Cadres And Monks In Saffron Robes...

What do you get when you cross communism with Buddhism? Arguably, you get Laos, a communist nation with a difference. The hammer and sickle, removed from banknotes and the national flag, is hard to find anywhere. In the old royal capital of Louangphrabang, the only such symbol this reporter saw was on a seedy storefront, locked on a workday, which proved to be the regional party headquarters.

The ruling Lao People's Revolutionary Party, which took power after the Pathet Lao army won a guerrilla war 20 years ago, remains in absolute control. But even the U.S. State Dept., in its most recent human-rights report, was hard-pressed to find violations like those in neighboring China or Vietnam. The report cites a youthful motorcyclist who was killed after running a roadblock; the police who shot him are now in jail. Several officials are serving 14-year prison terms for allegedly advocating a multiparty system, though Lao officials say they are actually doing time for corruption.

This apparent lack of KGB-style repression may owe something to the country's all-pervasive Buddhism. Where in China, and to a lesser extent Vietnam, the communists repressed Buddhism, temples abound in Lao towns, and saffron-robed monks go about their business freely. "Just about everyone in the party is a Buddhist," explains cadre Khamkhong Kongvongsa, an official in the Information Ministry, explaining why his 22-year-old son, an engineering student, is about to go through the Lao male's traditional rite of passage: entering a monastery for a few weeks.

Communism has also not prevented Laos from taking the free-market path. After the 1975 revolution, the country stagnated until 1986. But when the party introduced free-market reforms, the economy began to stir. Roads are being built to remote hamlets, and hydroelectric projects have made power not only cheap--at least where there are power lines--but also the single biggest export. Growth has averaged a healthy 7.5% a year since 1988, according to the World Bank.

NO PARADISE. Today, Laos offers some of the most liberal terms for foreign investment in all Asia. Enterprises may be 100% foreign-owned, may repatriate all profits, and enjoy free access to foreign exchange. So far, Laos has avoided the flagrant corruption that plagues both its communist and capitalist neighbors. And subsistence farmers, who usually own their own land, have not flocked to the cities.

Social stability notwithstanding, Laos is no paradise. With a population of 4 million, it produces a per capita income of only $200 a year. Infant mortality is high, average life expectancy is just 49 years, and foreign investment trickles in--about $200 million last year. The World Bank has pinpointed $2.5 billion in potential hydropower projects, but capital is tough to come by, despite virtually guaranteed returns due to soaring demand for electricity in Thailand.

One big obstacle to investment in Laos is the U.S. Washington's stance, in the words of one diplomat, "remains dictated by domestic policy"--specifically the prickly issue of POWs and MIAs. Although the U.S. was never at war with Laos, U.S. warplanes for 11 years bombed the Ho Chi Minh Trail and Pathet Lao-held territory. Dozens of planes crashed or were shot down over Laos. Of 501 MIA cases in Laos, 75 remain open. An embassy spokeswoman says Lao "cooperation has been very good since 1992," but the U.S. hasn't called an end to the issue.

The result: Laos lacks most-favored-nation trading status with the U.S. Its goods for export--primarily textiles--carry tariffs of up to 100% in the world's biggest market. "We could double our exports overnight if Laos got MFN," says Carol Ashenbrenner, an American who runs Camacraft, a church-affiliated co-op making Lao handicrafts.

U.S. embassy officials decline to comment, but sources say local State Dept. officials are embarrassed at the U.S. position, especially given the granting of MFN to China, where rights violations are more serious. One positive sign: On May 18, the U.S. said it would lift a 1975 ban on humanitarian aid. Ironically, Congress seems ready to end such aid altogether.

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