Background Notes: Laos

PA/PC Source: Office of Public Communication, Bureau of Public Affairs Date: Mar 28, 19913/28/91 Category: Country Data Region: Southeast Asia Country: Laos Subject: Military Affairs, Cultural Exchange, Travel, History, International Organizations, Trade/Economics [TEXT] Official Name: Lao People's Democratic Republic


Nationality: Noun and adjective-Lao (sing. and pl.). Population: 4 million (1988). Annual growth rate: 2.6%. Population Density: 16/sq. km. Ethnic groups: Lao 50%; Phoutheung (Khan) 15%; tribal Thai 20%; Hmong, Yao, and other 15%. Religions: Principally Buddhism, with animism predominant among tribal groups. Languages: Lao (official), French. Education: Literacy-45%. Health: Infant mortality rate-110/1,000. Life expectancy-48 years. Work force (1.6 million): Agriculture-85%; Industry-6%.
Area: 236,804 sq. km. (91,430 sq. mi.); smaller than Oregon. Capital-Vientiane (pop. est. 155,000); other principal cities- Savannakhet, Luang Prabang, Pakse, Thakhek. Terrain: Rugged mountains, plateaus. Climate: tropical monsoon.
Type: Communist. Branches: Executive-president (head of state); chairman, council of ministers (prime minister and head of government); 84-member Cabinet (including vice ministers). Legislative-Supreme People's Assembly. Judicial-mixture of regular and "people's courts," the latter for security cases. Political parties: Lao People's Revolutionary Party (only legal party). Leaders: Kaysone Phomvihan, prime minister and party secretary general (since December 1975); Phoumi Vongvichit, acting president (since October 1986). Administrative subdivisions: 17 provinces. Legal system: based on civil law system. Central government budget (1989 est.): Revenue-$81 million; expenditures-$187 million, including capital expenditures of $88 million. Flag: A red band at the top and bottom with a larger blue band between them; large white circle is centered. Major holidays: National Day (proclamation of the Lao People's Democratic Republic), December 2; Independence Day (from France), July 19.
GDP (1989 est.): $650 million; Per capita income: $162 (1989); Real growth rate: 10.7% (1989). Natural resources: tin, timber, gypsum, hydroelectric power. Agriculture (62% of GDP): Products-rice, corn, tobacco, coffee, cotton. Industry: (16% of GDP) Types-tin/gypsum mining, lumber, textiles, construction. Industrial growth: 26% (1989). Merchandise Trade: Exports- $58 million (1989): chiefly hydroelectric power and timber; also coffee and tin. Major markets-Thailand, Eastern Europe, USSR, Vietnam, Malaysia. Imports-$171 million (1989): chiefly foodstuffs, petroleum, machinery, manufactured goods. Major suppliers-Thailand, USSR, France, Japan, Vietnam. Foreign debt: $944 million (end of 1989). Inflation rate: 22% (1990 est.). Official exchange rate (Jan. 1991): 700 kip=US $1. Fiscal year: July 1-June 30.
Membership in International Organizations
UN and some of its specialized and related agencies, including the World Bank, International Monetary Fund, FAO, GATT (observer), ICAO, IDA, IFAD, ILO, ITU, UNCTAD, UNESCO, UPU, WHO, WMO; Council for Mutual Economic Assistance [observer], Nonaligned Movement, Group of 77, Asian Development Bank, Colombo Plan, Economic and Social Commission for Asia and the Pacific, Inter-Parliamentary Union, Interim Mekong Committee, World Federation of Trade Unions.


Laos' population is estimated at about 4 million, spread unevenly across the country. Most people live in valleys of the Mekong and its tributaries. Vientiane, the capital and largest city, has about 155,000 residents. Just under half the people are ethnic Lao, the principal lowland inhabitants and politically and culturally dominant group. The Lao are descendent from the Thai people who migrated southward from China in the 13th century. Mountain tribes of Sino- Tibetan (Hmong, Yao, Aka, and Lahu) and Thai ethno-linguistic heritage are found in northern Laos. In the central and southern mountains, Mon-Khmer tribes predominate. Some Vietnamese and Chinese minorities remain, particularly in the towns, but most have left since 1975. The predominant religion is Theravada Buddhism. Animism is common particularly among the mountain tribes. Buddhism and spirit worship coexist easily. Most Christians (primarily Roman Catholic) have left since 1975. The official and dominant language is Lao, a tonal language of the Thai linguistic group. French, once common in government and commerce, has declined with the departure of many former government officials.


The first recorded history of the Lao begins with King Fa Ngum, by legend the 23rd successor of Khoun Lo, who first united Laos in 1353. He established his capital at Luang Prabang and ruled a kingdom called Lan Xang (literally, "million elephants") that covered much of present-day Thailand and Laos. He also established Buddhism as the state religion. In the 16th century, Lan Xang entered a period of decline caused by dynastic struggles and conflicts with Burma, Siam (now Thailand), Vietnam, and the Khmer Kingdom. By the 18th century, the Siamese and Vietnamese kingdoms were competing for control of Laos. In the 19th century, the Siamese dominated much of what is now Laos and divided it into principalities centered on Luang Prabang, Vientiane, and Champassak. Late in the century, they were supplanted by the French, who already controlled present-day Vietnam. In 1899, France established protectorates and direct rule over all of the principalities, and Laos became part of French Indochina. The Franco-Siamese treaty of 1907 defined the present Lao boundary with Thailand. During World War II, the Japanese occupied French Indochina and extended their control over Laos. They induced King Sisavang Vong of Luang Prabang to declare his independence from France in 1945, just before Japan's surrender. In September 1945, Vientiane and Champassak united with Luang Prabang to form the new Kingdom of Laos. The king was overthrown shortly afterward by the Free Lao (Lao Issara) anti-French government, but in April 1946 he was enthroned as a constitutional monarch after accepting the Lao Issara constitution. French troops reoccupied Vientiane and Luang Prabang in May and, in August 1946, recognized Lao autonomy after elections to a constituent assembly. A new constitution took effect in 1947. France formally recognized the independence of Laos within the French Union on July 19, 1949, and Laos remained a member of the French Union until 1953. From 1954 until 1957, pro-Western governments held power. The first coalition government, the Government of National Union, led by Souvanna Phouma, was formed in 1957, but it collapsed in 1958 with the imprisonment of Prince Soupha-nouvong and other LPF leaders by the government. A pro- Western regime took over the Royal Lao Government. The LPF insurgency resumed after 1959, when Souphanouvong and other leaders escaped from prison. In 1960, Kong Le, a paratroop captain, seized Vientiane in a coup and demanded formation of a neutralist government to end the fighting. Kong Le and the neutralist government, again under Souvanna Phouma, were driven from Vientiane later in the year by rightist forces under Gen. Phoumi Nosovan and then formed an alliance with the LPF. By early 1961, the LPF, with North Vietnamese military support, threatened to take over the entire country. US military advisers and supplies were sent to aid the Royal Army. A 14-country conference convened in Geneva to address the issue of Laos reached an agreement in 1962 that provided international guarantees for the independence and neutrality of Laos. But the LPF ceased cooperating with the government in 1964, and fighting intensified against the neutralists and rightists. In 1972, the Lao communists publicly proclaimed the existence of the Lao People's Revolutionary Party (LPRP). A new coalition, with Communist participation, and a cease-fire were arranged in 1973, but the political struggle between the communists, neutralists, and rightists continued. The collapse of Saigon and Phnom Penh in April 1975 hastened the decline of the coalition. On December 2, 1975, the monarchy was abolished and the communist Lao People's Democratic Republic (LPDR) was established. The new government opted for socialism, with centralized economic decision-making and broad security measures, including the control of media and the arrest and incarceration of thousands of members of the previous government and military in remote prison camps called "re-education camps." The government, in cooperation with Vietnamese forces in Laos, also launched a military campaign intended to control dissidents, notably Hmong tribespeople who had long resisted Vietnamese and Lao communists from their mountain redoubts. This military campaign, along with deteriorating economic conditions and government attempts to enforce political control, prompted an exodus of lowland Lao and Hmong tribespeople in the early years of LPDR rule. About 10% of the Lao population sought refugee status after 1975. Many have since been resettled in third countries, including 185,000 who have come to the United States. An estimated 65,000 refugees remain in Thailand, though 7,000 returned voluntarily to Laos in recent years. In the late 1980s, the government closed most re-education camps and released most political prisoners, though reports indicate that at least 34 high officials from the former government remain in custody.


The only legal political party is the communist LPRP. The head of state is President Souphanouvong. Since his stroke in late 1986, most of his duties have been taken over by acting president Phoumi Vongvichit. Real power, however, rests with Kaysone Phomvihan, chairman of the council of ministers and LPRP secretary general. The Lao national legislature, the Supreme People's Assembly (SPA), adopted new election laws in 1988, and the first national elections under the current government took place in March 1989 (local elections were held in 1988). The newly elected SPA set out to draft a constitution, which was finished in mid-1990 and is expected to be approved in 1991. The constitution calls for a strong legislature elected by secret ballot, but most political power continues to rest with the party-dominated council of ministers.


Laos is a poor, landlocked country with a real per capita GDP of less than $170, a grossly inadequate economic infra-structure, and a largely uneducated workforce. Agriculture, mostly subsistence rice farming, dominates the economy, employing 85% of the population and producing 62% of the national income. Domestic savings are low, so Laos depends almost entirely on foreign aid and concessional loans for investment. Nevertheless, Laos has plenty of arable land, a favorable land-to-labor ratio, tremendous hydro- electric potential, and large amounts of minerals, including tin, gold, and probably petroleum. When the current government came to power in 1975, it imposed a harsh, Soviet-style economic system, replacing the private sector with state enterprises and cooperatives, centralizing investment, production, trade, and pricing, and creating barriers to internal and foreign trade. Lao authorities began to realize as early as 1979 that their economic policies were inappropriate, but not until 1985, with the introduction of the "new economic mechanism" (NEM), did they initiate major reforms. Initially timid, the NEM soon was expanded to include a range of reforms that changed the structure of the Lao economy. Free market prices replaced government-set prices. Farmers were allowed to own land and sell crops at market prices. State firms were granted increased decision-making authority but lost most of their subsidies and pricing advantages. The government set the exchange rate at market levels, lifted trade barriers, replaced import quotas with tariffs, and stimulated private sector firms by giving them direct access to imports and credit. These reforms have helped boost exports, reduce inflation, encourage business, and increase the availability of goods. However, the economy is dominated by an unproductive agricultural sector that operates largely outside the money economy, which the public sector continues to dominate. Recognizing these problems, Lao authorities in mid-1989 signed an agreement with the World Bank and the International Monetary Fund committing themselves to extending and deepening reforms. They agreed to expand fiscal and monetary reform, promote private enterprise and foreign investment, privatize or close state firms, and strengthen banking. They also agreed to maintain a market exchange rate, reduce tariffs, and eliminate unneeded trade regulations. In the last 2 years, the Lao have enacted a liberal foreign investment code, begun to privatize public firms, and expanded economic ties with the West. They have tried especially hard to attract foreign investment.


The Pathet Lao leaders who took over in December 1975 aligned themselves with the Soviet bloc and adopted a hostile attitude toward the West. Laos has been close to the Soviet Union and Eastern Europe and is an observer at the Council for Mutual Economic Assistance, the Soviet-bloc economic organization. Since 1975, Laos has maintained close ties with Vietnam, described by the Lao and Vietnamese as a "special relationship" and formalized in a friendship and cooperation treaty. Laos has maintained close ties with Cambodia since the 1979 installation of a Vietnamese-backed regime. In the last few years, Laos has sought to improve relations with other countries and to reduce its dependence on Vietnam and the Soviet bloc. Much of its efforts have focused on Thailand, Laos' principal means of access to the sea and its primary trading partner. Less than a year after serious border clashes in 1987, Lao and Thai leaders signed a communique signaling their intention to improve relations. Since then, progress has been made on several fronts, and relations now are better than they have been since 1975. Laos also has improved relations with China. Although the two were allies during the Vietnam War, the China-Vietnam conflict in 1979 led to a sharp deterioration in Sino-Lao relations. Relations began to improve in the late 1980s, and Prime Minister Kaysone's October 1989 visit to China resulted in complete normalization of Sino-Lao relations. Flexibility on the part of both countries led to agreements on border demarcation trade. Finally, Laos has begun to reduce its international isolation by improving relations with other countries, including France, Australia, and Japan.


US-Lao relations deteriorated in 1975, although diplomatic relations were not severed. Since that time, the United States has maintained a small embassy in Laos, and Laos has maintained a small embassy in Washington, DC, both headed by charges d'affaires. Relations were cool during the early years of the government, but in 1982 both governments agreed to work to improve them. The United States stressed that progress in accounting for Americans still missing in Laos from the Vietnam War would be the principal measure of Lao sincerity in improving relations. More recently, narcotics control has become another important US concern in Laos, which is a major producer of opium and marijuana. In the last few years, progress has been made in both areas. In February 1985, a Lao-US team conducted the first joint excavation of a plane crash site, resulting in the identification of the remains of all 13 missing servicemen. Progress has accelerated since 1988, with Laos agreeing to expand POW/MIA activities. The two countries have conducted numerous site surveys and recovery operations since January 1989. In 1987, Laos began to cooperate on narcotics, when it requested assistance in providing viable alternative crops to opium farmers. Since then, the two countries have signed an agreement on cooperation and initiated a multimillion dollar crop-substitution program. Laos also has formed a national committee on narcotics, participated in US-sponsored narcotics training seminars, and taken law enforcement actions. For its part, the United States has supported loans to Laos by the Asian Development Bank (the United States previously abstained on such loans), deleted Laos from a list of countries prohibited from receiving most forms of US assistance, provided emergency food and medicine shipments, agreed to a major prosthetics program in Laos, and urged private organizations to provide humanitarian assistance.
Principal US Officials
Charge d'Affaires-Charles B. Salmon, Jr. Deputy Chief of Mission-Karl Wycoff The US Embassy in Laos is on Rue Bartholomie, Vientiane [tel. 2220].
Visitors can apply for visas at the Lao Embassy in Washington, DC Although, in theory, tourist visas are temporarily "suspended" except for group travel, in practice individual visa applications have generally been approved on a case-by-case basis. Business travel is encouraged. US citizens of Lao origin have been able of late to obtain visas easily to visit family and have not experienced any particular difficulty in Laos. Several US journalists have been able to secure visas within the past year as well. Sponsorship by an individual or organization in Laos can ease the application process. Vientiane is served by four international airlines: Thai Airways, Air Vietnam, Lao Aviation, and Aeroflot (USSR). Flights connect Vientiane to Bangkok, Rangoon, Hanoi, and (via several stops) Moscow. Bangkok is the nearest city served by a US carrier.
Principal Government Officials
Chairman, Council of Ministers-Kaysone Phomvihan Acting President-Phoumi Vongvichit [since October 1986] Charge d'Affaires in Washington-Linthong Phetsavan Permanent Representative to the United Nations-Saly Khamsy Laos maintains an embassy in the United States at 2222 S St., NW, Washington, DC 20009 [tel. 202-332-6416]. Published by the United States Department of State -- Bureau of Public Affairs -- Office of Public Communication -- Washington, DC --Series Editor: Peter Knecht--Department of State Publication Background Notes Series. This material is in the public domain and may be reprinted without permission; citation of this source is appreciated. For sale by the Superintendent of Documents, US Government Printing Office, Washington, DC 20402.(###)