STRASBOURG, France, Sept 6 (Reuters) - The European Commission on Thursday called human rights violations in Myanmar a scandal and said its military government was a threat to the Southeast Asian region.

But the EU executive said isolating Myanmar was not the way to encourage change.

"The Commission remains very worried about this situation," EU Commissioner Viviane Reding told the European Parliament. "We are believing that the military regime is a threat to the region, most of all to the country and the people of Burma."

Reding said much of Myanmar's population lived "in anguish and poverty" and the Commission viewed the rights situation as a "scandal".

She dismissed a National Convention process which this month completed the first stage of drawing up a new constitution as a procedure to boost the power of the current government.

"It was certainly not a genuine exercise to draft a new constitution and it was certainly far from inclusive," she said, adding that the European Union backed a U.N. call for a transparent and inclusive process.

"An effective policy should aim at bringing the country back into the international community. As regards engaging the regime, there is a consensus more needs to be done, not less. Isolation will only make the population pay a greater price."

The commissioner said communication channels needed to be kept open with the government, notably to allow the EU to convey its concerns on human rights.

"We do not believe that additional restrictive measures will push the government in the desired direction or will alleviate the suffering of the people," Reding said.

More than 150 people have been arrested in a crackdown on dissent in Myanmar since Aug. 19, when activists began protests against an increase in fuel prices that nearly froze transport.

The crackdown has been one of the harshest since the army crushed a nationwide pro-democracy uprising in 1988, when around 3,000 people are thought to have been killed.

Hundreds of monks held a group of government officials for more than four hours on Thursday and torched their cars after the officials went to a monastery in the town of Pakokku to apologise for soldiers firing over the heads of protesting monks on Wednesday.

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