Laos
Land of the Poppy

Laos is one of those historical oddities like Monaco, Andorra, and Lichtenstein which were somehow left behind when petty principalities were consolidated into great nations. Although both nineteenth-century empire builders and cold war summit negotiators have subscribed to the fiction of Laotian nationhood out of diplomatic convenience, this impoverished little kingdom appears to lack all of the economic and political criteria for nationhood. Not even the Wilsonian principle of ethnic determinism that Versailles peacemakers used to justify the carving up of the Austro-Hungarian Empire after World War I validate Laos's existence. Some 8.0 million Lao live in northeast Thailand, but there are only about 1.5 million Lao in Laos. With a total population of between 2 and 3 million and singularly lacking in natural resources, Laos has been plagued by fiscal problems ever since independence in 1954. Unable to finance itself through corporate, mineral, or personal taxes, the Royal Laotian government has filled its coffers and lined its pockets by legalizing or tolerating what its neighbors have chosen to outlaw, much like needy principalities the world over. Monaco gambles, Macao winks at the gold traffic, and the Laotian government tolerates the smuggling of gold, guns, and opium.

While the credit card revolution has displaced paper currency in most of suburban America, peasants and merchants in underdeveloped countries still harbor a healthy distrust for their nations' technicolor currency, preferring to store their hard-earned savings in gold or silver. Asian governments have inadvertently fostered illicit gold trafficking either by imposing a heavy revenueproducing duty on legal gold imports or else limiting the right of most citizens to purchase and hold gold freely; thus, an illicit gold traffic flourishes from Pakistan to the Philippines. Purchased legally on the European market, the gold is flown to Dubai, Singapore, Vientiane, or Macao, where local governments have imposed a relatively low import duty and take little interest in what happens after the tax is paid.

Laos's low duty on imported gold and its government's active participation in the smuggling trade have long made it the major source of illicit gold for Thailand and South Vietnam. Although Laos is the poorest nation in Southeast Asia, Vientiane's licensed brokers have imported from thirty-two to seventy-two tons of gold a year since the American buildup in Vietnam began in 1965. As thousands of free-spending GIs poured into Vietnam during the early years of the war, Saigon's black market prospered and Laos's annual gold imports shot up to seventytwo tons by 1967.(24) The 8.5 percent import duty provided the Royal Lao government with more than 40 percent of its total tax revenues, and the Finance Ministry could not have been happier. (25) However, in 1968 the Tet offensive and the international gold crisis slowed consumer demand in Saigon and plunged the Laotian government into a fiscal crisis. Prime Minister Souvanna Phouma went before the National Assembly and explained that because of the downward trend in the gold market, "one of our principle sources of income will not reach our expectations this year." Faced with what the prime minister described as "an extremely complex and difficult situation," Finance Minister Sisouk na Champassak privately suggested that the government might seek an alternate source of revenue by taxing the clandestine opium trade. (26) When the establishment of a gold market in Singapore in 1969 challenged Laos's position as the major gold entrepot in Southeast Asia and forced the Finance Ministry to drop the import duty from 8.5 to 5.5 percent in 1970, (27) Sisouk na Champassak told a BBC reporter, "The only export we can develop here is opium, and we should increase our production and export of it." (28)

As minister of finance and acting minister of defense, Sisouk is one of the most important government officials in Laos, and his views on the opium trade are fairly representative of the ruling elite. Most Laotian leaders realize that their nation's only valuable export commodity is opium, and they promote the traffic with an aggressiveness worthy of Japanese electronics executives or German automobile manufacturers. Needless to say, this positive attitude toward the narcotics traffic has been something of an embarrassment to American advisers serving in Laos, and in deference to their generous patrons, the Laotian elite have generally done their best to pretend that opium trafficking is little more than a quaint tribal custom.(29) As a result, violent coups, assassinations, and bitter political infighting spawned by periodic intramural struggles for control of the lucrative opium traffic have often seemed clownlike or quixotic to outside observers. But they suddenly gain new meaning when examined in light of the economics and logistics of the opium trade.

Since the late 1950s the opium trade in northern Laos has involved both the marketing of the locally grown produce and the transit traffic in Burmese opium. Traditionally most of Laos's domestic production has been concentrated in the mountains of northeastern Laos, although it is now greatly reduced because of massive U.S. bombing and a vigorous opium eradication program in Pathet Lao liberated zones.(30) Designated on Royal Lao Army maps as Military Region 11, this area comprises the Plain of Jars and most of the Meo highlands that extend from the northern rim of the Vientiane Plain to the border of North Vietnam. While northwestern Laos also has extensive poppy cultivation, opium production has never achieved the same high level as in the northeast; soil conditions are not as favorable, the traffic has not been as well organized, and tribal populations are more scattered. For example, there are between 150,000 and 200,000 Meo living in the northeast, but only about 50,000 Meo in the northwest. As a result, the opium trade in northwestern Laos, now known as Military Region 1, was always secondary in importance during the colonial era and the early years of the postcolonial opium traffic. However, in the mid 1960s Shan and Nationalist Chinese opium caravans began crossing the Mekong into Laos's extreme northwest with large quantities of Burmese opium. As dozens of refineries began springing up along the Laotian bank of the Mekong to process the Burmese opium, the center of Laos's opium trade shifted from the Plain of Jars to Ban Houei Sai in northwestern Laos.

The mountains of northern Laos are some of the most strikingly beautiful in the world. Shrouded with mile-high clouds during the rainy season, they are strongly reminiscent of traditional Chinese scroll paintings. Row upon row of sharp ridges wind across the landscape, punctuated by steep peaks that conjure up images of dragons' heads, towerin monuments, or rearing horses. The bedrock is limestone, and centuries of wind and rain have carved an incredible landscape from this porous, malleable material. And it is the limestone mountains that attract the Meo opium farmers. The delicate opium poppy, which withers and di s in strongly acidic soil, thrives on limestone soil. Tribal opium farmers are well aware of the poppy's need for alkaline soil, and tend to favor mountain hollows studded with limestone outcroppings as locations for their poppy fields.

But the mountain terrain that is so ideal for poppy cultivation makes long-range travel difficult for merchant caravans. When the French tried to encourage hill tribe production during the colonial era, they concentrated most of their efforts on Meo villages near the Plain of Jars, where communications were relatively well developed, and they abandoned much of the Laotian highlands to petty smugglers. Desperate for a way to finance their clandestine operations, French intelligence agencies expropriated the hill tribe opium trade in the last few years of the First Indochina War and used military aircraft to link the Laotian poppy fields with opium dens in Saigon. But the military aircraft that had overcome the mountain barriers for Laotian merchants were withdrawn in 1954, along with the rest of the French Expeditionary Corps, and Laos's opium trade fell upon hard times.