Vietnam’s standoff with China in Laos
Author: Nguyen Khac Giang, Victoria University of Wellington
In March, Vietnam announced that it had offered a new parliament building worth US $ 111 million in Laos. The move reflects Hanoi’s unease over Beijing’s growing influence over its closest ally. China overtook Vietnam as the biggest investor and lender in Laos. Keeping Laos alongside Vietnam is a top foreign policy priority for Hanoi. The question is how without engaging in costly competition with China.
Laos is Vietnam’s most loyal friend. The two Communist states fought together against the United States during the Vietnam War. It would have been difficult for Pathet Lao to gain power in 1975 without Hanoi’s support. Without the support of the Lao Communists, the Ho Chi Minh Trail – which played a vital role in the victory of North Vietnam – would not have been possible. The connection of the two regimes is particular: socialism training in Vietnam is a must for Laotian politicians who aspire to be national leaders. Laos is one of two countries the Communist Party of Vietnam (CPV) calls anh em (brothers), the other being Cuba. Vietnam’s ambassador to Laos is one of the few career diplomats to hold the rank of Deputy Foreign Minister.
Hanoi’s geopolitical survival is also linked to Laos. Vietnam has land borders with only China, Cambodia and Laos. Given the complex history and perpetual mistrust of Beijing’s intentions, the formation of a unified “Indochina” political bloc to guard against possible encroachment from the North has always been a priority in strategic thinking. from Hanoi. The last time they failed in the late 1970s, North Vietnam had to wage wars on both sides of the country and was on the verge of total collapse. In addition, since China’s support for the government of Cambodian Prime Minister Hun Sen has attracted Cambodia safely in orbit, Vietnam cannot afford to lose Laos.
Since China’s regional presence has grown, there have been disagreements between Laos and Vietnam. Laos is striving to become the “battery of Asia” by building a series of hydroelectric projects along the Mekong River, many of which are financed by Chinese loans. Vietnam has expressed its opposition to these dams to protect the Mekong Delta region. Hanoi is also eager to put the South China Sea issue on the ASEAN agenda, while Laos has no interest in the subject for fear of displeasing its biggest lender, China.
The Beijing Belt and Road Initiative (BRI) was warmly welcomed in Vientiane, but it was coldly received by Hanoi. Some Vietnamese researchers fear that BRI projects, including the Kunming – Singapore railway that crosses Laos, are designed to isolate Vietnam from the rest of the region. As China expands its influence southward through the BRI, Vietnam struggles to maintain its traditional sphere of influence. Hanoi cannot compete financially with Beijing for the granting of loans and investments. This concerns Hanoi because financial resources have been the determining factor in deepening Sino-Cambodian ties and Hanoi does not want Laos to follow the same path.
But Hanoi still has some cards to play. First, Vietnam’s relations with Laos are based on a close political relationship developed over more than 40 years, as well as on deep economic and cultural ties between the two countries. Vietnamese companies have operated successfully in Laos over the past decades, especially in southern provinces such as Savannakhet and Attapeu. Daily economic activities between the two countries have almost no barriers and many Vietnamese have taken the opportunity to immigrate to Laos, working in a variety of jobs, from small traders to construction workers. These interpersonal interactions have deepened the relationship between Vietnam and Laos and it will be some time before China has similar ties.
Second, Laos also has a strategic interest in maintaining a warm relationship with Vietnam. Being landlocked, Vietnam offers the best route for Laos to access the sea for trade. Infrastructure projects to link Laos to Vietnam’s major economic centers, including a railroad project from Vientiane to the central Vietnamese deep-water port of Vung Ang, are under consideration. Chinese infrastructure funding has also left Laos a heavy debt burden and vulnerable to manipulation from Beijing. Vietnam provides a counterweight to this trend. The best strategy for Laos is to cross the line between its two bigger neighbors and benefit from both.
The leadership transitions in Laos and Vietnam earlier this year may offer a glimpse into future Vietnam-Laos-China relations. In Laos, Prime Minister Thongloun Sisoulith, fluent in Vietnamese, was elected as the new leader of the Lao People’s Revolutionary Party and he promoted a childhood classmate of Chinese President Xi Jinping to the daughter of a Lao diplomat who spent time in Beijing, become his best help.
In Vietnam, CPV Secretary General Nguyen Phu Trong chairs a leadership team with the confidence to elevate Vietnam’s status in Asia. In particular, President Nguyen Xuan Phuc has done an admirable job in managing the country’s relationship with the unpredictable Trump administration, while the recently inaugurated Prime Minister Pham Minh Chinh has extensive foreign policy experience, including experience in work in foreign embassies as an intelligence officer.
The priority of Hanoi’s foreign policy will be to strengthen its own security environment. For this reason, Vietnam will likely aim to strengthen its relations with Laos, in particular by deepening economic cooperation. Road, port and rail projects linking Laos to Vietnam will be a priority – but not up to and pace with Chinese projects. Hanoi knows that even with friends, the national interest has the last word.
Nguyen Khac Giang is a doctoral candidate at Victoria University of Wellington.