USAID in Laos

USAID (United States Agency for International Development) played a significant role in providing various forms of assistance to Laos. Here's an overview of USAID funds and activities in Laos:

• Diverse Forms of Support: U.S. support to Laos, including that administered by USAID, took diverse forms. This encompassed more than just financial aid, extending to technical assistance and project implementation.

• Early Years (Pre-1964):

  • Following the establishment of the Program Evaluation Office (PEO) in Laos in December 1955, overall US aid jumped drastically from approximately $1.5 million in 1955 to some $26 million in 1956.
  • While direct MAP (Military Assistance Program) aid was about 25 percent of the total American aid to Laos, other significant portions came under different categories, likely including what would be administered by precursors to USAID or later by USAID itself. In 1959, total US foreign aid was around $28.5 million, including military assistance, defense support ($20 million), and technical cooperation ($1.7 million).
  • The report "U.S. Aid Operations in Laos" from 1959 discusses various shortcomings and inefficiencies in the aid program, including those related to the International Cooperation Administration (ICA), a predecessor agency. Control of the road program passed from ICA/Washington to USOM/Laos (U.S. Operations Mission). USOM officials also assisted in the development of a construction monopoly.
  • The bulk of US aid funds in Laos was in the defense support category, but "Project Aid" was also present.

• Increased Involvement (Post-1964):

  • U.S. financial assistance to Laos was to increase threefold in later years.
  • The Deputy Chief, Joint United States Military Advisory Group, Thailand (DEPCH/JUSMAGTHAI) logistically supported MAP aid, both overt and covert. USAID also expended comparable sums to military aid.
  • A new AOC (Air Operations Center) was constructed at Savannakhet to augment the one at Wattay Airport, Vientiane, suggesting USAID involvement in infrastructure projects related to the conflict.

• Specific Areas of USAID Activity:

  • Police Project: One of the two major projects in ICA's (later USAID) Laos program was a police project, involving both technical advice and material aid. By February 28, 1959, ICA had obligated about $1.6 million for equipment, technicians, and contract services, plus the equivalent of over $6.5 million in counterpart funds for police salaries and other budgetary support. This project was carried out by a U.S. Police Advisory Group. Training in Laos was also conducted at the USAID-established and supported Police Academy.
  • Refugee Relief: USAID played a key role in providing relief and resettlement for refugees displaced by Communist military action. By the end of fiscal year 1967, the program aimed to make as many refugees as possible self-sufficient by providing seeds and farming tools or through resettlement. Since many refugees were in remote areas, air drops were often the only feasible means of providing supplies. USAID also supported self-help building projects in accessible refugee areas.
  • Health: AID directly supported and assisted the only medical services received by the majority of the population, especially outside urban areas. These services included basic medical treatment, sanitary facilities, immunisation, and education in personal hygiene. AID also aimed to train indigenous doctors, nurses, and medical technicians. Village clinic workers trained by Operation Brotherhood also staffed village clinics with AID assistance.
  • Education: Much of U.S. technical aid was devoted to teacher training, educational facilities and materials, and improvement of curricula and administration. Initially focusing on primary education, efforts were later added to expand secondary education.
  • Agriculture: To increase rice production, AID supported large-scale demonstration projects and experiments with rice varieties. It also assisted in creating a joint U.S./Lao agency called the Agriculture Development Organisation (ADO) to expand rice seed multiplication and improve distribution. ADO also studied the formation of farm credit.
  • Highways: USAID provided assistance for road construction, including a 100-kilometre stretch of the National Highway linking the administrative capital Vientiane with its river port facilities. Construction of the northern portion of the highway between Vientiane and Luang Prabang was also started with AID assistance.
  • Small Industries: A program to support the growth of small industries also received further AID assistance.
  • Community Development: Enlarged programs for refugee housing and other public works allied to community development were being considered.

• Financial Aspects:

  • In fiscal year 1965, AID provided $50.6 million in assistance.
  • The fiscal year 1967 program was intended to follow the guidelines of current activities.
  • USAID also managed counterpart funds generated from American aid materials. The percentage of counterpart funds used for administration of American Aid programs in Laos was higher (15%) compared to Vietnam and Cambodia due to proportionately high transportation costs.
  • USAID also provided humanitarian assistance, encouraging other donors, including international organisations, to do the same.

• Coordination and Control: The in-country program was controlled by the Embassy in Vientiane. The Office of the Assistant for Plans and Programs, RO/USAID, exercised in-country supervision of the MASF (Military Assistance Service Fund) Training Program and proposed programs for coordination with various entities, including DEPCH. DEPCH also relied on USAID in Vientiane for the supplies requested by CAS (Central Intelligence Agency).

• Critique of Aid Effectiveness: the in-country program controlled by the Embassy, Vientiane, seemed "directed toward no firm objective" and its success was only measurable by maintaining a tenuous political-military status quo. The overall impression was described as "something just less than pouring money down a hole".

In summary, USAID played a multifaceted role in Laos, providing significant financial and technical assistance across various sectors, including public safety, refugee relief, health, education, agriculture, and infrastructure. These efforts were aimed at promoting stability, improving living standards, and countering Communist influence, although the effectiveness of the aid programs was sometimes questioned. USAID also worked in conjunction with other US government agencies and international partners in its operations. 

Here's what we know about the Foreign Exchange Operations Fund (FEOF) and how it worked inside Laos:

• Purpose: The Foreign Exchange Operations Fund (FEOF) served as a mechanism to provide foreign exchange support to Laos. This was important for a country like Laos with a generally non-monetary economy, where generating sufficient government revenue was difficult. The FEOF helped finance Laos's foreign exchange expenditures.

• Multilateral Support: The FEOF was a multi-national channel, indicating that it received contributions from several countries. These included the United States, France, Great Britain, Australia, and Japan (as mentioned in our conversation history).

• Link to US Aid: The United States Agency for International Development (AID) also provided foreign exchange support through the FEOF. This suggests that the FEOF was an important component of the broader foreign aid efforts in Laos.

• Supporting Commodity Imports: One specific way the FEOF operated was by facilitating the import of commodities that were financed by AID. This implies that the fund was used to provide the necessary foreign currency for Laos to purchase goods from other countries.

• Maintaining Financial Stability: The broader objective of US aid to Laos, which included the FEOF, was to promote financial stability in the face of inflationary pressures created by the prolonged political and military unrest. The FEOF likely played a role in this by ensuring the availability of foreign exchange needed for essential imports and to manage the Laotian currency (Kip).

It is clear that the FEOF was a significant instrument for providing crucial foreign exchange support to the Laotian government during a period of instability.

The Program Evaluation Office (PEO) was a United States entity established in Laos in December 1955.

Here are the key details about the PEO:

• Purpose and Function: The primary mission of the PEO was to advise the American Ambassador to Laos on the requirements for and the utilisation of military equipment. It was essentially the mechanism through which the U.S. could provide military assistance to Laos while attempting to navigate the restrictions imposed by the Geneva Accords. The PEO suneptitiously equipped and trained regular units of the Forces Armees Royales (Royal Laotian Armed Forces).

• Establishment and Circumvention of Accords: The establishment of the PEO was a covert attempt to create an effective air force for Laos, an underdeveloped country facing the threat of being taken over by communists. The 1954 Geneva Accords, and their further clarification in 1956, stipulated that only the French were permitted to provide military advice and training to the Laotians. However, due to an apparent lack of interest and progress on the part of the French, the U.S. increased its involvement and established the PEO. By staffing it with Department of Defense (DOD) civilians, the US aimed to circumvent the provisions of the Geneva Accords that prohibited a foreign military presence beyond a residual French mission. Nominally, the PEO was presented as part of the economic aid program.

• Reporting Structure: The small staff of the PEO reported directly to the Commander-in-Chief, Pacific Command (CINCPAC).

• Early Activities: In its initial years, the PEO's focus extended beyond military equipment and training. It operated more in the political arena, concentrating on covert actions designed to popularise the Vientiane government. Furthermore, as early as 1955, the PEO had already considered providing clandestine support to the Hmong, who were mountain tribesmen with prior alliances with the French against the Viet Minh.

• Evolving Role: The PEO's activities and views were noted in later years as well. For instance, in 1961, the then chief of the PEO observed that the Laotian leader Phoumi Nosavan was hesitant to allow any single military personality to become too powerful. The PEO also provided assessments of the capabilities and morale of Phoumi's forces. The CIA's management of paramilitary programs also had relations with the PEO.

• Relation to USOM: The USOM (U.S. Operations Mission) also had a role related to military matters in the early days due to the State Department's prohibition against establishing a formal Military Assistance Advisory Group (MAAG) in Laos. The responsibility for administering the military program was initially placed on the USOM, which lacked experience in such matters. Subsequently, a special section within USOM was staffed with personnel having some expertise in military budget and logistic matters, and this section was called the Programs Evaluation Office. This appears to be the same entity established in 1955.

In summary, the Program Evaluation Office (PEO) was a crucial early instrument for the United States to provide military assistance and exert influence in Laos, particularly in the context of the limitations imposed by the Geneva Accords. It evolved from a small advisory group focused on military equipment to an entity involved in training, political action, and assessment of Laotian forces, all while officially being a civilian component of the US aid mission.