KEY POINTS:
YANGON - After early optimism, hopelessness now pervades Yangon.
Communication to the outside world has been largely cut and, say diplomats in the region, up to 200 protesters are dead.
The official death count from the Government is nine. But no one believes the Government.
The maroon-clad Buddhist monks from the monasteries at Moe Gaung, Ngwe Kyar Yan and elsewhere, who marched in their thousands to give impetus to a new generation of Burmese protesters, are locked up in prison or behind their monastery gates.
Their monks' cells have been smashed, stained with their blood and looted. Those who escaped have taken off their robes and sought refuge disguised as laymen. Parks, grocery stores and internet cafes are closed. Troops stand on every corner.
Few protesters - in contrast to the hundreds of thousands who flocked to the streets last week - were playing a game of cat-and-mouse with the military and pro-military thugs.
For now it has been left to a United Nations envoy, Ibrahim Gambari, to persuade the generals to use negotiations instead of guns to end mass protests against 45 years of military rule.
"He's the best hope we have. He is trusted on both sides," Singapore Foreign Minister George Yeo said. "If he fails, then the situation can become quite dreadful."
A sense of despair was reflected in Yangon, the centre of gravity of the protests, which have faltered and failed under a hail of rubber bullets, tear gas and live rounds.
"I don't think that we have any more hope to win," said a young woman who took part in a huge demonstration on Friday that was broken up when troops opened fire into a crowd. She was separated from her boyfriend and has not seen him since. "The monks are the ones who give us courage."
"People are living in a state of fear and hate," said another onlooker.
But, perhaps, it is not the whole picture. For in Myanmar in these past two weeks of protests, two stories have emerged.
The first has been sharply visible in the images of the vast demonstrations against the military junta that have coalesced around the Sule and Shwedagon pagodas, and the violent response of the regime.
It has been told in pictures of bloodshed and confrontation that have brought back bleak memories of the last time the Burmese people rose up to confront the military. That was in 1988, when 3000 people were murdered by the Army.
But there has been a second, more discreet story that has emerged. The most powerful weapons in the revolution, albeit one that has been crushed for now, were the worldwide web, Facebook and the blogs - in particular, those that fed the Burmese media network in Oslo that fed the world.
With the internet in Myanmar largely closed down, as activists in Norway concede, the powerful images that commanded the world's attention have become scraps of just a few seconds.
Still, the story has seeped out via hurried conversations in Yangon and Mandalay, passed down the line to opposition groups in exile in Bangkok and on the Thai border.
And what it has described is a sclerotic military regime that has been struggling to impose the power it has for so long enjoyed. It tells for the first time of cracks in the military command, of officers questioning the "morality" of their orders and the self-interest of the generals in charge.
"There are differences in the rank and file of the Army for the first time," said one exiled trade union activist.
They are focused, too, on tensions within an Army and bureaucracy who have begun to feel as excluded as the vast majority of Myanmar's people.
Signs of dissent within the military have also been reported by Zin Lin, an official with the Burmese Government in exile.
"We have heard reports from inside the country of places where soldiers are not following orders to fire on demonstrators, including in Mandalay where they refused an order to fire on monks."
There are more intriguing claims emerging that appear to contradict the narrative of the democracy movement being snuffed out without any gain in the last few days.
Among them is the claim in Irrawaddy news magazine that the bubbling dissent within the armed forces has led to a serious falling out between the head of the Army, Vice Senior General Maung Aye, and Senior General Than Shwe over the response to the demonstrations.
Mark Farmaner of the Burma Campaign UK has heard the same accounts.
"The junta relies on its psychological grip on the population. It requires people to be afraid. But people kept coming out day after day. You can say that its grip is lessening."
Although China last week blocked a strong resolution at the UN, it has made unusually strong remarks - strong by its diplomatic standards, that is, that have criticised its ally, perhaps mindful that in the year before the Beijing Olympics it does not want to be seen as party to widespread bloodshed. China supplies arms to Myanmar, part of the US$1.3 billion in goods it exported to its neighbour last year. China accounts for 34 per cent of Myanmar's imports.
Hopes for a positive response are based on Beijing's increasingly pro-active diplomatic policy, despite usually preferring not to interfere in the affairs of other nations.
There are also other internal risks for the Burmese regime.
Armed ethnic groups that had been on ceasefire have been outraged by last week's violence and are angry at the junta's continued intransigence in pushing forward a new constitution that has ignored their demands.
So while the junta may have won for now, quite what the terms and scope of its victory are remain unclear.
The junta does not seem necessarily stronger, only more desperate.
-Observer