Fighting continues in the north, against various tribal groups. This is low-level stuff, with rebels skirmishing with army patrols, or troops moving in to search, or destroy, villages. No reporters are allowed in the area, and most information on the war is obtained from refugees fleeing to Bangladesh, China and Thailand. Often, the refugees are forced back. The UN and Thailand are fighting over this, but Thailand does not want these tribes to permanently move into Thailand.
New revenue from natural gas and other economic projects, financed by China, is expected to continue the expansion and modernization of the army. In the last 25 years, the army has tripled in size, but remains a poorly equipped force mainly devoted to fighting tribal rebels and keeping the population under control. China has been supplying inexpensive new weapons and equipment, but expects to get paid.
The new government provides an opportunity for many who call for the lifting of sanctions. The main argument is that the sanctions have not worked. China and Thailand continue to invest in Burma anyway, and many other nations, especially neighbors, and major trading nations in Europe, want to get involved in the many economic opportunities in Burma. The military government has taken a hint from China, and is privatizing much of the economy and allowing a market economy. There's a lot of economic opportunity, with foreign investors and members of the military (now in civilian clothes) government ready to share the profits. Most Burmese can't expect to see more than a low-paying job, and getting pushed around as they have been for decades.
The World War II "Stilwell (or Ledo) Road", from northeast India into Burma, is going to be rebuilt, in part. The road was originally, in 1942, built to replace the "Burma Road" that got Allied military aid to Chinese troops fighting the Japanese. But Japan captured Burma in 1942, and cut that connection. The new Ledo road will bypass India, and just go from China into Burma. India is not happy about being left out, and nervous about how the new road will go right up to the Indian border.
China is building an oil terminal in Western Burma, where tankers from the Persian Gulf will unload oil, which will then be moved into southwestern China via a new pipeline. China will run the new oil terminal, and the Burmese government will be responsible for the security of the pipeline, which runs through tribal territory that still suffers from periodic violence.
January 10, 2011: The new parliament will meet on the 31st, the first meeting of an elected parliament in 22 years. The government controls 80 percent of the seats, including a quarter of the seats that are reserved for the military. The election was widely believed (by locals and foreign observers) to be rigged. Despite that, the new government is campaigning to get economic sanctions lifted.
January 9, 2011: It's been revealed that one of the last laws passed by the old, military controlled, parliament last year was one that introduced conscription for men and women. The law is still secret, and no one is quite sure what it is for. At worse, it appears to be a legal way to remove large numbers of anti-government activists from public life. Those who refuse to report for service can be sent to prison for three years.