A month after being put under house arrest in September of 2000, the dissident participated in United Nations-brokered talks with Burma’s ruling military junta, hoping to transform the government from a military state to something approaching a democratic society.

It was only after nearly two years of house arrest that she was released as a confidence building gesture by the junta. Now that the 56-year-old Aung San Suu Kyi has been freed from house arrest, however, questions remain as to how serious the military is about reform and where the democratic process goes from here.

To be sure, Burma’s ruling junta has plenty of reason to change. Having witnessed authoritarian regimes fall to democracy in a number of countries around the world, the junta has a vested interest in fostering political change before it is inevitably forced upon them. They know Burma is suffering under their stewardship. More than a decade of international isolation has led to the breakdown of virtually every aspect of society. Basic social and medical services have dwindled to nothing while the country’s HIV rate has skyrocketed.

Economic sanctions have crippled an already dilapidated economy. Hyper-inflation has set in and the kyat, Burma’s national currency, has dropped nearly 500 percent over the past year, 15 percent over the past few weeks. Basic staples like rice, eggs and oil are quickly becoming too expensive for local residents to buy. At the same time, the U.S. Congress had been contemplating further sanctions against Burma’s textile industry that would have cost the country some $500 million a year in revenues. “If the army can’t resolve Burma’s economic issues, there is a belief that it may collapse,” says NLD activist Hung Htoo.

So far, the military has promised Aung San Suu Kyi that more democracy advocates will soon be freed. Human Rights Watch estimates that 1,500 political prisoners, including 17 democratically-elected members of parliament, remain holed up in Burmese prisons. Aung San Suu Kyi has said that the release of the remaining political prisoners is a pre-requisite for the dialogue for democracy to move forward. “It is now the single most important challenge to the military as to what they will do with the political prisoners,” Mike Jendrzejczyk , Human Rights Watch’s Burma expert told NEWSWEEK. “Suu Kyi would like to see them released all at once. But if the military decides to release them in phases as they have done in the past, that will be seen as moving far too slowly.”

The NLD is anxious to move to the next step in the process, establishing a new constitution and holding elections, but Aung San Suu Kyi is painfully aware that trying to move too far too fast may lead to yet another crackdown. While she has been promised by the military that she can leave the city of Rangoon, she has yet to announce that she will force the issue. The last time she tried to leave the capital, she was imprisoned for almost two years. But Aung San Suu Kyi knows that re-establishing the hundreds of NLD offices around the country will require that she travel. “This is basically a highly delicate start of a long process,” says David Steinberg, a professor at Georgetown University and a leading expert on Burma. “It is too early to be euphoric.”