Navigating Socialism, Security, and China in Laos-Vietnam Relations

Laos is important to China, but it is indispensable to Vietnam and its long-term security.

This year marks a milestone for Vietnam-Laos relations: It marks the 60th anniversary of Vietnam-Laos diplomatic ties and the 45th year of the Vietnam-Laos Treaty of Amity and Cooperation that christened the two nations’ “special relationship.” Officially dubbed the Vietnam-Laos Solidarity and Friendship Year of 2022, Vietnam is celebrating the milestone with its single most important ally with a host of activities, from high-profile visits and grand cultural exchanges to the signing of a flurry of agreements involving multiple ministries.

The country has thrown its whole weight behind affirming this relationship not only to Laos, but also to its own public. From casting bilateral relations in deeply affective (if sappy) expressions –“brotherly,” “mighty,” “invaluable,” and “evergreen” – to organizing public competitions and TV programs on the relationship, Vietnam is going very far to remind its citizens about how important and unshakable its ties with Laos are.

This overt enthusiasm in Vietnam serves perhaps to dampen the troubling domestic situation in Laos. In contrast to Vietnam’s official optimism in its relations with Laos, recent commentaries have emphasized how the country is sliding further into China’s orbit, especially given its ongoing debt crisis. In playing a balancing game between its bigger socialist brothers, Laos seeks to benefit from China’s ascendant economy and Belt and Road Initiative (BRI) infrastructure push, while remaining committed to the security interests of Vietnam, its longstanding ally.

However, the small country has appeared to inch ever closer to China, the recently opened China-Laos Railway serving as the most tangible and public sign of the advancing bilateral relations. Amidst its expressed anxiety about China’s increasing presence in Laos, Vietnam may find its standing further diminished. While Vietnam has sought to renew its ties with Laos, the country cannot realistically outmatch China’s economic heft.

However, is the picture for Laos socialist relations so straightforward? It is important to note that China’s rise – and the infrastructure push that epitomizes it – are not unlimited. The narrative of Chinese “debt traps,” which has gained renewed life in the context of Laos’ current economic woes, has been debunked before, with China instead expressing a willingness to renegotiate its loans and projects with recipient countries. China and Laos are pragmatic enough to understand the disastrous ramifications of a default and are unlikely to let it happen.

China has also recently scrutinized its own lending spree to clean up the BRI portfolio, which remains stymied by low performance and minimal returns. The BRI recalibration is occurring at a historic juncture of China’s economic slowdown, owing to its still stringent COVID-19 restrictions and troubled investment in infrastructure and housing. This stands in contrast to the more optimistic outlook in Vietnam, which has benefitted from companies relocating out of China for economic as well as political reasons. Vietnam also provides for Laos its most direct access to the seas. As long as Vietnam’s economy remains competitive, Laos will find little reason to pivot away from its ally.

Additionally, the recent rush of Chinese products and infrastructure into Laos has not gone unnoticed by the Lao population. BRI infrastructure projects, driven by Chinese companies, have been known to displace local communities and tend to employ Chinese labors and managers. This occurs to the detriment of the local economy, increases clashes between the Chinese workforce and local peoples, and strains inhabitants’ perception of their government, which willingly tolerates these disruptive projects.

China’s rapid presence throughout the Lao territory and markets has inspired popular anxiety and ambivalence. While the allure of China’s economy has hiked demand for Chinese language classes among the young and entrepreneurial in Laos, rising concerns about China have also forced the ruling Lao People’s Revolutionary Party (LPRP) to come out of the shadows. The palpable presence of China could disturb the LPRP’s well-practiced projection of unity and independence as it potentially intensifies populist and ethnic grievances in the ethnically fragmented Lao nation. The LPRP therefore has incentives to mitigate its overreliance on China to keep these underlying tensions at bay.

Moreover, it should be emphasized that Vietnam and China see Laos with different levels of strategic priority. With its economic shrewdness, unmatched size, and adjoining territories, China can make deals with any regime that comes to power in Laos, though no doubt the current socialist government is preferred. In contrast, the continued rule of the Vietnam-friendly LPRP is absolutely crucial to Vietnam’s national security, and a transition of power could be politically catastrophic to Vietnam. This is because Laos shares a border of 2,161 kilometers with Vietnam – nearly double the length of the borders it shares with China or Cambodia  – and lies right next to Vietnam’s historical adversary, China. Vietnam knows this and will attempt to do as much as permissible to buttress the rule of the LPRP.

The histories of their communist parties have been intertwined longer than their states’ official relations – back to the founding of the Indochinese Communist Party in 1930 – and will remain so as long as they stay in power. Simply put, Laos is important to China, but it is indispensable to Vietnam. Laos’ domestic problems are an inconvenience to China, but a source of anxiety for Vietnam.

This understanding motivates Vietnam to institutionalize its relations with Laos in an all-encompassing manner. Relations extend down to the provincial or even village units and effectively mobilize all of their ministries. The two countries have practiced “twinning” or “sister province” arrangements since the beginning of their diplomatic ties – a socialist variant of para-diplomacy between local authorities to promote ties from trade relations and people-to-people connectivity to educational and political exchanges.

All 17 provinces of Laos maintain some interlocal ties with their counterparts in Vietnam, and one province can have multiple ties. The scale of these ties varies according to available administrative resources and national importance of the connected provinces, in view of national priorities like drug enforcement, voluntary migration, and the East West Economic Corridor regional infrastructure plan, in which Laos plays a central role.

As such, border provinces in central Vietnam and southern Laos have comprehensive relations and command political attention from the center. Major Vietnamese economic centers are also tied to multiple provinces in Laos, with many MoUs having values of millions of dollars. The true scale of these interlocal ties is not fully known as they remain understudied and low-key, but their surface complexity suggests concerted efforts to interweave Vietnam and Laos beyond any reasonable prospect of delinkage. These complicated, institutionalized ties cannot be easily replicated or diminished by China’s rise.

Thus, Laos – and the LPRP – knows that Vietnam cares greatly about it and will make sure that its anxious brother is heard. Yet this may not always translate to action, as Laos’ primary interest is not merely to play second fiddle to Vietnam. Much like Vietnam’s balancing act between the U.S. and China, Laos also wishes to balance between Vietnam and China. Laos’ commitment to being Vietnam’s comrade in arms led it to endure the worst of American bombing at the height of the Vietnam War and China’s interference with its northern ethnic minorities during the Sino-Vietnamese war. The influx of Vietnamese into Lao territories during the war and their contemporary presence can likewise stir nationalist sentiment in Laos, despite the LPRP’s best efforts to manage the issue. Vietnam and Laos’ national interests may have significant overlaps, but they are not truly the same.

One such area where Laos diverges from Vietnam and demonstrates agency is in its energy plans. Being landlocked with few resources but rivers, Laos is set on becoming the ”battery of Southeast Asia” through multiple ambitious hydropower projects. Yet this directly affects Vietnam’s own hydropower mainstay and environmental resilience in its pursuit of renewable energy. Geopolitically, this means Laos is pulled closer to China’s infrastructural capital while Vietnam seeks to ensure energy security from upstream developments in China and Laos. The case of the Xayaburi dam in Laos demonstrates how the country has leveraged Vietnam’s dependence on it to unilaterally push forward an environmentally controversial project that has roused objections from neighboring states and external observers. Putting too much pressure on Laos would strain Vietnam’s relations with the country and push it further into China’s embrace. Without credible alternatives for Laos, Vietnam has little sway over the country’s hydropower ambitions.

The history of Vietnam and Laos’ intimate relations ensures that neither country can stray far from the other. Yet in their shared desire for strategic autonomy and economic development, Vietnam and Laos face increasingly difficult questions over their relations with a rising China. As this triangular interplay tilts towards China, Vietnam should understand that Laos’ pull towards its giant northern neighbor stems also from its own domestic and economic limitations. Like Vietnam’s rising status in the global economy, Vietnam’s standing vis-à-vis Laos also hinges on its infrastructural and institutional capacity to continue growth and augment its value for Laos. To fix its foreign policy woes, Vietnam should perhaps not just look outward but also inward to ensure its future economic development and thereby the future of its alliance with Laos.

By To Minh Son – The Diplomat – October 07, 2022