Page 1 of 2 China and Vietnam square off in Laos
By Brian McCartan
VIENTIANE - China's growing influence in resource-rich Laos is seen by some as
coming at the expense of ties with Vietnam, long the communist country's main
patron and de facto security guarantor. The diplomatic recalibration is part of
the landlocked country's bid to more fully integrate economically with the
region and has so far served its interests well.
Laos is of increasing strategic importance to both China and Vietnam, two of
Asia's fastest growing countries. Vietnam's interests lie primarily in securing
its long land border with Laos and developing greater access to markets in
Thailand. For China, Laos provides a growing avenue to export products to wider
Southeast Asia, particularly from its remote and less-developed, landlocked
southwestern regions.
Both countries have a growing interest in Laos' bountiful and largely untapped
natural resources, agricultural products and hydropower to fuel their expanding
economies.
Some analysts here predict that the balance of influence inside the ruling Lao
People's Revolutionary Party (LPRP) could soon shift in Beijing's favor, as
senior Lao leaders fade from the political scene and younger, more market-savvy
cadre lacking experience in the communist revolutionary period assume positions
of power.
Although 10 of the 11 member politburo's standing committee speak fluent
Vietnamese - a mark of their deep personal ties to Hanoi and its political
leadership - rising mid-ranking cadre are less likely to have studied in
Vietnam while an increasing number have studied in the former Soviet Union,
China or elsewhere.
Lao Prime Minister Bouasone Bouphavanh's appointment at the 2006 Eighth Party
Congress was seen by many as the beginning of a shift towards more Chinese
influence over the government. Born in 1954, he was a 21-year-old student
activist and not a revolutionary war veteran when the communists took over the
country in 1975. He later studied in the Soviet Union rather than Hanoi.
In apparent realization of this changing dynamic, China has adopted a long term
diplomatic strategy for Laos. Rather than overly leveraging its commercial
might, Beijing is simultaneously cultivating younger Lao leaders through
programs that bring them to China for vocational, ideological and military
training. These moves are being made in anticipation of an already dawning era
when Vietnam-orientated old guard cadre fade from the political scene.
In an interview with Asia Times Online, Lao spokesman Yong Chanthalangsy showed
the pragmatic side of Lao thinking. Noting that China is the new emerging power
in the region, he said, "Openness and integration in the region is far better
than the Cold War in the past imposed by some power. When Laos was a part of a
security belt, it resulted in thirty years of war.”
Although he was referring to the broader Indochina War with the US, and earlier
France, he could have just as easily been referring to the era of cool
relations between Laos and China in the period between 1975 and 1988. Now, as
the region's former communist countries reform their centrally planned
economies with more market-driven policies, commercial imperatives are
redefining how the region interacts, including with Laos.
Commercially positioned
Laos is now eager to promote itself as "land-linked" instead of "landlocked",
emphasizing its potential role as a trade crossroads between China and
Southeast Asia. According to spokesman Yong, "Laos has been suffering because
it is landlocked and isolated. Connectivity in the region can only bring good
things to Laos."
This view means that Laos sees the value in diversifying its diplomacy away
from its traditional reliance on Vietnam. The balancing act has also extended
to its erstwhile Western donors: while keen to accept investment and aid to
boost the economy, create jobs and raise living standards, at the same time the
government would rather avoid the conditions for political change and more
official transparency often accompanying such aid.
Investments from China and Vietnam, on the other hand, come without
pre-conditions. According to a 2005 monograph by noted Lao scholar Martin
Stuart-Fox, it is not in the strategic best interests of China or Vietnam for
the LPRP to lose its monopoly on political power and with both countries'
commercial support there is little incentive for the LPRP to initiate political
reforms.
Vietnam's strong relationship with Laos stems from the origins of the two
countries' communist parties through the Indochinese Communist Party in the
1930s. This relationship was further cemented in the thirty years of struggle
against the colonial French and then an American-backed regime, which was
finally overthrown in 1975.
Communist Lao and Vietnamese forces fought side-by-side throughout those wars;
then-North Vietnam's supply pipeline - the Ho Chi Minh Trail - famously used in
its fight against the US-backed South Vietnam, ran through eastern Laos. Lao
communist cadre received ideological and military training in Hanoi, while
Chinese involvement in the struggle in Laos was confined to road building in
the northern regions.
Laos and Vietnam entered into a formal twenty-five year Lao-Vietnam Friendship
and Cooperation Treaty in 1977, underpinning what the two sides referred to as
a "special relationship". Vietnam's siding with the Soviet Union against China
in a doctrinal dispute meant that relations between its ally Laos and China
also cooled. Relations worsened when Vietnam invaded Cambodia in late 1978 and
China made a limited invasion of northern Vietnam in early 1979.
Bilateral relations between Laos and Vietnam are still strong, although the
1977 alliance was allowed to lapse in 2002. Personal ties between Lao and
Vietnamese leaders remain strong enough politically for the "special
relationship" to endure. Lao state-run media contains almost weekly news of
bilateral socio-economic, cultural and military cooperation between the two
countries. Billboards across Laos last year hailed the 45th anniversary of
diplomatic ties and the 30th anniversary of the Lao-Vietnam Friendship and
Cooperation Treaty.
Meanwhile, Vietnam remains Laos' second largest trading partner. The
Vietnam-Lao Committee for Cooperation said in July that two-way trade hit
US$240 million for the first half of this year, an increase of 58% year on
year. The two countries have stated a shared goal of reaching $1 billion in
bilateral trade by 2010 and $2 billion by 2015.
Investment competition
Vietnam is also clearly competing with China for investment influence. Figures
released at an August 12 conference on Vietnam-Lao investment cooperation held
in Vientiane showed that Vietnam's investment had grown to 177 projects valued
at $1.28 billion. If accurate, this would raise Vietnam to the second-largest
foreign investor in Laos behind Thailand and would move China down into third
place.
Targeted investment areas include mining and expert-oriented agriculture and
processing. Recent years have seen heavy Vietnamese investment in rubber
plantations in southern Laos, particularly in Savannakhet and Champassak
provinces. Laos is also increasingly being seen as a potential source of
hydropower and state-run PetroVietnam and Electricity Vietnam are reported to
be planning new projects in the country.
To facilitate trade and investment and access to markets in Thailand and the
rest of Southeast Asia, Vietnam has been busy constructing roads in eastern
Laos as part of the Greater Mekong Subregion's East-West Corridor road project,
which aims to link Vietnam, Laos, Thailand, Myanmar and India. The most
important link is the road connecting the Vietnamese central port of Danang
with the so-called "Second Friendship Bridge" across the Mekong connecting
Savannakhet, Laos, with Mukhdahan, Thailand.
While commercial ties are fast expanding, the two countries security links are
perhaps better-established. Until at least the late 1980s, 40,000-50,000
Vietnamese soldiers were estimated to be based in Laos. Although Vietnam pulled
its troops out in the 1990s, it still maintains training cadre, and according
to some sources, military intelligence stations in the country. The Lao
military continues to turn to Vietnam for military advice, especially
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