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PP RUEHCHI
DE RUEHVN #0596/01 1810610
ZNY CCCCC ZZH
P 300610Z JUN 06
FM AMEMBASSY VIENTIANE
TO RUEHC/SECSTATE WASHDC PRIORITY 0067
INFO RUEHBK/AMEMBASSY BANGKOK 6668
RUEHHI/AMEMBASSY HANOI 2687
RUEHGO/AMEMBASSY RANGOON 2138
RUEHPF/AMEMBASSY PHNOM PENH 1799
RUEHBJ/AMEMBASSY BEIJING 1986
RUEHCHI/AMCONSUL CHIANG MAI 0420
RHHMUNA/CDR USPACOM HONOLULU HI

C O N F I D E N T I A L SECTION 01 OF 03 VIENTIANE 000596 
 
SIPDIS 
 
SIPDIS 
 
DEPARTMENT FOR EAP/MLS, DRL 
 
E.O. 12958: DECL: 06/30/2016 
TAGS: PGOV SOCI PHUM EAGR PREL LA
SUBJECT: THE GREAT LAND GRAB 
 
REF: A. VIENTIANE 142 
 
     ¶B. 05 VIENTIANE 784 
 
Classified By: Ambassador Patricia M. Haslach, reason 1.4 (b) and (d). 
 
¶1. (SBU) Summary: Economic development is spurring a land 
grab in broad areas of the country, and the poorest Lao are 
paying the price. What is feeding the frenzy is a boom in the 
mining industry and in agricultural commodities, principally 
rubber and eucalyptus.  Foreign investment projects are 
contributing to the problem; ongoing and planned 
mega-projects, especially in hydropower, are forcing 
villagers from their land.  Those being dispossessed have 
little recourse: land ownership is based more on tradition 
than law, and citizens have no viable means of seeking 
redress from their government. Dispossession will continue as 
long as the GoL puts coddling some investors above the 
welfare of its citizens. End summary. 
 
Economic development 
-------------------- 
¶2. (SBU) Laos' economic growth over the past decade has been 
greatest in sectors supplying commodities to neighboring 
China and Vietnam.  China's search for goods and raw 
materials of all kinds is fueling a revolution in agriculture 
in the northern provinces, as farmers abandon subsistence 
practices to produce for the market.  Much the same thing is 
beginning to happen in the south, where Vietnamese are 
investing in coffee and rubber.  The mining sector is seeing 
an explosion of activity, as the mining world discovers that 
Laos has untapped, and largely unexplored, mineral wealth. 
Private and state-owned companies from Laos' neighbors are 
also investing in hydropower, as they look to provide energy 
to their own power-hungry markets. 
 
Taking the land 
--------------- 
¶3. (SBU) Investment in these sectors is coming at a price, as 
poor rural dwellers in some areas face loss of access to, and 
in some cases dispossession of, their traditional lands.  A 
weak land ownership system is providing a handy loophole for 
investors, both foreign and domestic, wishing to put land to 
more "productive" use. Nowhere is the practice more 
pronounced than in the agricultural sector, where villagers 
in some areas face loss of their livelihoods through the 
destruction of forests as investors move in to plant rubber 
and eucalyptus.  The rubber boom is already affecting Laos' 
far-north Luang Namtha province.  Chinese investors, helped 
by Lao authorities, are taking thousands of hectares of 
"unused" land, much of it important resources for neighboring 
ethnic minority villages, and converting it to rubber 
plantations. Even some areas set aside as National 
Biodiversity Conservation Areas (NBCAs) are being cleared for 
rubber. The trend is mirrored in the far south, where 
Vietnamese investors are clearing large tracts for rubber. 
 
¶4. (SBU) Eucalyptus is the "next best thing" in the 
agriculture industry. Two major foreign corporations, Japan's 
Oji Paper Company and India's Aditya Birla Group, have 
received large concessions, totaling more than 200,000 
hectares in the central part of the country, for planting 
pulp trees. The country director of Oji, Japan's largest 
paper manufacturing company, told us Oji would rely on 
district and provincial agricultural officials to designate 
where the company could plant. In theory only "degraded" or 
"unproductive" forest land could be used. But the director 
admitted that Oji would have no influence over this process. 
A Lao forestry official, echoing these remarks, said measures 
of "degraded" forest were subjective, and easily manipulated: 
local officials could designate as "degraded" forests that 
were in fact healthy and important sources of non-timber 
forest products (NTFPs) for local villagers. 
 
¶5. (SBU) Rural villagers are also seeing the loss of land to 
the mining sector.  The central government doles out 
concessions with little apparent consideration for 
on-the-ground consequences, especially for nearby villagers. 
And, as with the forest plantations, mining is taking place 
on lands that are the traditional sources of NTFPs for 
locals.  Even Laos' two world-class mining operations, 
Australian-owned Oxiana Mining and Phu Bia Mining, have 
created tensions with local villagers over loss of land, 
alleged destruction of ancestral graves, and polluted water 
sources. The impact of Thai, Vietnamese and Chinese mines, 
 
VIENTIANE 00000596  002 OF 003 
 
 
little-regulated by the GoL, has been more profound.  One 
mine, the Vieng Phoukha Cole Mine in Luang Namtha, provides 
an object lesson.  As the mine has expanded, local villagers 
have lost first their paddy land and finally their homes, 
with only minimal compensation. 
 
¶6. (SBU) The hydropower sector may have an even bigger impact 
on village lands. The Nam Theun 2 project, now under 
construction, is forcing the relocation of about 2,000 
villagers, but at least social/environmental mitigation 
measures associated with the project have ensured adequate 
resettlement arrangements for these people. Other projects, 
privately funded, have not contained safeguards. The planned 
Nam Ngeum 2 Dam will necessitate the relocation of several 
thousand villagers to distant areas like Muang Feuang 
district in Vientiane province, infamous for its poor-quality 
land.  The experience of ethnic minority villagers displaced 
from other dams built in recent years, like the Nam Mang 3 in 
Vientiane province or the Houay Ho in Attapeu province, 
demonstrates the government's lack of concern for the welfare 
of the most vulnerable minorities forced to take up lives in 
new areas. 
 
¶7. (SBU) Even urban dwellers have been impacted by government 
policy aimed at making land available to investors at the 
cost of pushing out the original tenants. Around 200 
families, many of them members of the military and police, 
face eviction from a 40-hectare plot of land bordering 
Vientiane's international airport, to make way for a 
Chinese-funded trade center. So far the government has made 
no announced plans for where the former residents will be 
resettled. If the past is a guide, they may be relegated to 
Vientiane's outskirts. Hundreds of people displaced by the 
construction of the Nong Chanh Park in central Vientiane 
three years ago were resettled in a dusty field miles from 
the city, leaving many of them bitter over the experience. 
The "Boten Golden City," another Chinese investment in Luang 
Namtha province, has already forced the relocation of three 
long-established villages to marginal lands (reftels). 
 
Weak laws and weak rights 
------------------------- 
¶8. (SBU) Weak land ownership laws is a major factor in this 
phenomenon.  Laos is one of the least-populated countries in 
Southeast Asia, at 27 persons per square kilometer. Low 
population density has meant that, for centuries, villages 
were free to exploit nearby lands without competition. 
Villagers rely heavily on nearby forests for their 
livelihoods: NTFPs are a major source of food and materials 
in all rural areas.  But the country has never developed a 
clear-cut system of land ownership. Land titles, even in the 
cities, are a recent phenomenon. In rural areas they are 
by-and-large non-existent. Farmers have by tradition "owned" 
lands by agreement from others in the village, with fields 
handed down through generations by consensus. 
 
¶9. (SBU) The Lao government has made only weak efforts to 
address the problem. Beginning in 1989, the government 
undertook a program of land-forest allocation, to formalize 
what had up to then been very informal arrangements of land 
ownership. A 1997 Land Law furthered the process, 
establishing transfer and inheritance of land and 
guaranteeing rights of citizens to own and use land. Both 
laws were designed in part to address concerns over 
deforestation, and discouragement of swidden agriculture, a 
traditional farming practice seen by the government as 
contributing to forest destruction.  The Australians have 
tried to assist the process of providing permanent title to 
land through a long-term "land titling project," aimed at 
giving deeds to Lao for their property. But this project has 
emphasized urban areas, and has hardly scratched the surface 
of land ownership outside Vientiane and a few major cities. 
 
¶10. (SBU) Making matters worse, Lao citizens have no way to 
seek redress for loss of their land. Although the 1997 Land 
Law acknowledges private ownership of land, the concept 
remains foreign to most Lao officials, who regard the state 
as the ultimate owner. The National Assembly in theory 
provides a forum for Lao to bring their grievances; National 
Assembly members hear concerns of their constituents and 
bring them to the government. In practice this system breaks 
down: the UN, which conducts a large project to improve the 
Assembly's responsiveness, has identified constituent 
services as one of the Assembly's critical shortcomings. 
 
VIENTIANE 00000596  003 OF 003 
 
 
 
¶11. (SBU) Ignorance and greed may be the biggest factors 
working against the victims.  The Lao government is keen to 
attract investment dollars to meet economic growth goals, 
regardless of local consequences. Anecdotally, government 
officials at both the central and provincial level have a 
plate of tricks to benefit from concessions, for example 
selling off logs from areas designated as degraded forest. 
District and provincial officials, who in the case of 
plantation forests are the ones determining areas to be 
planted, have unchallenged authority in their areas.  Local 
governments and courts in effect have the final say on 
matters of land jurisdiction and often have strong incentive 
to divest poor villagers of their land, both for personal and 
"official" reasons.  Faced with the power of the state, 
villagers have no recourse but to accept their losses. 
 
Comment 
------- 
¶12. (C) Intent on giving an open door to some foreign 
investors, the government has few compunctions about 
trampling on its own citizens, ignoring their traditional 
lands and livelihoods and utter dependence on their 
environment for their survival.  In the near-absence of 
meaningful rule of law, those affected are at the mercy of 
sometimes venal, usually uncaring, bureaucrats administering 
the land use system.  As Laos' reputation grows as an "easy" 
place for investors in sectors like hydropower, plantation 
forests and mining, more and more of Laos' poorest citizens 
are likely to find themselves dispossessed of their 
traditional lands. End comment. 
HASLACH