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Cablegate: Laos Presses for Lifting of Eximbank Limitation

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Markist-Leninist country -- is out of date and does not serve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

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