Laos: No Safe Haven from the Regional Tumult

Summary

1997 was the year Laos entered the Association of Southeast Asian Nations (ASEAN) as a full member, and persisted with a more outward-looking — albeit still relatively reserved — stance towards the enveloping region, and the international community as a whole. Unfortunately, the country's opening up coincided with a marked dip in the economic fortunes of Southeast Asia, particularly Thailand, on which land-locked Laos remains heavily dependent for essential inputs. The first ripple effects emanating from regional turbulence was felt by Laos in mid-1997, when the local currency shadowed the Thai baht in depreciating markedly. And further adverse consequences will undoubtedly be felt in 1998, most notably with regard to much-needed foreign investment inflow pledges, which are likely to decline. Looking forward, the small scale of the country's economy — and its relative detachment from the region's financial markets — may help buoy Laos in weathering this economic storm, although the country will certainly not be wholly immune. Much will also depend on the extent of Vientiane's volition and competence in pushing ahead with the sorts of economic reform that provide the best guarantee of sustaining domestic economic growth. Notwithstanding the considerable progress made under the decade-long “New Economic Mechanism” reform programme, the leadership remains somewhat ambivalent about the prospect of moving ahead with a wholly new and coherent tranche of economic reform measures, preferring instead to take a familiar gradualist approach.

Political Developments: National Assembly Elections

After the drama of a Sixth Party Congress in 1996, developments in Laos' political sphere returned to relative normality throughout much of 1997. However, the pace of events picked up again towards the end of the year as Laos held nation-wide elections in late December for seats in the fourth legislature of the National Assembly. Polls for the National Assembly are held every five years, and approximately 2.5 million people were eligible to vote in 1997.