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WEEKLY NEWSLETTER
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Laos
Index
The retarded economic diversification and development
of Laos
constrained its foreign policy opportunities and generated
its
dependency in succession upon France, the United States,
and the
Soviet bloc. Following the economic collapse of the Soviet
Union,
Laos has become heavily dependent upon the advice and
contributions
of UN agencies and the readiness of regional states such
as
Australia, Japan, and Thailand to invest in its economy.
Sweden has
also made significant economic contributions.
There has been a dramatic shift away from maintaining
basic
solidarity with a military/political bloc of
mentors--first, the
United States regional security alliance and then the
"special
relations" of Vietnamese-influenced Marxism-Leninism--to
maximizing
donor-recipient relations with UN agencies, state donors,
and
private investors. Although the universe of relations has
not
essentially grown, especially with Russia cutting back on
its
assistance, the expectation of genuine economic progress
has begun
to creep into economic dealings with outsiders. By moving
resolutely and responding to Thai and Chinese gestures,
Laos has
broadened its range of donors, trading partners, and
investors. The
presence of Thai traders and investors has dramatically
increased.
The degree to which Laos has depended upon outside
donors and
investors, and which ones, has been a function not only of
need but
also political choice, a dependence that was carefully
controlled
during Kaysone Phomvihan's tutorship. Without his
pervasive
leadership, foreign economic relations might have fallen
victim to
internal rivalries between ministries and factions within
the
party.
However, through legislation enacted by the National
Assembly
in 1991 of a basic criminal and investment code and the
creation of
a judiciary, Laos opened its doors wider to serious
investors. In
addition, the stabilization of foreign exchange rates and
inflation
signaled major steps toward engaging constructively with
countries
outside the ideological blocs within which it used to
confine
itself. The new institutions require a few years of
serious
testing, but a Burma-like return to stagnation seems
unlikely, even
with Kaysone's departure from the helm. The tantalizing
images of
Thailand's growth and prosperity, conveyed by television
along the
Mekong border, and increasingly easier travel across the
river--in
both directions--makes the economic policy of openness
seem all but
irreversible.
Data as of July 1994
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