The military government will allow elections this year, but the new election laws allow the new elections commission to control who runs, and how. The military government controls who will be in the elections commission, so the generals apparently plan to control the election process to put their own people into office. As blatant as this is, it wins the points in the international PR battle between the dictators and democracy backers. Things like this make it more difficult for opponents to, for example, get the UN to go after the generals for war crimes. The military dictatorship in Myanmar has been very clever, and successful, in dealing with pressure from foreign nations and international organizations like the UN. The promised (two years ago, after many years of diplomatic and media pressure) elections will probably not weaken the dictatorship, but will likely be carried out in such a way that the generals can argue that they kept their promise.
The army is apparently going to let new, elected, rulers, take charge. But these new men will be beholden to the military for economic support and, in an emergency, muscle (with or without guns). The generals are selling off state assets, and putting the money into special military accounts, for politicians in need of campaign funds to get elected, or re-elected. The generals now acknowledge that Burma cannot survive in isolation. The international economy has been booming for decades, and Burma has fallen well behind. Time to catch up. That doesn't work very well unless you allow a certain amount of freedom. China showed the way, even though China has no intention to allow elections. But Burma comes from a democratic background (at least in the early decades of independence.) Plus, the generals think they can pull this off.
More troops are being moved into the tribal areas, especially along the Chinese border, to help insure that the elections, no matter how bogus they might be, will go off without incident.
After buying 20 MiG-29s from Russia, the government is now buying two An-148 commercial aircraft (which normally carry up to 90 passengers) for VIP transports. The bad behavior of the generals has led to several embargos over the years, but Russia and China will sell Burma whatever it wants. Russia, and especially China, will also block the UN from applying any really damaging sanctions. In response, China gets lots of Burmese natural gas, at a good price. Similar shipments to Thailand, encourages the Thais to send Burmese tribal refugees back, and crack down on the use of refugee camps in Thailand for rebel bases.
India has been more circumspect, being a democracy, in supplying weapons to Burma. But India has invested over a billion dollars in natural gas production alone, and this will increase enormously if the generals can pull off their "shift to democracy" (with the generals still pulling the strings). India justifies military sales to Burma largely because of cooperation in keeping Indian tribal rebels out of Burma. Currently, Indian and Burmese troops are cooperating in searching for the Indian rebels on either side of the border. This sort of thing causes India to look the other way as the Burmese abuse (murder, rape, prostitution, slave labor) their own tribal rebels (particularly the Karen.) India needs the good relations with Burma, because the Indian tribal rebels (over a dozen different groups) sustain a drug and weapons smuggling network into India. This smuggling is more of a concern to India, than to Burma.
The generals may have to stop buying weapons from North Korea during this political shift. The North Koreans are too unpopular, and under too many export restrictions. It's not safe to trade with North Korea and expect to remain undetected.
Many of the tribal and ethnic minorities in the east and north are threatening to resume fighting the government, in the face of an election that will be a sham. There is also fear that growing revenue from natural gas exports (to India, China and Thailand) and growing heroin production (done in cooperation with former rebel groups that have made peace, and expect to be rewarded), makes the government strong enough to finally crush all the tribal rebels. The government denies any involvement in the revived heroin trade, but travelers in Shan State, along the Chinese border, note the reappearance of poppy crops.
March 13, 2010: The Shan State Army (an ethnic Chinese group) claim they killed twenty soldiers in a battle near where the Chinese, Burmese and Thai borders meet.
February 25, 2010: In response to the earlier killings, police raided a drug smuggler camp on the Thai border. Weapons, ammunition and raw materials for methamphetamine were seized. Apparently, several dozen gangsters were living in the camp, but all were elsewhere, or fled at the approach of the large force of police.
February 20, 2010: Thirteen police and local militia were killed in a battle with drug traffickers, on the Mekong river near the Thai border. The smuggling gangs are large and heavily armed, and prefer to bribe or intimidate border security personnel. If that fails, the gangsters will shoot to kill.