Foreign Relations of the United States, 1958–1960, East Asia-Pacific Region; Cambodia; Laos, Volume XVI

294. Memorandum From the Acting Director of the International Cooperation Administration (Saccio) to the Under Secretary of State (Dillon)¹

Washington, November 20, 1959.

SUBJECT

• Evaluation of U.S. Aid Program in Laos

I. Critical Situation In Laos Depicted

Ambassador Smith and USOM Director Tobler in their eight part message of November 9, 1959,² express extreme concern over the existing and probable future political, security and economic situation in Laos. They characterize the U.S. aid program to date as grossly inadequate relative to past, present and future requirements, devoid of significant accomplishment, poorly coordinated and heading for failure. The apparently contradictory courses of political policy and action pursued by the Embassy [less than 1 line of source text not declassified] toward the existing government are portrayed as destroying the effectiveness of the Phoui regime, undermining U.S. prestige and opening the way to the most dangerous and potentially disastrous course of events concerning the future of the embattled country.

The seriousness of the assessment thus made of the present situation in Laos clearly warrants immediate and intensive review. The following is an examination of the major criticisms submitted, along with proposed corrective measures. Relatively secondary operational and administrative issues raised in the message will be treated in a separate memorandum.³

II. The Field’s Proposal for Action

The two major criticisms stressed by the cable are the apparently contradictory aspect of our present political policy and the lack of tangible progress in the economic aid program. Much more rapid accomplishment in road construction is proposed as the economic aid prescription which will correct and resolve the urgent problems confronting Laos.

The accelerated road program proposed by the field calls for supplementary allotments of $15 million in FY 1960 and $20 million in FY 1961, compared with presently planned amounts of $3 million for roads in each year. These additions would constitute an approximate 150% increase in annual aid levels for Laos. Construction of roads will, of course, involve heavy future requirements for highway maintenance, and consequently increase the continuing U.S. aid burden in Laos.

The Ambassador urges in effect the completion by June 30, 1961, of the most essential elements of a national road net, a long-range objective accepted both by the Royal Lao Government (RLG) and USOM/Laos since 1957. Completion of the five component road projects under this program would constitute the major segments of such a net connecting previously isolated towns and villages into a coherent communications system. He states that the completed road will furnish evidence of government accomplishment to the population; it will afford the basis for improved security control through greater mobility of army and police forces and improve administrative control by providing lines of communication from the Central Government to the provinces; it will increase distribution facilities between agricultural surplus and deficit areas, commercial centers and the hinterland, and give access to and from areas with natural resources. It will also connect with major ports of entry and enable Laos’ fuller participation in international trade. Thus, a vital condition for economic growth, political stability and internal security will have been fulfilled.

Under the $3 million annual program currently projected, no definite completion date has yet been set by USOM/Laos for the several road projects comprising the national network, although it has been hoped that this goal might be realized by the end of FY 1964. For a variety of reasons progress realized to date has been disappointingly slow. However, with the recent arrival of Bureau of Public Roads staff, better performance is anticipated.

III. Critique of Proposal for an Accelerated Program

It is obviously impossible to separate the political, military and economic components of an accelerated road program. The project could clearly make a significant contribution to progress in each of these three spheres.

The dominance of subsistence farming and the absence of agricultural specialization in Laos suggest that a national road net will probably play only a minor economic role for some time to come. An equivalent investment might produce significantly greater dividends if employed in other types of economic development activities.

Undoubtedly the present government would derive political benefit from announcement of such an accelerated road program, particularly in its current political rivalry with the CDNI (Committee for the Defense of the National Interests). However, it is questionable whether the most important political need in Laos at this time is the completion of a road net. Numerous other demands are equally or more deserving of attention. Reports from Laos over the last year have highlighted the political desirability for a more enlightened policy for dealing with tribal minorities, a routing out of corruption in the government, improvements in the administrative performance of key ministers and more harmonious relations within the present cabinet. None of these would appear resolved by an expanded road program.

Moreover, other economic development projects might well have wider appeal and greater public impact, especially in the outlying areas where the RLG has had little contact and thus less public support. Some examples of these are more widely spread, small-scale irrigation dams; wider distribution of already improved strains of rice, poultry and swine; and increased number of sawmills and the refinement of their production, improved public markets and slaughter houses, improved and expanded medical services and facilities, extensive construction of simple sanitary wells, more public schools and teachers and intensified rural self-help activities. Expansion of this type of activity is feasible, despite difficulties encountered in the past.

The Ambassador’s high rating of the road proposal as a political measure designed to strengthen the Phoui Government appears to adopt the most expensive possible expedient. A more direct and immediate course would be reducing present conflicts between the Prime Minister’s party and the CDNI/FAL alliance.⁴ [3½ lines of source text not declassified]

Road development contributes to improved security conditions. Through improved mobility, the effectiveness of any given force is enhanced. However, the communist forces in Laos are concentrated in the northern and southern extremities of the nation, where the proposed priority road net would not reach. The jungle tactics of the communists are not calculated to maximize the security value of road development. Once roads are built, the action might easily be shifted to other areas or the roads and bridges simply destroyed.

While opening the country to development by means of roads undoubtedly will have long-range benefits to Laos, there is little evidence that the proposed accelerated two-year program would rapidly augment Lao economic activity. Furthermore, experience to date in implementing road projects in Laos affords exhaustive evidence of the difficulties confronting effective operations, especially those of a “crash” nature. The failure to achieve more significant progress in this field is due not alone to the incompetence of contractors selected, past poor administration and waste, but also the physical difficulties of road construction attributable to weather, terrain and related conditions. Beyond this are the grave deficiencies in the capabilities and performance of the responsible RLG Ministry of Public Works and questions as to the availability of Lao labor.

Again, question is raised as to whether the time factor, which, in requiring multiplicity of equipment and services, is the most significant element in the cost of the accelerated program, is in fact as vital as is contended by Ambassador Smith. How much political capital would be sacrificed through more gradual completion as long as the road construction objective was effectively publicized?

IV. Recommendations for Alternative Courses of Action

1. Any divergencies [less than 1 line of source text not declassified] in interpreting the political position of the U.S. vis-à-vis the RLG should immediately be rectified.

2. Strenuous efforts should be undertaken by all U.S. agencies and Prime Minister Phoui to achieve more harmonious working relations between the two major factions composing the present cabinet.

3. More systematic efforts should be made by USIA to publicize within Laos the major U.S. activities in Laos. This may require a more effective informational program in its impact on different segments of the Lao population in order to accomplish the maximum desired political effectiveness.

4. Within the monetary limits of the existing economic project program, there is need for further concentration and intensification of effort. This is especially the case in the fields of agriculture, public health and rural development. A more imaginative and dynamic approach to the problems of rural areas should result in greater impact and produce more tangible evidence of U.S. interest in the welfare of the Lao.

5. Effort should be made to secure greater UN participation in Lao economic development, particularly because of the recent assignment of the Secretary General’s personal representative to Vientiane. A coordinated effort should also be made to enlist participation of additional nations in the development of Lao economic potential.

6. The present pattern of making available approximately $3 million per year towards the development of the national road net should be continued, rather than inaugurating an accelerated program. This more modest effort will direct special attention, through BPR staff, to the training of Lao in road construction and especially in maintenance, as well as to improving the organization and functioning of the Lao Government in the public works field.

7. If overriding political considerations really require an accelerated road program, the figures proposed by the Ambassador and the USOM appear unrealistic. Preliminary estimates made by Mr. Chauncey Aldrich of BPR (who recently spent a short period in Laos in connection with the road program) indicate that the maximum acceleration feasible from the technical and administrative viewpoint during the FYs 1960–1963, inclusive, would total approximately $21 million, above the level already approved for FY 1960 and projected for FY 1961, as follows:

• FY 1960—$2.5 million (for advance procurement of machinery)
• FY 1961—$6.5 million
• FY 1962—$6.5 million
• FY 1963—$6.5 million

These sums would complete the all-weather rehabilitation of the road from Vientiane to Luang Prabang (400 kms.) in FY 1961 and FY 1962; the rehabilitation of the spur from Luang Prabang to Xieng Khouang (160 kms.) in FY 1963; and the rehabilitation of the road from Vientiane to Ban Cadinh in FY 1963. Funds already available from FY 1960 and prior year programs will finance the road from Vientiane to Thadeua and most of the road from Ban Cadinh to Pakhinboun. This would represent the most essential elements of the national road net.

The feasibility of such an accelerated program is very largely dependent upon the success of the BPR in improving road construction operations in Laos. BPR staff has only very recently arrived in the country and only 4 of the planned 12 to 16 BPR staff members are in place. It is too early to determine whether this supervisory group can in fact secure the requisite improvements. Pending evaluation of BPR’s success, any additional funds for an accelerated program should be retained within the contingency fund rather than considered as firm requirements.

8. The sweeping negative assessment of the accomplishments of project activities made by the USOM Director is not viewed as accurately reflecting the record of accomplishments. Though it is true that developmental projects have been clearly subordinated to overriding security objectives and have of necessity been limited in scope, nonetheless an impressive and heartening variety of accomplishments can be identified. They comprehend solid, if modest, achievements in the major activity sectors of agriculture, public health, education, public administration and rural development. In view of the genuine progress to date, it is felt that the program should not be subjected to sudden and disruptive shifts in emphasis for hoped-for temporary advantage that creates even further imbalances. Rather, it is urged not only that a continuity of support be provided these activities which have been so painfully evolved, often over a period of years, and are now approaching fruition, but also that support can be imaginatively intensified to assure balanced growth.

L.J. Saccio

1. Source: Department of State, Central Files, 751J.5–MSP/11–2059. Secret. A note on the source text indicates that Dillon saw the memorandum.
2. Reference is to telegram 1300 from Vientiane; see footnote 2, Document 288.
3. Not found.
4. Within the past few days a less alarming assessment has been received from Ambassador Smith concerning the relations between the Prime Minister’s party and the CDNI/FAL alliance. The Ambassador now states that he feels “somewhat reassured as to the possibility of CDNI’s eventually being persuaded to cooperate effectively with Phoui on some program satisfactory to U.S.” [Footnote in the source text; the quote in the footnote is taken from telegram 1318 from Vientiane, November 11; Department of State, Central Files, 751J.00/11–1159; included in the microfiche supplement.]