Old meets new in the streets of Vientiane
Bruno Philip

VIENTIANE - The feeling of lethargy still lingers in the streets of old Vientiane. Things, however, are beginning to change: the time for indolence is over.

The capital of Laos, on the banks of the Mekong River, is brushing off its image as a sleepy, colonial market town by hosting the Asia-Europe Meeting (ASEM) this week. Vientiane, a city of 500,000 residents, is now discovering the symptoms of modernization that are recurrent in the "emerging" economies of Asia: traffic jams, a property boom, the growth of the middle class and the nouveaux riches who have unashamedly risen to wealth.

In the suburbs, “new towns” are sprouting up like mushrooms, with incredible, monstrous houses complete with Doric columns that support large domes, and where statues of eagles with outstretched wings sit enthroned. In the streets, it is not uncommon to pass a Porsche or a Ferrari.

"The Chinese are pouring colossal amounts of money into Laos," explains Ravansith Thammarangsy, a French architect originally from Laos. "Within the government, the pro-Chinese politicians have the wind in their sails," he says.

"We'll end up being swallowed up by China," fears Viengsanith Phattanasinh. She has just opened an antiques shop in the center of Vientiane.

For Laos, a landlocked country of nearly 6.5 million habitants, geography has never been a straightforward matter: The Lao People's Revolutionary Party (LPRP), in power since communists overtook the royalist Lao government in December 1975, relies heavily on its Vietnamese "brother" to the east. It supported the country, both in terms of politics and the military, during the Vietnam War with the U.S. and is still one of the country's biggest investors. To the north there is China: a monster that carries enormous weight in the country whilst trying to remodel itself.

Laos' government has based its development strategy on this neighbor: no political freedom, a closely monitored freedom of expression and soaring economic liberalization. The figures back up the country's economic "emergence," with a growth rate expected at 8.3% in 2012 and an annual GDP of $1,200 dollars per person, compared to $300 some 10 years ago. The country has gone from one of the poorest in the world to a lower-middle-income country. It is set to join the World Trade Organization (WTO) at the end of the year, despite the alarming disparities between Vientiane and the rest of the country -- poor, mountainous and isolated.

The communist façade

The red flags and their hammers and sickles that adorn every public building do nothing to hide the fact that communism has been nothing more than a mere façade for a long time now. However, "the implementation of a "new economic mechanism" has reinforced its influence, rather than being denounced by the ruling elite who have been brought up on Marxist-Leninist doctrine," say Vanina Bouté and Vatthana Pholsena in their book Laos: sociétés et pouvoirs (Laos: Societies and Power).

With their ties to the Party, a new class of entrepreneurs have become rich, leaving in their wake a Party hierarchy similar to those in China and Vietnam. However, for the sake of the public, corruption is denounced by the press and jeered by the members of the Central Committee.

A certain liberty to criticize the government is now emerging -- on the condition that it cannot get out of hand. Not long ago, a deputy, Khampheuy Panemalaythong, dared to appeal against the democratic reforms during a parliamentary session. Sources indicate that he was a victim of a government purge.

Modernization has been met with both satisfaction and perplexity: "Individualism is on the rise; the divorce rate is getting out of hand," says Douangmala Phommavong, vice-president of the European Chamber of Commerce and Industry.

"We were lagging behind many other countries in the region," explains Viengkao Inthavong, a 22-year-old blues singer. "The Internet, Facebook... modernization is bringing a better quality of life for us young people."

Unla, a 23-year-old hip-hop dancer and the embodiment of an unseemly modernization, remains a little skeptical: "I support technology and modernization, but I get the feeling that things are sometimes developing too quickly."

Twenty-nine-year-old film director Anysay Keola pointed out some home truths in his film Plai Tang (On the Horizon), which highlighted some of the country's problems: the accumulation of wealth and poverty; power and success; and the spoilt brats of the Party. It is a violent film noir with an unambiguous message: "My film reflects the reality of a modern Laos, torn between the people who think of nothing but money and those who cannot afford to buy themselves the luxury products that are now advertised everywhere," says Anysay, the frontrunner of Laos's nouvelle vague. "In terms of politics, the system makes me think of some sort of monarchy."

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Economy

European Debt? The First Question For Merkel's Successor

Across southern Europe, all eyes are on the German elections, as they hope a change of government might bring about reforms to the EU Stability Pact.

Angela Merkel at a campaign event of CDU party, Stralsund, Sep 2021

Tobias Kaiser, Virginia Kirst, Martina Meister


-Analysis-

BERLIN — Finance Minister Olaf Scholz (SPD) is the front-runner, according to recent polls, to become Germany's next chancellor. Little wonder then that he's attracting attention not just within the country, but from neighbors across Europe who are watching and listening to his every word.

That was certainly the case this past weekend in Brdo, Slovenia, where the minister met with his European counterparts. And of particular interest for those in attendance is where Scholz stands on the issue of debt-rule reform for the eurozone, a subject that is expected to be hotly debated among EU members in the coming months.

France, which holds its own elections early next year, has already made its position clear. "When it comes to the Stability and Growth Pact, we need new rules," said Bruno Le Maire, France's minister of the economy and finance, at the meeting in Slovenia. "We need simpler rules that take the economic reality into account. That is what France will be arguing for in the coming weeks."

The economic reality for eurozone countries is an average national debt of 100% of GDP. Only Luxemburg is currently meeting the two central requirements of the Maastricht Treaty: That national debt must be less than 60% of GDP and the deficit should be no more than 3%. For the moment, these rules have been set aside due to the coronavirus crisis, but next year national leaders must decide how to go forward and whether the rules should be reinstated in 2023.

Europe's north-south divide lives on

The debate looks set to be intense. Fiscally conservative countries, above all Austria and the Netherlands, are against relaxing the rules as they recently made very clear in a joint position paper on the subject. In contrast, southern European countries that are dealing with high levels of national debt believe that now is the moment to relax the rules.

Those governments are calling for countries to be given more freedom over their levels of national debt so that the economy, which is recovering remarkably quickly thanks to coronavirus spending and the European Central Bank's relaxation of its fiscal policy, can continue to grow.

Despite its clear stance on the issue, Paris hasn't yet gone on the offensive.

The rules must be "adapted to fit the new reality," said Spanish Finance Minister Nadia Calviño in Brdo. She says the eurozone needs "new rules that work." Her Belgian counterpart agreed. The national debts in both countries currently stand at over 100% of GDP. The same is true of France, Italy, Portugal, Greece and Cyprus.

Officials there will be keeping a close eye on the German elections — and the subsequent coalition negotiations. Along with France, Germany still sets the tone in the EU, and Berlin's stance on the brewing conflict will depend largely on what the coalition government looks like.

A key question is which party Germany's next finance minister comes from. In their election campaign, the Greens have called for the debt rules to be revised so that in the future they support rather than hinder public investment. The FDP, however, wants to reinstate the Maastricht Treaty rules exactly as they were and ensure they are more strictly enforced than before.

This demand is unlikely to gain traction at the EU level because too many countries would still be breaking the rules for years to come. There is already a consensus that they should be reformed; what is still at stake is how far these reforms should go.

Mario Draghi on stage in Bologna

Prime Minister Mario Draghi at an event in Bologna, Italy — Photo: Brancolini/ROPI/ZUMA

Time for Draghi to step up?

Despite its clear stance on the issue, Paris hasn't yet gone on the offensive. That having been said, starting in January, France will take over the presidency of the EU Council for a period that will coincide with its presidential election campaign. And it's likely that Macron's main rival, right-wing populist Marine Le Pen, will put the reforms front and center, especially since she has long argued against Germany and in favor of more freedom.

Rome is putting its faith in the negotiating skills of Prime Minister Mario Draghi, a former head of the European Central Bank. Draghi is a respected EU finance expert at the debating table and can be of great service to Italy precisely at a moment when Merkel's departure may see Germany represented by a politician with less experience at these kinds of drawn-out summits, where discussions go on long into the night.

The Stability and Growth pact may survive unscathed.

Regardless of how heated the debates turn out to be, the Stability and Growth Pact may well survive the conflict unscathed, as its symbolic value may make revising the agreement itself practically impossible. Instead, the aim will be to rewrite the rules that govern how the Pact should be interpreted: regulations, in other words, about how the deficit and national debt should be calculated.

One possible change would be to allow future borrowing for environmental investments to be discounted. France is not alone in calling for that. European Commissioner for Economy Paolo Gentiloni has also added his voice.

The European Commission is assuming that the debate may drag on for some time. The rules — set aside during the pandemic — are supposed to come into force again at the start of 2023.

The Commission is already preparing for the possibility that they could be reactivated without any reforms. They are investigating how the flexibility that has already been built into the debt laws could be used to ensure that a large swathe of eurozone countries don't automatically find themselves contravening them, representatives explained.

The Commission will present its recommendations for reforms, which will serve as a basis for the countries' negotiations, in December. By that point, the results of the German elections will be known, as well as possibly the coalition negotiations. And we might have a clearer idea of how intense the fight over Europe's debt rules could become — and whether the hopes of the southern countries could become reality.

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