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Laos (09/06)


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For the most current version of this Note, see Background Notes A-Z.

Flag of Laos is three horizontal bands of red at top, double-width blue, and red, with a large white disk centered in the blue band.

PROFILE

OFFICIAL NAME:
Lao People's Democratic Republic

Geography
Area: 236,800 sq. km. (91,430 sq. mi.); slightly larger than Utah.
Capital--Vientiane (2005 pop. est. 698,318). 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 (2005): 5.6 million.
Annual growth rate (2005): 2.5%.
Ethnic groups: Lao-Tai Language Family (8 ethnic groups): 64.9%; Mon-Khmer Language Family (32 ethnic groups): 25.4%; Hmong-lu Mien (2 ethnic groups): 8.5%; Other ethnic groups (including Vietnamese and Chinese): 0.2%; Unknown: 1%.
Religions: Buddhism: 66.8%; Others (including Animism: 30.9%; Christianity: 1.5%; Unknown (including Ba'hai and Muslim): 0.7%
Languages: Lao (official), French, English, and various ethnic languages.
Education: Literacy--53% (World Bank est.).
Health (2005): Infant mortality rate--82.2/1,000. Life expectancy--55 years (World Bank est.)
Work force (2.77 million, 2005): Agriculture—78.5%; industry and services—21.5% (2005).

Government
Type: Communist state.
Branches: Executive--President (head of state); Chairman, Council of Ministers (prime minister and head of government); 10-member Politburo; 52-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, one special region, and Vientiane prefecture.

Economy
GDP (2005 est.): $2.5 billion.
Per capita income (2004): $390.
GDP growth rate (2005 est.): 7.2%.
Natural resources: Hydroelectric power, timber, and minerals.
Agriculture (45.5% of GDP, 2005 est.): Primary products--glutinous rice, coffee, corn, sugarcane, vegetables, tobacco, ginger, water buffalo, pigs, cattle, poultry, sweet potatoes, cotton, tea, and peanuts.
Industry (28.7% of GDP, 2005 est.): Primary types--garment manufacturing, electricity production, copper, gypsum, and tin mining, wood and wood processing, cement manufacturing, agricultural processing, and tourism.
Industrial growth rate (2005 est.): 13%.
Services (2005 est.): 25.8.% of GDP.
Trade: Exports (2005 est.)--$379 million: gold and copper, garments, electricity, wood and wood products, coffee and other agricultural products, rattan, and tin. Major markets--Thailand, Vietnam, France, and Germany. Imports (2005 est.)--$541 million. 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 5.6 million in 2005, 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 698,000 residents in 2005. 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 Miao-Yao, Austro-Asiatic, Tibeto-Burman -- Hmong, Yao, Akha, and Lahu -- and 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, Mon-Khmer 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. Mountain tribes speak an assortment Mon-Khmer and Hmong-lu Mien 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.

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, the wealthy and mighty 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 drove it from power 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 U.S.

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 it 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 destroy the portion of the Ho Chi Minh Trail that passed through eastern Laos.

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.

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. Through the Office of the United Nations High Commissioner for Refugees (UNHCR), the International Organization for Migration (IOM), and non-governmental organizations, the U.S. has supported a variety of reintegration assistance programs throughout Laos. UNHCR monitored returnees for a number of years and has 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 ten-member Politburo and the 52-member Central Committee. Important government decisions are vetted by the Council of Ministers.

Laos adopted its Constitution in 1991. The following year, elections were held for a new 85-seat National Assembly with members elected by secret ballot to 5-year terms. 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 an expanding legal system but is governed largely through the issuance of decrees. Of note, in July 2002, the government promulgated Prime Ministerial Decree 92 governing religious practice. Since the end of the Indochina conflict, a low-level insurgency against the regime has continued. The incidents have included a series of bombings in the capital during the summer of 2000 and renewed spikes of violence in 2003 against all forms of transportation and public markets. 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.--Phanthong Phommahaxay
Permanent Representative to the UN--Alounkeo Kittikhoun

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 2004 was estimated to be $390. Agriculture, mostly subsistence rice farming, dominates the economy, employing an estimated 80% of the population and producing 45.5% of GDP. Domestic savings are low, forcing Laos to rely heavily on foreign assistance and concessional loans as investment sources for economic development. In 2003/2004, for example, donor-funded programs accounted for 5% of GDP and 63% of the capital budget. In 2004, the country's foreign debt was estimated at $3 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 timid, 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 also 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 pace of reform slowed during the Asian financial crisis in 1997-98, from which Laos has yet to fully recover. Currently, completion of several hydroelectric power projects is a key Lao objective to increase revenue through selling electric power to its neighbors.

These reforms led to economic growth and increased availability of goods throughout most of the 1990s. However, the Asian financial crisis, coupled with the Lao Government's own mismanagement of the economy, resulted in spiraling inflation and a steep depreciation of the kip, which lost 87% of its value from June 1997 to June 1999. Tighter monetary policies brought about greater macroeconomic stability in FY 2000 when inflation dropped to less than 1% per month. The economy continues to be dominated by an unproductive agricultural sector operating largely outside the money economy, and the public sector continues to play a dominant role. Tourism is a growing industry and important source of foreign exchange.

FOREIGN RELATIONS
The new 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 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's investment in Laos is increasing at a rapid rate and Chinese immigration to Laos is growing. 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' emergence from international isolation has been marked by improved and expanded relations with other nations such as Australia, France, Japan, Sweden, and India. 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. Currently, Laos' foreign policy concentrates on its immediate neighbors. Laos generally maintains a low profile in the larger international arena.

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 the assignment of a U.S. Ambassador in Laos. Progress in accounting for Americans missing in Laos from the Vietnam War has been a principal measure for improving relations. Counternarcotics activities are also an important part of the bilateral relationship as the Lao Government has stepped up its efforts to combat cultivation; production; and shipment of opium, heroin, and marijuana.

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. In counternarcotics activities, the U.S. and Laos are involved in a multimillion-dollar crop substitution/integrated rural development program. Laos also has formed its own national committee on narcotics, developed a long-range strategy for counternarcotics activities, participated in U.S.-sponsored narcotics training programs, and worked to improve law enforcement measures to combat the narcotics problem.

The U.S. Government provides foreign assistance to Laos in a number of areas, including support for Laos' efforts to suppress opium production, training and equipment for a program to clear and dispose of unexploded ordnance, and public education about the dangers of unexploded ordnance. The United States also provides humanitarian assistance and aid in the health and education sectors. In December 2004, the President signed into law a bill extending normal trade relations to Laos; in February 2005, the 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., particularly handicrafts.

Principal U.S. Embassy Officials
Ambassador--Patricia M. Haslach
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).



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