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dam-l LS: Short-term loss is Thai gain on Lao power deal

>The Nation / 23 August 1999
>
>Editorial & Opinion
>REGIONAL PERSPECTIVE: Short-term loss is Thai gain on Lao 
>power deal
>
>   VIENTIANE -- Thailand and Laos have reached a new 
>diplomatic plateau, which can either make or break their 
>long-standing ties. Since 1975, both countries have 
>delicately nurtured their relations in order to overcome 
>past differences. But to go beyond the current diplomatic 
>comfort level, both neighbours need a new approach -- a 
>combination of long-term strategies and economic packages 
>to rejuvenate their relations as part of Thai-Lao 
>brotherhood and as members of Asean.
>   In earlier years, border and internal security were the 
>main concern on both sides of the Mekong River. Border 
>clashes were common occurrences then. These border disputes 
>had led to two brief wars. Now efforts to demarcate the 
>1,730-kilometre border will continue after years of 
>procrastination. Thailand, which had assisted the right-
>wing Laotian government until its downfall in 1975, has 
>spent the past 25 years building trust with the new 
>leaders. This painstaking process has finally borne fruit 
>as the security-conscious Laotian leaders learn to have 
>confidence in their Thai counterparts.
>   In the 1970s and 1980s, the Hmong refugees issue has 
>been a constant thorn in Thai-Laos relations. But the days 
>when the refugees-turned-guerrillas made forays across the 
>border for espionage missions are no more. Now they are no 
>longer an irritant to bilateral ties. The Thai government's 
>recent action to clear up Wat Thamkrabong in Saraburi, 
>considered the country's biggest stronghold of the remnants 
>of right-wing Hmong leaders, has been much appreciated by 
>the Laotian side.
>   Despite all these positive developments, there remains 
>one stumbling block -- the current negotiation for the 
>price of 3,000-megawatt hydro-electricity to be imported 
>from Laos. Due to the economic crisis and lower energy 
>demand in the past two years, Thailand has asked for a 
>delay in the purchasing plan and a reduction of the price. 
>The Laotian side is nevertheless adamant that the signed 
>memorandum of understanding should be abided by without any 
>amendments.
>   The border trade with Laos last year reached Bt16 
>billion, an increase of 27.8 per cent over the previous 
>year, not to mention thousands of Laotians who cross the 
>Thai border at 36 locations in 11 provinces. Traffic over 
>the Thai-Lao Friendship Bridge has also increased, 
>especially over the weekend. In the past five years it has 
>further facilitated trade between the two countries.
>   However, the bridge is now being seen as a pipe which 
>funnels hard currencies out of Laos. When the bridge was 
>conceived, it was seen as a link to end the isolation of 
>the landlocked country. Now not a single day goes by 
>without Laotians bringing in household items and 
>necessities from Thailand.
>   The government has resorted to taxing major items to 
>dissuade those from purchasing goods abroad. In addition, 
>it has called on its citizens to use kip to buy cheaper 
>goods elsewhere. So far, it has not been able to stabilise 
>its currency, the kip, which has increased about 10 times 
>against the dollar in two years. One baht can fetch 255 kip 
>today, losing 80 per cent of its value of 1997.
>   With Laos facing economic uncertainties at home, its 
>future progress and infrastructure development will depend 
>much on Thailand's planned purchase of electric power from 
>Laos. Without enjoying the same conditions as in the past, 
>the prospect of having huge revenues in the first 10 years 
>of the 21st century will be further pushed back. As such, 
>it will also affect the future construction of various dams 
>inside Laos and the inevitable drop in foreign investment.
>   Laotian leaders have urged Thailand to follow the terms 
>contained in the memorandum of understanding, saying that 
>it would strengthen Thai-Lao relations as well as ushering 
>in Laos' integration in Asean and sustain its economic 
>growth. Most importantly, it will cushion the devastating 
>effect of the economic crisis on the Lao subsistence 
>economy.
>   Between 1988 and 1997, Laos received US$5.5 billion 
>worth of investment. Last year, there was around $200 
>million in new capital. Without the agreed purchasing plan 
>of hydro-electric power from Thailand, investors, whose 
>money comprises two-third of all investments in the 
>country, will also shy away from the country.
>   Fortunately for Laos, its agricultural input has been on 
>the rise, especially rice production. Farmers are able to 
>sell rice for a better price in Thailand. The production of 
>rice has doubled last year due to an increase in irrigation 
>and cultivated areas, which cover 87,000 hectares, almost a 
>four-fold increase on 1990 figure of 25,000 hectares. This 
>year the per capita income is expected to reach $420.
>   It is imperative that Thailand bites the bullet and 
>follows the terms and price of 5.7 cent per kilowatt. It is 
>a big sacrifice and a tall order given the health of the 
>Thai economy and the planned privatisation of the 
>Electricity Generating Authority of Thailand. Future 
>electric power consumption in Thailand will be lower but 
>more competitive. Certainly, it requires extraordinary 
>courage and vision from the Thai leaders to agree to the 
>terms which Laos prefers.
>   But this is not a one-off affair. Hydro-electricity will 
>remain the dominant feature of Thai-Lao relationship in the 
>next millennium. Therefore, the Foreign Ministry must take 
>the lead in ensuring that the favourable terms are 
>maintained in the purchase. A Laos that is stable and 
>healthy economically is crucial to Thailand's prosperity, 
>both within the bilateral and Asean context. The Asean 
>Human Resource Development Fund and Mekong Focus Group 
>initiated by Thailand last month, apart from ongoing 
>financial and technical assistance, will also improve Laos' 
>competitive edge and its human resource.
>   In the long-run, a Laos that is less worried about its 
>economic future will be more secured and confidence. A 
>confident Laos will not easily feel threatened by its 
>western neighbour, which in turn will transform the two 
>neighbours into genuine partners. As partners, they can 
>work together to strengthen their bond and help settle 
>their differences, including the long delayed demarcation 
>of the porous frontier.
>   BY KAVI CHONGKITTAVORN
>   The Nation
>
>


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Aviva Imhof
South-East Asia Campaigner
International Rivers Network
1847 Berkeley Way, Berkeley CA 94703 USA
Tel: + 1 510 848 1155 (ext. 312), Fax: + 1 510 848 1008
Email: aviva@irn.org, Web: http://www.irn.org
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