281. Paper Prepared in the Department of State1
With the formation of the Provisional Government of National Union (PGNU) in April 1974, the military contest for power in Laos became a political one. The Lao Patriotic Front (Pathet Lao) demonstrated a much greater ability in this than its opposition, the rightist Vientiane-side which retained its traditional disorganized methods of operation.
It can be deduced that the Pathet Lao—with or without encouragement from Hanoi—decided to step up its program for the assumption of power in Laos following the fall of Phnom Penh and Saigon. Coupled with this was the rapid demoralization of senior civil and military leaders of the Vientiane-side. By May 1, when a relatively modest group of demonstrators, largely students, took to the streets in Vientiane protesting against some of the Vientiane-side ministers, the Vientiane-side as a loosely organized body began to fall apart. Most controversial Vientiane-side civil and military leaders have left the country. The Forces Armées Royales (FAR) have virtually all submitted to the Pathet Lao Acting Defense Minister.
The Vientiane-side has been effectively removed from sharing power in the coalition and appears to have left only the role of compliant follower. Even though some Vientiane-side ministers remain in [Page 958]their posts and even if the Prime Minister replaces those Vientiane-side figures who have resigned with others from the Vientiane-side, the momentum on the part of the Pathet Lao is now too great to be stopped.
While the transition of power to the LPF should be relatively peaceful, there is a potential for violence. This comes from youth groups, particularly, who favor a “liberation” and, perhaps, achievement of final power through some sort of force à la Cambodia and South Vietnam. In some ways, the students and other radicals seem to be moving ahead of the LPF.
Our policy in Laos has been to support the PGNU, as it pursued its own policy of independence, neutrality and national reconciliation. On May 9, the Foreign Minister, who is of the LPF side, repeated to our Chargé his willingness to continue unchanged the relationship between our countries.2 We do not know, however, if the Pathet Lao, holding the upper hand in the coalition, will put into practice the Minister’s friendly words.
The collapse of the Vientiane-side presents us with several problems requiring early attention.
- —Our military assistance program has been intended largely to shore up the FAR as the single most organized body on the Vientiane-side capable of dealing with the LPF. The FAR now is effectively under the control of its erstwhile opponents. The Foreign Assistance Act places certain limits on the provision of assistance to countries governed by communist regimes. With this in mind, we have already concurred with DOD’s holding up all shipments of purely military items (e.g. ammunition) intended for Laos under the MAP program. We are continuing for the time being the flow of commercial consumables which make up a large part of the military assistance we give to Laos.
- —Our military assistance program, unlike the economic assistance program, was based on a request from Prime Minister Souvanna Phouma made before the formation of the coalition government. This was reaffirmed by Defense Minister Sisouk (Vientiane-side) at the time of the formation of the government in April 1974. Military assistance thus has been provided directly to the Defense Ministry and then to the FAR, bypassing the possibility of LPF control. The collapse of the Vientiane-side has changed this. The LPF, who have all along demanded that our military assistance be provided to the PGNU rather than to the Defense Minister, are now in a position to benefit from this aid.
- —Our economic assistance program faces the same legal requirements mentioned above relative to furnishing assistance to a communist-dominated regime. If it is determined, however, that it is in our national interest to continue such assistance, the Act (Section 620) allows us to go on with this program. We have been dealing through the Finance Ministry and Economy Ministry with both the Vientiane-side and the LPF in carrying out our aid program. The situation, then, is quite different from our one-sided dealings on military aid. We have also participated in an international aid effort through the Foreign Exchange Operations Fund and in setting up an informal consultative group under the IBRD for economic assistance to Laos. Moreover, we have completed three small scale projects within the LPF zone since the formation of the coalition. Most recently, we have provided funds to the United Nations High Commission for Refugees (UNHCR) for the refugee return-to-village program organized by the PGNU. Some 20,000 refugees in the Vientiane-side zone have been returned, under UNHCR supervision, to their places of origin in the LPF zone.
Issues and Choices
US Policy Toward Laos. For the time being, our relations with Laos continue as before with the encouragement of Prime Minister Souvanna Phouma and of the Foreign Minister (of the Pathet Lao side). Once the Pathet Lao take over is complete, either behind a facade of continued coalition or through assumption of all posts, we shall need to decide on whether it is in our interest to maintain our mission and some aid programs and at what level. Indications are that both factions and also interested foreign governments favor our presence, both for our concrete assistance and for our role as a balancing factor among the great powers. Our effort would demonstrate our continued interest in Indochina and support for Laos as a part of the area.
Military Assistance. The collapse of the Vientiane-side, the bowing of the FAR to Pathet Lao directives and particularly the resignation of Defense Minister Sisouk have rendered impossible the original objective of our military assistance program which was to shore up the military element of the Vientiane-side.
Complicating this issue is the fact that a large percentage of our military assistance program is in essence a welfare program for the Lao Army. The FAR was built up, at our behest, during the years of fighting to a level which the country by itself had no hope of sustaining. Since the ceasefire in 1973,3 FAR has demobilized steadily, with our encouragement and financial support, but it still has approximately 50,000 [Page 960]troops on its rolls. To cut off the assistance being provided now would leave a sizeable body of unemployed soldiers with nothing to fall back on. Such an abrupt change would have a significant impact on an economy already in shambles.
The choice comes down to continuing, at least for the time being, an adjusted military assistance program in which we furnish no ammunition, ordnance or other purely military hardware, or, alternatively, terminating the program altogether.
Economic Assistance. The Lao economy, which has steadily deteriorated over the last few months, is in part dependent upon American economic assistance through the internationally financed Foreign Exchange Operation Fund for hard currencies to finance essential imports. This mechanism, to which we contributed $16 million in FY 75, allows the country to buy the imports, principally food and fuel, to sustain itself. Other portions of our aid program are intended to set the country on the road to eventual economic self-sufficiency, a goal which we know is far off. The continuation of this aid will be a key factor in our relationship with Laos under a LPF-dominated regime. In the last year we have reduced the level of our assistance and the numbers of USG employees carrying out this program. Even without the recent changes in the government, we had plans to continue tailoring our program.
If we determine that continuation of economic aid is in the national interest, we forsee no abrupt changes in our relations with Laos to be expected from a PGNU dominated by the Pathet Lao. We shall reduce the number of Americans implementing the aid program.
For the present, we are following, rather than leading, developments in Laos.
We are prepared to maintain reduced MAP (except for arms and ammunition) and economic assistance programs as we observe developments. However, we may have to terminate these programs if our relations worsen or if American lives are clearly in danger.
We are proceeding with the despatch of Ambassador-designate Galen Stone in the normal way.
We may wish to consider inviting the King to Washington this summer as a mark of our support for him and as a sign of continued interest in Laos. The King is to visit Paris, and perhaps Moscow and Peking in July.
Because of the danger to Americans from radical group demonstrations and riots, whether tolerated or not by the government, we have decided on the withdrawal of all US personnel from the provinces and have instructed Chargé Chapman to speed-up a thinning out of Embassy personnel.