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Laos finding isolation far from splendid

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Old Indochina hands like to talk of the pre-revolutionary days of 1960s Laos when the economy was so tiny, the currency was balanced every Friday afternoon by a World Bank official with a briefcase full of dollars.

If only it were so simple now, they say.

The belief that Laos' isolated, subsistence economy would give it a cushion to simply hibernate from the worst impacts of the regional crisis is fast fading, diplomats, investors and financiers warn.

Just as other nations start to recover, Laos is facing new and worsening problems and few signs of co-ordinated effort from its Communist Party rulers in tackling them.

The currency, the kip, is continuing to tumble against the US dollar and Thai baht on a burgeoning black market. Last weekend it was reaching 7,500 to the dollar - 1,500 kip above the official rate and 6,600 above its price two years ago.

And with freshly-minted notes emerging from Vientiane bank booths, there is little doubt far too much is being printed to reverse the cycle.

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