Laos Stumbles on Path to Sporting Glory

VIENTIANE, LAOS — Lillehammer, Albertville, Lake Placid. Major sports events have a way of putting obscure places on the map. This was the hope harbored by Laos’s Communist leaders when they offered Vientiane, the capital, as the host of the Southeast Asian Games this December.

But so far the greatest legacy of the games is a record deficit that has forced the country to seek emergency loans and strike secretive deals that give away large swaths of land.

The SEA Games, as the biennial sporting event is known, are no Olympics. Participation is limited to 11 Southeast Asian countries, and the games this year include local favorites such as pétanque, dragon boat racing and the martial art wushu, in addition to a roster of more globally appreciated sports: soccer, track and field events, tennis and volleyball.

Accommodating more than 3,000 athletes and many more spectators is nonetheless an ambitious undertaking for a country where the majority of the people are either rice farmers or mountain-dwelling tribal groups. The World Bank, a major creditor to Laos, says a surge in borrowing caused both by the effects of the global economic crisis and costs related to the games has become a “major concern.” The government appears to be in the hock to China to the tune of about $100 million after a rare public uproar forced the leadership to back down on its plan to give China prime real estate in exchange for construction of a stadium complex. The stadiums are nearly finished, but the Laotian government is declining to say how it is going to pay for them.

Laos has turned to other neighbors for both workers and much-needed cash.

Thailand has spent more than $2 million to build a kick-boxing stadium and fix up a second one. Brunei’s government chipped in $1.7 million to construct another sports complex. A Vietnamese real estate company built the Athletes Village. Japan and South Korea helped with other games-related projects.

The state media, meanwhile, recently reported that the government scraped together $800,000 to spruce up the city with a beautification program.

“It’s a Lao version of a stimulus package,” said Patchamuthu Illangovan, country manager for the World Bank in Laos.

The government is tight-lipped about the overall cost of the games.

“I have no idea about the budget,” said Southanom Inthavong, the president of the country’s Aquatic Federation who also serves as the international communications liaison for the games. He referred the question to another official who ignored repeated requests for an interview channeled through the Foreign Ministry.

Dependent on tourism, mining and forestry, the country’s revenues have dropped over the past year because of the poor international economic climate. But Mr. Inthavong says the games will go ahead as scheduled.

“Of course the economy has hit us quite hard,” he said. “But it shouldn’t be a problem for the games. We have many friends.”

Among those friends are Vietnam and China, neighbors to the east and north both jockeying for access to Laos’s forests, arable land, hydropower possibilities and other natural resources.

Partly because games-related financial dealings have become controversial, the Laotian government has kept details of arrangements with those countries secret. But some details are leaking out.

At the inauguration of the Athletes Village in early September, officials from Laos and Vietnam gave speeches praising the historical friendship and cooperation between the two countries. They announced that a $19 million dormitory complex was financed by a no-interest loan and a $4 million outright grant from Vietnam.

But a more complete picture emerged in an interview with Somvang Vongvilay, the director of the construction company that built the dormitories. As part of the deal, he said, the Laotian government gave a Vietnamese real estate company, Hoang Quan, 10,000 hectares, or about 25,000 acres, in southeastern Laos to plant rubber trees. The tract of land is nearly double the area of Manhattan.

Such opaque deals have been common in Laos, where the state media only report what is sanctioned by the government. Yet over the past two years some of the opacity has thinned away: The public backlash last year over the financing of the Chinese stadium complex in Vientiane was considered by many as a milestone in public dissent toward the traditionally autocratic government.

When rumors circulated that as part of the deal 50,000 Chinese would move into the Chinese-built industrial zone in Vientiane, government ministers were forced to call a news conference — a rare event for the Communist hierarchy. Deputy Prime Minister Somsavat Lengsavad, who is ethnically Chinese, explained details of the plan: the China Development Bank would finance the main sports complex in exchange for 1,600 hectares of land on the outskirts of Vientiane, which a Chinese company would convert into what was called the “New City Development Project.” The government said it would lease the land for 50 years to Chinese developers with a possibility of an extension.

But the announcement only served to kindle opposition to the plan.

Farmers who lived on the land and wealthy residents who lived nearby commonly derided the project as “Chinese City,” a term with a pejorative ring in a country where Chinese businesses have mushroomed in recent years.

In August 2008 the government backed down and said the Chinese government would only receive 200 hectares, a small fraction of the original deal.

More than a year later the government refuses to divulge how it is compensating the Chinese government, which according to Laotian state media paid the full cost of the stadium complex.

“No one knows,” said Mr. Illangovan of the World Bank. “This is the kind of information we don’t have access to.”

In order to reduce its deficit this year, which the World Bank estimates may reach 7 percent of gross domestic product, the government plans to increase taxes on alcohol and cigarettes and will defer the hiring of new staff.

It has also postponed the purchase of some furniture and equipment for the games. The athletes’ dormitories were initially supposed to have air conditioning. They have been given fans instead.

“Instead of the Rolls-Royce version, they are buying the Toyota Corolla,” Mr. Illangovan said.

The World Bank predicts that Laos will be able to bring down its deficit next year as the global economic situation improves. By that time the government will have a better idea if the money spent on the games — both the cash and the land pledged to foreign interests — did indeed help to raise the country’s profile.

Anouza Phothisane, 23, the leader of a break-dance troupe called the Lao Rockets, which will perform in the opening ceremony of the SEA Games, says foreigners often look at him with puzzlement when he says he is from Laos.

“In Singapore and Taiwan people asked us, what is Laos?” Mr. Anouza said.

“I have to explain to them that it’s next to Vietnam and Thailand.”