Khin Nyunt is being treated like a head of state

This meant that they were often critical of the Burmese, and did not always support them in international forums like the United Nations or the Internation Labour Organisation. As a result the exchange visits of senior leaders were in effect suspended.

When Thaksin Shinawatra was elected Prime Minster earlier this year he and his Defence Minister Chaovalit Yongchaiyut had expected to immediately improve relations with Rangoon. But cross border incursions by Burmese troops and the rebel Wa - who are regarded as responsible for most of the drug production in Burma's Golden triangle - put paid to that.

Mr Thaksin's government has spent much of the last six months trying to convince Rangoon that they really wanted to enter a new relationship

For several weeks there were heavy exchanges of fire across the border. Several Thais and Burmese refugees were killed. According to Burmese military sources, several hundred Burmese soldiers also died in the fighting.

Both sides blamed each other, saying the other was supporting ethnic groups involved in drug production. The Thais said the Burmese were supporting the Wa, while Rangoon blamed Bangkok for supporting the Shan.

Diplomatic moves

Mr Thaksin's government has spent much of the last six months trying to convince Rangoon that it really did want to enter a new relationship. A Rangoon-based Asian diplomat told the BBC that Mr Thaksin's visit to Burma in June was the turning point.

Drug smuggling is an area of tension

"Now with Khin Nyunt visiting Bangkok, they'll be able to get down to business on fighting drug-trafficking and improving bilateral relations generally," he said.

Combating the drugs trade has already dominated the bilateral discussions.

"We need cooperation from all sides to effectively suppress drug trafficking," the deputy head of Thailand's anti-drug force, Chatchai Suthiklom told journalists.

Prime Minister Thaksin has also reportedly told Khin Nyunt that Thailand was prepared to help Burma's efforts to suppress the trade with technical assistance and know-how. There were also offers to support Burmese crop substitution programmes financially in the Wa area, and import the produce at preferential rates.

However US drug experts remain sceptical that the Burmese and Wa will deliver on this promise.

Khin Nyunt for his part told the Thais that the Wa - who have a ceasefire agreement with the Burmese army - have agreed to make the region a drug-free zone by 2005.

It is this news, Thai Foreign Minister Surakiat Sathirathai told journalists, that has prompted the government's offer of financial support.

Road project

But both sides have also been discussing other business projects. Mr Thaksin's government is committed to expanding the country's economy, and part of that involves strengthening bilateral ties. Burma is a high priority for these sorts of schemes.

Already there are plans to transfer sugar cane plantations along the border in western Thailand across the border into Burma to utilise the cheaper labour force that is available there. The Thai Prime Minister signed a contract on his June visit to Rangoon which provides funds for a major access road from Thai border town of Kanchanaburi to the Burmese port town of Tavoy.

The Tavoy project, as it is called, is now to be replicated further south. The Burmese for their part have promised Thailand priority in the offer of fishing concessions in the Andaman sea.

Predictably there is opposition in Thailand to this proposed close economic relationship with Burma.

Opposition MP Kraisak Choonhavan - who is also chairman of the Thai Senate's Foreign Affairs Committee - told the BBC that the previous Thai policy of flexible engagement had failed.

"Something new should be tried," he said. "But Thaksin government's 'forward engagement' only means business engagement which benefited Thaksin's cronies."