Myanmar's government has signed a cease-fire deal with the Karen rebels, which could help end one of the country's longest standing ethnic conflicts and appease Western leaders who have said efforts to end conflict are a key demand in order for sanctions to be lifted.
Full details of the pact were not disclosed, but both sides agreed to open communication offices and allow passage through territories, a government official said.
The agreement follows other recent deals with major ethnic groups, including the Shan State Army-South in December. The cease-fire with the Karen is particularly significant, as it forms one of the country's larger ethnic groups, making up 7% of the population.
The Karen are also important because they have been active in the Dawei industrial zone. Undergoing a major redevelopment worth $50 billion, the project is considered to be a cornerstone of the government's plan to revitalise Myanmar's economy.
Karen diaspora groups cautiously welcomed the deal, but said that it remains unsafe for exiles to return to the country.
Meanwhile, observers have said that military operations in the North-east against Kachin rebels appear to be continuing, with aid workers saying that more than 50 000 Kachin people had been forced from their homes in the past six months.
If the Karen truce holds, it is hoped that it will lead to further breakthroughs in conflict resolution in the country.
Report: Myanmar Signs Pact With Rebels [Wall Street Journal, 12 January 2012]
Report: Burma government signs ceasefire with Karen rebels [BBC News, 12 January 2012]
The government also announced that it would release 600 more prisoners on Friday.
Prisoner releases have featured prominently amongst the government's series of reforms, but have been heavily criticised by observers for only releasing common criminals, rather than political prisoners.
However, an announcement on Myanmar state radio and television said the prisoners would be released so they can "participate in the task of nation-building", raising hopes that many would be political.
The amnesty follows a visit by the British foreign secretary William Hague last week, who repeatedly raised the issue with government leaders.
A spokesman for the opposition party the National League for Democracy (NLD) said "the government is releasing the prisoners apparently because the recent clemency order was strongly criticised by us and the international community."
The three pre-conditions for sanctions imposed by the European Union and the US on Myanmar to be lifted are free elections, the release of political prisoners and an end to conflicts between dozens of ethnic groups and the government, which have been going on intermittently for decades.
Report: Burma agrees to prisoner amnesty [Guardian, 12 January 2012]