Wayzata World Factbook 1995/World Factbook - 1995 Edition - Wayzata Technology (1995).iso/mac/text/Build/orig BACKGR/BNOT0062.TXT

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National Trade Data Bank
ITEM ID     : ST BNOTES LAOS
DATE        : Oct 28, 1994

AGENCY      : U.S. DEPARTMENT OF STATE
PROGRAM     : BACKGROUND NOTES
TITLE       : Background Notes - LAOS

Source key      : ST
Program key     : ST BNOTES
Update sched.   : Occasionally
Data type       : TEXT
End year        : 1992
Date of record  : 19941018
Keywords 3      :
Keywords 3      : | LAOS

US DEPARTMENT OF STATE
BACKGROUND NOTES:  LAOS

Official Name:  Lao People's Democratic Republic

PROFILE

People
Nationality:  Noun and adjective-Lao (sing. and pl.).  Population:  4
million (1988).  Annual growth rate:  2.6%.
Population Density:  16/sq. km.
Ethnic groups:  Lao 50%; Phoutheung (Khan) 15%; tribal Thai 20%;
Hmong, Yao, and other 15%.  Religions:  Principally Buddhism, with
animism predominant among tribal groups.
Languages:  Lao (official), French.
Education:  Literacy-45%.

Health:  Infant mortality rate-110/1,000;
Life expectancy-48 years.  Work force (1.6 million):  Agriculture-85%;
Industry-6%.


Geography
Area:  236,804 sq. km. (91,430 sq. mi.); smaller than Oregon.
Capital-Vientiane (pop. est. 155,000); other principal
cities-Savannakhet, Luang Prabang, Pakse, Thakhek.  Terrain:
Rugged mountains, plateaus.  Climate:  tropical monsoon.


Government
Type:  Communist.

Branches:  Executive-president (head of state); chairman, council of
ministers (prime minister and head of government); 84-member
Cabinet (including vice ministers).  Legislative-Supreme People's
Assembly.  Judicial-mixture of regular and "people's courts," the latter
for security cases.  Political parties:  Lao People's Revolutionary
Party (only legal party).  Leaders: Kaysone Phomvihan, prime
minister and party secretary general (since December 1975); Phoumi
Vongvichit, acting president (since October 1986).  Administrative
subdivisions:  17 provinces.

Legal system:  based on civil law system.

Central government budget (1989 est.):  Revenue-$81 million;
expenditures-$187 million, including capital expenditures of $88
million.  Flag:  A red band at the top and bottom with a larger blue
band between them; large white circle is centered.  Major holidays:
National Day (proclamation of the Lao People's Democratic
Republic), December 2; Independence Day (from France), July 19.


Economy
GDP (1989 est.):  $650 million; Per capita income:  $162 (1989); Real
growth rate: 10.7% (1989).  Natural resources:  tin, timber, gypsum,
hydroelectric power.

Agriculture (62% of GDP):  Products-rice, corn, tobacco, coffee,
cotton.

Industry:  (16% of GDP)  Types-tin/gypsum mining, lumber, textiles,
construction.  Industrial growth:  26% (1989).  Merchandise Trade:
Exports- $58 million (1989):  chiefly hydroelectric power and timber;
also coffee and tin.  Major markets-Thailand, Eastern Europe, USSR,
Vietnam, Malaysia.

Imports-$171 million (1989):  chiefly foodstuffs,  petroleum,
machinery, manufactured goods.  Major suppliers-Thailand, USSR,
France, Japan, Vietnam.

Foreign debt:  $944 million (end of 1989).

Inflation rate:  22% (1990 est.).

Official exchange rate (Jan. 1991):  700 kip=US $1.  Fiscal year:
July 1-June 30.


Membership in International Organizations
UN and some of its specialized and related agencies, including the
World Bank, International Monetary Fund, FAO, GATT (observer),
ICAO, IDA, IFAD, ILO, ITU, UNCTAD, UNESCO, UPU, WHO, WMO;
Council for Mutual Economic Assistance [observer], Nonaligned
Movement, Group of 77, Asian Development Bank, Colombo Plan,
Economic and Social Commission for Asia and the Pacific,
Inter-Parliamentary Union, Interim Mekong Committee, World
Federation of Trade Unions.


PEOPLE
Laos' population is estimated at about 4 million, spread unevenly
across the country.  Most people live in valleys of the Mekong and
its tributaries.  Vientiane, the capital and largest city, has about
155,000 residents.

Just under half the people are ethnic Lao, the principal lowland
inhabitants and politically and culturally dominant group.  The Lao
are descendent from the Thai people who migrated southward from
China in the 13th century.  Mountain tribes of Sino-Tibetan (Hmong,
Yao, Aka, and Lahu) and Thai ethno-linguistic heritage are found in
northern Laos.  In the central and southern mountains, Mon-Khmer
tribes predominate.  Some Vietnamese and Chinese minorities
remain, particularly in the towns, but most have left since 1975.

The predominant religion is Theravada Buddhism.  Animism is
common particularly among the mountain tribes.  Buddhism and
spirit worship coexist easily.  Most Christians  (primarily Roman
Catholic) have left since 1975.

The official and dominant language is Lao, a tonal language of the
Thai linguistic group.  French, once common in government and
commerce, has declined with the departure of many former
government officials.


HISTORY
The first recorded history of the Lao begins with King Fa Ngum, by
legend the 23rd successor of Khoun Lo, who first united Laos in
1353.  He establi-shed his capital at Luang Prabang and ruled a
kingdom called Lan Xang (literally, "million elephants") that covered
much of present-day Thailand and Laos.  He also established
Buddhism as the state religion.
In the 16th century, Lan Xang entered a period of decline caused by
dynastic struggles and conflicts with Burma, Siam (now Thailand),
Vietnam, and the Khmer Kingdom.  By the 18th century, the Siamese
and Vietnamese kingdoms were competing for control of Laos.

In the 19th century, the Siamese dominated much of what is now
Laos and divided it into principalities centered on Luang Prabang,
Vientiane, and Champassak.  Late in the century, they were
supplanted by the French, who already controlled present-day
Vietnam.  In 1899, France established protectorates and direct rule
over all of the principalities, and Laos became part of French
Indochina.  The Franco-Siamese treaty of 1907 defined the present
Lao boundary with Thailand.

During World War II, the Japanese occupied French Indochina and
extended their control over Laos.  They induced King Sisavang Vong
of Luang Prabang to declare his independence from France in 1945,
just before Japan's surrender.  In September 1945, Vientiane and
Champassak united with Luang Prabang to form the new Kingdom
of Laos.  The king was overthrown shortly afterward by the Free Lao
(Lao Issara) anti-French government, but in April 1946 he was
enthroned as a constitutional monarch after accepting the Lao Issara
consti-tution.  French troops reoccupied Vientiane and Luang
Prabang in May and, in August 1946, recognized Lao autonomy after
elections to a constituent assembly.  A new constitution took effect
in 1947.

France formally recognized the independence of Laos within the
French Union on July 19, 1949, and Laos remained a member of the
French Union until 1953.  From 1954 until 1957, pro-Western
governments held power.  The first coalition government, the
Government of National Union, led by Souvanna Phouma, was
formed in 1957, but it collapsed in 1958 with the imprisonment of
Prince Soupha-nouvong and other LPF leaders by the government.
A pro-Western regime took over the Royal Lao Government.  The
LPF insurgency resumed after 1959, when Souphanouvong and
other leaders escaped from prison.

In 1960, Kong Le, a paratroop captain, seized Vientiane in a coup
and demanded formation of a neutralist government to end the
fighting.  Kong Le and the neutralist government, again under
Souvanna Phouma, were driven from Vientiane later in the year by
rightist forces under Gen. Phoumi Nosovan and then formed an
alliance with the LPF.  By early 1961, the LPF, with North Vietnamese
military support, threatened to take over the entire country.  US
military advisers and supplies were sent to aid the Royal Army.
A 14-country conference convened in Geneva to address the issue
of Laos reached an agreement in 1962 that provided international
guarantees for the independence and neutrality of Laos.  But the LPF
ceased cooperating with the government in 1964, and fighting
intensified against the neutralists and rightists.

In 1972, the Lao communists publicly proclaimed the existence of the
Lao People's Revolutionary Party (LPRP).  A new coalition, with
Communist participation, and a cease-fire were arranged in 1973, but
the political struggle between the communists, neutralists, and
rightists continued.  The collapse of Saigon and Phnom Penh in April
1975 hastened the decline of the coalition.  On December 2, 1975,
the monarchy was abolished and the communist Lao People's
Democratic Republic (LPDR) was established.

The new government opted for socialism, with centralized economic
decision-making and broad security measures, including the control
of media and the arrest and incarceration of thousands of members
of the previous government and military in remote prison camps
called "re-education camps."  The government, in cooperation with
Vietnamese forces in Laos, also launched a military campaign
intended to control dissidents, notably Hmong tribespeople who had
long resisted Vietnamese and Lao communists from their mountain
redoubts.

This military campaign, along with deteriorating economic conditions
and government attempts to enforce political control, prompted an
exodus of lowland Lao and Hmong tribespeople in the early years of
LPDR rule.  About 10% of the Lao population sought refugee status
after 1975.  Many have since been resettled in third countries,
including 185,000 who have come to the United States.  An
estimated 65,000 refugees remain in Thailand, though 7,000 returned
voluntarily to Laos in recent years.

In the late 1980s, the government closed most re-education camps
and released most political prisoners, though reports indicate that at
least 34 high officials from the former government remain in custody.


GOVERNMENT
The only legal political party is the communist LPRP.  The head of
state is President Souphanouvong.  Since his stroke in late 1986,
most of his duties have been taken over by acting president Phoumi
Vongvichit.  Real power, however, rests with Kaysone Phomvihan,
chairman of the council of ministers and LPRP secretary general.

The Lao national legislature, the Supreme People's Assembly (SPA),
adopted new election laws in 1988, and the first national elections
under the current government took place in March 1989 (local
elections were held in 1988).  The newly elected SPA set out to draft
a constitution, which was finished in mid-1990 and is expected to be
approved in 1991.  The constitution calls for a strong legislature
elected by secret ballot, but most political power continues to rest
with the party-dominated council of ministers.


ECONOMY
Laos is a poor, landlocked country with a real per capita GDP of less
than $170, a grossly inadequate economic infra-structure, and a
largely uneducated workforce.  Agriculture, mostly subsistence rice
farming, dominates the economy, employing 85% of the population
and producing 62% of the national income.  Domestic savings are
low, so Laos depends almost entirely on foreign aid and
concessional loans for investment.  Nevertheless, Laos has plenty of
arable land, a favorable land-to-labor ratio, tremendous hydro-electric
potential, and large amounts of minerals, including tin, gold, and
probably petroleum.

When the current government came to power in 1975, it imposed a
harsh, Soviet-style economic system, replacing the private sector
with state enter-prises and cooperatives, centralizing investment,
production, trade, and pricing, and creating barriers to internal and
foreign trade.

Lao authorities began to realize as early as 1979 that their economic
policies were inappropriate, but not until 1985, with the introduction
of the "new economic mechanism" (NEM), did they initiate major
reforms.  Initially timid, the NEM soon was expanded to include a
range of reforms that changed the structure of the Lao economy.
Free market prices replaced government-set prices.  Farmers were
allowed to own land and sell crops at market prices.  State firms
were granted increased decision-making authority but lost most of
their subsidies and pricing advantages.  The government set the
exchange rate at market levels, lifted trade barriers, replaced import
quotas with tariffs, and stimulated private sector firms by giving them
direct access to imports and credit.

These reforms have helped boost exports, reduce inflation,
encourage business, and increase the availability of goods.
However, the economy is dominated by an unproductive agricultural
sector that operates largely outside the money economy, which the
public sector continues to dominate.

Recognizing these problems, Lao authorities in mid-1989 signed an
agreement with the World Bank and the International Monetary Fund
committing themselves to extending and deepening reforms.  They
agreed to expand fiscal and monetary reform, promote private
enterprise and foreign investment, privatize or close state firms, and
strengthen banking.  They also agreed to maintain a market
exchange rate, reduce tariffs, and eliminate unneeded trade
regulations.

In the last 2 years, the Lao have enacted a liberal foreign investment
code, begun to privatize public firms, and expanded economic ties
with the West.  They have tried especially hard to attract foreign
investment.


FOREIGN RELATIONS
The Pathet Lao leaders who took over in December 1975 aligned
themselves with the Soviet bloc and adopted a hostile attitude toward
the West.  Laos has been close to the Soviet Union and Eastern
Europe and is an observer at the Council for Mutual Economic
Assistance, the Soviet-bloc economic organization.

Since 1975, Laos has maintained close ties with Vietnam, described
by the Lao and Vietnamese as a "special relationship" and formalized
in a friendship and cooperation treaty.  Laos has maintained close
ties with Cambodia since the 1979 installation of a
Vietnamese-backed regime.
In the last few years, Laos has sought to improve relations with other
countries and to reduce its dependence on Vietnam and the Soviet
bloc.  Much of its efforts have focused on Thailand, Laos' principal
means of access to the sea and its primary trading partner.  Less
than a year after serious border clashes in 1987, Lao and Thai
leaders signed a communique signaling their intention to improve
relations.  Since then, progress has been made on several fronts,
and relations now are better than they have been since 1975.

Laos also has improved relations 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.  Relations began to
improve in the late 1980s, and Prime Minister Kaysone's October
1989 visit to China resulted in complete normalization of Sino-Lao
relations.  Flexibility on the part of both countries led to agree-ments
on border demarcation trade.

Finally, Laos has begun to reduce its international isolation by
improving relations with other countries, including France, Australia,
and Japan.


US-LAO RELATIONS
US-Lao relations deteriorated in 1975, although diplomatic relations
were not severed.  Since that time, the United States has maintained
a small embassy in Laos, and Laos has maintained a small embassy
in Washington, DC, both headed by charges d'affaires.

Relations were cool during the early years of the government, but in
1982 both governments agreed to work to improve them.  The
United States stressed that progress in accounting for Americans still
missing in Laos from the Vietnam War would be the principal
measure of Lao sincerity in improving relations.  More recently,
narcotics control has become another important US concern in Laos,
which is a major producer of opium and marijuana.

In the last few years, progress has been made in both areas.  In
February 1985, a Lao-US team conducted the first joint excavation
of a plane crash site, resulting in the identification of the remains of
all 13 missing service-men.  Progress has accelerated since 1988,
with Laos agreeing to expand POW/MIA activities.  The two countries
have conducted numerous site surveys and recovery operations
since January 1989.

In 1987, Laos began to cooperate on narcotics, when it requested
assistance in providing viable alternative crops to opium farmers.
Since then, the two countries have signed an agreement on
cooperation and initiated a multimillion dollar crop-substitution
program.  Laos also has formed a national committee on narcotics,
participated in US-sponsored narcotics training seminars, and taken
law enforcement actions.

For its part, the United States has  supported loans to Laos by the
Asian Development Bank (the United States previously abstained on
such loans), deleted Laos from a list of countries  prohibited from
receiving most forms of US assistance, provided emergency food
and medicine shipments, agreed to a major prosthetics program in
Laos, and urged private organizations to provide humanitarian
assistance.

TRAVEL NOTES
Visitors can apply for visas at the Lao Embassy in Washington, DC
Although, in theory, tourist visas are temporarily "suspended" except
for group travel, in practice individual visa applications have generally
been approved on a case-by-case basis.  Business travel is
encouraged.  US citizens of Lao origin have been able of late to
obtain visas easily to visit family and have not experienced any
particular difficulty in Laos.  Several US journalists have been able to
secure visas within the past year as well.  Sponsorship by an
individual or organization in Laos can ease the application process.

Vientiane is served by four international airlines:  Thai Airways, Air
Vietnam, Lao Aviation, and Aeroflot (USSR).  Flights connect
Vientiane to Bangkok, Rangoon, Hanoi, and (via several stops)
Moscow.  Bangkok is the nearest city served by a US carrier.


Principal Government Officials
Chairman, Council of Ministers-Kaysone Phomvihan
Acting President-Phoumi Vongvichit [since October 1986]
Charge d'Affaires in Washington-Linthong Phetsavan
Permanent Representative to the United Nations-Saly Khamsy

Laos maintains an embassy in the United States at 2222 S St., NW,
Washington, DC  20009 [tel. [phone]].


PRINCIPAL US OFFICIALS
Charge d'Affaires-Charles B. Salmon, Jr.

Deputy Chief of Mission-Karl Wycoff
The US Embassy in Laos is on Rue Bartholomie, Vientiane [tel.
2220].


Published by the United States Department of State --  Bureau of
Public Affairs  -- Office of  Public Communication --  Washington, DC,
March 1991 -- Editor: Jim Pinkelman.

Department of State Publication 8874--Background Notes Series  --
This material is in the Public domain and may  be reprinted without
permission; citation of this source is appreciated.


For sale by the Superintendent of Documents, U.S. Government
Printing Office, Washington, D.C.  20402.