The context for this engagement is deeply rooted in shifting dynamics within the Mekong region. China’s economic dominance, coupled with its assertive military expansion, is prompting a realignment among Southeast Asian nations. Laos, traditionally reliant on China for trade and investment, is now actively seeking to diversify its partnerships. Simultaneously, the United States, under the Biden administration, is recalibrating its approach to Southeast Asia, aiming to restore alliances and counter China’s influence. Thailand, itself wrestling with internal economic challenges and navigating its own complex relationship with China, recognizes the imperative to maintain its strategic autonomy. The visit to Laos serves as a tangible demonstration of this commitment.
Key stakeholders—Thailand, Laos, the United States, and China—all have distinct motivations. Thailand seeks to maintain a stable, multi-faceted regional network, leveraging Laos as a bridge to engage with China while simultaneously strengthening its ties with Washington. Laos, burdened by significant debt to China and facing increasing pressure from Beijing regarding water resource management on the Mekong River, is seeking alternative sources of support and investment. The Lao PDR’s economy, heavily reliant on agriculture and hydropower, is particularly vulnerable to fluctuations in the river’s flow, a matter already heightened by China’s dam construction. The Thai government’s stated interest in addressing “transboundary challenges” – a euphemism for the Mekong’s water security – is therefore a critical element of the partnership. Thailand’s own extensive hydropower sector and expertise in water management, garnered through decades of experience, provide a focal point for collaboration.
Recent developments over the past six months solidify the strategic importance of this relationship. The ongoing disputes over the Xepong Dam in Laos, built by China with minimal consultation with downstream countries, highlighted the vulnerability of the Mekong nations. While Thailand has publicly expressed concerns, the visit provides an opportunity to engage in deeper discussions about shared water management strategies and advocating for greater transparency from Beijing. Furthermore, Thailand’s commitment to bolstering economic connectivity—through initiatives like the Eastern Economic Corridor (EEC) and potential infrastructure projects in Laos—is designed to incentivize economic growth within Laos and provide Thailand with access to regional markets. “Combating transnational crimes,” another stated priority, reflects a growing concern about illegal drug trafficking, human smuggling, and other illicit activities facilitated by the region’s porous borders.
Data from the International Monetary Fund (IMF) indicates that Laos’s GDP growth slowed to 3.2% in 2024, largely due to external headwinds and drought conditions. This economic vulnerability has increased the pressure on the Lao government to diversify its economic base, making Thailand’s investments and trade agreements increasingly attractive. Analysis by the Centre for Strategic and International Studies (CSIS) suggests that Thailand’s engagement with Laos is not solely driven by economic considerations but also reflects a broader strategic goal: to prevent Laos from becoming an overly reliant partner in China’s sphere of influence. The Prime Minister’s emphasis on “strengthening economic and connectivity cooperation” suggests a longer-term vision, possibly encompassing infrastructure projects that could eventually link Laos to Thailand’s wider ASEAN network. A recent report by the Economist Intelligence Unit forecasts that Thailand will invest $3 billion in infrastructure projects within Laos over the next decade, primarily focused on transport and energy.
Looking ahead, the short-term (next six months) will likely see continued negotiations on water resource management and infrastructure development. Thailand will likely seek to secure greater influence within regional forums, such as the Greater Mekong Subregion (GMS) cooperation mechanism, to advance its interests. The long-term (5-10 years) trajectory is more complex. If China continues its assertive foreign policy and exerts further pressure on the Mekong, Laos’s alignment could solidify, potentially strengthening China’s strategic foothold in Southeast Asia. However, if Thailand and other regional partners can successfully counter China’s influence through collaborative infrastructure projects, diplomatic efforts, and economic incentives, Laos could become a key counterweight, a “stabilizing force” within the Mekong region. Ultimately, the success of Thailand’s strategic play hinges on its ability to foster genuine partnership with Laos, underpinned by mutual benefit and a shared commitment to regional stability, a test that requires astute diplomacy and a deep understanding of the evolving power dynamics in Southeast Asia.