Laos, at the heart of Asia?

Laos, at the heart of Asia?

The Lao People's Democratic Republic covers an area of 236 800 km² and has a population close to six million people, that is a population density of about 25 inhabitants per km². Its low demographic weight does not hinder a very great linguistic and cultural diversity. Until recently, Laos officially registered 47 ethnic groups. The Lao ethnic group, dominant at the political level, counts for hardly half the total population. According to research conducted by the Lao Front for National Construction (the main government size organization), the country would have right now 49 of it, divided into four ethno linguistic categories: Lao-Tai, Mon-Khmer, Hmong-Mien and Sino-Tibetan. This list of 49 names was however not approved by the National Assembly during the last July 2008 parliamentary session. It is not so much the ‘discovery' of two new ethnic groups that explains this slight increase, but a complex process dictated by criteria and selection methods, sometimes arbitrary, that the members of the ethnic groups are contesting today and who feel that they got a raw deal because their names were modified without their consent, or worse still, because they do not appear in this list any longer. These conflicts bring to light the difficult exercise of defining the Lao nation; they also show that important decisions, even on sensitive subjects, are not exclusively debated and taken within the Politburo of the Communist Party.

Laos is bordered by Thailand in the West and Burma, China in the North, Vietnam in the West, Cambodia in the South; it is the only country in the Indo-China peninsula that does not have direct access to the sea. Laos paid a heavy price for its geographical position during the conflict between United States and North Vietnam. The American bombs bombarded the eastern part of the country between 1964 and 1973 without ever managing to stop the infiltration of North Vietnamese communist forces towards South Vietnam. The « domino » fell finally – without dragging Thailand in its fall, thus belying the fears of the military and analysts of the pro-capitalist camp – in December 1975. Since then, the Lao People's Revolutionary Party, which gets the unfailing support of Chinese and Vietnamese regimes (its two closest political allies), monopolizes the power. 

It is from a regional level that its leaders are now picturing the future of the country. Laos has joined ASEAN, South-East Asian regional organization, on the 23rd July 1997. In November 2004, the regime organized the 10th annual ASEAN summit at Vientiane. More than 3000 delegates, comprising 800 foreign journalists, were invited. The organization of this summit symbolized in some way the end of a long journey undertaken by this country, coming out of the ravages of thirty years of war and several years of economic and diplomatic ostracism by the international community. This support has undeniably brought an extra visibility to Laos, just as it has allowed its senior civil servants to acquire precious skills in institutionalized cooperation. But ASEAN does not have the capacity (nor the mission) to grant development aids for its members. In actual fact, the regional integration of Laos above all continues outside the major official meetings. 

Two of the cross-border routes (including roads, bridges, railroads, etc.), or « Economic Corridors», according to the term employed by the Asian Development Bank (ADB), crosses the country: the North-South and East-West Corridor. Since this year, the first one links the north of Thailand, north-west of Laos and south-west of China (Yunnan), while the second from the Centre of Vietnam covers the south of Laos and the north and north-east of Thailand to join Burma in the west. In the last century, the French colonial administrators hoped to link Laos to Vietnam by road and find a river route on the Mekong towards China. Their attempts failed. The Lao government's plan, protected by powerful sponsors (including ADB), to transform the country into a regional economic hub today gets greater financial and technical  aid, as well as strong support from neighbouring countries (particularly, China and Thailand) resolved to strenghten the economic integration in the Indo-Chinese peninsula. These « Corridors » are in fact expressions of great ambitions : according to the ADB and neighboring countries bordering on Laos, they are going to improve free movement of goods and people (for example, the oriental branch from the North-South Corridor to the North-West of Laos – a four-lane road of 280 km – would reduce the transport time between Kunming and Bangkok from five to one day only) ; from the Lao government's point of view, these roads are finally giving shape to the opening up of the country – by transforming it from a condition of land-locked to land-linked – and its strategic repositioning in the heart of peninsular South-East Asia. To date, these road have less favored exchanges between Laos and the outside world than setting up of foreign investors (particularly, Chinese, Thai and Vietnamese) in the border zones, crossing or near « corridors », on the basis of land leases (thus, at Boten on the Chinese border; in the province of Savannakhet on the route of the East-West Corridor, and at Houei Xai in the North-West, close to the Thai border), where commercial infrastructures and touristic facilities quickly developed (hotels, casinos, restaurants) meant for mainly a foreign clientele.

In spite of an average annual growth of 6.5 %, the Lao economy contains structural weakness (strong dependance on international aid, industrial sector badly developed and low qualification of manpower especially), that does not allow it to fully exploit the opening of its borders. The country, on the other hand, is rich in natural resources (uncultivated arable lands; forest cover (although there is a continuous decline due to cutting of wood (legal and, especially, illegal), the conversion of forest surfaces into spaces of permanent cultures and development of infrastructures (roads and dams, particularly); mine resources (copper, gold, and carbon, among others). In this context, their development seems as the most immediate solution to improve the growth of exports and the GDP from the Lao regime's point of view. Thus, for example, since the 1990s, the Lao government, supported by international lending organisms and private investors, has accelerated its policy for constructing hydroelectric dams. Laos, with the province of Yunnan, has the greatest hydroelectric energy potential among the affluent countries of Mekong, and its leaders hope that the country will become at middle term the « battery of South-East Asia». The challenge to face is immense, nevertheless: how to convert the ‘unexploited' natural resources into a source of revenue for both the State and its citizens; in other words, how to implement a sustainable and equitable national development strategy based on exploitation of natural resources on which rural communities (having three-fourths of the population) largely depend for their subsistence?

The commercial culture of rubber illustrates the risks of drift in the strategy of conversion of natural resources - here, the vacant cultivable lands – in capital. In the absence of official statistics, it is difficult to know the total surface of agricultural lands converted into commercial plantations; in February 2007, the Planning and Investment Committee estimated the area earmarked for rubber cultivation at 200 000 hectares,  distributed over 17 different companies (mostly Chinese, Vietnamese and Thai). The great needs of the Chinese economy in raw materials (having become, since 2002, the first opening for the world production of rubber, while its domestic production is stagnating since the beginning of the 1990s) partly explain this very rapid growth expansion – the boom of the rubber cultivation started only in Laos in 2004 with the arrival of Chinese companies in the North of Laos (Luang Namtha, Oudomxay, Phongsaly). This Chinese request also strengthens the Lao government in its strategy of rural development, and particularly, its policy of lowering poverty focused in transforming an economic auto-sufficient agriculture into market agriculture in rural and mountainous zones. Finally, individual investment of rural households should not be underestimated which are just as eager to receive a share of the cake, albeit a small one.

The conditions in which private companies operate are different. In the North (at Luang Namtha, among others), contracts represent most of the agreements among investors (Chinese mostly) and the villagers. If the formula « 2 + 3 » rather finds  favor with the villagers (they bring the land and the manpower, while the companies provide the capital, technical skills and openings; after the harvest the villagers receive 70% of the profit, the companies, 30%), the companies prefer the formula « 1 + 4 » because it gives them a greater control (the villagers get the land, the rest is taken care of by the companies; the profit share is reversed: 70% goes to the investors), which has stood out more. Moreover, the terms of these contracts (« 2+3 » or « 1+4 ») are often imprecise, vague, indeed sometimes contradictory or downright untruthful in some cases. The risks of disputes among the villagers, local authorities and private companies are, consequently, real, especially as the villagers are rarely consulted while negotiating the contracts.

These changes in the Lao agrarian landscape have in fact quickly provoked criticisms of foreign NGO's working in the country, but also protests of villagers who were victims of unscrupulous practices encouraged by an inadequate and less than binding legal framework, by also the lenient and calculating attitude of some local authorities (according to the laws of decentralization, the provinces are authorized to sign investment contracts with private companies not exceeding three million USD (5 million for the biggest provinces) and 100 hectares of surface area. In the eyes of some projects situated outside the capital, these limits have been clearly overshot, but the important thing is the provincial authorities should know them, which is not always the case).

The tensions were particularly high in the south of the country at the beginning of 2007 in the districts of Laogname (Saravane) and Bachieng (Champassak) between villagers and private companies, accused by the former of encroaching on their agricultural lands to expand their rubber plantations. The gravity of the situation – especially as these clashes were far from being an isolated case – pushed the government to take an unusual decision: on the 9th May 2007, the Prime Minister, Bouasone Bouphavanh, announced the installation of a permanent moratorium on the extensive land leases in the profit-making mining and agricultural sectors. Unlike the North, most of the private companies in the provinces of the South (Savannakhet, Khammouane, Saravane, Champassak, Sekong) develop their commercial crops on the basis of land leases (whose surfaces could cover upto several thousand hectares over a period of 30 to 50 years) that practically escape all control, exclude the participation of the local population and undermine as much the land rights of the households by exaggerating land privatization.

Adopting this moratorium shows that some lessons were learnt, even if the reforms remain urgent and necessary in a sector suffering from numerous shortcomings (absence of systematic collection of data on the cultivated and non cultivated agricultural surfaces; lack of clarity in the prerogatives of different politico-administrative levels (Ministries, provinces, districts) ; inadequate legal frameworks; incomplete enforcement of the land right; lack of qualified personnel and technical support to villagers, etc.). Far from the clichés on the slow progress of the country, the above examples (be it the opening of Laos or upheavals in the agrarian landscape) display the quick changes in the Lao economy and society; without a better wealth management of the country (natural and created), that is impartial to the entire population and sustainable for the environment, these transformations are likely to benefit only a minority.