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"All other regional organizations which started the same way of noninterference now realize that crises do not remain internal or geographically limited for long," Annan said.
"It tends to spread and they have been much more active in intervening whether it is the African Union, the European Union ... they have been very active in trying to assist their neighbors to get things right and I think Asean should be able to do that."
Burma, which has failed to deliver on its pledge to allow democracy, has become a growing embarrassment for the Asean bloc, which comprises Brunei, Cambodia, Indonesia, Laos, Malaysia, Burma, Philippines, Singapore, Thailand and Vietnam.
Burma's junta took power in 1988 and crushed the democracy movement led by Aung San Suu Kyi. In 1990, it refused to hand over power when Suu Kyi's party, the National League for Democracy, won a landslide election victory.
Suu Kyi, the 1991 Nobel Peace Prize winner, has been in prison or under house arrest for more than 12 of the past 18 years.
In a speech at a forum in Kuala Lumpur late Thursday, Annan said Asean must be more "politically courageous" to promote good governance in the region, in an apparent reference to Burma.
He warned political oppression and human rights abuse often send citizens across borders as refugees, which could "poison the whole neighborhood as a whole."