential of what was once Asia’s richest country, it would be a win-win for all, especially Japan.

Kevin Rafferty first reported from Burma in 1973. His reports for the Financial Times were quoted in Burma’s official documents before the army got its teeth into the country’s resources.

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