VZCZCXRO4208
RR RUEHCHI RUEHCN RUEHDT RUEHHM
DE RUEHVN #0801 3030207
ZNR UUUUU ZZH
R 300207Z OCT 07
FM AMEMBASSY VIENTIANE
TO RUEHC/SECSTATE WASHDC 1613
INFO RUEHZS/ASSOCIATION OF SOUTHEAST ASIAN NATIONS
RUCPDOC/DEPT OF COMMERCE WASHDC
RUEATRS/DEPT OF TREASURY WASHDC

UNCLAS VIENTIANE 000801 
 
SIPDIS 
 
( C O R R E C T E D - COPY) CLASSIFICATION 
 
SENSITIVE 
 
STATE FOR EAP/MLS 
STATE FOR L/EEB JOHN SCHNITKER 
STATE FOR EB/IFD/ODF CONNELL 
STATE PASS USTR FOR BISBEE 
COMMERCE FOR ITA H.P. PHO 
TREASURY FOR S. CHUN 
 
E.O. 12958: DECL: N/A 
TAGS: ETRD EAID EFIN PREL EINV LA
SUBJECT: LAOS PRESSES FOR LIFTING OF EXIMBANK LIMITATION 
 
REF: VIENTIANE 442 
 
¶1.  (SBU)  Summary:  The prohibition on EXIM Bank operations 
in Laos -- based on the characterization of Laos as a 
Markist-Leninist country -- is out of date and does not serve 
U.S. interests.  GOL views the EXIM ban as inconsistent with 
the USG's economic policy toward Laos, highlighted by 
Congressional action in 2004 to grant Laos Permanent Normal 
Trade Relations status.  Action to end the ban on EXIM 
programs would affect the Lao reaction to the recent decision 
to waive certain provisions of the INA (related to material 
support to terrorists) as they apply to ethnic Hmong. 
Lifting the ban would also serve U.S. interests by 
strengthening those in the Lao government who are promoting 
improved relations with the U.S. and further market-based 
economic reforms.  End summary. 
 
¶2. (SBU) The Lao government has repeatedly raised the 
prohibition against Eximbank financing to U.S. companies 
operating in Laos at senior levels to include the Prime 
Minister.  The GOL views the continued ban as, at best, an 
anachronism from the Cold War.  They consider the Exim ban to 
be inconsistent with the positive trend in U.S.-Lao economic 
relations that has included the signing of the 2005 Bilateral 
Trade Agreement and Congressional approval of NTR in 2004. 
The Lao also suggest that lifting the Exim ban would increase 
American investments in and exports to Laos, thus benefiting 
both the American and the Lao economy. 
 
¶3.  (SBU) Seen in the light of our overall objectives, the 
Embassy believes Administration actions to lift the ban would 
be in the U.S. interest.  Lifting the ban would strengthen 
the hand of those in the Lao government who are working with 
us to implement the BTA and prepare for Laos to enter the 
WTO. Although removing the Eximbank prohibition is unlikely 
to have an immediate economic impact, having Eximbank 
financing options available to U.S. companies increases the 
potential for U.S. exports. Embassy believes that EXIM 
financing could support future sales of aircraft, as well as 
power-generating equipment, for example. 
 
¶4. (SBU) Further, the Lao government views with serious 
concern the October 20 issuance of an exemption to "material 
support to terrorism" provisions of the Immigration and 
Nationality Act to persons who provided assistance to ethnic 
Hmong anti-government elements in Laos (ref B).  We have yet 
to see the full political impact of this decision, but we 
anticipate that it will lend support to old-school 
authoritarians inside the government who see the lessening of 
internal controls and closer ties with the United States as 
mistakes.  A positive response to the Prime Minister's 
request on Eximbank would be a timely signal of our continued 
desire to support Laos' economic development and be well 
received by the reform-minded leaders, largely concentrated 
in the economic ministries. 
HUSO