Secretary of State Condoleezza Rice sharply criticized Burma’s military government Wednesday for denying the aspirations of its people, describing it as an oppressive holdout in a region moving increasingly toward democracy.

Speaking during the second day of a visit to Indonesia, Rice condemned Burma’s rulers for bankrupting their once vibrant economy and shuttering universities that had previously attracted top scholars.

Her tough remarks, which echoed earlier administration criticism of Burma, capped an address surveying the state of U.S. relations with countries across Southeast Asia.

“A country that was once the jewel of Southeast Asia is now out of step with the entire modern experience of the region,” she told an audience of scholars, politicians, businessmen and students at the Indonesia Council on World Affairs. Citing Burma’s decision late last year to relocate its capital to a remote site in its interior, she continued, “The Burmese regime is now literally retreating into the depths of the country, closing its people off from the world and robbing them of their future.”

The U.S. government has imposed economic sanctions on Burma over the last decade in hope of pushing the ruling generals toward political reform and winning the release of detained democracy activist Aung San Suu Kyi. The country’s military rulers have maintained tight control since they rejected the results of a 1990 election won by Suu Kyi’s National League for Democracy in a landslide.

With few formal contacts remaining between Washington and Rangoon, U.S. officials have been looking to the leaders of Burma’s Asian neighbors to press the cause of political reform.

“Democracy still faces determined opponents, and where freedom is under attack, it must be defended,” Rice said after noting that Indonesians themselves had successfully established a democratic system in recent years after longtime dictator Suharto was ousted in 1998 amid mass protests.

Two weeks ago, Indonesian President Susilo Bambang Yudhoyono traveled to Burma and called on its rulers to keep the rest of Southeast Asian informed about internal political changes. He also urged that monitors from countries in the region be allowed to visit.

While these steps were modest, they reflect a new willingness by neighboring countries to intervene in Burma’s domestic affairs. Members of the Association of Southeast Asian Nations (ASEAN) had long rejected what they called meddling in each other’s internal matters.

Late last year, ASEAN agreed to dispatch Malaysia’s foreign minister, Syed Hamid Albar, on a mission to Burma to assess whether the government intended to proceed with democratic reforms it had promised. But Burma repeatedly rebuffed Albar’s request to visit.

In her speech, Rice praised ASEAN for its recent efforts to move Burma toward democracy. She also noted that the U.N. Security Council is reviewing the situation inside that country.

“So long as the proud people of this great nation remain oppressed, there can be no business as usual in Southeast Asia,” she said.

During her remarks, Rice emphasized the U.S. wish to cooperate with ASEAN in confronting a range of security challenges.

Several Southeast Asian governments, including U.S. allies, have criticized the Bush administration in recent years for its apparent reluctance to engage with the organization. These regional officials have warned that the U.S. approach is ceding influence to China, which has proven more enthusiastic about engaging with ASEAN as an institution.

Rice outlined three areas of concern, including the hazard posed by pirates and other criminals to crucial shipping lanes in the Malacca Straits, a narrow strip of water between Indonesia, Singapore and Malaysia through which a quarter of the world’s oil and trade passes. She also cited the danger of epidemic illnesses, most recently bird flu, and the continuing threat of terrorism carried out by radical groups, such as the Jemaah Islamiyah underground in Indonesia and Abu Sayyaf in the Philippines.

On the economic front, Rice said the United States would continue to promote free trade in the region. She noted that the U.S. government has already completed a free trade agreement with Singapore and has started talks with Thailand and Malaysia on similar accords.extended by six months in December.