Cablegate: Visit to Laos of Staffdel Gudes

VZCZCXRO5534
RR RUEHCHI RUEHDT RUEHHM
DE RUEHVN #0668 2331002
ZNR UUUUU ZZH
R 211002Z AUG 07
FM AMEMBASSY VIENTIANE
TO RUEHC/SECSTATE WASHDC 1475
INFO RUEHZS/ASSOCIATION OF SOUTHEAST ASIAN NATIONS

UNCLAS VIENTIANE 000668

SIPDIS

SENSITIVE
SIPDIS

STATE FOR EAP/MLS
STATE FOR H

E.O. 12958: N/A
TAGS: PREL ECON ETRD EINV KHDP PGOV OTRA LA
SUBJECT: VISIT TO LAOS OF STAFFDEL GUDES

REF: A. VIENTIANE 390
B. VIENTIANE 442

1. (SBU) Visiting professional congressional staff members
Scott Gudes and Dan Brandt visited Vientiane August 16-19.
While in Vientiane they met with Vice Foreign Minister
Phongsavath Boupha, who raised restrictions against Eximbank
working in Laos, discussed financial reform in Laos with the
Vice Minister of Commerce and officials from the National
Assembly, and offered to set up a briefing on the Hill for
UXO Lao if they visit Washington, DC as planned in early
October. End Summary.

2. (SBU) Senate Budget Committee Minority Staff Director
Mr. Scott Gudes and Minority Chief Economist Mr. Daniel
Brandt met with Vice Foreign Minister (VFM) Phongsavath
Boupha for an hour on April 17. Mr. Phongsavath discussed
the current state of the Lao-U.S. relationship and urged the
U.S. to lift the ban on Eximbank financing in Laos, becoming
the fifth Lao government official to raise this with either
Post or visitors since March 2007. (Note: Eximbank's charter
prohibits aid to Marxist-Leninist countries, and Laos is
included on this list. The President may remove the
restriction by signing a national interest waiver, as was the
case with Vietnam. (Ref A and B detail some previous
requests by the Lao Government to lift the prohibition.) End
Note.) VFM Phongsavath also requested that the U.S. provide
more funding for humanitarian projects related to missions
involving the Joint POW/MIA Accounting Command in Laos. Mr.
Gudes told the Vice Foreign Minister he would carry the
information on Eximbank back to the U.S. Senate.

3. (SBU) Over lunch at the Ambassador's residence with Ms.
Khemmani Polsena, Vice-Minister of Commerce, National
Assembly representative Dr. Koukeo Akkhamounty, and Mr.
Thanta Kongphaly, a senior National Assembly staffer involved
in economic planning, staffdel members discussed their recent
visits to Vietnam and Cambodia and the various strategies
countries in Southeast Asia are using to strengthen their
economies. Noting the high cost of electricity in Cambodia,
and the constraints this posed for the development of light
industry, Mr. Brandt raised the idea of using Laos' abundant
energy as a comparative advantage, offering foreign investors
cheap electricity in return for setting up shop in Laos.
Commenting on the small amount of electricity Laos is
planning to use from upcoming power projects (for example,
Laos will receive about 1/20 of the electricity produced from
the World Bank financed Nam Theun II dam), Mr. Brandt
suggested that perhaps future power project bidders should be
required to contribute some of the electricity generated to
Laos itself. Dr. Koukeo revealed himself as a closet C-Span
junkie, noting he found the broadcasts very instructive.
Both he and Mr. Thanta listened with great interest to the
staffdel's explanation of the U.S. budget process.

4. (SBU) Dr. Koukeo told the staffdel members about the new
Lao budget law, which centralizes revenue collection with the
national government, away from provincial authorities. The
new law is intended to ensure that revenues are collected and
distributed by the center. Under the prior system,
provincial governors had a great deal of autonomy in
determining how much revenue to retain and how much to return
to Vientiane. Mr. Brandt pointed out that the initial
Articles of Confederation had to be rewritten into the
Constitution partially because the states did not voluntarily
provide enough money to properly run the federal government.
When Mr. Brandt noted that the U.S. system was designed to
avoid excessive concentration of power, Dr. Koukeo expressed
approval, reiterating the well known saying "power corrupts,
and absolute power corrupts absolutely." (Comment: It is
not every day that a nominally communist official voices such
thoughts. End Comment)

5. (SBU) Prior to departing for Luang Prabang to tour the
National Museum and American Corner, the staffdel had coffee
with John Dingley, Senior Technical Advisor at UXO Lao, the
Lao government's unexploded ordnance clearance body. Mr.
Dingley briefed the delegation on the current UXO situation
in Laos and the American contribution to the cleanup. Mr.
Gudes appeared struck by the magnitude of the problem and
questioned the apparent slowness of the cleanup. Upon
hearing that Mr. Dingley hoped to be in Washington in October
with the Director of UXO Lao, Mr. Gudes offered to attempt to
set up a briefing at the Senate for interested parties.

HUSO

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