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Soviet Retreat From Laos Leaves Idle Factories, Shell of New Embassy

WHEN Russian diplomat Valery Stchetinin arrived in this languid Southeast Asian capital three years ago, a tour of duty in Vientiane was highly coveted by his colleagues in chilly Moscow.

"At the time, the Foreign Ministry had great plans for Laos," Mr. Stchetinin says. "This was to be our diplomatic front line for the region. And besides, the climate is very nice."

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But in the wake of last summer's failed Kremlin coup, Laos has quickly become a professional wasteland for diplomats like Stchetinin. After 16 years as Laos' principal benefactor, Russia is beating a hasty retreat from its former client state, cutting the tiny landlocked country off from its key source of aid and political support.

Towering over the diplomatic enclave on the outskirts of Vientiane, the unfinished shell of Russia's new embassy complex stands as testament to nearly two decades of Soviet sponsorship gone to waste. When building began four years ago, the embassy was to be the tallest building in the country. Now, construction has all but stopped.

"The situation in the world has changed. The cold war is over. Now we must deal with Laos in ways that we can," Stchetinin says.

As a result of Moscow's domestic crisis, Lao and Russian officials say they expect the Kremlin to drop its aid commitment to Laos by nearly 90 percent in 1992.

Russian diplomats say that embassy personnel will be reduced by half by 1993. Already, all of Moscow's military advisers have returned home, and many technical advisers soon will follow, they say.

The withdrawal swiftly ends a political alliance forged in 1975, when the communist Pathet Lao seized power from the United States-backed government in Vientiane.

It also brings to an end nearly two decades of lavish Soviet aid that helped prop up Vientiane's communist leadership, and sustain forced agricultural collectivization and centrally planned industry.

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In the five years up to 1990, the Kremlin gave more than $410 million to Laos, nearly 50 percent of all aid dollars received by Vientiane during that period.

Some Western observers say that aid may have done more harm than good.

"The Russians are rolling up their red carpet and are heading home just about as quickly as they can. And what they are leaving behind doesn't really amount to much for this country anyway," says Don Scott, an US businessman living in Laos.

According to the World Bank, Laos is one of the poorest countries in the world, with a per capita gross domestic product of less than $180 a year.

"There is no doubt that Moscow spent as much as it could to keep Laos in its orbit," says Rolf Samuelson, a Swedish development specialist based in Laos. "But it is still far from clear whether its money has had any impact here."

On the outskirts of Vientiane, dozens of Soviet-donated bulldozers sit broken down in the middle of Route 13, which though largely unpaved and rutted, is considered one of the country's best highways.

"It's like the road out of Kuwait City after the Gulf war," says Mr. Samuelson. "These bulldozers were built for cold Russian winters, not Laos' heat. And besides, the Russian technicians who service them have all left. There is nobody left to make them work, or to move them out of the road."

Near Luang Prabang, a quiet town 100 miles north of Vientiane, a Soviet-built brick factory lies dormant near the city's airstrip. Since it was built, not a single brick has been produced. A dearth of trained workers and Russian managers has left the factory inactive and in disrepair.

"The problem was we were in no position to say no to free money from Moscow," says a Laotian official, who declined to be identified. "Even if it is bad money, we are too poor to say no."

To make up for the sharp decline in aid from its former Kremlin sponsors, the government in Vientiane has launched an aggressive campaign to lure new sources of foreign currency. Recently, the Pathet Lao enacted a foreign investment code considered by economists here to be one of the more liberal in Southeast Asia, allowing full repatriation of profits and guarantees against nationalization.

So far, that campaign is beginning to pay off. According to a State Department briefing paper, several hundred foreign joint ventures have been signed with Lao partners since 1990, luring more than $70 million in hard currency to the cash-strapped economy.

Stchetinin says Russian investors account for seven of these new joint ventures. "We are doing what we can, not more," he says. "We have nothing to be ashamed of. Our goal now is not to dominate here anymore, but to simply be one part of all humanity in this country."


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