Clinton voices deep concern on Myanmar sectarian unrest Mon Jun 11, 2012 10:01pm EDT (Reuters) - Secretary of State Hillary Clinton has voiced deep concern over sectarian violence in Myanmar, unrest that threatens to endanger democratic and economic reforms in the country after decades of military-ruled isolation. Clinton and the European Union, which both recently suspended economic sanctions against Myanmar to recognize and encourage its transition to democracy, have appealed to the nation's rulers to calm the situation and bring reconciliation. Tensions between Buddhists and Muslim Rohingyas, a stateless people, turned violent in Myanmar's northwest over the past week, after the gang rape and murder of a Buddhist woman, widely blamed on Muslims, sparked bloody reprisals. "The situation in Rakhine state underscores the critical need for mutual respect among all ethnic and religious groups and for serious efforts to achieve national reconciliation in Burma," Clinton said in a statement on Monday. We urge the people of Burma to work together toward a peaceful, prosperous, and democratic country that respects the rights of all its diverse peoples. At the weekend, mobs of Muslims and Buddhists torched houses in Sittwe, the biggest town in Myanmar's western Rakhine State. Hundreds of Rohingyas boarded boats to try to flee into neighboring Bangladesh but many were turned back. It is the worst communal violence since a reformist government replaced a junta last year, began to allow political pluralism and vowed to tackle ethnic divisions. The European Union said on Monday it was satisfied with the "measured" handling of the violence so far by Myanmar President Thein Sein, who has said the unrest could jeopardize the transition to democracy if allowed to spiral out of control. However, U.S.-based Human Rights Watch criticized Thein Sein's handling of the violence, saying he had effectively ceded control of the situation to the army and that troops had opened fire on Rohingyas since the unrest erupted in Rakhine State, also known by its former name Arakan. "Deadly violence in Arakan State is spiraling out of control under the government's watch," Elaine Pearson, deputy Asia director at Human Rights Watch, said in a statement on Tuesday. The group urged the government to allow international journalists, aid workers and diplomats into the area. "Opening the area to independent international observers would put all sides on notice that they were being closely watched," Pearson added. EU states suspended most sanctions against Myanmar after it released many political prisoners, allowed opposition leader Aung San Suu Kyi and her National League for Democracy to contest by-elections, and lifted some repressive measures. The United States, which had imposed more stringent and comprehensive sanctions against Myanmar, has also suspended curbs on U.S. investment and the provision of financial services in response to changes in the country. The curfews underline the risk to Myanmar's attempts to encourage tourism and foreign investment back into the country. The country also has large untapped resources of oil and natural gas and the potential to be a major exporter of rice and wood. Rohingyas live in abject conditions along Myanmar's border with Bangladesh and are despised by many Rakhine, who belong to the predominantly Buddhist majority. About 100 Rohingyas tried to flee by boat into Bangladesh but were pushed back on Monday, Bangladesh's border guard said. Writing by Andrew R.C. Marshall and Sebastian Moffett.; Editing by Jason Szep and Mark Bendeich)