Asia Times: Laos attacks expose brewing economic unrest


	July 8, 2000	atimes.com

Southeast Asia

Laos attacks expose brewing economic unrest
By Satya Sivaraman

VIENTIANE - A series of mysterious bomb explosions in the Lao capital Vientiane and a botched attempt by rebel gunmen to attack government offices along the Thai-Lao border have brought sudden attention to dissident activity in this otherwise slow and sleepy communist-ruled country.

While most political analysts rule out dissidence spinning out of control and posing a real threat to the Lao government, there are signs that public discontent due to the economy's poor state, rampant corruption and rising material expectations could grow rapidly if the authorities do not take heed.

The most dramatic evidence of dissidence came on July 3, when a group of 60 anti-government rebels clashed with Lao troops while trying to capture state offices at a village inside Laos close to the southern section of the Thai-Lao border. The anti-Vientiane insurgents lost six of their members before fleeing into Thailand, where they are currently now in custody. Thai police seized a letter from the rebels signed by a US-based commander of the rebel Lao United Army, which calls for a ''struggle of Lao freedom fighters to liberate the country from the communists''. One rebel was quoted by the Thai media as saying that the movement wanted the revival of ''the Lao monarchy, democracy and independence''.

The rebel action comes on the heels of nearly a dozen random bomb explosions in Vientiane during the past two months, which the Lao government has blamed on remnants of an ethnic Hmong army that fought the communists during the Vietnam war. At least one person was killed and many, including foreign tourists, were injured in the blasts which were usually caused by low-intensity grenade type devices.

''The frequency with which the blasts have occurred clearly show that they are not due to individual cases of business rivalry or personal enmity but clearly aimed at the Lao government,'' says an Asian diplomat based in Vientiane. According to the diplomat, however, it is unlikely that the Hmong, many of whom are refugees in Thailand, are involved.

Observers in Vientiane say that anti-government forces might be trying to exploit a perceptible rise in public discontent since the onset of the Asian economic crisis in mid-1997, which derailed an otherwise steady pace of growth in the country.

Between 1992 and 1997, Laos' annual GDP growth averaged 7 percent. Laos had managed to attract foreign investment and aid from multilateral agencies in the nineties due to liberalization of its economy. This led to rising incomes in urban centers like Vientiane and growing expectations in the countryside, where a bulk of the population still lives. But in 1998-99 the inflation rate jumped to more than 143 percent and the value of the kip, the Lao currency, dipped from 930 kip to the US dollar in early 1997 to nearly 9,500 kip by August 1999 before steadying somewhat at 7,500 kip currently.

A number of businesses, both foreign and locally owned, have ceased operations. Foreign direct investment commitments to Laos fell by 91 percent in 1997, and actual flows declined by 41 percent.

According to an International Monetary Fund report last year, the crisis has resulted in reduced real incomes and purchasing power, changes in consumption and saving patterns. While more affluent farmers have benefited from higher agricultural prices in Thai markets and a favorable foreign exchange rate, poorer farmers have suffered significant real income erosion and declining living conditions. There has also been a growing pressure on the labor market due to the return of many Lao migrant workers from neighboring Thailand.

The downturn in the economy has led to greater public focus on the functioning of the state machinery, where abysmally low salaries make officials prone to corruption.

The recent incidents against the Lao government have also heightened tensions with neighboring Thailand, which Vientiane accuses of harboring and even aiding anti-government rebels. The fact that 15 of the 60 rebels participating in the border raid carried Thai identification cards has also aroused suspicions regarding the role of the Thai authorities.

The Lao government has asked Thailand to hand over all the insurgents involved in the border raid incident and currently now in custody of the Thai police, but Bangkok says the attackers have to be charged in Thailand.

During the Vietnam War, Thailand was a staging point for both US and pro-royalist Lao troops to fight the communist guerillas. Relations between the two countries remained hostile until the end of the Cold War in the late eighties.

With the opening up of the Lao economy in the early nineties, Thailand has become its single largest investor, a major source of imports as well as a gateway for exports from the landlocked country. ''Laos has become more and more economically dependent on Thailand in recent years and this has led to factionalism within the Lao government between pro- and anti-Thai lobbies,'' says a foreign businessman based in Vientiane. While some members of the ruling party have favoured greater economic ties with Thailand, others worried about losing the country's economic independence have sought closer ties with Vietnam and China.

According to the businessman, the possibility that the current spurt in terrorist activity could be encouraged by elements within the Lao establishment cannot be ruled out.

Whether that is true or not, there is little doubt that the Lao government will unwittingly play into the hands of external forces trying to destabilize it if it fails to stamp out corruption and pay more attention to its citizens' needs.

(Inter Press Service)

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