Background Notes - Laos

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PROFILE


OFFICIAL NAME:
Lao People's Democratic Republic

Geography
Area: 236,800 sq. km. (91,430 sq. mi.); slightly larger than Utah.
Capital--Vientiane (2006 pop. est. 711,919). Other principal towns--Savannakhet, Luang Prabang, Pakse, Thakhek.
Terrain: Rugged mountains, plateaus, alluvial plains.
Climate: Tropical monsoon; rainy season (May to November); dry season (November to April).

People
Nationality: Noun and adjective--Lao (sing. and pl.).
Population (2007 est.): 6.5 million.
Annual growth rate (2007): 2.4%.
Ethnic groups: Tai-Kadai language family (6 ethnic groups)--66.2%; Austro-Asiatic (Mon-Khmer and Viet-Muong) language family (30 ethnic groups)--22.8%; Hmong-Yao (2 ethnic groups)--7.4%; Tibeto-Burman (8 ethnic groups)--2.7%; other ethnic groups (including Vietnamese and Chinese)--0.9%.
Religions: Buddhism--65%; Christianity--1.3%; others (including animism, Ba'hai, and Islam)-33.7%.
Languages: Lao (official), French, English, and various ethnic languages.
Education: Literacy--69%.
Health (2007): Infant mortality rate-81.4/1,000. Life expectancy--56 years.
Work force (2.1 million, 2006): Agriculture--78.5%; industry and services--21.5% (2006).

Government
Type: Communist state.
Branches: Executive--President (head of state); Chairman, Council of Ministers (prime minister and head of government); 11-member Politburo; 55-member Central Committee. Legislative--115-seat National Assembly. Judicial--district, provincial, and a national Supreme Court.
Political parties: Lao People's Revolutionary Party (LPRP)--only legal party.
Administrative subdivisions: 16 provinces, and Vientiane prefecture.

Economy
GDP (2006 est.): $2.79 billion.
Per capita income (2006): $572.
GDP growth rate (2006 est.): 8.3%.
Natural resources: Hydroelectric power, timber, and minerals.
Agriculture (43.4% of GDP, 2006 est.): Primary products--glutinous rice, coffee, corn, sugarcane, vegetables, tobacco, ginger, water buffalo, pigs, cattle, poultry, sweet potatoes, cotton, tea, and peanuts.
Industry (30.6% of GDP, 2006 est.): Primary types--garment manufacturing, electricity production, copper, gold, gypsum, and tin mining, wood and wood processing, cement manufacturing, agricultural processing, and tourism.
Industrial growth rate (2006 est.): 13%.
Services (2006 est.): 26% of GDP.
Trade: Exports (2006 est.)--$593.6 million: garments, gold and copper, electricity, wood and wood products, coffee and other agricultural products, rattan, and tin. Major markets--Thailand, Vietnam, France, and Germany. Imports (2006 est.)--$1.092 billion. Major imports--fuel, food, consumer, goods, machinery and equipment, vehicles and spare parts. Major suppliers--Thailand, China, Vietnam, Singapore.

PEOPLE
Laos' population was estimated at 6.5 million in mid-2007, dispersed unevenly across the country. Most people live in valleys of the Mekong River and its tributaries. Vientiane prefecture, the capital and largest city, had about 711,919 residents in 2006. The country's population density was 27/sq. km.

About half the country's people are ethnic Lao, the principal lowland inhabitants as well as the politically and culturally dominant group. The Lao are descended from the Tai people who began migrating southward from China in the first millennium A.D. Mountain tribes of Hmong-Yao, and Tibeto-Burman (Kor and Phounoy) as well as Tai ethno-linguistic heritage are found in northern Laos. Until recently, they were known as Lao Sung or highland Lao. In the central and southern mountains, Austro Asiatic (Mon-Khmer and Viet-Muong) tribes, formerly known as Lao Theung or mid-slope Lao, predominate. Some Vietnamese and Chinese minorities remain, particularly in the towns, but many left in two waves-after partial independence in the late 1940s and again after 1975.

The predominant religion is Theravada Buddhism. Animism is common among the mountain tribes. Buddhism and spirit worship coexist easily. There also are small numbers of Christians and Muslims.

The official and dominant language is Lao, a tonal language of the Tai linguistic group. Minorities speak an assortment of Mon-Khmer, Hmong-Yao, and Tibeto-Burman languages. French, once common in government and commerce, has declined in usage, while knowledge of English--the language of the Association of Southeast Asian Nations (ASEAN)--has increased in recent years. The government is encouraging officials and students to learn English. High school students are required to take either French or English; the majority today choose English. The government plans to introduce English at the primary school level by 2010.

HISTORY
Laos traces its first recorded history and its origins as a unified state to the emergence of the Kingdom of Lan Xang (literally, "million elephants") in 1353. Under the rule of King Fa Ngum, this powerful and wealthy kingdom covered much of what today is Thailand and Laos. His successors, especially King Setthathirat in the 16th century, helped establish Buddhism as the predominant religion of the country.

By the 17th century, the kingdom of Lan Xang entered a period of decline marked by dynastic struggle and conflicts with its neighbors. In the late 18th century, the Siamese (Thai) established suzerainty over much of what is now Laos. The region was divided into principalities centered on Luang Prabang in the north, Vientiane in the center, and Champassak in the south. Following their colonization of Vietnam, the French supplanted the Siamese and began to integrate all of Laos into the French empire. The Franco-Siamese treaty of 1907 defined the present Lao boundary with Thailand.
During World War II, the Japanese occupied French Indochina, including Laos. King Sisavang Vong of Luang Prabang was induced to declare independence from France in 1945, just prior to Japan's surrender. During this period, nationalist sentiment grew. In September 1945, Vientiane and Champassak united with Luang Prabang to form an independent government under the Free Laos (Lao Issara) banner. The movement, however, was short-lived. By early 1946, French troops reoccupied the country and conferred limited autonomy on Laos following elections for a constituent assembly.
During the first Indochina war between France and the communist movement in Vietnam, Prince Souphanouvong formed the Pathet Lao (Land of Laos) resistance organization committed to the communist struggle against colonialism. Laos was not granted full sovereignty until the French defeat by the Vietnamese and the subsequent Geneva peace conference in 1954. Elections were held in 1955, and the first coalition government, led by Prince Souvanna Phouma, was formed in 1957. The coalition government collapsed in 1958, amidst increased polarization of the political process. Rightist forces took over the government.

In 1960, Kong Le, a paratroop captain, seized Vientiane in a coup and demanded the formation of a neutralist government to end the fighting. The neutralist government, once again led by Souvanna Phouma, was not successful in holding power. Rightist forces under Gen. Phoumi Nosavan supplanted it later that same year. Subsequently, the neutralists allied themselves with the communist insurgents and began to receive support from the Soviet Union. Phoumi Nosavan's rightist regime received support from the United States.

A second Geneva conference, held in 1961-62, provided for the independence and neutrality of Laos. Soon after accord was reached, the signatories accused each other of violating the terms of the agreement, and with superpower support on both sides, the civil war soon resumed. Although Laos was to be neutral, a growing American and North Vietnamese military presence in the country increasingly drew Laos into the second Indochina war (1954-75). For nearly a decade, Laos was subjected to extremely heavy bombing as the U.S. sought to interdict the portion of the Ho Chi Minh Trail that passed through eastern Laos. Unexploded ordnance, particularly cluster munitions, remains a major problem.
In 1972, the communist People's Party renamed itself the Lao People's Revolutionary Party (LPRP). It joined a new coalition government in Laos soon after the Vientiane cease-fire agreement in 1973. Nonetheless, the political struggle among communists, neutralists, and rightists continued. The fall of Saigon and Phnom Penh to communist forces in April 1975 hastened the decline of the coalition in Laos. Several months after these communist victories, the Pathet Lao entered Vientiane. On December 2, 1975, the king abdicated his throne and the communist Lao People's Democratic Republic (LPDR) was established.

The new communist government imposed centralized economic decision-making and broad security measures, including control of the media and the arrest and incarceration of many members of the previous government and military in "re-education camps." These draconian policies and deteriorating economic conditions, along with government efforts to enforce political control, prompted an exodus of lowland Lao and ethnic Hmong from Laos. About 10% of the Lao population sought refugee status after 1975, many of whom resettled in third countries, including the United States. From 1975 to 1996, the U.S. resettled some 250,000 Lao refugees from Thailand, including 130,000 Hmong. The last major resettlement to the United States of about 15,000 Hmong from the Wat Tham Krabok camp was in 2004.

Over time, the Lao Government closed the re-education camps and released most political prisoners. By the end of 1999, more than 28,900 Hmong and lowland Lao had voluntarily repatriated to Laos--3,500 from China and the rest from Thailand. The Office of the United Nations High Commissioner for Refugees (UNHCR) monitored returnees for a number of years and reported no evidence of systemic persecution or discrimination against returnees per se. UNHCR closed its Laos office at the end of 2001.

GOVERNMENT AND POLITICAL CONDITIONS
The only legal political party is the Lao People's Revolutionary Party (LPRP). The head of state is President Choummaly Sayasone. The head of government is Prime Minister Bouasone Bouphavanh. Government policies are determined by the party through the all-powerful eleven-member Politburo and the 55-member Central Committee. Important government decisions are vetted by the Politburo.

Laos adopted its Constitution in 1991, amending it most recently in 2003. The National Assembly, which has added seats at every election, approves all new laws, although the executive branch retains the authority to issue binding decrees. The most recent elections took place in June 2006, when the National Assembly was expanded to 115 members. Laos has enacted a number of new laws in recent years, but the country is still governed largely through the issuance of decrees.

Since the end of the Indochina conflict, a low-level insurgency against the regime has continued. Incidents have included a series of bombings in Vientiane during the summer of 2000 and renewed spikes of violence in 2003 and 2004 against various types of land transportation and public markets. There were reports of continued fighting in 2005 and 2007. In late 2006 and 2007, several hundred former fighters and family members surrendered to Lao authorities. The United States does not endorse or support violent activities carried out against the Lao Government.

Principal Government Officials
President--Choummaly Sayasone
Prime Minister--Bouasone Bouphavanh
Ambassador to the U.S.--Phiane Philakone
Permanent Representative to the UN--Kanika Phommachanh

Laos maintains an embassy in the United States at 2222 S Street NW, Washington, D.C. 20009 (tel: 202-332-6416).

ECONOMY
Laos is a poor, landlocked country with an inadequate infrastructure and a largely unskilled work force. The country's per capita income in 2006 was estimated to be $572. Agriculture, mostly subsistence rice farming, dominates the economy, employing an estimated 78% of the population and producing 43.4% of GDP. Domestic savings are low, forcing Laos to rely heavily on foreign assistance and concessional loans as investment sources for economic development. In 2006, donor-funded programs accounted for 13% of GDP and 70% of the capital budget. In 2006, the country's foreign debt was estimated at $3.2 billion.

Following its accession to power in 1975, the communist government imposed a harsh, Soviet-style command economy system, replacing the private sector with state enterprises and cooperatives; centralizing investment, production, trade, and pricing; and creating barriers to internal and foreign trade. Within a few years, the Lao Government realized its economic policies were preventing, rather than stimulating, growth and development. No substantive reform was introduced, however, until 1986 when the government announced its "new economic mechanism" (NEM). Initially small in scale, the NEM was expanded to include a range of reforms designed to create conditions conducive to private sector activity. Prices set by market forces replaced government-determined prices. Farmers were permitted to own land and sell crops on the open market. State firms were granted increased decision-making authority and lost most of their subsidies and pricing advantages. The government set the exchange rate close to real market levels, lifted trade barriers, replaced import barriers with tariffs, and gave private sector firms direct access to imports and credit.

In 1989, the Lao Government reached agreement with the World Bank and the International Monetary Fund on additional reforms. The government agreed to expand fiscal and monetary reform, promote private enterprise and foreign investment, privatize or close state firms, and strengthen banking. In addition, it agreed to maintain a market exchange rate, reduce tariffs, and eliminate unneeded trade regulations. A liberal foreign investment code was enacted and appears to be slowly making a positive impact in the market. The process of economic reform continues.

These reforms led to increased availability of goods and economic growth that has continued since the early 1990's, despite short-term economic setbacks resulting from the 1997 Asian financial crisis. The economy continues to be dominated by an unproductive agricultural sector operating largely outside the money economy, and the public sector continues to play an important role. Tourism is a growing industry and important source of foreign exchange. The Government of Laos is promoting infrastructure development, especially in the hydropower and mining sectors. Several large hydropower projects currently under construction are expected to increase national revenue significantly once completed.

International indices rate Laos poorly on transparency and ease of doing business. Corruption continues to hamper economic development. Laos has begun the World Trade Organization accession process, with the intention of joining that organization by 2010.

FOREIGN RELATIONS
The government that assumed power in December 1975 aligned itself with the Soviet bloc and adopted a hostile posture toward the West. In ensuing decades, Laos maintained close ties with the former Soviet Union and its eastern bloc allies, and depended heavily on the Soviet Union for most of its foreign assistance. With the collapse of the Soviet Union, Laos has sought to improve relations with its regional neighbors. Laos was admitted into the Association of Southeast Asian Nations (ASEAN) in July 1997 and applied to join the World Trade Organization (WTO) in 1998. The government hopes to accede to the WTO by 2010. Currently, Laos' foreign policy concentrates on its immediate neighbors. Laos generally maintains a low profile in the larger international arena, although it has been playing an increasing role in activities of the Non-Aligned Movement.

Laos maintains a "special relationship" with Vietnam and formalized a 1977 treaty of friendship and cooperation that created tensions with China. Although the two were allies during the Vietnam War, the China-Vietnam conflict in 1979 led to a sharp deterioration in Sino-Lao relations. These relations began to improve in the late 1980s. In 1989 Sino-Lao relations were normalized. Today China is becoming a major player in Laos; Chinese investment in Laos is increasing at a rapid rate, bringing with it a growing number of Chinese workers. Thailand remains the largest single foreign investor in Laos. In 2003, Laos and Thailand signed agreements to cooperate on cross-border, labor, and counternarcotics issues. Laos and Thailand signed a joint communique in March 2007, the first in 20 years, covering infrastructure development, avian influenza, border control, and Hmong migration issues.

Laos is a member of the following international organizations: Agency for Cultural and Technical Cooperation (ACCT), Association of Southeast Asian Nations (ASEAN), ASEAN Free Trade Area (AFTA), ASEAN Regional Forum, Asian Development Bank, Colombo Plan, Economic and Social Commission for Asia and Pacific (ESCAP), Food and Agriculture Organization (FAO), G-77, International Bank for Reconstruction and Development (World Bank), International Civil Aviation Organization (ICAO), International Development Association (IDA), International Fund for Agricultural Development (IFAD), International Finance Corporation (IFC), International Federation of Red Cross and Red Crescent Societies, International Labor Organization (ILO), International Monetary Fund (IMF), Interpol, International Olympic Commission (IOC), International Telecommunications Union (ITU), Mekong River Commission (MRC), Non-Aligned Movement (NAM), Permanent Court of Arbitration (PCA), UN, United Nations Convention on Trade and Development (UNCTAD), United Nations Educational, Social and Cultural Organization (UNESCO), United Nations Industrial Development Organization (UNIDO), Universal Postal Union (UPU), World Federation of Trade Unions, World Health Organization (WHO), World Intellectual Property Organization (WIPO), World Meteorological Organization (WMO), World Tourism Organization, and World Trade Organization (observer).

U.S.-LAO RELATIONS
The United States opened a legation in Laos in 1950. Although diplomatic relations were never severed, U.S.-Lao relations deteriorated during in the post-Indochina War period after 1975. The relationship remained cool until 1982 when efforts at improvement began. Full diplomatic relations were restored in 1992 with a return to ambassadorial-level representation. Accounting for Americans missing in Laos from the Vietnam War has been a special focus of our bilateral relationship. Since the late 1980s, joint U.S. and Lao teams have conducted a series of excavations and investigations of sites related to cases of Americans missing in Laos.

Counternarcotics activities are also an important part of the bilateral relationship. The United States and Laos cooperate closely on opium crop control projects that have helped to bring about a 96% decline in poppy cultivation, from 42,000 hectares in 1989 to 1700 hectares in 2006. Laos, however, remains on the U.S. list of major opium producers. U.S.-sponsored demand reduction programs have increased Laos' capacity to treat both narcotic and amphetamine addiction. The U.S. also provides law enforcement assistance to help contend with the rapid growth in methamphetamine abuse and crime that has occurred in Laos since 2003.

The U.S. Government provided more than $13.4 million in foreign assistance to Laos in FY 2006, in areas including unexploded ordnance clearance and removal, health and avian influenza, education, economic development, and governance.

In December 2004, the President signed into law a bill extending normal trade relations to Laos; in February 2005, a Bilateral Trade Agreement between the United States and Laos entered into force. There has been a consequent rise in Lao exports to the U.S., although the volume of trade remains small in absolute terms. Bilateral trade reached $15.7 million in 2006, compared with $8.9 million in 2003. The Lao Government is working to implement the provisions of the Bilateral Trade Agreement while simultaneously seeking to join the World Trade Organization.

Principal U.S. Embassy Officials
Ambassador--Ravic R. Huso
Deputy Chief of Mission--Mary Grace McGeehan

The U.S. Embassy in Laos is on Rue Bartholonie, That Dam, Vientiane; tel: 21-26-7000; fax: 21-26-7190: country code: (856); city code (21).

TRAVEL AND BUSINESS INFORMATION
The U.S. Department of State's Consular Information Program advises Americans traveling and residing abroad through Consular Information Sheets, Public Announcements, and Travel Warnings. Consular Information Sheets exist for all countries and include information on entry and exit requirements, currency regulations, health conditions, safety and security, crime, political disturbances, and the addresses of the U.S. embassies and consulates abroad. Public Announcements are issued to disseminate information quickly about terrorist threats and other relatively short-term conditions overseas that pose significant risks to the security of American travelers. Travel Warnings are issued when the State Department recommends that Americans avoid travel to a certain country because the situation is dangerous or unstable.

For the latest security information, Americans living and traveling abroad should regularly monitor the Department's Bureau of Consular Affairs Internet web site at http://www.travel.state.gov, where the current Worldwide Caution, Public Announcements, and Travel Warnings can be found. Consular Affairs Publications, which contain information on obtaining passports and planning a safe trip abroad, are also available at http://www.travel.state.gov. For additional information on international travel, see http://www.usa.gov/Citizen/Topics/Travel/International.shtml.

The Department of State encourages all U.S citizens traveling or residing abroad to register via the State Department's travel registration website or at the nearest U.S. embassy or consulate abroad. Registration will make your presence and whereabouts known in case it is necessary to contact you in an emergency and will enable you to receive up-to-date information on security conditions.

Emergency information concerning Americans traveling abroad may be obtained by calling 1-888-407-4747 toll free in the U.S. and Canada or the regular toll line 1-202-501-4444 for callers outside the U.S. and Canada.

The National Passport Information Center (NPIC) is the U.S. Department of State's single, centralized public contact center for U.S. passport information. Telephone: 1-877-4USA-PPT (1-877-487-2778). Customer service representatives and operators for TDD/TTY are available Monday-Friday, 7:00 a.m. to 12:00 midnight, Eastern Time, excluding federal holidays.

Travelers can check the latest health information with the U.S. Centers for Disease Control and Prevention in Atlanta, Georgia. A hotline at 877-FYI-TRIP (877-394-8747) and a web site at http://www.cdc.gov/travel/index.htm give the most recent health advisories, immunization recommendations or requirements, and advice on food and drinking water safety for regions and countries. A booklet entitled "Health Information for International Travel" (HHS publication number CDC-95-8280) is available from the U.S. Government Printing Office, Washington, DC 20402, tel. (202) 512-1800.

Further Electronic Information
Department of State Web Site. Available on the Internet at http://www.state.gov, the Department of State web site provides timely, global access to official U.S. foreign policy information, including Background Notes and daily press briefings along with the directory of key officers of Foreign Service posts and more. The Overseas Security Advisory Council (OSAC) provides security information and regional news that impact U.S. companies working abroad through its website http://www.osac.gov

Export.gov provides a portal to all export-related assistance and market information offered by the federal government and provides trade leads, free export counseling, help with the export process, and more.
STAT-USA/Internet, a service of the U.S. Department of Commerce, provides authoritative economic, business, and international trade information from the Federal government. The site includes current and historical trade-related releases, international market research, trade opportunities, and country analysis and provides access to the National Trade Data Bank.