Laos Foreign Aid and Debt
Laos’s history of aid and debt is interesting for one because it is a next-door neighbor to China and for another because it only joined the WTO in 2013, and before that its communist government worked to stay financially independent [6]. Since it joined the WTO, though, there has been a large influx of foreign aid into the nation, mostly towards funding its energy-producing and transportation sectors.
First, the World Bank and Asian Development Bank have been for a while funding the creation of massive hydroelectric dams in Laos [2]. Overall, this has been a very productive aid project as Laos went from energy-lacking to becoming a profitable exporter, and hydroelectric energy is still a growing market in the country [5]. However, a serious noted downside to the project is that due to the command economy of the nation and the lack of citizen involvement, the effects on the environment and risk that nearby communities are put at are being mostly ignored [2]. I believe there is valid criticism to be made of the World Bank and Asian Development Bank for profiting off a loan that they know is going to a project that will have unforeseen consequences for the people of Laos and may ultimately cause more harm than good to the nation.
The second major aid project to discuss in Laos is aid from China. The powerful neighboring nation has for a while been providing funds to Laos in return for the ability to build transportation corridors through the strategically placed Laos in order to connect China with other Asian countries [4]. Although Laos is receiving significant funds through this project, ultimately it is primarily for China’s benefit. The main issue here is that, as pointed out in a 2017 IMF report, Laos is putting itself in incredible debt risk [3]. It is borrowing based on incredibly optimistic projections of growth that ignore or underestimate the possibility of, among other things, natural disasters in their region. An issue that escalates as their reliance on China grows and will be exacerbated in the likely case that they default on their debt is the control China has over their government, often already forcing them to vote in China’s favor on issues in disagreements between Asian nations [1].
Works Cited
First, the World Bank and Asian Development Bank have been for a while funding the creation of massive hydroelectric dams in Laos [2]. Overall, this has been a very productive aid project as Laos went from energy-lacking to becoming a profitable exporter, and hydroelectric energy is still a growing market in the country [5]. However, a serious noted downside to the project is that due to the command economy of the nation and the lack of citizen involvement, the effects on the environment and risk that nearby communities are put at are being mostly ignored [2]. I believe there is valid criticism to be made of the World Bank and Asian Development Bank for profiting off a loan that they know is going to a project that will have unforeseen consequences for the people of Laos and may ultimately cause more harm than good to the nation.
The second major aid project to discuss in Laos is aid from China. The powerful neighboring nation has for a while been providing funds to Laos in return for the ability to build transportation corridors through the strategically placed Laos in order to connect China with other Asian countries [4]. Although Laos is receiving significant funds through this project, ultimately it is primarily for China’s benefit. The main issue here is that, as pointed out in a 2017 IMF report, Laos is putting itself in incredible debt risk [3]. It is borrowing based on incredibly optimistic projections of growth that ignore or underestimate the possibility of, among other things, natural disasters in their region. An issue that escalates as their reliance on China grows and will be exacerbated in the likely case that they default on their debt is the control China has over their government, often already forcing them to vote in China’s favor on issues in disagreements between Asian nations [1].
Works Cited
[1] Finney, Richard. "China Pours Billions in Aid and Investment Into Laos." Radio Free Asia, Radio Free Asia, 12 January 2018, www.rfa.org/english/news/laos/billions-01122018160501.html
[2] "Foreign Aid to Laos." Sombath, Mekong Watch, 31 August 2016, www.sombath.org/wp-content/uploads/2016/08/2016-08-31-Foreign-Aid-Mekong-Watch.pdf
[3] Hutt, David. "How Worried Should Laos Be About Its Debt Problems?" The Diplomat, Diplomat Media, 13 July 2018, thediplomat.com/2018/07/how-worried-should-laos-be-about-its-debt-problems/
Kawase, Kenji. "Laos Stresses the Need to Borrow as West Raises Debt Alarm." Nikkei Asian Review, Nikkei, 13 June 2018, asia.nikkei.com/Spotlight/The-Future-of-Asia-2018/Laos-stresses-the-need-to-borrow-as-West-raises-debt-alarm
[5] "Laos." International Hydropower Association, International Hydropower Association, www.hydropower.org/country-profiles/laos
[6] "Laos Country Profile." BBC, BBC, 24 July 2018, www.bbc.com/news/world-asia-pacific-15351898
Comments
Post a Comment