Identifier
Created
Classification
Origin
06VIENTIANE646
2006-07-10 09:15:00
CONFIDENTIAL
Embassy Vientiane
Cable title:  

LAO PRESIDENT PAYS HOMAGE TO CHINA

Tags:  PGOV PINR PREL LA 
pdf how-to read a cable
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DE RUEHVN #0646/01 1910915
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P 100915Z JUL 06
FM AMEMBASSY VIENTIANE
TO RUEHC/SECSTATE WASHDC PRIORITY 0116
INFO RUEHBK/AMEMBASSY BANGKOK 6692
RUEHHI/AMEMBASSY HANOI 2695
RUEHGO/AMEMBASSY RANGOON 2144
RUEHPF/AMEMBASSY PHNOM PENH 1806
RUEHBJ/AMEMBASSY BEIJING 1992
RUEHCHI/AMCONSUL CHIANG MAI 0432
RHHMUNA/CDR USPACOM HONOLULU HI
C O N F I D E N T I A L SECTION 01 OF 02 VIENTIANE 000646 

SIPDIS

SIPDIS

DEPARTMENT FOR EAP/MLS, INR

E.O. 12958: DECL: 07/10/2016
TAGS: PGOV PINR PREL LA
SUBJECT: LAO PRESIDENT PAYS HOMAGE TO CHINA

REF: VIENTIANE 565

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

Summary
-------
C O N F I D E N T I A L SECTION 01 OF 02 VIENTIANE 000646

SIPDIS

SIPDIS

DEPARTMENT FOR EAP/MLS, INR

E.O. 12958: DECL: 07/10/2016
TAGS: PGOV PINR PREL LA
SUBJECT: LAO PRESIDENT PAYS HOMAGE TO CHINA

REF: VIENTIANE 565

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

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

1. (C) During his June 27-July 2 visit to China, Lao
President Choummaly met with the senior Chinese leadership
and signed an agreement for a low-interest loan for 280
million Yuan (about $35 million) that we understand will be
used in part to fund the purchase of construction equipment.
The Chinese played welcoming hosts to the President and his
entourage, with the two sides signing a joint communique
stressing China's commitment to assist Laos in its economic
growth and to improve ties across the board. In contrast to
the uncritical Chinese, the Vietnamese may be losing patience
with the GoL's lack of commitment to reform; during
Choummaly's Vietnam call last month (reftel),the Vietnamese
exerted pressure on his government to tackle corruption or
risk serious problems down the road. If the fruits of these
two visits are a guide, the Lao relationship is drifting
toward China, away from traditional patron Vietnam. End
summary.

A "friendship visit"
--------------

2. (C) President Choummaly's China trip followed almost
immediately on the heels of his June 19-22 courtesy call to
Vietnam; together the two visits conveyed a clear signal that
Laos' recent leadership changes would not affect the
Communist Party's relations with long-time ally Vietnam and
with its new development partner China. Officially making the
trip at the invitation of Chinese President Hu Jintao,
Choummaly traveled with a large retinue, representing the
senior ranks of the government's foreign and economic
ministries, including the Deputy Prime Minister and Minister
of Foreign Affairs Thongloun Sisoulith. During their six-day
stay, the President and his entourage met with the National
People's Congress Chairman Wu Bangguo, Premier Wen Jiabao,
and Vice President Zeng Qinghong, and toured sites in
Beijing.


3. (C) At the close of the visit the two presidents issued a
joint communique, expressing their intent to cooperate
closely across a range of areas and making mention of a new

plate of assistance the Chinese government would provide
Laos. The largest item on the plate would be China's
provision of a low-interest loan to the GoL. MFA contacts
told us the loan would be for 280 million Yuan (about $35
million); the purpose of the loan had not yet been decided.
We have heard from other sources, however, that part of the
loan would be set aside to fund the purchase of Chinese-made
road-building and mining equipment by companies operating in
Laos, and was therefore money that would directly benefit
Chinese manufactures.


4. (C) In addition to the loan, President Hu agreed to
provide agricultural equipment for the Lao farming sector,
and increased training for Lao officials. The two leaders
also discussed in vague terms other areas of possible
assistance, including Chinese help to fund construction of a
long-delayed railroad link from the Friendship Bridge on the
border with Thailand to the Lao shipping port of Tha Nalaeng.
The Chinese President promised to increase activity in
economic endeavors where the Chinese have been most active in
recent years, such as the mining, hydropower, agriculture and
tourism sectors. In their joint communique, the two sides
agreed to work closely together on border issues, expand
border trade, and generally increase cooperation in defense,
education and public security.

No substance
--------------

5. (C) The Director-General of MFA's Asia-Pacific Department,
briefing us on the visit, assured us there were "no secrets"
to Choummaly's trip, and billed it as a "courtesy call" as
part of the new President's round of calls subsequent to
taking office. With the exception of the Chinese loan and a
few other small aid items, he told us, the two leaders did
not broach any new issues. The content of the joint
communique reflected a visit that was more concerned with
emphasizing the status quo than with breaking new ground.
Although President Hu stressed the need to encourage Chinese
trade and investment in Laos and in increasing exchanges and

VIENTIANE 00000646 002 OF 002


training opportunities at all levels, the DG told us there
was no detailed discussion of how to arrive at these goals.

Vietnam gets serious with the Lao
--------------

6. (C) Choummaly's China visit may have been more pleasant
than his trip to Vietnam the previous week. Embassy's NAS
Director learned from the UNODC Representative in Vientiane
last week that UNODC had received reports of mass arrests, up
to 300 individuals, as part of a government crackdown on
corruption. While the majority of those detained are
reportedly village chiefs, the dragnet also purportedly
included the Customs Director at the Thai-Lao Friendship
Bridge, a particularly prestigious (and lucrative) position.
According to UNODC, this crackdown came at the behest of the
Government of Vietnam, which raised the issue during
Choummaly's visit. Reportedly, the Vietnamese admonished the
GoL for its poor performance in fighting corruption, and
pointed to Vietnam,s relative success in this area during
the past three years. The Lao counter-corruption campaign,
if it is in fact occurring, may be a hasty attempt by the GoL
to placate the Vietnamese. Possibly as a follow-on to the
Choummaly trip there, FM Thongloun will return to Vietnam,
and travel on to Cambodia, later this month.

Comment
--------------

7. (C) The Chinese made a point of finding a deliverable for
Choummaly -- their low-interest loan -- while the Vietnamese
appear to have been more interested in rousing the Lao to
deal with their serious internal problems. The Vietnamese
see corruption for what it is, a disease eating away at the
vitals of their regime, and may be worried about the similar
implications for corruption in the country that guards its
western flank. Until very recently, the Lao had failed to
grasp the import of the message. That may be changing,
possibly at the behest of the Vietnamese. We understand from
government contacts that the Vietnamese were in large part
responsible for getting the Lao to reestablish the office of
Party Secretariat at the 8th Party Congress in March, as a
tool for dealing with internal corruption. This recent round
of arrests, although unconfirmed, is another signal that the
Lao may be turning around on corruption. The new Prime
Minister, Bouasone, has already made anti-corruption a mantra
of his administration.


8. (C) We have never had the sense that the Chinese are so
concerned about Laos' internal problems. "Non-interference"
is more than a slogan to the Chinese, who are happy to leave
the Lao to their own internal affairs. The Chinese are much
more concerned with Laos' support on external affairs,
convincing them to toe the line on several issues dear to
China's heart. Laos' foreign policy more and more tracks with
that of China, such as on the one-China policy. The Lao are
beginning to echo the Chinese even in ASEAN. A contact in
the Singapore Embassy said that Lao Deputy FM Bounkeut has
recently spoken up in ASEAN meetings about the proposed East
Asia Community, arguing China's position and taking issue
with that of Vietnam. Those subtle differences hint that the
days of Laos-Vietnam as close as "lips and teeth" may be
ending. End comment.
HASLACH