Clinton Visit Puts Spotlight on South China Sea

July 10, 2012
By PATRICK BARTA
The Wall Street Journal

U.S. Secretary of State Hillary Clinton's visit to Southeast Asia this week was expected to put a spotlight on territorial disputes in the South China Sea, as well as the growing significance of a relatively new actor in the region's power plays: tiny, landlocked Laos.

Mrs. Clinton was scheduled to spend Tuesday in Hanoi after stops in Tokyo and Mongolia, with plans to discuss the growing commercial and political ties between the U.S. and Vietnam. Washington and Hanoi have grown especially close over the past few years as Vietnam has grown more wary of efforts by China, its northern neighbor, to project influence across Southeast Asia, especially in the resource-rich South China Sea, parts of which are jointly claimed by China, Vietnam, the Philippines and other countries.

Mrs. Clinton is scheduled to arrive Wednesday in the Laotian capital of Vientiane, the first such trip by a U.S. Secretary of State in 57 years. Laos's political profile has risen as it has moved deeper into China's orbit. Her trip to Laos will be followed by a visit to Cambodia, where she will attend a regional forum of the Association of Southeast Asian Nations and meet with U.S. businesses.

Communism and capitalism are mixing in Laos

President and Communist Party General Secretary of Laos Choummaly Sayasone (L) meets with Chinese President Hu Jintao at the Great Hall of the People in Beijing in this file photo (Reuters)

TheMalayInsider.com

VIENTIANE, Laos, Sept 18 — Hammer-and-sickle flags flutter above government offices in central Vientiane, and the entrance to the national museum is decorated with massive sculptures glorifying the workers’ revolutionary struggle.

Officially, this sparsely populated country is still communist — and has been since 1975. But these days, that really depends on whom you ask.

Three months ago the Obama administration declared that Laos, the country the United States tried so hard to prevent from toppling toward communism during the Vietnam War, had “ceased to be a Marxist-Leninist country.”

Following similar announcements in past decades for China and Vietnam, the White House made the declaration without fanfare in a June 12 memorandum that lifts a ban on Laotian companies from getting financing from the US Export-Import Bank.

But in Vientiane, the capital, news of the US policy change was perplexing for Klongmanee Boonliang, an amiable saleswoman in a government-run bookshop. Karl Marx and Vladimir Lenin are still best sellers, she said.

Every month, schools and offices buy 400 to 500 poster-size portraits of the two men and hang them in prominent places. “The Smile of Lenin,” one of several booklets praising Lenin on the shelves, also sells well.

“He was a brave and smart person,” she said, offering an impromptu homily to the founder of Soviet communism. “Everyone wants to get lessons from him. It’s still important.”

What to make of Laos, the former French colony that became a focal point of great powers during the Vietnam War, only to slide back into obscurity once the Cold War ended?

Landlocked and mountainous, Laos has long had a reputation as more somnolent than its hard-charging neighbours. Today, however, Vientiane’s streets are filled with the hallmarks of conspicuous consumption — Hummers, Mercedes and other fancy cars. Purse snatchings are on the rise, a sign perhaps that people have more to steal. In a centre-city gym, a group of high school girls spend their evenings practicing dance moves that might make teenagers in Los Angeles blush, let alone the ashen-faced members of the Lao Politburo.

Capitalism is making inroads in Laos, but mastering the ideology might require some re-education. The country is scheduled to open its first stock exchange next year, a plan that prompted a local newspaper to run a series of articles offering a glossary of capitalist terms (“A stock market itself is like any other market,” said a recent explanatory article. “Everything has a price.”)

The official line from the government is that Laos is a one-party democracy — only members of the Communist Lao People’s Revolutionary Party are allowed to contest elections.

“Marxist-Leninist theory is practical and is suitable for the current situation in Laos,” President Choummaly Sayasone said in a speech to military veterans earlier this year that was reported in the English-language Vientiane Times.

Yet even some government offices are enthusiastically entrepreneurial. Provincial authorities have encouraged the construction of lucrative casinos that cater to Chinese and Thai gamblers (Lao citizens are not allowed). And in Vientiane, the Foreign Ministry charges 1 million kip, about RM438 as a “registration fee” for visiting journalists and US$24 (RM88) for every day in the country — princely sums for this impoverished country.

Laos is, above all, divided between the rising incomes of Vientiane and a handful of other towns and the poverty of the countryside, where most of the country’s seven million people live — and where ideology of any stripe can seem irrelevant.

In a village about 15 miles outside Vientiane, Thai Lee, a rice farmer, said he had never heard of Marx. Lenin? He guessed he might be a famous Vietnamese leader. “If I had studied more, I might know more about it,” Lee said.

Even during the Cold War, Laos was never a communist country in the style of the more industrialised and developed Soviet satellites in Europe.

Efforts to establish farming communes in the early 1980s were so unpopular that they were abandoned within a few years. And children in Laos are often educated in Buddhist schools, where Marx and Lenin take a back seat to Siddhartha.

Although the cities show signs of newfound wealth, Laos is also too poor overall to be a textbook communist government capable of providing for all of its people. The government is so skeletal that public spending makes up only 11 per cent of the country’s economy, according to World Bank numbers, compared with more than double that level in the world’s capitalist headquarters, the United States.

Politically, Laos remains authoritarian, and dissent from the party line is banned. But there have been signs of glasnost, the openness that Mikhail Gorbachev described in the dying days of the Soviet Union.

The National Assembly, the country’s Parliament, inaugurated a hot line two years ago, encouraging citizens to call in with complaints, which were researched and in some cases aired publicly. Earlier this year, the government passed a law allowing citizens to form non-profit organizations, a move that chips away at the Communist Party’s monopoly on political life.

“Civil society in Laos is still very immature at the moment, but it’s growing,” said Viengsamay Srithirath, a communications officer at the World Bank office in Vientiane. “You see a number of grass-roots organisations coming up.”

For the United States, the decision to change Laos’s Marxist-Leninist status might be seen as a belated coda to the Secret War, the effort by the US government four decades ago to keep Laos from becoming communist and to interdict Vietnamese supply lines through the Ho Chi Minh trail, much of which ran through Laos.

The war, conducted by the Central Intelligence Agency and kept secret because it violated Laos’s neutrality, featured tens of thousands of hill tribe mercenaries on the US payroll and a devastating bombing campaign.

The bombings ultimately failed to shut down the Ho Chi Minh trail, and Lao communist forces, backed by Vietnam and China, were victorious in 1975.

Ravic Huso, the current US ambassador to Laos, says the decision to change Laos’s Marxist-Leninist status was not a comment on the country’s political system. “Are they still a one-party state? Yes,” Huso said during an interview in his office. “The legislation was not intended to apply to that. It was intended to apply to the way the economy was run.”

In the June memorandum, President Barack Obama said, “I hereby determine that The Lao People’s Democratic Republic has ceased to be a Marxist-Leninist country.” The memo includes a reference to the US Export-Import Bank’s definition of Marxist economies.

The definition reads: “‘Marxist-Leninist country’ means any country that maintains a centrally planned economy based on the principles of Marxism-Leninism, or is economically and militarily dependent on any other such country.”

The change in US policy was years in the making, Huso said. Cambodia was removed from the list at the same time. Only North Korea and Cuba remain, he said.

So, is Laos communist?

Southanom Inthavong, the head of the country’s Olympic Committee who has graduate degrees from universities in Moscow and Minnesota, answers the question with a question.

China plans to invade Vietnam ... ooops, sorry, that's not Beijing official position

Vietnam protests hawkish Chinese Web postings

Chinese officials have confirmed that plans posted online for an invasion of Vietnam do not reflect Beijing's official position. But the postings are heightening tensions at a time when China seeks to gain control of oil-rich regions in the South China Sea.

September 10, 2008
By Jonathan Adams
The Christian Science Monitor

The Hanoi government has complained to Beijing about postings on Chinese websites that detail plans for an invasion of Vietnam. Chinese officials have dismissed the posts as the ramblings of a hypernationalist minority. But the diplomatic flare-up is seen as an indication of rising tensions between the two nations over the potentially oil-rich South China Sea. There, China has been pressuring Western oil firms to cancel joint exploration projects with Vietnam in waters that Beijing also claims.

The South China Morning Post (SCMP) reported that the invasion plans have been posted on the popular Chinese web portal Sina.com and at least three other websites. Analysts interviewed by the SCMP characterized the posted "invasion plans" as the work of kooks, with little military value.

• The supposed plans detail a 31-day invasion, starting with five days of missile strikes from land, sea and air and climaxing in an invasion involving 310,000 troops sweeping into Vietnam from Yunnan, Guangxi and the South China Sea. The electronic jamming of Vietnamese command and communications centers is mentioned, along with the blocking of sea lanes in the South China Sea....
• "Vietnam is the strategic hub of the whole of Southeast Asia. Vietnam has to be conquered first if Southeast Asia is to be under [China's] control again," the plans say. "From all perspectives Vietnam is a piece of bone hard to be swallowed."

The SCMP added that Vietnamese officials were baffled that the postings remained online after they registered their complaints, since Beijing can easily block any Web content that has been brought to its attention.

The Straits Times, a Singapore daily, reported that Chinese officials have assured Vietnam that the postings do not reflect Beijing's official position.

The web postings come as China and Vietnam are squaring off over exploration projects in the South China Sea in areas that both claim. In July, Beijing had warned the American oil giant ExxonMobil to scrap an exploration deal with Vietnam, reported the World Tribune. The report suggested that Vietnam had a better case for its claim to potentially oil-rich fields off its coast. But China is flexing its growing political muscle by asserting its claim to nearly the entire South China Sea.

• A Hong Kong newspaper says Beijing's diplomats have threatened retaliation if ExxonMobil goes ahead with a preliminary agreement with the Vietnamese state oil firm PetroVietnam. The deal covers exploitation in the South China Sea off Vietnam's south and central coasts, according to the Sunday Morning Post....
• The Hong Kong newspaper quoted unidentified sources saying Exxon Mobil was confident of Vietnam's sovereign rights to the blocks it was now seeking to explore. But it is clear that ExxonMobil could not dismiss China's warnings out of hand given the rapidly increasing Chinese market for crude oil and oil products....
• Last year, Chinese media targeted an agreement between Vietnam and BP near the Spratlys maintaining that those islands had been an "indisputable part of Chinese territory since ancient times." The Spratlys, like other island groups in the region, are uninhabited rocky outcroppings and coral but are in an area that may contain large oil and gas deposits.

Reuters reported that China and Vietnam are actually cooperating in oil and gas exploration in the Gulf of Tonkin off Vietnam's north coast. But in waters further south, the two sides are at odds. The territorial dispute in southern waters led British oil giant BP to scotch its plans for exploration there.

Once united by their communist ideology, relations between Vietnam and China cooled in the 1970s, particularly when Vietnam invaded Cambodia in late 1978 to oust the Beijing-backed Khmer Rouge regime. Partly in retaliation, China invaded Vietnam a few months later, as detailed by Global Security. The two sides fought a nasty one-month border war that left tens of thousands dead before Beijing retreated. Border clashes continued throughout the 1980s.

That history helps explain Vietnam's sensitivity to public "invasion plans" on Chinese websites, no matter how bogus they might be.

In the past two decades, relations have warmed as both countries moved ahead with pragmatic market reforms, despite several ongoing territorial disputes. In addition to the Spratly and Paracel islands in the South China Sea, the countries are also battling for influence over neighboring, resource-rich Laos. A commentary in the Asia Times argued that Laos is likely to increasingly tilt toward China, despite the landlocked country's historically close ties to Vietnam.

• Laos is of increasing strategic importance to both China and Vietnam, two of Asia's fastest growing countries. Vietnam's interests lie primarily in securing its long land border with Laos and developing greater access to markets in Thailand. For China, Laos provides a growing avenue to export products to wider Southeast Asia, particularly from its remote and less-developed, landlocked southwestern regions....
• Some analysts here predict that the balance of influence inside the ruling Lao People's Revolutionary Party (LPRP) could soon shift in Beijing's favor, as senior Lao leaders fade from the political scene and younger, more market-savvy cadre lacking experience in the communist revolutionary period assume positions of power.

China and Vietnam square off in Laos

Aug 30, 2008
By Brian McCartan
Asia Times (Hong Kong)

VIENTIANE - China's growing influence in resource-rich Laos is seen by some as coming at the expense of ties with Vietnam, long the communist country's main patron and de facto security guarantor. The diplomatic recalibration is part of the landlocked country's bid to more fully integrate economically with the region and has so far served its interests well.

Laos is of increasing strategic importance to both China and Vietnam, two of Asia's fastest growing countries. Vietnam's interests lie primarily in securing its long land border with Laos and developing greater access to markets in Thailand. For China, Laos provides a growing avenue to export products to wider

Southeast Asia, particularly from its remote and less-developed, landlocked southwestern regions.

Both countries have a growing interest in Laos' bountiful and largely untapped natural resources, agricultural products and hydropower to fuel their expanding economies.

Some analysts here predict that the balance of influence inside the ruling Lao People's Revolutionary Party (LPRP) could soon shift in Beijing's favor, as senior Lao leaders fade from the political scene and younger, more market-savvy cadre lacking experience in the communist revolutionary period assume positions of power.

Although 10 of the 11 member politburo's standing committee speak fluent Vietnamese - a mark of their deep personal ties to Hanoi and its political leadership - rising mid-ranking cadre are less likely to have studied in Vietnam while an increasing number have studied in the former Soviet Union, China or elsewhere.

Lao Prime Minister Bouasone Bouphavanh's appointment at the 2006 Eighth Party Congress was seen by many as the beginning of a shift towards more Chinese influence over the government. Born in 1954, he was a 21-year-old student activist and not a revolutionary war veteran when the communists took over the country in 1975. He later studied in the Soviet Union rather than Hanoi.

In apparent realization of this changing dynamic, China has adopted a long term diplomatic strategy for Laos. Rather than overly leveraging its commercial might, Beijing is simultaneously cultivating younger Lao leaders through programs that bring them to China for vocational, ideological and military training. These moves are being made in anticipation of an already dawning era when Vietnam-orientated old guard cadre fade from the political scene.

In an interview with Asia Times Online, Lao spokesman Yong Chanthalangsy showed the pragmatic side of Lao thinking. Noting that China is the new emerging power in the region, he said, "Openness and integration in the region is far better than the Cold War in the past imposed by some power. When Laos was a part of a security belt, it resulted in thirty years of war.”

Although he was referring to the broader Indochina War with the US, and earlier France, he could have just as easily been referring to the era of cool relations between Laos and China in the period between 1975 and 1988. Now, as the region's former communist countries reform their centrally planned economies with more market-driven policies, commercial imperatives are redefining how the region interacts, including with Laos.

Commercially positioned

Laos is now eager to promote itself as "land-linked" instead of "landlocked", emphasizing its potential role as a trade crossroads between China and Southeast Asia. According to spokesman Yong, "Laos has been suffering because it is landlocked and isolated. Connectivity in the region can only bring good things to Laos."

This view means that Laos sees the value in diversifying its diplomacy away from its traditional reliance on Vietnam. The balancing act has also extended to its erstwhile Western donors: while keen to accept investment and aid to boost the economy, create jobs and raise living standards, at the same time the government would rather avoid the conditions for political change and more official transparency often accompanying such aid.

Investments from China and Vietnam, on the other hand, come without pre-conditions. According to a 2005 monograph by noted Lao scholar Martin Stuart-Fox, it is not in the strategic best interests of China or Vietnam for the LPRP to lose its monopoly on political power and with both countries' commercial support there is little incentive for the LPRP to initiate political reforms.

Vietnam's strong relationship with Laos stems from the origins of the two countries' communist parties through the Indochinese Communist Party in the 1930s. This relationship was further cemented in the thirty years of struggle against the colonial French and then an American-backed regime, which was finally overthrown in 1975.

Communist Lao and Vietnamese forces fought side-by-side throughout those wars; then-North Vietnam's supply pipeline - the Ho Chi Minh Trail - famously used in its fight against the US-backed South Vietnam, ran through eastern Laos. Lao communist cadre received ideological and military training in Hanoi, while Chinese involvement in the struggle in Laos was confined to road building in the northern regions.

Laos and Vietnam entered into a formal twenty-five year Lao-Vietnam Friendship and Cooperation Treaty in 1977, underpinning what the two sides referred to as a "special relationship". Vietnam's siding with the Soviet Union against China in a doctrinal dispute meant that relations between its ally Laos and China also cooled. Relations worsened when Vietnam invaded Cambodia in late 1978 and China made a limited invasion of northern Vietnam in early 1979.

Bilateral relations between Laos and Vietnam are still strong, although the 1977 alliance was allowed to lapse in 2002. Personal ties between Lao and Vietnamese leaders remain strong enough politically for the "special relationship" to endure. Lao state-run media contains almost weekly news of bilateral socio-economic, cultural and military cooperation between the two countries. Billboards across Laos last year hailed the 45th anniversary of diplomatic ties and the 30th anniversary of the Lao-Vietnam Friendship and Cooperation Treaty.

Meanwhile, Vietnam remains Laos' second largest trading partner. The Vietnam-Lao Committee for Cooperation said in July that two-way trade hit US$240 million for the first half of this year, an increase of 58% year on year. The two countries have stated a shared goal of reaching $1 billion in bilateral trade by 2010 and $2 billion by 2015.

Investment competition

Vietnam is also clearly competing with China for investment influence. Figures released at an August 12 conference on Vietnam-Lao investment cooperation held in Vientiane showed that Vietnam's investment had grown to 177 projects valued at $1.28 billion. If accurate, this would raise Vietnam to the second-largest foreign investor in Laos behind Thailand and would move China down into third place.

Targeted investment areas include mining and expert-oriented agriculture and processing. Recent years have seen heavy Vietnamese investment in rubber plantations in southern Laos, particularly in Savannakhet and Champassak provinces. Laos is also increasingly being seen as a potential source of hydropower and state-run PetroVietnam and Electricity Vietnam are reported to be planning new projects in the country.

To facilitate trade and investment and access to markets in Thailand and the rest of Southeast Asia, Vietnam has been busy constructing roads in eastern Laos as part of the Greater Mekong Subregion's East-West Corridor road project, which aims to link Vietnam, Laos, Thailand, Myanmar and India. The most important link is the road connecting the Vietnamese central port of Danang with the so-called "Second Friendship Bridge" across the Mekong connecting Savannakhet, Laos, with Mukhdahan, Thailand.

While commercial ties are fast expanding, the two countries security links are perhaps better-established. Until at least the late 1980s, 40,000-50,000 Vietnamese soldiers were estimated to be based in Laos. Although Vietnam pulled its troops out in the 1990s, it still maintains training cadre, and according to some sources, military intelligence stations in the country. The Lao military continues to turn to Vietnam for military advice, especially concerning the ethnic Hmong insurgency. Lao military delegations to Vietnam in 1999 and 2000 went, according to some analysts, to seek advice after protests and a wave of mysterious bombings across the capital, Vientiane.

In contrast, China only resumed normal diplomatic relations with Laos in 1988 - but it is now fast making up for lost time. China was able to vastly increase its clout in Laos by bailing out the country from the 1997 Asian financial crisis through increased aid, investment and trade. Generous export subsidies and interest-free loans helped stabilize the tanking local currency, the kip.

Since then, a series of bilateral agreements have been signed covering economic and technical cooperation, infrastructure development and investment and banking. In 2000, President Jiang Zemin paid the first visit ever by a Chinese head of state to the country, paving the way for continued high-level government-to-government exchanges. According to Chinese media reports, Beijing canceled much of Laos' $1.7 billion debt owed in 2003.

China's interest in Laos is primarily economic, as both a source of natural resources and a conduit for its manufactured goods into Southeast Asia. Chinese investors are heavily involved in Lao hydropower and several dams are under construction with more in the planning stage. Mining is also an important area of investment, with concessions granted to Chinese investors for gold, copper, iron, potassium and bauxite.

So, too, is commercial agriculture, with Chinese investing heavily in corn, cassava, sugarcane and rubber in northern regions for export to China. Noting the new technology, seeds and markets brought in by Chinese investment, spokesman Yong said "Improved relations and opening up to China in those six (northern) provinces has had an immediate benefit."

Two-way trade stood at $249 million in 2007, but similar to Vietnam, China has said it hopes bilateral flows will hit $1 billion over the next few years. According to the Lao Committee for Planning and Investment, Chinese direct investment totaled $1.1 billion by August 2007, making China the second largest investor behind Thailand.

During Chinese Premier Wen Jiabao's visit to Vientiane in March, in conjunction with a Greater Mekong Subregion Summit, seven agreements were signed between the two countries covering economic issues, technology, energy and e-governance. China also offered $100 million in export purchaser credits for the vehicles and helicopters. Chinese loans have also helped to set up the Lao Telecom Company and Lao Asia Telecom, establish e-government projects and purchase aircraft for Lao Aviation.

China has paid particular attention to the development of the fast-expanding network of roads in northern Laos. Reconstruction of Route 3, connecting the Chinese city of Jinghong in Yunnan, through Laos to the town of Huay Xai across from Chiang Khong, Thailand, was completed earlier this year. Construction on a bridge - funded by China - across the Mekong River to complete the route is expected to begin later this year. The road project is a part of the Greater Mekong Subregion's North-South Corridor to connect China, Laos and Thailand. China hopes that the route will allow it to more efficiently transport goods through Thailand to the rest of Southeast Asia and provide a link with Thai seaports.

Soft and hard power

However not all Chinese investment has been strictly commercial. Considerable effort - and money - has been spent on "soft influence" projects, including the Beijing-financed construction of the $7-million National Cultural Hall, the 13-kilometer Central Avenue, renovation of the Patuxai Victory Monument and its surrounding park in Vientiane. It has also constructed a Sino-Lao Friendship Hospital just outside of the tourist town and old royal capital of Luang Prabang. In addition, increasing numbers of LPRP cadre are attending trainings and seminars in China, many in the southern Chinese city of Kunming, while more and more scholarships are being made available for Lao students to study in China.

Significantly, China has built on these economic ties to make strategic initiatives towards Laos, seen by some as a potential threat to Vietnam's position. It has recently increased contacts between the Lao People's Army (LPA) and the Chinese People's Liberation Army (PLA), while the number of Lao officers attending trainings in China has increased.

The Lao military's budget has grown steadily in recent years, according to analysts, and the government is no doubt aware that with China's huge weapons industry and Beijing's demonstrated willingness to exchange military hardware for commercial concessions is better placed to modernize its military through closer ties with China than Vietnam.

Not everyone is happy with China's growing role, however. While many Laos are happy to have access to cheaper Chinese manufactured goods, they are not always as enthused about what some see as a growing influx of Chinese migrants into the country and a perceived increase of Chinese influence over the government. Lao fears of a gradual "Chinese invasion" were perhaps most in evidence through the disapproval expressed in the wake of the government's announcement of a big land concession to Chinese investors near Vientiane's iconic That Luang Buddhist monastery.

While the land grant was apparently made in exchange for China's construction of a modern new sports stadium complex to be used when Laos hosts the 2009 Southeast Asia Games, the arrangement apparently angered some in the LPRP who were not consulted on the deal. Although the government has been at pains to dispel these rumors, they continue to persist.

Former Lao president Kaysone Phomvihan once said, "The mountains may wear out, rivers may run dry, but the Lao-Vietnam relationship will last forever." That may be true, due to geography as much as history, but China-Vietnam competition for influence in Laos is running high and so far the country has benefited nicely in balancing the two neighbors' advances.

Brian McCartan is a Chiang Mai-based freelance journalist. He may be reached at brianpm@comcast.net.