VZCZCXRO7276
OO RUEHDT RUEHPB
DE RUEHVN #0389/01 2191049
ZNR UUUUU ZZH
O 071049Z AUG 09
FM AMEMBASSY VIENTIANE
TO RUEHC/SECSTATE WASHDC IMMEDIATE 2737
INFO RUCNARF/ASEAN REGIONAL FORUM COLLECTIVE

UNCLAS SECTION 01 OF 03 VIENTIANE 000389 
 
SENSITIVE 
SIPDIS 
 
DEPARTMENT FOR H, EAP/MLS; PLEASE PASS TO SENATOR WEBB 
 
E.O. 12958: N/A 
TAGS: PREL PGOV PHUM ECON ETRD MARR LA
SUBJECT:  SCENESETTER FOR SENATOR WEBB'S VISIT TO LAOS 
 
This message is Sensitive But Unclassified.  Please handle 
accordingly. 
 
¶1. (SBU) You come to the Lao People's Democratic Republic as the 
bilateral relationship continues to broaden beyond anything seen 
since the Communist Pathet Lao came to power in 1975.  Your visit 
will be interpreted by the Lao government (GOL) as further evidence 
of U.S. interest in positive engagement with Laos.  The GOL 
participated in the June 23 Lower Mekong Ministerial with Secretary 
Clinton in Thailand, and has warmly welcomed the prospect of greater 
U.S. attention to Southeast Asia.  President Obama's decision in 
June to lift restrictions on U.S. Export-Import Bank support for 
U.S.-Lao trade has also been received as a very positive political 
signal. 
 
¶2. (SBU) While the Lao political system remains firmly in the 
control of the avowedly-Leninist Lao People's Revolutionary Party, 
the forces of globalization and regionalization continue to drive 
the Lao government to open the economy to market forces.  Laos is a 
weak, landlocked state surrounded by much more powerful neighbors. 
China and Vietnam are ideological allies that are also interested in 
exploiting the country's natural resources and exercising political 
influence. Laos' 12 years as a member of ASEAN have helped bring its 
leadership greater confidence in dealing with the international 
community and greater willingness to integrate with the global 
economy outside of its immediate neighborhood. 
 
¶3. (SBU) The current government - in office since 2006 with a 
five-year term - is more technocratic and less ideological than its 
predecessors and has kept up a steady pace of economic reform. A 
cohort of talented and more outward-looking Lao officials is rising 
in the government and Party. Despite residual suspicion of U.S. 
intentions among the aging politburo members, the Lao government has 
responded favorably to Embassy efforts to broaden engagement with 
the U.S. and to address positively areas of difference, including on 
human rights. As older politburo leaders retire in 2011, we expect 
this trend toward leadership pragmatism and positive relations with 
the United States to continue. 
 
Global Crisis Has Slowed Recent Economic Progress 
--------------------------------------------- ---- 
 
¶4. (SBU) Until the global economic crisis of 2008, international 
investments in mining and hydropower over the past decade had 
resulted in a windfall of revenues for the government and helped 
fuel high GDP growth. The global recession has hit these sectors 
hard, bringing projected growth rates for the years 2009-2011 down 
from 8 percent to 4-5 percent annually. 
 
¶5. (SBU) While Laos has been to some extent been insulated from the 
crisis by the fact that over 70 percent of the population depends on 
rural, largely subsistence activities, the slowdown in investment 
will hamper prospects for Laos' prospects for achieving its goal of 
leaving Least Developed Country status by 2020. Laos will continue 
to rely heavily on international donors for investments in human 
resource and infrastructure development. Laos will also be hard 
pressed to significantly reduce the high national rates of poverty 
and malnutrition, especially in children under the age of five, and 
raise the low standards of education and health care that place the 
country firmly in the lowest tier of UN and World Bank human 
development indicators. 
 
¶6. (SBU) The key development challenge for the Lao government over 
the next ten years will be to achieve more broadly based economic 
growth that will create employment opportunities and lift living 
standards of the impoverished rural sector. Although Laos has 
recently generated significant new wealth, these riches have gone 
disproportionately to urban elites associated with the communist 
party. Laos' poorly developed system of governance and dire shortage 
of trained personnel will make it difficult to carry through 
economic reforms, even when the government has the will to do so. 
 
Moving Laos toward international governance standards 
--------------------------------------------- -------- 
 
¶7. (SBU) Under the GOL's one party political system, rights to free 
speech, free press and free association are limited. The 
international community, including the United States, has continuing 
concerns about religious freedom and human rights generally in Laos, 
though the GOL has been more willing in recent years to engage on 
these issues.  The GOL is also now beginning to take some steps to 
permit the emergence of civil society, including a Prime Minister's 
decree in April this year that promises to allow the legal formation 
of Lao non-profit organizations to an unprecedented degree. 
 
¶8. (SBU) Key Embassy objectives are to assist Laos to integrate 
fully within ASEAN and the global economy, to promote sustainable 
economic and social development, and to strengthen the emerging but 
very fragile civil society along with greater respect for human 
rights.  Laos, in turn, values constructive relations with and 
 
VIENTIANE 00000389  002 OF 003 
 
 
assistance from the U.S. (along with Europe, Japan and Korea), to 
balance its relations with China and Vietnam.  The Embassy looks to 
take advantage of the opportunity that now exists to influence Lao 
economic policy and development, and thus its political development 
as well. 
 
Plans to bring USAID back soon 
------------------------------ 
 
¶9. (SBU) The Embassy has begun talking with the Lao government and 
with USAID about opening a USAID office in Vientiane within the next 
two years, to expand assistance programs into new economic reform, 
health, education, and environment projects. The Lao government has 
expressed a strong interest in increased U.S. development assistance 
and recognizes that this would require quietly dropping past 
objections to a USAID presence, derived from the agency's 
association with the pre-1975 "secret war." 
 
¶10. (SBU) The Lao have been eager to receive U.S. technical 
assistance to help them implement the commitments they made to us in 
the Bilateral Trade Agreement and to prepare for WTO membership. 
Since the BTA came into effect in 2005, bilateral trade has 
increased rapidly from a small base, growing from $25 million in 
2007 to $60 million in 2008. We are expanding an assistance program 
that would build Laos' capacity to modernize its legal and 
regulatory framework for trade. This will be an important step 
toward developing a rule of law society in Laos. 
 
¶11. (SBU) We have seen very positive cooperation in preventing and 
containing infectious disease in Laos, with recent emphasis on avian 
influenza, which sees frequent outbreaks here. This has been a 
multi-agency effort, involving the Centers for Disease Control 
(CDC), U.S. Pacific Command and Defense medical agencies, and the 
Department of Agriculture, as well as USAID. 
 
Military relations broadening as well 
------------------------------------- 
 
¶12. (SBU) The POW/MIA full accounting mission remains of the highest 
importance to the American people and to this Mission. The GOL 
continues to provide very active cooperation to our joint recovery 
efforts.  Our broader goal of assisting the Lao military to become a 
more professional institution is proceeding with the opening of the 
U.S. Defense Attache Office in December 2008.  Senior Lao military 
officials are now frequently participating in U.S. DOD-sponsored 
regional conferences.  Our small IMET program is for the moment 
focused mostly on English language training, to broaden the pool of 
Lao military personnel who can effectively interact in international 
settings. 
 
UXO Clearance a Continuing Humanitarian Need 
-------------------------------------------- 
 
¶13. (SBU) Unexploded ordinance (UXO) is another legacy of the 
Indochinese war that continues to take a heavy civilian toll, 
especially among children killed or injured by the remaining tens of 
millions of unexploded cluster bombs.  UXO also has considerable 
impact on economic development, driving up the cost of 
infrastructure construction and preventing large amounts of arable 
land from being safely farmed.  U.S. Special Forces personnel 
trained Lao UXO clearance experts in the late 1990s, and the USG is 
the largest single donor to Lao UXO clearance operations.  While the 
Lao do not explicitly link our assistance in the removal of UXO to 
their support for the MIA recovery operations, they perceive both as 
driven by humanitarian considerations. 
 
¶14. (SBU) UXO clearance in Laos is at present an overwhelmingly 
civilian activity, either by the state agency UXO Lao or by 
international NGOs.  With the Defense Attache Office now open, we 
hope in the near future to use an initial small Foreign Military 
Financing program to help the Lao military enhance its de-mining 
capacity.  The civilian agencies do not undertake de-mining work. 
 
Counter Narcotics Cooperation a Notable Success Story 
--------------------------------------------- -------- 
 
¶15. (SBU) U.S.-funded opium crop control programs in Laos have been 
a success story. Alternative development projects have brought opium 
cultivation down from 26,000 hectares in 1998 to around 2,000 
hectares in 2008. There are reports, however, indicating increased 
opium planting in early 2009, possibly influenced by the economic 
slowdown and historically high opium prices. Laos is highly 
vulnerable to illegal trafficking of all kinds - human, drugs and 
wildlife -- because of weak law enforcement and rapidly expanding 
road links to China, Thailand and Vietnam. Combating all these forms 
of trafficking continues to be a key U.S. interest. 
Lao law enforcement has been slower to work with U.S. agencies other 
GOL elements, but has recently increased cooperation with DEA.  The 
growing threat of methamphetamines to Lao youth and the recent 
appearance of West African drug trafficking networks have boosted 
 
VIENTIANE 00000389  003 OF 003 
 
 
Lao interest in international law enforcement collaboration. 
 
Resolving the Issue of Lao Hmong Detained in Thailand 
--------------------------------------------- -------- 
 
¶16. (SBU) There are currently around 5,000 ethnic Hmong Lao citizens 
detained in Thailand for illegal entry.  The GOL and Royal Thai 
Government (RTG) have announced their intent to return to Laos all 
of these detainees by the end of 2009. An additional 2,700 Lao Hmong 
have already been returned - voluntarily, say the two governments - 
since 2006, with the GOL providing support for reintegration into 
Lao communities.  Both governments have expressed concern that 
resettling detained Lao Hmong to any other country will result in 
more Lao Hmong crossing to Thailand in order to emigrate abroad. 
 
 
¶17. (SBU) The U.S. has an established humanitarian interest in the 
status of the ethnic Hmong minority, some of whom fought on behalf 
of the U.S. during the "secret war" in Laos. The central Embassy 
Vientiane objective regarding Lao Hmong detainees is to put in place 
a process, consistent with international norms and transparent to 
the international community, for the safe resettlement in Laos of 
Hmong who left for Thailand in the expectation of resettlement as 
refugees in a third country, but who do not qualify for refugee 
status.  U.S. Embassy Bangkok is addressing with the RTG the issue 
of an appropriate screening process to determine whether any of the 
Lao Hmong detainees may in fact have grounds to be considered 
refugees.