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Cablegate: Scenesetter for Codel Faleomavaega Visit to Laos

VZCZCXRO7978
OO RUEHDT RUEHPB
DE RUEHVN #0594/01 3641149
ZNR UUUUU ZZH
O 301149Z DEC 09
FM AMEMBASSY VIENTIANE
TO RUEHC/SECSTATE WASHDC IMMEDIATE 2912
INFO RUCNARF/ASEAN REGIONAL FORUM COLLECTIVE PRIORITY

UNCLAS SECTION 01 OF 03 VIENTIANE 000594

DEPARTMENT FOR H, EAP/MLS;
PLEASE PASS TO CONGRESSMEN FALEOMAVAEGA, HONDA, AND CAO

SENSITIVE
SIPDIS

E.O. 12958: N/A
TAGS: PREL PGOV PHUM ECON ETRD MARR LA
SUBJECT: SCENESETTER FOR CODEL FALEOMAVAEGA VISIT TO LAOS

This message is Sensitive But Unclassified. Please handle
accordingly.

1. (SBU) You come to the Lao People's Democratic Republic after a
year of increased international attention to Laos, and 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 - an issue raised by the Prime Minister in his
meeting with you last January - has also been received as a very
positive political signal. In December, Laos hosted for the first
time the Southeast Asian Games and received great international
praise in the region for its efforts. At the end of December,
though, the forced repatriation by the Thai Government of Lao Hmong
led to considerable U.S. and international pressure on the GOL for
increased transparency in its handling of the returnees.

2. (SBU) Although 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.

Return of the Lao Hmong from Thailand
-------------------------------------

4. (SBU) The GOL and Royal Thai Government (RTG) had announced their
intention to return to Laos all remaining Lao Hmong detainees --
roughly 4,300 Hmong in a camp in Petchabun province and 158 Hmong in
the Nong Khai Immigration Detention Center -- by the end of 2009.
The UNHCR has accorded the Nong Khai group status as persons of
concern, and the RTG and international community believe some of the
Phetchabungroup have legitimate fears of returning to Laos.
Nonetheless, on December 28, the RTG repatriated both groups to Laos
despite U.S. and international pressure for a process consistent
with international norms and transparent to the international
community.

5. (SBU) Since the return of the two groups, the GOL has stated that
both groups are being processed at a previously prepared facility in
Paaksan, Borikhamsay province. Other sources have reported that the
Nong Khai group is being held at a different location, closer to
Vientiane. As of December 30, the GOL had not allowed third-party
observers access to any of the returnees. Some of the returnees
seem to have phone access, and we have received no reports of
abusive or improper treatment of the returnees.

6. (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 USG
objectives regarding Hmong returnees are:
-- to process for possible resettlement in the U.S. certain Hmong
previously identified by the UNHCR as persons of concern,
-- to determine whether any of the Hmong returnees from Huay Nam
Khao may in fact have grounds to be considered for resettlement to
another country, and
-- to ensure the humane treatment of the returnees while they are
reintegrated into their former villages or resettled in new
"development" villages.

Military Relations Broadening
-----------------------------

7. (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

VIENTIANE 00000594 002 OF 003


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, and the full-time
presence of the Defense Attache since July 2009. Senior Lao
military officials are now frequently participating in U.S.
DOD-sponsored regional conferences, and there is an active civ-mil
medical cooperation program. 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
--------------------------------------------

8. (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.

9. (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.

Global Crisis Has Slowed Recent Economic Progress
--------------------------------------------- ----

10. (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, although recent increases in
metal prices have helped the mining sector recover somewhat.

11. (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.

12. (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
--------------------------------------------- --------

13. (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.

14. (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
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

VIENTIANE 00000594 003 OF 003


economic policy and development, and thus its political development
as well.

Plans to bring USAID back
-------------------------

15. (SBU) The Embassy has begun talking with the Lao government and
with USAID about establishing an AID presence at the Embassy 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."

16. (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.

17. (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.

Counter Narcotics Cooperation a Notable Success Story
--------------------------------------------- --------

18. (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 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 in the past two years shown some increased cooperation with DEA.
The growing threat of methamphetamines to Lao youth and the recent
appearance of West African drug trafficking networks have boosted
Lao interest in international law enforcement collaboration.

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