At its last stop, near the Chinese border, brand-new residential towers rise out of the jungle.

China funded much of the glistening new infrastructure that has transformed this landlocked country of 7.5 million people.

The building boom showcases the kind of modernity China says it can offer the world, notably the high-speed Laos-China railway that in a feat of engineering transformed a two-day journey across the country into a sleek three-hour trip.

The line was built by Chinese engineers to Chinese rail standards, allowing it to connect to China's high-speed network.

But Laos is also an economy in distress. Inflation rose to more than 41 percent at its peak this spring.

The Laotian kip has depreciated more than 43 percent against the U.S. dollar.

In a country where virtually everything is imported, the statistics translate into sacrifice: farmers who can no longer afford fertiliser, children who have dropped out of school to work and families cutting back on health care.

The China-led strategy was meant to protect Laos from these shocks — instead, it led to them.

Laos is struggling to repay the billions it borrowed from China to fund the hydroelectric dams, trains and highways, which have drained the country of foreign reserves.

As repayments drag, external debt is rising, a vulnerability exacerbated by the pandemic and rising global fuel and food prices.

The AidData research lab at William & Mary, which tracks China's lending, calculates Laos's total debt to China over an 18-year period starting in 2000 to be at $12.2 billion — about 65 percent of gross domestic product.

Add in loans from other agencies and countries, and Laos's debt stands at more than 120 percent, according to AidData.

There is "no country in the world with a higher amount of debt exposure to China than Laos.

It is a very, very extreme example," said Brad Parks, AidData's executive director. "Laos went on a borrowing spree and got in over its head."

Laos has had to make compromises, including on its own sovereignty, to appease Beijing and seek some financial forbearance, allowing Chinese security agents and police to operate in the country as Beijing extends its repression beyond its borders, according to human rights groups and Lao activists.

The Laotian electrical grid is now partly controlled by China, in what analysts believe is a trade-off in lieu of debt repayments. A Chinese company provides security for the new train line. Read more

• Shibani Mahtani is a Singapore-based international investigative correspondent for The Washington Post. She focuses on accountability-driven investigations across the Asia-Pacific region.

Those warnings fell on deaf ears as Vientiane — hell-bent on becoming the "Battery of Asia" — borrowed heavily and built hydropower dams to sell electricity into neighbouring countries, plus highways, bridges and railways.

It was an unfathomable wish list.

Like many countries in the region, Laos has felt the full economic impact of the Covid-19 pandemic. Remittances from foreign workers have evaporated alongside tourism income and exports from its state-run factories.

The upshot is that this tiny landlocked country is facing a sovereign default as its foreign reserves slump below US$1 billion, with China taking control of an electricity grid once touted for future prosperity but in reality just another debt trap.

It has been an exercise in economic stupidity, with its dams contributing heavily to the dismal plight of the Mekong River, which is suffering a second year of drought that is threatening the livelihoods of 70 million people who live hand to mouth in downstream countries.

According to the Financial Times, Laos' annual debt payments will be more than $1 billion a year until the end of 2024 while its current reserves stand at just $864 million.

The World Bank said in June that Laos' debt levels would reach up to 68 per cent of gross domestic product in 2020, up from 59 per cent last year. Total GDP is less than $18 billion, and most of its borrowings are coming from China with state assets serving as collateral.

According to China's state-run news service Xinhua, Chinese investment in power, transport and other projects already tops $10 billion.

As a result, Moody's Investors Service has downgraded Laos' rating to Caa2 from B3, which puts its debt quality firmly amid the ranks of "junk" with a negative outlook. Fitch Ratings has also downgraded Laos' ability to repay debt and changed its outlook to negative.

Laos also consistently ranks near the bottom of the heap on Transparency International's index on perceptions of corruption. Its accounts are opaque and, as with one-party states the world over, are not fully trusted.

The last Asian country to default on its sovereign debt was Myanmar in 2002. Thailand also did so as the Asian financial crisis erupted in 1997. The prospect of Laos being forced to suspend repayments and go cap in hand to the International Monetary Fund and ask for help is real and embarrassing.

That probable ignominy follows reports that a deal has been reached between state-owned Electricite du Laos and China Southern Power Grid Co, with Laos ready to cede majority control of its electricity grid.

Details of the deal are scant but the Chinese embassy in Laos reportedly said on its website that Laos could gradually repurchase shares, assuming returns from operations are sufficient.

China has earned itself a notorious reputation for laying debt traps in cash-strapped countries from Africa to Sri Lanka to the Pacific and now — it would appear — Laos. It has a habit of lending too much, then seizing control of assets when a nation fails to repay. Its economic colonialism makes American imperialism look benign.

And at the heart of the problem remain inept politicians and unsubstantiated allegations of big kickbacks from huge projects. A 10 per cent cut from a dam worth more than $3 billion is a substantial reward for signing off on a project sold to the public as in their interests.

China is thin-skinned and whinges loudly when criticized by outsiders. Its motives should not be questioned and criticism from within is met with the full force of a state apparatus designed to shut people up, enabling a communist hierarchy and a coterie of wealthy elites to do as they please.

It's a dreadful combination that should serve as a warning for other small, less developed countries like Timor-Leste with ambitions of borrowing and spending their way into higher standards of living.

The bishop of Vientiane once remarked that the Laos Church is poor but beloved by Pope Francis. It's a comforting notion that will be sorely tested in the coming years when struggling Laotians will be forced to make good on the promises of a few and repay their debt.

• Luke Hunt
• First published in UCANews.com. Republished with permission.
• The views expressed here do not necessarily reflect those of CathNews.

"They say in our village that there is no Christian god and that our ancestors were all animist," a villager living in mountainous northern Laos recently told Radio Free Asia.

Christianity is little understood among many Laotians, most of whom hold a syncretism of animistic and Buddhist beliefs. Many Laotian animists believe that by practicing their "foreign" faith local Christians antagonize the country's tutelary spirits, foreign Christian organizations have reported. Read more

Eighty million cluster munitions did not explode, instead settling on farmland and around villages, only to later kill or injure 20,000 people.

Obama spoke of that legacy as he visited a center in Vientiane called the Cooperative Orthotic and Prosthetic Enterprise (COPE) that offers treatment for survivors.

"Here in Laos, here at COPE, we see the victims of bombs that were dropped because of decisions made half a century ago and we are reminded that wars always carry tremendous costs, many of them unintended," he said.

Obama stressed that wars impact countless people beyond the famous who appear in history books.

"Above all, acknowledging the history of war and how it's experienced concretely by ordinary people is a way that we make future wars less likely."

His comments came a day after announcing a doubling of U.S. funding over the next three years to help the survivors and bomb-clearing efforts.

Obama was also due to hold a town hall meeting later Wednesday with young people involved in a U.S.-sponsored leadership program.

Tuesday he reassured nations in the Asia Pacific region that the U.S. strategic rebalance "will endure for the long-term" because it "reflects fundamental national interests."

In a speech in Vientiane, Laos, Obama said there is widespread recognition in the U.S. that the Asia Pacific region "will become even more important in the century ahead, both to America and to the world."

The president addressed an estimated 1,000 people in Lao National Cultural Hall, one day after making history as the first sitting U.S. president to visit the country.

Against a backdrop of flags representing the U.S., Laos and the Association of Southeast Asian Nations (ASEAN), Obama spoke to a group that included government officials, Lao and U.S. business leaders, students, civil society leaders and women's groups.

Source

• voanews.com
• Image: jrusa.org

Authorities in Huay village, Savannakhet province, accused the Protestant converts of conducting worship in their homes and said they must recant or be expelled, said Human Rights Watch for Lao Religious Freedom (HRWLRF).

The villagers have defied the order on the grounds that freedom of worship is guaranteed under the Laos constitution, said the Tennessee-based rights group.

HRWLRF also said yesterday that it had received reports of Christians in Nonsung village in Savannakhet province being summoned to a village meeting and ordered to participate in animist oath-taking. They refused to do so, it said.

The eviction threat in Huay village is the second reported in Laos in a month.

On Aug 30, HRWLRF said that 50 Christians in central Bolikhamsai province were ordered to reconvert to their traditional animist religion. They too are resisting the order.

Authorities in Bolikhamsai accused the Christians of believing in the religion of a "foreign Western power," a common charge leveled at converts in Laos, according to London-based Christian Solidarity Worldwide.

Source: ucanews.com
Used with permission