June 3, 2015
Laos
The Lao People’s Democratic Republic (LPDR or Laos),
The LPDR launched a market-oriented economic policy in
with a population of 6.8 million in a land-locked area
1986. The government disbanded collective farms,
around the size of Utah, is one of Asia’s poorest nations.
legalized private ownership of land, allowed market forces
Laos is a member of the Association of Southeast Asian
to determine prices, and encouraged private enterprise in
Nations (ASEAN), which it will chair in 2016. In 2013, the
most sectors. The country’s economic growth has been
LPDR became a member of the World Trade Organization
steady, lately fueled by construction, food processing,
(WTO). In 2012, then-Secretary of State Hillary Clinton
hydropower, and tourism. Between 1988 and 2008, the
became the first U.S. Secretary of State to visit Laos in 57
economy grew by over 6% per year on average, with the
years, which some observers viewed as a reflection of the
exception of 1997-1998, when the economy contracted due
Obama Administration’s policy of engagement with
to the Asian financial crisis. In recent years, the economy
countries in the region.
has expanded by 7-8% annually.

Despite economic growth, Laos continues to perform
poorly on many social indicators. The country has the
highest level of child mortality in Southeast Asia, and about
one-fourth of Lao children under five years of age are
considered underweight. Development of the agriculture-
based economy has been uneven and dependent upon
natural resources, particularly hydropower, metals, and
timber, with wealth accruing primarily in Vientiane, the
capital. Neighboring countries—China, Thailand, and
Vietnam—are Laos’s largest export markets and dominate
foreign investment.
U.S.-Laos Relations
The United States did not sever diplomatic relations with
Laos, as it did with Cambodia and Vietnam, when
communist parties in these countries took power in 1975.

Full diplomatic ties, however, were not restored until 1992.
The Lao government is said to be heavily influenced by
Source: Central Intelligence Agency, The World Factbook, 2015
China and Vietnam. Some observers say the LPDR is eager
The United States and the LPDR have experienced a slow
to offset its reliance on its large neighbors, particularly
warming of relations during the past several years, although
China, by maintaining good relations with the United States
the U.S. government remains concerned about human rights
and U.S. allies in Asia, but also is wary about U.S.
issues and the Lao government’s treatment of the ethnic
advocacy for democracy and human rights. U.S.
Hmong minority. To some observers, the LPDR’s status as
engagement in Laos, which has focused largely on helping
the next chair of ASEAN, as well as its new membership in
the LPDR integrate economically into the Southeast Asian
the WTO, may offer opportunities for the United States to
region through participating in trade agreements and
develop deeper relations with the country. Some also note
developing its legal and regulatory frameworks, has
that in 2016, 5 out of 11 members of the Lao People’s
expanded and diversified. The Obama Administration
Revolutionary Party (LPRP) Politburo are scheduled to
requested a substantial increase in foreign assistance to
retire, marking a possible transition in the country’s
Laos for FY2016. In 2012, Hillary Clinton met with Lao
leadership, although the potential impact and direction of
leaders and discussed regional integration, the Lower
the change remain unclear.
Mekong Initiative (LMI), Vietnam War legacy issues, and
the environment. High-level U.S. officials are likely to visit
Politically, Laos is an authoritarian state dominated by the
Laos when the LPDR hosts the ASEAN Leaders Meeting
communist LPRP. The government places substantial
and the East Asia Summit in 2016.
restrictions on civil and labor rights and political freedoms.
There are a handful of known political prisoners. In
Congress did not extend non-discriminatory treatment to
December 2012, Lao activist Sombath Somphone, who had
the products of Laos until 2004. Legislation to extend
spoken out against land takings and organized an
normal trade relations status to the LPDR faced opposition
international civil society event in Vientiane, disappeared
from many Members of Congress concerned about human
after being taken from his car at a police checkpoint. He
rights conditions in Laos and the plight of the Hmong
remains missing, and the Lao government denies
minority. In 2014, total trade between Laos and the United
knowledge of his whereabouts.
States was valued at $61 million, a 12% increase over 2013.
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Laos
Lao exports to the United States totaled $32.9 million in
development of the Mekong River and collaboration on the
2014, dominated by apparel items and precious metals.
management of shared water resources. According to some
observers, two major, foreign-financed and developed
The U.S. government has noted progress and cooperation in
Mekong dams under construction in Laos, the Xayaburi and
some areas of the bilateral relationship. In 2009, the United
the Don Sahong, proceeded without the approval of the
States and Laos exchanged defense attachés, the first time
MRC. Although these and other hydropower projects are to
in over 30 years, and the Obama Administration removed
generate electricity and revenues for Laos and other lower
the prohibition on U.S. Export-Import Bank financing for
Mekong countries, their potentially adverse environmental
U.S. companies seeking to do business in Laos, citing the
effects include displacement of people; the loss of
country’s commitment to opening its markets. In 2010, the
agricultural land; disruptions to water supplies, agriculture,
two countries signed a comprehensive Open Skies
and fish stocks; and the decimation of some wildlife and
agreement to expand and liberalize aviation ties.
aquatic species in Laos and neighboring countries.
Since 1988, the United States Joint Prisoner of
Unexploded Ordnance
War/Missing in Action (POW/MIA) Accounting
Commandrecovery teams have carried out over 100
The United States dropped over 2.5 million tons of
missions in the LPDR with the cooperation of the Lao
munitions, mostly cluster bombs or submunitions, on Laos
government. Over 40% of MIAs from the Vietnam War
during the Vietnam War, more than the amount that fell on
reportedly have been accounted for while 304 cases remain.
Germany and Japan combined during World War II in
Bilateral cooperation on counternarcotics activities
terms of tonnage. Over 50,000 Laotians have been killed or
contributed to a sharp decline in opium production during
wounded by unexploded ordnance (UXO) since 1964.
the 1990s and 2000s, although output has risen in recent
Unexploded submunitions reportedly caused 7,586
years.
casualties between 1964 and 2012, including 3,180 deaths
Foreign Assistance
and 4,373 Laotians injured, according to the Landmine &
Cluster Munition Monitor and other sources. The U.S.
Laos receives over $500 million in bilateral and multilateral
government has provided $83 million in funding for de-
assistance annually. The top sources of bilateral official
mining and other UXO-related assistance since 1993.
development assistance to Laos include Japan, Australia,
The Hmong
South Korea, Switzerland, and Germany. China also is a
major provider of investment, financing, development
Beginning in the early 1960s, the U.S. Central Intelligence
assistance, and infrastructure in the LPDR. China
Agency trained and armed an estimated 60,000 ethnic
reportedly has invested $4 billion in agriculture,
Hmong in Vietnam and Laos to fight the Vietcong. After
hydropower, and mining in Laos, including a reported $1.3
the Lao communists took power in 1975, Lao and
billion in 2013 alone.
Vietnamese troops decimated most of the Hmong guerilla
army in Laos, although some Hmong fighters remained in
U.S. assistance to Laos has risen under the Obama
remote mountain areas for decades. There were reports of a
Administration—$16.3 million in FY2014 and a requested
skirmish in 2012 in which seven Hmong and four Lao
$21.7 million for FY2016. The largest U.S. aid programs in
Army combatants were killed. Some human rights
Laos long have been de-mining (clearance of unexploded
organizations claim that the Lao military committed
ordnance) and counternarcotics efforts. The FY2016 budget
atrocities against Hmong militias and that the Lao
request for foreign operations significantly bolsters
government has persecuted or discriminated against ethnic
development assistance (DA) to the LPDR. DA programs
Hmong citizens, charges that the government denies.
include efforts aimed at helping Laos comply with
commitments related to its WTO membership and
Following the Communist takeover, up to one-third of the
participation in the ASEAN Free Trade Area and ASEAN
Hmong minority in Laos, which numbered 350,000 in 1974
Economic Community. Other program areas include
by some estimates, fled to Thailand. Many of them
maternal and child health, aid for people with physical
eventually emigrated to the United States. Between the
disabilities, sanitation, environmental protection, military
early 1990s and 2010, over 35,000 Hmong reportedly
education (military professionalism and democratic values),
returned or were repatriated to Laos from Thailand. In
and Foreign Military Financing to assist the Lao military
2003, the United States accepted 15,000 Hmong facing
with English language training and de-mining capabilities.
deportation in Thailand. Approximately 2,000 Hmong
insurgents surrendered to Lao authorities between 2005 and
The Lower Mekong Initiative, a sub-regional foreign
2007 and settled in lowland areas. The Lao government has
assistance effort launched in 2009 by then-Secretary of
provided limited access for international observers to
State Hillary Clinton, promotes cooperation and capacity
investigate conditions of resettlement villages of Hmong
building in the areas of education, health, women’s issues,
returnees and former rebels.
regional infrastructure, and the environment. LMI
participants are Burma (Myanmar), Cambodia, Laos,
Ben Dolven, bdolven@crs.loc.gov, 7-7626
Thailand, and Vietnam. Among other activities, the LMI
Thomas Lum, tlum@crs.loc.gov, 7-7616
provides support to the Mekong River Commission (MRC),

an inter-governmental agency (Cambodia, Laos, Thailand,
and Vietnam) whose mission is to promote the sustainable
IF10236
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