Ethnic Koe Kant children play in front of their house at a village near Lashio
The United States ruled out an immediate end to its main sanctions on Myanmar, saying it wanted to preserve leverage to push the regime on ending ethnic violence and other key issues.
The European Union and Canada this week suspended most sanctions and Japan waived Myanmar's debt as rewards after a dramatic year of reforms in which President Thein Sein freed political prisoners and reached out to opponents.
President Barack Obama's administration has taken a lead in negotiating with Myanmar and has eased some restrictions, including ending a ban on financial transactions by US non-governmental organizations.
But Kurt Campbell, a key architect of the US outreach to Myanmar, on Wednesday told cautious lawmakers that the administration had no "gauzy gaze and rose-colored glasses" and would only ease sanctions in "certain prescribed areas."
"I would simply say that there is no intention to 'lift' sanctions," Campbell, the assistant secretary of state for East Asian affairs, told the House Foreign Affairs Committee.
"We recognize very clearly that there have to be provisions and capabilities to be able to respond if there is a reversal or a stalling out (of reforms), that leverage is an essential component of our strategy," he said.
Campbell hailed actions taken by Thein Sein, including the decision to allow April 1 elections that gave Aung San Suu Kyi -- who spent most of the past two decades under house arrest -- a seat in parliament.
But Campbell said reforms have mostly impacted urban and Burman-majority areas and have not been felt by ethnic minorities in the country formerly known as Burma, which has some of the world's longest-running separatist conflicts.
"We need to ensure that that process extends into the country as a whole and we are troubled by very clear -- and we believe reliable -- reports of continuing attacks and atrocities that are completely antithetical to the overall effort that we're seeking to achieve," he said.
Human rights groups have voiced particular concern about allegations of rape, forced labor and other abuses in Kachin state, where troops appeared to ignore Thein Sein's orders in December to halt violence.
Campbell also warned Myanmar to sever any lingering relationship with North Korea, warning that any signs of military cooperation "will put a brake" on US engagement.
"I can't say it any more directly -- that countries are judged by the company they keep," he said.
The United States maintains strict sanctions against exports from Myanmar, including on gems, lumber and other lucrative products seen as sources of funding for the long-dominant military.
Human rights campaigners have pressed the US administration and Congress not to go as far as the European Union, which froze virtually all sanctions, albeit for an initial one-year period and with a continued embargo on weapons sales.
Representative Don Manzullo, a Republican who heads the House Foreign Affairs subcommittee on East Asia, questioned whether "our European and Asian allies have gone too far by rushing head-long into suspending all sanctions and immediately boosting assistance."
Representative Joe Crowley, an architect of US sanctions on Myanmar who visited in January, estimated there were still at least several hundred political prisoners and deplored "serious acts of violence against ethnic nationalities."
"A lot of the media coverage around Burma lately has been overheated, if not slightly overstated," he said at the hearing.