• Short Summary

    Laos is faced with galloping inflation, and the pro-Communist Pathet Lao Government is allowing only the most essential goods to be imported.

  • Description

    Laos is faced with galloping inflation, and the pro-Communist Pathet Lao Government is allowing only the most essential goods to be imported. For decades, a diplomatic agreement has allowed Laos to bring such goods -- including food and household appliances -- through Thailand free of normal duties and taxes. The imports are ferried between the two countries along a 550-mile (880 kms) stretch of the Mekong River.

    Relations between Laos and Thailand have recently been strained with representatives of the artist "21 Organisations" -- made up of student, military and labour groups -- calling on Laotian Prime Minister, Prince Souvanna Phouma, to end diplomatic relations between Thailand and Laos.

    At the movement the ambassadors for both countries have been recalled, although Thailand has repeatedly stated that it wishes to maintain good relations with its neighbour. If diplomatic relations between the two countries are severed, it would lead to further serious damage to an already weak Laotian economy.

    For the past 11 years Laos, whose exports are negligible, has been buying goods abroad with money provided by the six-nation Foreign Exchange Operation Fund (F.E.O.F.), which last year provided some 32 million U.S. dollars.

    The agreement was recently renewed with five of the six nations contributing 6.5 million U.S. dollars (GBP2.8 million pounds Sterling approximately) to the fund. But the United States, who contributed half of last year's 32 million dollars, is taking a long look at their commitment in the light of the anti-American demonstrations which forced the closure of the U.S. Aid Mission and the drastic reduction of the Embassy staff.

    The United State has paid five million dollars in advance into this year's fund, and that may be all an angry U.S. Congress will allow. ??? with the prospect of decreasing foreign aid, the Laos economy is becoming increasingly more reliant on Thailand, which last year provided a grant for Laos o three-quarter million U.S. dollars.

    At the movement, the Laotian Government is concentrating on its most immediate problem of supplying rice to the rural population in the interval before the next harvest in six months time. On the outskirts of Vientiane, Pathet Lao soldiers have been assisting farmers in planting next season's rice crop.

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    Reuters - Including Visnews
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