Myanmar's government opened peace talks with the Karen National Union (KNU) on Thursday to try to end the country's longest-running rebellion as part of a drive to strike ceasefire deals with all its ethnic separatist groups.
Both the government and the 19-member KNU delegation were optimistic that deals could be reached later in the day on three key areas on the agenda, which would be a small step towards the lifting of two decades of Western sanctions on Myanmar.
Through its military wing, the Karen National Liberation Army (KNLA), the KNU has fought successive governments for greater autonomy since 1949, a year after Myanmar gained independence from Britain.
Peace talks have since been held on at least six occasions but no lasting agreement has been reached. The KNU is still optimistic a deal can be struck with the new reform-minded civilian government that came to power in March 2011.
The government's peace negotiator, Minister of Rail Transport Aung Min, said he expected the delegations would reach agreements on separate issues before signing an overall deal.
If we agree on one point, we will sign the agreement on it. If we agree on two points, then an agreement will be signed on these points, Aung Min told reporters.
Hla Maung Shwe, a leading businessman and mediator in the talks, was positive both sides were ready to commit to peace.
I'm very optimistic. The government delegation has agreed to the KNU's demands in principle, he told Reuters. I think they will be able to sign an agreement later today.
The conflict with the Karens has been extremely violent, with offensives by government troops driving hundreds of thousands of people from their villages, many into camps in neighbouring Thailand, which has struggled to cope with the flood of refugees.
Myanmar's army has been accused of oppressing the Karens and other ethnic minorities by committing a litany of human rights abuses, from rape and forced labour to torture and murder.
The West has responded by maintaining tight sanctions on the country and the United States and Europe have made the resolution of ethnic conflicts a prerequisite for lifting embargoes that have long frustrated the government.
Peace with the KNU is also vital for Myanmar's economic interests. If the conflict persists, it presents a security threat that could disrupt construction of the $50 billion Dawei Special Industrial Zone, which will be Southeast Asia's biggest industrial estate when completed and a major source of income for the impoverished country.
The talks with the KNU, based in eastern Kayah and Kayin States, are the latest in a series of dialogues between the government and rebel groups along Myanmar's borders with Thailand and China.
An agreement has already been reached with Shan State Army (South) but initial talks with the Kachin Independence Army (KIA) have been derailed by fighting that continues to rage, despite an order last month by President Thein Sein for the military to end its operations.
But U.S. officials have said the peace process might prove the toughest challenge ahead for civilian leaders who are eager to bring the long-isolated nation in from the cold after five decades of iron-fisted army rule.
The rebels hold deep distrust towards Thein Sein's government, which is comprised of the same people as the old military regime, but they are broadly behind Nobel laureate Aung San Suu Kyi's vision of federalism within Myanmar's republic, a plan supported by her late father, Aung San.
(Additional reporting by Aung Hla Tun in Yangon; Writing by Martin Petty; Editing by Paul Tait)