Foreign Relations of the United States, 1955–1957, East Asian Security; Cambodia; Laos, Volume XXI

516. Telegram From the Embassy in Laos to the Department of State¹

Vientiane, December 28, 1957—6 p.m.

1077. Reference: Deptel 618.² RLG visit to Washington is motivated by several factors including (a) concern as to US public and government reaction to coalition and (b) desire to show US and west that Laos albeit neutral (non-provocative) recognizes where its primary dependence lies. Souvanna personally is anxious overcome US “misunderstanding” of RLG position and explain why Lao can’t be Communist. He also is interested in prestige of trip, eager to meet key Americans and hopeful of reaching understanding with US. He is full of easy confidence as to success of his policy for uniting country, conscious that he has no formidable rivals to his leadership at present, and pleasantly aware that neither French nor British opposed him in final stages RLG–PL negotiations—only Americans. Personally he is a bit vain, facile, sensitive but bland and gentlemanly. While his preference is to agree with each interlocutor, he can be stubborn when crossed and has adhered for year and half to consistent and coherent (if perilous) plan of settlement even though at times success must have appeared beyond his reach. He believes he is right and we are wrong and that he can prove [it?] to us. Unfortunately, all too often this reduces itself to sterile argument on fundamental point whether or not PL are Communist. This he will not admit for his policies would then appear indefensible before westerners at least. Rather than attack this point directly with him it is far better I believe for us to insist that guarantees and precautions we seek are in interest of Laos regardless who is right. If PL are Communist, safeguards may save RLG, if they are not Communist, safeguards are essential in meantime anyway if we are to make case for continued appropriations for Laos.

At outset of talks it will probably be necessary to emphasize that our decisions rest in considerable measure on what Souvanna can tell us. We really need to elucidate Souvanna’s thinking on five topics set forth reference telegram both to obtain information needed for re-evaluation and to demonstrate seriousness our concern. Following five sections offer questions or topics for consideration in this context.

1. Measures to insure safe execution of accords.

(A) When accords signed ANL plans called for sealing off borders by military (police). How effectively have these plans been carried out?

(B) There are indications that hard-core PL recalcitrants (i.e., Kayson) have refused to integrate and may resort to active resistance. What measures does RLG contemplate to deal with this situation?

(C) In other ten provinces PL and Santiphab agents already working hard to alienate population from RLG. Release of political prisoners and of indoctrinated PL soldiers has increased capabilities subversive elements. As proposed anti-Communist legislation apparently shelved, what measures does RLG propose to counter menace of subversion?

(D) What precautions has RLG taken to insure that PL Ministers and functionaries may not use their positions to undermine government (e.g. attempts to influence Buddhist monks)?

(E) Will PL functionaries who have been Communist indoctrinated be screened to keep them out of information and educational systems? How?

2. Monetary reform.

Monetary reform negotiations³ suspended November 15 when Lao spokesman declared all questions of technicians had been satisfactorily answered and remained for government make main decision whether adjust rate. RLG proposed resumption negotiations and at meeting December 27 gave government decision that it could not accept any solution which included devaluation but to prove its interest suggested three possible points (Embtel 1073⁴) departure for further negotiations: (1) new study by US of Lao counter proposal (Embtel 741⁵) which Lao believed would accomplish same purpose as US plan; (2) enlarge scope of Lao stabilization fund plan and share exchange rate difference with US (Embtel 741); and (3) US to present new plan taking into account current psychological and political problems (i.e. approaching supplementary elections). We informed Lao we would submit their decision Washington immediately so that US have chance consider before Lao delegation arrives Washington January. Possible concessions which US might make have already been transmitted Washington for consideration (Embtel 988⁶).

Honesty in aid administration.

One of most important sources dishonesty in aid program has just been removed with new procedure on processing import licenses which requires USOM approval to make import licenses valid (Toica in preparation). Still no effective control, however, over granting exchange transfers for invisibles except post-audit privilege on which could be based claims for reimbursement of non-approved transfers. USOM–Embassy have concentrated on first correcting import license procedure before tackling other transfer problem. If free convertibility aspect US monetary reform plan accepted, it would eliminate necessity transfer controls.

RLG may well take position new licensing procedures now obviates necessity monetary reform. It should be emphasized that new procedure prevents granting of licenses by ministers without knowledge CNIE and USOM but does not correct opportunity for large profits, diversion, et cetera, by persons obtaining approved licenses at 35 kip per dollar. This can be corrected only by adoption realistic exchange rate.

New budgetary and accounting system for counterpart kip expenditures for economic projects has been proposed to RLG (Toica 454⁷). Disappearance of kip has not always been satisfactorily explained. New system if adopted should prevent misuse of funds and misunderstandings arising from present poor bookkeeping system.

3. Tactics in combatting PL in March and future elections.

(A) How far have plans of conservative parties matured to counter United Front and electoral tactics of Neo Lao Hak Zat and Lao Rouam Samphan?

(B) How can Prime Minister assure us that conservative candidates will not be competing against each other to profit of leftist parties?

(C) There is talk of “Nationalism”. Will it include others besides progressives (Nationalists) and independents?

(D) How will RLG counter opposition parties lines that American aid has gone into pockets of few to detriment of many?

(E) If leftist parties win only handful of seats, will they be excluded from government to be formed after elections even though present government contains two representatives of former PL?

4. Effective development program.

Major economic development program Laos has been construction transportation network—principally Vientiane–Luang Prabang highway and adequate ferry service Nongkhai–Thadeua. Former project slow for many reasons among which failure to maintain equipment and diversion equipment other uses; latter project delayed for failure Lao-Thai agreement in-transit procedures and operational arrangements.

Failure of Laos to draw up realistic and comprehensive development plan has been drawback to rational planning for long-range economic development and efficient coordination of aid from different sources. What are possibilities of drawing up such a plan and can US be of assistance?

RLG should also make greater effort to conclude with Thai satisfactory agreements concerning in-transit rights and operation of ferry service.

Civic action should be greatly strengthened and encouraged as economic, political and psychological project.

5. Attitude toward bloc.

(A) What are RLG’s views re acceptance of aid from Communist countries, which is strongly demanded by PL?

(B) Does RLG intend accept diplomatic relations with Communist countries? Trade missions from those countries?

(C) What does RLG propose to do about Polish resistance to Prime Minister’s request to reduce ICC teams in Laos? Why does not RLG formally state that settlement foreseen in Article 14 of Geneva Accord has been achieved?

(D) What would be attitude of RLG towards a proposal to open trade routes to sea through North Vietnam?

Following additional questions might also be raised:

(a) What are RLG’s future plans for auto-defense forces, civic action, Operation Brotherhood, ANL, reserve forces, national police?

(b) What are RLG plans for integration two former PL battalions in ANL?

Parsons

1. Source: Department of State, Central Files, 033.51J11/12–2857. Secret; Priority.
2. Phoui Sananikone told Ambassador Parsons that the Royal Lao Government had decided to send him to Washington to explain the Pathet Lao settlement and Phoui asked how he would be received. (Telegram 898 from Vientiane, November 28; ibid., 033.51J11/11–2557) It soon became apparent from discussions with Lao officials that Souvanna Phouma wanted to go in place of Phoui. (Telegrams 902 and 907 from Vientiane, both November 29; ibid., 033.51J11/11–2957) In telegram 618 to Vientiane, November 30, the Department suggested early January as the best time for Souvanna’s visit, and noted that while Souvanna would be given the red-carpet treatment, the visit would have to be treated as a business meeting because of the lack of time for preparation. (Ibid., 033.51J11/11–2957)

   Souvanna Phouma visited Washington, January 13–15, 1958.

3. Documentation on these negotiations is in Department of State, Central File 851J.131.
4. Dated December 28, not printed. (Ibid., 851J.131/12–2857)
5. Dated November 6, not printed. (Ibid., 851J.1311/11–657)
6. Dated December 12, not printed. (Ibid., 851J.131/12–1257)
7. Not printed. (Washington National Records Center, ICA Message Files: FRC 59 A 2458, Box 78, Vientiane)