SCENESETTER FOR DAS ERIC JOHN'S VISIT TO LAOS

C O N F I D E N T I A L VIENTIANE 000335

SIPDIS

SIPDIS

DEPARTMENT FOR EAP DAS ERIC JOHN, EAP/MLS

E.O. 12958: DECL: 04/10/2016
TAGS: PREL LA
SUBJECT: SCENESETTER FOR DAS ERIC JOHN'S VISIT TO LAOS

REF: VIENTIANE 302

Classified By: Ambassador Patricia M. Haslach, reason 1.4 (b) and (d).

Summary
--------------

1. (C) You are visiting Laos at a time when Lao-U.S.
relations are at their lowest ebb since 1999, when two
Lao-Americans disappeared on the border between Laos and
Thailand. The Lao government's detention of 27 Hmong
deported from Thailand in December has much to do with the
strain, but there are other factors -- the killings of
American citizens in northeastern Thailand, Lao backsliding
on religious freedom, and Lao failure to implement the
Bilateral Trade Agreement, for example. The March Party
Congress showed that the Lao government's distrust of the
U.S. is as strong as ever. Far from liberalizing, the Party
is strengthening its power. The Lao drift toward China is
unabated, although Vietnam remains the preeminent
relationship. Thailand-Lao ties are cordial on the surface
but suffer deep strains. India and Japan have more limited
influence.


2. (C) Only within the context of ASEAN do the Lao appear to
be moving in a positive direction -- ASEAN membership is
slowly leading Laos toward economic, and perhaps eventually
political, integration with the region. Although relations
with the U.S. are not good, we have a role to play here and
U.S. assistance can go far in influencing Laos' future.
While in Vientiane, you will be able to explain to senior GoL
officials the U.S. role in the region and more particularly
our interests in Laos, reassuring them that our goal is not
regime change but improved behavior and better treatment of
the Lao people. It will also be an opportunity to press at
senior levels the need for movement on our key concerns.
Talking points on Lao-specific issues for the meeting with
the Foreign Minister are at the end of this cable. End
summary.

Poor relations
--------------

3. (C) The bilateral relationship is at its lowest point
since two Hmong-Americans went missing along the Lao-Thai
border in 1999. Their disappearance was never solved, but
all signs pointed to Lao security officials being
responsible. For now, we have only minimal contact with the
GoL, and we are limiting our training and assistance for Lao
officials to the extent possible. The Lao appear to believe
at least some of the recent events troubling the
relationship, like the disappearance of the Hmong children,
were provocations engineered by the U.S.


4. (C) The central issue between the two governments today is
the Hmong children. This issue has dragged on for four
months. The visit of the UNHCR Deputy High Commissioner
Wendy Chamberlin to Thailand and Laos the week of March 27-31
promised some hope of a resolution, but so far there has been
no breakthrough. The missing children are not U.S. citizens
and the case does not immediately affect our interests. It
does, however, get to the heart of what we are trying to
accomplish in Laos: promote human rights and respect for rule
of law. It also has shown the Lao government's paranoia and
unscrupulousness. The case reminds the international
community just how little influence it has with the senior
leadership.


5. (C) While the issue of the disappeared children has
dragged on, other problems have come up. In January, two
American citizens were murdered in Nong Khai, Thailand, just
across the river from Vientiane. These murders were the most
recent of a string of killings in northeastern Thailand of
persons associated with anti-Lao government activities.
Among those killed since the beginning of 2005, in addition
the Lao-American couple, were two other U.S. citizens. Thai
police investigations of the murders have been inconclusive,
but information collected by DEA indicates the GoL may have
been behind the killings.


6. (C) The GoL's behavior in other areas over the past year
has been nearly as reprehensible. On religious freedom, the
government has taken steps back from several years ago, when
it seemed to be on a course to institutionalize religious
tolerance. Lao officials burned a church and arrested
Christians in Bokeo province last October, and have refused
to permit the Catholic Church to ordain Laos' first new
priest since 1975. The government has also lost momentum on
its anti-trafficking efforts. While it continues to spend
donor money on anti-trafficking, it has made few real
attempts to prosecute traffickers or to punish officials
involved in facilitating illegal migrations to Thailand.

7. (C) The Lao have also failed to respond to repeated
appeals from the international community to establish a
durable program for ending the Hmong insurgency. Reports from
the jungle indicate the military may have stepped up efforts
to eradicate the last pockets of insurgent resistance. The
GoL has been dilatory in approving USG-funded NGO projects,
leading us to believe the government may have made a
conscious decision to limit U.S. participation in
developmental activities. Finally, the Lao government has
largely ignored inconvenient provisions of our Bilateral
Trade Agreement signed in 2004. The Agreement remains only
incompletely implemented and, partly as a result, the
benefits of Normalized Trade Relations have been minimal.

Political stagnancy
--------------

8. (C) In part, this across-the-board backsliding can be
attributed to growing conservatism within the Communist
Party. The Party Congress held March 18-21 reaffirmed the
leading role of the Party. It also instituted measures, like
the creation of a new Party Secretariat and an accelerated
membership drive, designed to further consolidate Party
control. The changes in leadership were cosmetic: the new
Party Secretary, Choummaly Sayasone, is a protege of his
predecessor and comes from the same conservative, pro-Vietnam
military background. Choummaly is a Khamtai crony and is
unlikely to bring new ideas to the table.


9. (C) There are no clear explanations for the Party's turn
to the right, since its deliberations are opaque. However, it
may be a product of the Party's new-found confidence in its
economic leadership. Laos is attracting limited foreign
investment, mostly in the mining and hydropower sectors. The
Nam Theun 2 Dam, a $1.2 billion project which will bring in
hundreds of millions of dollars over a period of years, is
under construction. Trade is picking up and foreign aid --
so far -- has kept close to a $400 million a year level,
thanks in large part to Japanese, WB and ADB assistance. The
Lao believe they can sustain a six percent growth rate for
years, enough to raise PCI figures to $800 a year by 2010 --
twice the current level -- and to bring Laos out of the ranks
of Least Developed Countries by 2020. Convinced that its
continued leadership is a sine qua non to achieving these
developmental goals, the Party has rationalized its monopoly
on power.

China, Vietnam and Thailand
--------------

10. (C) The real engine of Laos' development is China.
Relations with China have never been closer. Chinese trade,
investment and assistance to Laos are all growing at an
unprecedented rate, as China looks to Laos as a source of
cheap raw materials and a place to trade and invest. Laos has
embraced the relationship, seeing China as a successful
Communist country to emulate. China is playing the role of
socialist big brother that the Soviet Union played in the
1980's and 1990's. Laos' relationship with Vietnam remains
strong, and changes to the Central Committee lineup made in
that last Party Congress guarantee a continued pro-Vietnam
policy. But on the practical level of trade and investment,
Vietnam lags behind China. Laos' relationship with Thailand
is neurotic: superficially the two countries could not be
closer, and share a similar language and culture, but beneath
the surface the GoL distrusts the Thai, and the Thai are
frustrated with Lao intransigence on issues like the
Petchaboon Hmong. Other countries play a lesser role here.
India and Japan both use their assistance to steer Laos away
from over-reliance on China, although their influence is
limited.

ASEAN
--------------

11. (C) Laos' ASEAN membership stands out as the bright spot
in an otherwise dismal political picture. Having joined
ASEAN in 1997, Laos has become an active player. In 2004-2005
Laos was ASEAN chair, and hosted major ASEAN events like the
Summit and Post Ministerial Meeting. The government rated
its chairmanship of ASEAN as a great success. Other ASEAN
member countries agreed that Laos played its "process" role
well. Foreign Minister Somsavat owes his promotion to the
Politburo at the Party Congress to his ASEAN success. Laos
sees ASEAN membership as an avenue for integration into the
larger ASEAN economy, and believes ASEAN membership will pay
economic dividends. More importantly for Laos' long-term
development, ASEAN membership could eventually help steer
Laos toward more responsible political behavior, as it slowly
adopts its institutions to conform to ASEAN norms. On the
other side of the coin, the Lao remain resentful that the
Secretary did not attend the Post Ministerial Meeting in

SIPDIS
Vientiane.
The U.S.
--------------

12. (C) Lao-U.S. relations are not good, and many of our
programs here -- counter-narcotics and UXO especially --
benefit Laos more than the U.S. The state of our relations
begs the question why we need to be engaged in Laos at all.
Yet on a person-to-person level, ties with the United States,
and its 500,000 strong community of Lao-Americans, is strong.
Most Lao (outside the Party) probably have a generally
benign view of the United States and its allies. Only the
government here is venal; left to its own devices, Laos'
present political course could threaten the entire region.
We have already seen signs of Laos taking a turn for the
worse: narcotics, especially amphetamine, trafficking by
authorities, for example, is a well-known problem that
appears to be growing. Laos could easily become a haven for
drug and human traffickers and terrorists. U.S. aid can help
thwart this trend. Continued assistance to Laos'
counter-narcotics drive is money well invested. Assistance
to the Lao on CT, and in particular creation of a mil-to-mil
relationship, will help steer their security forces toward
more responsible behavior. Most importantly, a continued and
growing U.S. aid presence will convince the Lao people that
the United States is engaged and concerned about their
country's future.

Your visit
--------------

13. (C) We have requested a meeting with Deputy Prime
Minister and Foreign Minister Somsavat Lengsavad, who is now
a Politburo member. We have also asked the MFA to prepare a
venue, either the National Assembly or MFA's Foreign Affairs
Institute, for you to give a formal presentation.


14. (C) The Lao fundamentally misunderstand the U.S., and
their outmoded Cold War view of us is frustrating even to
their Vietnamese colleagues, who see us in a much more
nuanced way. Although the Foreign Minister regularly meets
with high-level U.S. officials, he has rarely had a
discussion that encompassed the range of bilateral issues.
The formal presentation to the National Assembly or the
Foreign Affairs Institute will allow you to explain the U.S.
role in the region, from a strategic perspective. in the
meeting with the Foreign Minister you can also discuss our
specific interests in Laos: POW/MIA, UXO, counter-narcotics,
economic development, and promotion of human rights.


15. (C) These exchanges may help convince the Lao that we are
not attempting to subvert their regime, but will send a
message that we believe strongly they must open their system
and provide their citizens greater rights if they wish to be
accepted as a member in good standing of the international
community.

Suggested talking points for meeting with FM
--------------
-- The U.S. is an active participant in Laos' development and
has many important interests here.
-- Locating remains of Americans lost in the Indochina
Conflict remains a priority. We appreciate the Lao
government's cooperation in this important effort.
-- The U.S. is also the leading donor in the area of UXO. We
expect to give on the order of $6 million this year for UXO
activities.
-- We remain deeply committed to helping Laos fight drug
trafficking. Laos achieved a great success this year in
eliminating significant opium production, thanks in part to
U.S. assistance. Laos deserves much credit for this
unprecedented achievement. We are continuing to help,
providing assistance to confront the more insidious problem
of methamphetamine (ATS) trafficking and abuse.
-- The U.S. is also providing significant assistance to Laos
to confront a potential outbreak of Avian Influenza.
-- Through the Global Fund and through USG assistance to
International Financial Institutions like World Bank and ADB,
the U.S. is actively contributing to Laos' development in
many areas -- education, health care, and infrastructure.
-- In all these areas, we are grateful for Laos' cooperation
and we congratulate your country on the results that have
been achieved to date.
-- But we remain very concerned about some developments that
are not positive. In the area of human rights and political
liberalization, your country has less to boast of.
-- Our biggest concern is the continued detention of 27 Hmong
people deported from Thailand in December. Most of these
people were children. They should not have been detained and
they should be released immediately to rejoin their families
in Thailand.
-- I would like to emphasize that this is a humanitarian
issue. But your government's handling of this issue has put
Laos in a very poor light internationally.
-- We are also concerned about the fate of "remote people" in
Laos' forests. We often receive reports from credible sources
that Lao military forces are attacking these groups. The use
of military force against them has made it impossible in some
cases for them to resettle under your government's care. We
urge you to reach out to these groups to encourage their
resettlement and to allow international assistance to reach
them after they resettle.
-- In the area of religious freedom, there have been
setbacks, especially at the district and provincial levels.
Lao officials have arrested persons for their religious
faith. The government has also so far not permitted the
Catholic Church to ordain its first new priest since 1975.
This is inexplicable.
-- The Lao government needs to show that it is fully
committed to stopping human trafficking. More effort needs to
be put into arresting and prosecuting traffickers here,
including Lao officials involved in trafficking Lao people to
Thailand.
-- Finally, we have noticed that NGO projects receiving USG
funding face a difficult time obtaining MOUs from your
government. We worry that the Lao government does not wish to
see USG money being used in developmental work here. We urge
you to look into this issue to ensure that USG-funded
activities are vetted impartially. At a time when many
developing countries are seeking developmental funds, Laos
should be taking steps to make it easier, not more difficult,
for donors to assist.

HASLACH