WALLAY, BURMA—When foreign dignitaries visit Myanmar, still known as Burma in much of the West, they don’t walk the rural hills over which the central government and ethnic groups such as the Karen fought for; for decades. Like isolated Wallay village.

Wallay gets none of the attention of bustling Rangoon or the empty capital of Naypyitaw. Yet the fact that I could visit without risking being shot may be the most important evidence of change in Burma. For three years the Burmese army and Karen National Liberation Army have observed a ceasefire. For the first time in decades Karen children are growing up with the hope of a peaceful future.

The global face of what Burma could become remains Aung Sang Suu Kyi, the heroic Nobel Laureate who won the last truly free election in 1990—which was promptly voided by the military junta. The fact that she is free after years of house arrest demonstrates the country’s progress. The fact that she is barred from running for president next year, a race she almost certainly would win, illustrates the challenges remaining for Burma’s transformation.

The British colony gained its independence after World War II. The country’s short-lived democracy was terminated by General Ne Win in 1962. The paranoid junta relentlessly waged war on the Burmese people.

Then the military made a dramatic U-turn, four years ago publicly stepping back from power. Political prisoners were released, media restrictions were relaxed, and Suu Kyi’s party, the National League for Democracy, was allowed to register.

The U.S. and Europe lifted economic sanctions and exchanged official visits. Unfortunately, however, in recent months the reform process appears to have gone into neutral, if not reverse.

While most of the military battles in the east are over, occasional clashes still occur. None of the 14 ceasefires so far reached has been converted into a permanent peace. While investment is sprouting in some rebel-held areas, most communities, like Wallay, are waiting for certain peace and sustained progress.

Of equal concern, Rakhine State has been torn by sectarian violence, exacerbated by the security forces. At least 200 Muslims Rohingyas have been killed and perhaps 140,000 mostly Rohingyas displaced.

Political reform also remains incomplete. Particularly serious has been the reversal of media freedom and imprisonment of journalists. Khin Ohmar, with Burma Partnership, a civil society network, cited “surveillance, scrutiny, threats and intimidation.”

The 2008 constitution bars Suu Kyi from contesting the presidency. Arbitrarily barring the nation’s most popular political figure from the government’s top position would make any outcome look illegitimate.

Even economic liberalization has stalled. Much of the economy remains in state- or military-controlled hands.

In short, the hopes that recently soared high for Burma have crashed down to reality.

But U.S. influence is limited. Washington could reimpose economic sanctions. However, returning to the policy of the past would be a dead end.

Nor can the U.S. win further reform with more aid. Washington’s lengthy experience attempting to “buy” political change is exceedingly poor. Anyway, participation in the Western economies is worth more than any likely official assistance package.

The administration also hopes to use military engagement as leverage for democracy. Unfortunately, contact with America is not enough to win foreign military men to democracy.

As I wrote in Forbes online:  “The best strategy would be to work with Europe and Japan to develop a list of priority political reforms and tie them to further allied support and cooperation. These powers also should point out that a substantially larger economy would yield plenty of wealth for regime elites and the rest of the population, whose aspirations are rising.”

Finally, friends of liberty worldwide should offer aid and support to Burmese activists.

During his recent visit President Obama said:  “We recognize change is hard and you do not always move in a straight line, but I’m optimistic.” This still impoverished nation has come far yet has equally far to go. America must continue to engage the regime in Naypyitaw with prudence and patience.