The aid plans were launched earlier this year by Norway, the World Bank, European Union, United Kingdom, United Nations and Australia.
Norway's ambassador refutes that notion and says the funds goal is a lasting peace, according to an article on the Voice of America website on Thursday.
Burma's President Thein Sein has come out in support of the initiative, and since taking office has signed cease-fire agreements with most ethnic armed groups.
However, a number of ethnic political parties and civil groups claim the plan is being instituted with a lack of openness and inclusion before a firm peace is established.
Khin Ohmar, with Burma Partnership, speaking at the Foreign Correspondents Club of Thailand, recently said development should not be a substitute for political settlement.
“The government has clearly prioritized economic development over achieving a sustainable peace through the political dialogue. And, what we're seeing now also is that there is lack of involvement of women and civil society in the process so far,” she said.
The World Bank has said its Community Driven Development Program is giving $85 million in grants for schools, roads, water and other projects to be decided by locals.
Hundreds of millions more are expected to become available once Burma settles past debts with the bank.
The Norway-founded Peace Donor Support Group, formed in June at the request of President Thein Sein, pledged an initial $30 million for conflict-affected areas.
The primary focus is on development aid including short-term relief, de-mining, poverty alleviation and education.
After consultations with rights groups and rebel groups, other projects being developed focus on implementing cease-fire agreements, such as funding liaison offices and monitoring.
Katja Nordgaard, Norway's ambassador to Burma, Cambodia and Thailand, said the goal of the peace funds is to encourage political dialogue.
“Everything we're doing is trying to ensure a lasting peace,” said the ambassador. “So, I mean, we're doing this in close consultation with the armed groups, with the government trying to build trust, trying to build contacts, establishing space for normal aid intervention to come in. All of these things are going to be crucial for a lasting peace.”
On the other hand, rights groups say the peace funds fail to address some fundamental causes of the conflict, such as resources.
Fighting has continued between the Burmese army and Kachin rebels since breaking out last year near China-backed hydropower and oil-pipeline projects.
The exiled Kachin News Group reports fighting has intensified since August near Hpakant, one of the world's most important sources of jade.
Local observers say the fighting there is largely about who controls the resources.
“Natural resources is a major cause of conflict in the area, where you can see big projects are and you can see militarization issues and human right abuses,” explained Paul Sein Twa, with the Karen Environmental Social Action Network. “And, this I think, during the peace-building time, especially in the initial phase right now that's then the issues have to be addressed. And, issues related to benefit sharing, ownership issues or political decision over the management of these resources. So, if we cannot address this from the beginning, I think it also can lead to more conflict.”
Norway's Ambassador Nordgaard told VOA although control of resources is not addressed through the peace funds, it would have to be addressed through the political dialogue.
And, although acknowledging the peace process is fragile, she rejected criticism the funding is coming too soon.
“No, just the opposite I would say. It's really important to support the cease-fires as they are and to encourage,” said Nordgaard.
Norway's Myanmar Peace Support Initiative has sought to provide a coordination and facilitation role between the cease-fire groups, authorities and locals since January.
In July, Mizzima reported criticism of the plan by a Karen community-based organization, saying the Norway Peace Initiative process may be fueling added tensions in the region.
Saw Paul Sein Twa, the director of the grassroots Karen Environmental and Social Action Network (Kesan), told Karen News, “There is no transparency, they don't disclose information, or their agreements with the government, or with the cease-fire groups.”
Saw Paul said some people continue to question how a top-down approach will benefit the poor and powerless in Burma.
“They approach only the government and the parties involved in the conflict,” he said.
“It is a lack of parallel discussion and participation…they exclude the involvement of civil society – their aid money and program is top down, and goes to the military-linked elite,” he was quoted as saying.
He charged that information about the Norwegian plan for peace was only obtained from a leaked document.