News analysis

Asean chair a potential coming of age for Laos

US, China and Japan investing in country, thanks to its strategic position in region

Laos, sandwiched by China, Thailand, Vietnam and Cambodia, is under the spotlight this year as it chairs Asean.

Some analysts say it is a potential coming of age for the relatively isolated country, still run by an opaque old guard communist regime with Cold War memories of being bombed by the United States during the Vietnam War. This year will see world leaders meeting in its riverside capital.

In September, a US president will visit for the first time as Vientiane hosts the Asean summit. The US has donated millions of dollars to clear unexploded ordnance left behind by the Indochina War, and been supporting Laos' education system.

Because of its strategic position, Laos is emerging as a magnet for competing powers. Most recently, it has flirted with China, signing on to a US$6 billion (S$8.3 billion) railway linking China with Thailand and allowing rampant Chinese investments in the north.

 Japan is also an increasingly major player in Laos. At the Mekong Summit last year, Prime Minister Shinzo Abe unveiled 750 billion yen (S$9.1 billion) in official development assistance (ODA) to the Mekong region over the next three years. A few months earlier, Japan announced a US$110 billion commitment to support infrastructure in Asia.

"China supports north-south linkages, Japan supports east-west linkages," said a diplomat based in the region. "It is widely acknowledged that Japan is the largest ODA donor in Laos, possibly in the entire Mekong region."

Not to be outdone, China launched the Lancang-Mekong Cooperation Framework last November at a meeting with Asean in Jinghong, Yunnan province. The idea: to promote sustainable development and regional integration, including people-to-people exchanges.

 This year, with changes at the top in the secretive Politburo, Laos appears to have returned from a seemingly pro-China stance to balance major powers and lean towards old ally Vietnam again. Current Deputy Prime Minister and Foreign Minister Thongloun Sisoulith is expected to be elevated to Prime Minister on March 20.

"Thongloun... is viewed as somewhat of an internationalist who wants to promote closer ties not only with Laos' Asean neighbours, but also with the United States and Japan," Mr Murray Hiebert, senior fellow and deputy director of the Sumitro Chair for South-east Asia Studies at the Centre for Strategic and International Studies (CSIS) in Washington, wrote last month in the CSIS blog. "Thongloun is not anti-China but wants to hedge Laos' foreign policy with broader regional and international ties."

CSIS associate fellow Phuong Nguyen said in an interview: "The chairmanship... is a very big deal for Laos. Apart from dynamics with the major powers, this is the first year that the Asean Economic Community (AEC) is in effect and it is on Laos' watch.

"They see their job as also helping to implement to the extent that they can, the goals of the AEC and even own some of the items, for example trade facilitation and small and medium enterprises."

But even as the nation of seven million is courted by major powers, some analysts are cautious not to overstate Laos' case.

"Laos has gained prominence this year because it chairs Asean at a time of heightened geopolitical tension in the region," said Professor Thitinan Pongsudhirak, director of Chulalongkorn University's Institute of Security and International Studies, in an e-mail interview.

Last week's Asean foreign ministers retreat - the first of a series of meetings culminating in the September summit - saw little dissonance among Asean ministers as Laos worked hard to balance all interests, sources say. But Laos still walks a tightrope.

It has been "easy prey for Chinese economic expansionism", wrote Prof Thitinan. Without the chairmanship, Laos would "revert to its small-state dilemma of having to straddle contentious bigger neighbours".

He cautioned: "That Laos gets a lot of bandwidth now is rotational and ephemeral. Its external challenges of maintaining some geopolitical space, and internal upward pressure for reform, will persist after its chairmanship ends."

A version of this article appeared in the print edition of The Straits Times on March 05, 2016, with the headline 'Asean chair a potential coming of age for Laos'. Print Edition | Subscribe