Laos: Liberalisation at the Crossroads
03 Apr, 2013 · 3867
Aparupa Bhattacherjee analyses the extent and impact that economic liberalisation has brought to governance
Aparupa BhattacherjeeResearch Officer
The arcane disappearance of a Laotian citizen, award-winning activist, Sombath Somphone has baffled the world. The Laos government is facing criticism from their neighbouring countries, and especially from the US, due to their inability to probe into the case after more than hundred days of Mr. Sombath’s disappearance. Interestingly, this is not the first case of disappearance in Laos. Authorities in Laos have obstructed the US’ investigations into the whereabouts of two US citizens and an American permanent resident that have been missing from Laos for a long time. The government has taken no major initiative to investigate these cases. These incidents hamper the image of the Communist Laos government, whose newly liberalised economy propels them to be dependent on their neighbour and the US for both investment and funding. Moreover, the changes which liberalisation has brought into Laos are being questioned under such circumstances.
Changes brought about due to Liberalisation
For the world outside, Laos is a beautiful landlocked country. That is the image portrayed by the Laos government, which is quite evident from their slogan “simply beautiful”. Laos has a long history of struggle and bloodshed. The Communist government, which followed the Chinese and USSR model of governance, faced a lot of criticism due to their mistreatment of the ethnic tribes, especially the Laotians of Hmong ethnicity. Voices against the government were also brutally crushed. The system of governance was very opaque. The disappearances of people who were critical of the government were not unusual. The situation seems to have changed only after liberalisation. But the question arises that has the scenario changed for the better or for worse?
The government introduced the New Economic Mechanism (NEM) to boost the economy. Although the political system remained strictly communist, NEM has been responsible for the entry of capitalist institutions, the opening up of the market to the world, and an influx of Foreign Direct Investment. Thus, several foreign policy changes were introduced by the government to enhance its relations with other countries. Membership in the Association of Southeast Asian Nations (ASEAN), the East Asia Summit (EAS) and La Francophone has been part of this strategy. As a step forwards in joining the capitalist world, Laos launched its stock exchange in 2011. The agro-based economy of Laos suddenly shifted its emphasis to tourism, production of electricity, metals, and minerals.
Laos heavily depends on its neighbouring countries, especially Thailand, Vietnam, and northern China for trade. Change was also initiated at the domestic front when amendments were introduced in the constitution to safeguard the human rights of all nationals. The amendment also highlighted the equality of all multi-ethnic tribes of Laos. Moreover, there are some Non Governmental Organisations and Civil Society actors questioning the actions of the Laotian government.
The Change: Reality or Illusion?
Although things seem to have changed in a positive direction, the reality is very different. The government claimed that the Laotian economy is growing at a rate of seven per cent annually. Many NGOs have cautioned the growth strategy of the government, which features large scale foreign investment in the resource sector that might have a negative impact on socio-economic development. Overemphasis on the resource industry has also affected agrarian development, which is risky, as the majority of Laotian nationals still depend on agriculture for their livelihood. Moreover, in several cases, farmers have accused the government of seizing their land forcibly.
The government has also attracted criticism from environmentalists due to their expanding commercial exploitation, deforestation, and specifically for the construction of the Xayaburi Dam on the Mekong River. The construction of this ‘mega dam’ not only upsets other Mekong neighbours, but also put the lives of several Laotians at stake. The equality of multi-ethnic people remains restricted to the pages of the Constitution. The increasing number of ethnic minority immigrants to neighbouring countries makes this evident. Thailand and Vietnam, being the immediate neighbours, receive a huge influx of migrants from Laos, especially the nationals of Hmong ethnicity. Be it in the government or in the Politburo of the Communist Party, the dominance of nationals of Lao ethnicity is evident.
Although there are some civil societies, the government is still intolerant of dissent. The political system and governance is still very opaque. The mysterious disappearance of Sombath Somphone and other US nationals and the silence of the government make this apparent. The government is not only obstructing the US government’s investigation of the case, but also refusing the US any assistance in the Sombath case. This can severely hamper Laotian relations with the US and other European countries. Neither any European country nor the US has threatened to cut off aid to Laos over the cases of disappearance, but have clearly emphasised the damage caused to the reputation of the Laotian government.
The fall in the government’s reputation not only affects the nation’s aid but also affects their foreign investments. A steep plunge in reputation will not be good for the country, which recently acquired full membership in the World Trade Organisation.
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