YANGON (Reuters) - Myanmar holds crucial by-elections on Sunday that are expected to see Aung San Suu Kyi, who led the fight for democracy under the former junta, entering parliament for the first time and could lead to an easing of sanctions by the West.
The United States and European Union have hinted economic sanctions - imposed years ago in response to human rights abuses - could be lifted if the election is free and fair, which could unleash a wave of investment in the impoverished but resource-rich country bordering India and China.
A civilian government took office a year ago after almost five decades of military rule and has surprised the world with the speed at which it has implemented political and economic reforms, including freeing hundreds of political prisoners.
To be regarded as credible, the vote needs the blessing of 66-year-old Suu Kyi, a Nobel Peace Prize laureate who was herself freed from house arrest in November 2010, just after the general election that led to the civilian government the following March.
That election was widely seen as rigged to favour the military-backed Union Solidarity and Development Party (USDP), the biggest in parliament, and Suu Kyi's National League for Democracy (NLD) boycotted the vote.
Suu Kyi appears to have taken a gamble after the reforms pushed through by President Thein Sein, who was himself a general in the former junta. She has called him "honest" and "sincere" and accepted his appeal for the NLD to take part.
Her party is competing for 44 of the 45 by-election seats, but has complained of irregularities that could undermine the vote.
"What has been happening in this country is really beyond what is acceptable for a democratic election. Still, we are determined to go forward because we think that is what our people want," a frail but defiant Suu Kyi told reporters outside her lakeside house in Yangon on Friday.
She has accused rivals of vandalising election posters, padding electoral registers and "many, many cases of intimidation", including two attempts to injure candidates with catapulted projectiles.
Suu Kyi is running in the constituency of Kawhmu, south of Yangon. She planned to tour polling stations there early on Sunday after voting starts at 6 a.m. (2330 GMT on Saturday), before returning to Yangon later in the day.
It was not clear when the results would be announced.
The government has invited in a small number of election observers, including five from the Association of Southeast Asian Nations, but they have been given hardly any time to prepare inside Myanmar.
As big as France and Britain combined, Myanmar's size, energy resources and ports on the Indian Ocean and Andaman Sea have made it a vital energy security asset for Beijing's landlocked western provinces, and a priority for Washington as President Barack Obama strengthens engagement with Asia.
Some U.S. restrictions such as visa bans and asset freezes could be lifted quickly if the election goes smoothly, diplomats say, while the EU may end its ban on investment in timber and the mining of gemstones and metals.
(Editing by Alan Raybould and Ed Lane)
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