The Thailand-Laos relationship, historically rooted in economic interdependence and shared strategic interests, is now facing unprecedented strain. Thailand, seeking to maintain its position as a regional leader, is leveraging its economic clout – particularly in tourism and investment – while Laos, heavily reliant on Thai trade and infrastructure, is increasingly drawn to Beijing’s Belt and Road Initiative. Data from the Asian Development Bank (ADB) reveals that Thai investment in Laos has consistently accounted for over 40% of Laos’s total foreign direct investment over the last decade. However, this dependence creates vulnerabilities.
Historically, Thailand’s foreign policy has been centered on maintaining stability within the Mekong sub-region, largely through cooperation within ASEAN. The 2003 Bangkok Declaration for ASEAN Cooperation in the Mekong Region demonstrated this approach. However, the growing prominence of China, combined with Thailand’s own strategic adjustments, is challenging this framework. The disputed territory along the Prek Sah Rep river, a critical waterway for Cambodia, represents a key flashpoint. Thailand’s insistence on maintaining control over this area, based on historical claims and perceived strategic advantages, is deepening the rift with Phnom Penh. As noted by Dr. Surin Nakano, a specialist in Southeast Asian politics at the ISEAS – Yusof Ishak Institute, “Thailand’s approach is predicated on a realist worldview – prioritizing national security interests over multilateral norms.”
The Laos-China axis represents a significant counterweight. China’s investments in Laos’s hydropower sector—particularly the Xepian Xe Pian 2 (Doi Khan) project—have fundamentally altered the region’s hydrological balance and raised serious concerns among downstream countries, notably Cambodia and Vietnam. Figures from the World Bank demonstrate a direct correlation between Chinese investment and a surge in Laos’s economic growth, mirroring a trend observed in other Belt and Road Initiative nations. This economic boost has simultaneously strengthened Laos’s diplomatic ties with Beijing, allowing the Communist Party-led state to play a more assertive role in regional affairs. Recent reports from the Center for Strategic and International Studies (CSIS) highlight how Laos is using its position as a transit route for Chinese goods and energy to gain leverage in negotiations with Thailand and ASEAN.
Within the ASEAN framework, Thailand’s position has become increasingly complex. The ongoing border dispute has strained relations with Cambodia, a key ASEAN member. While Thailand has emphasized the importance of resolving the conflict through existing bilateral mechanisms – primarily the International Court of Justice – the process has been slow and unsatisfactory to Phnom Penh. The Secretary-General of ASEAN, Dato Seri Aminah Hassan Ali, has repeatedly called for a peaceful resolution, but the fundamental disagreement regarding sovereignty continues to hamper ASEAN’s ability to address the issue effectively.
Looking ahead, the next six months will likely see intensified diplomatic efforts, primarily focused on mediation by ASEAN and external actors like China and the United States. However, the core issue of territorial claims remains unresolved. Longer term, the competition between Thailand and Laos for regional influence is expected to accelerate. Within 5-10 years, the region’s strategic landscape will be significantly altered, with China’s influence potentially solidifying, potentially creating a multi-polar ASEAN. A significant factor will be the outcome of the International Court of Justice’s ruling, which, regardless of its outcome, will exert considerable pressure on both parties to engage in substantive dialogue. Furthermore, the evolving security situation in Myanmar, and the potential for spillover effects in the Mekong region, adds another layer of complexity to an already precarious situation. The ability of Thailand and Laos, along with other regional players, to navigate these challenges will undoubtedly shape the future of the Mekong River and its surrounding nations. The key now lies in proactive diplomacy and a commitment to upholding the principles of international law – a capacity that, based on recent events, appears increasingly strained.