From Carpet Bombing To Capitalism in Laos

ON the main avenue of this Southeast Asian capital, once regarded as so strategic that it had the largest United States Embassy in the world, goats and cattle roam freely, unbothered by the few motorcycles and even fewer cars.

But the slow pace in Vientiane, a town of only 125,000 on the Mekong River, is deceptive. Underneath lies a deliberate design by the Communist leaders of Laos to avoid pushing their country pell-mell into the 20th century. ``We can't open the door too far,'' says Sannya Aphay, vice governor of the National Tourism Authority. ``But we don't want to close ourselves off and remain poor.''

Even though the Communist Party has shed many of its Stalinist ways and embraced free markets since 1986, it has decided recently to try an unusual experiment in economic restraint, or what it calls ``the Lao way.''

Its leaders, who once suffered American carpet-bombing in jungle hideouts, want to prevent the social and environmental ills of rapid growth that they see in neighboring Thailand, Vietnam, and China.

New investment projects are carefully scrutinized and often delayed, even though this former French colony remains one of the world's poorest nations, with an average annual income of less than $250 per person.

As a result, Laos has retained much of its forest cover and has built few dams on its plentiful rivers. Vientiane remains virtually free of pollution, crime, drugs, AIDS, and large-scale corruption. Unlike Thailand, tourists are allowed to enter Laos only in small numbers.

Perhaps the best example of measured development is Laos's reluctance to seek a second bridge across the wide Mekong to Thailand. The first bridge, called Mitraphap (friendship), will open next April near Vientiane and the Thai town of Nong Khai. ``They want to wait one or two years to see what kind of people, goods, and ideas come over from Thailand,'' says Australian Ambassador Michael Mann, whose country built and paid for the new bridge.

At present, Laos plans to block motorcycles and bicycles from using the bridge. In fact, only about 1,300 vehicles are expected to cross daily, even by 1995.

The unhurried pace of progress, however, has not always been deliberate. Laos suffers the same bureaucratic inertia as any third-world nation, perhaps with less corruption. Communist takeover

After 1975, when the Hanoi-backed Pathet (land) Lao guerrillas took power from the monarchy in a bloodless Communist coup, private property was confiscated, farmers collectivized, and some 30,000 to 40,000 people were sent to prison-like ``re-education camps.'' Another 343,000 Laotians, mainly from the Hmong tribe, fled to Thailand. The country was renamed the Lao People's Democratic Republic.

Most of these steps have been reversed as Communist measures lost favor here and party leaders joined with comrades in Vietnam to move toward ``market Leninism'' - a one-party state with little command over the private economy.

In Vientiane, dozens of private shops sprung up overnight. Big banks from Thailand moved in. The town even sported a cellular phone system. The starting gate was opened for Laos to become another ``little Asian tiger.'' But its leaders have since pulled in the reins.

The ruling Lao People's Revolutionary Party decided to give the country a constitution only in 1991. It also took the hammer and sickle off the national flag. In the party motto, the word ``prosperity'' has replaced ``socialism.'' A propaganda bookstore in Vientiane with books on Lenin appears closed, but not completely shuttered.

``Laos is not on the way to communism,'' claims government spokesman Vanhevan Vongvichet, ``We are on the way to democracy.''

Last year, however, the party sentenced three top officials to 14 years in prison for ``antigovernment activities,'' or advocating a multiparty system. The US claims Laos holds six political prisoners, down from hundreds in the 1970s. ``Being Communist is still the claim of legitimacy by the government,'' says a Western diplomat.

After longtime leader Kaysone Phomvihan died last year, he was replaced by a shy, former military officer named Gen. Khamtay Siphandon, who rules over a 66,000-member party. He has yet to make noticeable change.

In downtown Vientiane, the party's revolutionary museum showing heroic deeds against the former US enemy today appears unkempt and is closed most of the time. Just down the street, an office of the International Monetary Fund has opened up to dispense capitalist advice to former guerrillas.

The drag on development is the fact that about two-thirds of the estimated 4.4 million Laotians are seminomadic peasants who practice slash-and-burn agriculture in a landlocked, hilly nation the size of Oregon with very few roads. Ambassador Mann recounts a recent helicopter trip to a remote village of 8,000 Laotians - none of whom had ever seen a non-Asian before.

Female illiteracy and infant mortality are among the highest in the world, and of all the many small experiments being conducted by international aid groups to find ways to uplift Laotian villages, not one has spread across the country, says Ameerah Haq-Perera, United Nations Development Programme representative in Vientiane. ``Laos is practicing preventative development,'' she says, ``and is trying to learn from the errors of its neighbors. Someday, it may be ahead in social cohesion and environmental protection.''

The go-slow approach was not adopted at first in 1986 when Laos opened its door. But when foreign investment did not flood in, the older party leaders decided to tighten the reins of development. They also began to worry about being overwhelmed by Laos's bigger and more powerful neighbors: China, Vietnam, Thailand, and Burma. An estimated 40,000 Vietnamese emigres, for instance, were sent home from Laos last year.

What little foreign investment did come, mainly in textiles, also ran into bottlenecks. When it comes to boosting trade and tourism, ``we will be sticking to the protection of the environment and human resource development simultaneously,'' says Phao Bounnaphol, head of the prime minister's staff. Debating change

Within the party, a lively debate continues over how much change to allow. ``The old party guys are conservative, but the younger ones say that Laos must adjust to cope with inevitable changes coming its way,'' Mann says. The debate may be influenced by Laos's widespread Buddhist faith, a religion that teaches one to look inward during hard times and to avoid extremes.

Tourism, especially the kind of sex tourism found in Bangkok, worries almost every Lao leader. ``There will be many negative effects on our culture,'' says Mr. Sannya. ``Now people are living an easy and peaceful life, and they are happy with this.''

But cultural or economic influence from Thailand or the West does not worry Foreign Vice- Minister Phongsavath Boupha. ``The Lao take pride in themselves, so we're not too worried,'' he says. ``The Lao will always be Lao.''

Laos has yet to make a transition from a subsistence economy to a commodity-based economy, says Dr. Sonephet Inthavong, deputy minister for planning. ``We can't absorb all the assistance given to us.'' Much of the commerce in Laos is still by barter, not cash.

The estimated economic growth this year may reach 6 percent, not high enough to keep pace with rapid population growth. But in a bold step, Laos signed an agreement with Thailand in June to build several hydroelectric dams by the year 2000 and export the electricity to Thailand. The export revenues could make it easier for the Communist Party to direct development.

The loss of economic help from the former Soviet empire has not greatly changed Laos' direction, even though it lost 25 percent of its export markets and 58 percent of its import sources. Much of that has been made up by increased foreign aid, mainly from Sweden, Japan, and Australia.

In a historic irony, the US is now the largest investor in Laos, after once waging war in Indochina from Vientiane. Most of the investment is in oil and minerals.

Remnants of the US war are everywhere. The landscape is pocked with bomb craters. Parachutes from downed US jets serve as awnings for restaurants. Shell casings are used as opium pipes. Motorcyclists wear US Army helmets.

Laos was once so important to Washington that Dwight Eisenhower told John Kennedy in a presidential-transition talk that this country was ``the key to the entire area of Southeast Asia.'' Laos was the key domino in the domino theory, and was a take-off point for much US bombing of Vietnam between 1964 and 1973.

Today, this least-known of Communist nations is nearly forgotten in Asia's political landscape. And to some degree, its leaders, who live in the big, suburban-style houses left by the Americans, prefer it that way.