Vietnam at the crossroads

Wary Communist Party loosens its hold grudgingly

By John Christensen
CNN Interactive

Ho Chi Minh City residents travel by bicycle and motorbike -- the city's most popular forms of transportation

(CNN) -- Visitors to Ho Chi Minh City in southern Vietnam are struck by its frenetic pace, by the modern skyscrapers, by stores bulging with goods and by streets teeming with industrious Vietnamese.

At night young men and women cruise the neon-lit streets of the former Saigon on shiny Honda motorbikes, gathering in coffee bars, discos and restaurants where they are serenaded by the beeps and chirps of their cell phones.

Despite the signs of prosperity, however, Vietnam is at a critical crossroads in its existence.

ANALYSIS 'Hanoi Hilton' now holds only painful memories

• Overview • U.S.-Vietnam ties • America at 25 • Remembering Kent State • A soldier's diary • The boat people • Covering two wars • Dien Bien Phu • About the War • Vietnam Guide • Photo Gallery • Postcards • Vietnam's Neighbors

The economy has slowed almost to a halt, many overseas investors have pulled out, unemployment is high, per capita income -- $333 a year in 1998 -- is one of the lowest in the world, and young people are increasingly discontented. In rural areas, where four out of five Vietnamese live, fresh water and electricity are often luxuries.

"The country is at a watershed in terms of further development," says William J. Duiker, emeritus professor of history at Penn State University and a renowned authority on Vietnam. "Until the government makes some tough decisions, there are legitimate questions about whether Vietnam will make rapid progress in the future."

"It is faced with some pretty serious obstacles, economic, social and political," agrees another expert on Vietnam, Robert K. Brigham, assistant professor of history at Vassar College. "But I'm not that pessimistic. If you take the long view, which you must do, I think there's reason to be optimistic."

'Just another holiday'

The majestic Hanoi Opera House is one of many reminders of the city's French colonial past

Vietnam is a lush, tropical country with coastal lowlands, mountains in the north and central regions, river deltas and beautiful beaches. Where Ho Chi Minh City manifests non-stop capitalist hustle, Hanoi, the capital, has wide, tree-lined boulevards, French colonial architecture and a slower, Old Asia charm.

Domestic air service is infrequent and expensive, trains are hot and dirty and the roads are terrible -- travel guides recommend four-wheel-drive vehicles outside the major cities. But visitors are pleasantly surprised by the warmth and industriousness of the Vietnamese.

"They are delightful," says Duiker. "The tours I've taken there have been delightfully surprised at how friendly the people are. It's truly a fascinating place to visit."

The lack of animosity toward Americans can be explained. More than half of the country's 77 million people were born after the Vietnam War ended in 1975 and have no memory of it. Although the government has staged elaborate celebrations to commemorate the 25th anniversary of the Communist victory, many Vietnamese are unmoved.

"It's just another holiday," a college student told the Pacific News Service. "It means I can go on a vacation with my girlfriend and no school for three days."

Economic restructuring

After the Vietnam War -- the Vietnamese call it the American War -- ended in 1975, the Communists renamed Saigon and unified North and South Vietnam as the Socialist Republic of Vietnam.

The Vietnam War took the lives of some 58,000 U.S. soldiers and millions of Vietnamese, and disrupted the region's agriculture, business and industry

In late 1978 troops were sent into Cambodia to replace the Khmer Rouge government with a pro-Vietnamese government. But Vietnamese troops were then required to defend that government against attacks by the Khmer Rouge and other Cambodian groups.

Shortly thereafter, in early 1979, Vietnam fought a short, bloody border war with China, which wanted to punish the Vietnamese for interfering in Cambodia.

At home, in an attempt to eliminate all vestiges of capitalism, the government banned private trade, seized the goods of an estimated 50,000 retailers, confiscated land and alienated the prosperous Chinese business community in the south.

A "command economy" was instituted, weekly Communist indoctrination sessions were held for everyone and permits were required for all travel, inside the country and out.

Over the next several years, hundreds of thousands of people fled Vietnam, often by sea. The loss of these "boat people" -- especially the intellectuals, professionals and entrepreneurs -- eventually helped bring the country's economy to a standstill.

Chastened, the government in 1986 finally launched a plan for restructuring the economy known as doi moi (renovation). Chief among its features was the return of competition and private enterprise.

A 23-year-old shop owner said the reforms allowed her and two siblings to open a profitable textile shop, something they could not have done before.

"If we hadn't opened up," she told the New Straits Times of Malaysia, "I would have had to become a teacher. I would have earned much less."

A stunning refusal

After some initial success in attracting international investors in a variety of businesses, and in significantly upgrading tourism, the economy has slumped in recent years.

A Vietnamese factory makes clothes for consumers in Southeast Asia

The government's response has been to ease up on such things as requiring international companies doing business in Vietnam to have a Vietnamese partner. It is also allowing local officials to authorize many business deals, rather than forcing them through cumbersome bureaucratic processes.

But many investors are waiting for the economic climate to improve even further.

Roughly 60 percent of the country's 6,000 state-owned enterprises are not only inefficient and unprofitable, they are also losing jobs. The economy also suffers from widespread corruption, high corporate and personal income taxes and a banking system that needs reform.

As if these problems were not enough, the leadership stunned the financial world in September 1999 by refusing to sign a trade agreement with the United States after nine rounds of negotiations. Signing would have been a major step in the reconciliation between the countries. More importantly it would have signaled that Vietnam was ready to compete in the global marketplace.

The party leaders are thought to have feared the rapid urbanization, crime and drug abuse that have occurred when other socialist countries turned to capitalism. They may also have feared that such a move would weaken their grip on the country.

"They have minimal experience in the international marketplace and for entering the technological age," says Duiker. "A lot of the problem is that after 1975 the party leadership was isolated for 15 of 20 years and doesn't have the experience and broader outlook that was present in most other countries in the region."

Without the trade agreement, a U.S. official told Asian Business magazine, "They are going to become like Burma or Laos. Maybe not as bad, but they are going to be in everyone's wake."

'A high quality of life'

Vietnam is controlled by the Communist Party's Politburo, a group of 19 elderly men whose attitudes were shaped by the struggle for independence against the French and then the Americans.

Reformers have existed in the party, but they have not always been welcome. A retired general who encouraged the party to cleanse itself was expelled, and even those who have succeeded are countered by hard-line conservatives.

Brigham acknowledges the party has been the problem, but says, "It might also be part of the solution." He has seen what he believes is "a new phase in the Hanoi government."

In late 1997, Phan Van Khai replaced Vo Van Kiet as prime minister, a development Brigham saw as a reassuring indication that the party leadership was not backsliding. Having met both men, Brigham says, "I'm impressed with them. I think they're pretty pragmatic, but they still have Vietnam's interests at heart."

A government advertisement in Ho Chi Minh City urges Vietnamese people to move away from agriculture and focus on industrialization

Brigham, who visits Vietnam five or six times a year, points out that the country's $333 per capita income is misleading. The Vietnamese receive food subsidies, free education and free health care. The literacy rate -- about 90 percent -- is the envy of the region.

"My friends in Hanoi have an attractive intellectual life," he says. "There is history and culture in the city, and many people in the countryside have a sense of personal relationship with the land. They have a high quality of life, an interesting quality of life."

Forward thinking

Dissidents also have "interesting" lives, although the quality is debatable. Monks, priests and intellectuals who oppose government policies have been harassed, attacked and jailed.

Religion is discouraged: Those wishing to join a religious group must have government permission. In September 1999 leaders of Vietnam's leading religions -- Buddhism, Catholicism, Protestantism and Cao Dai -- sent an unprecedented letter to the government demanding that it respect religious freedom and return religious property seized over the past decades.

The government has responded by sticking grimly to its policies of the past. A United Nations representative who visited Vietnam was thwarted in his attempts to investigate religious repression. And in late March 2000 police reportedly beat and seized members of the neo-Buddhist Hoa Hao society in the southern part of the country.

"Those who speak out will suffer the consequences," Duiker says. "They are harassed or forced into silence. Their writings are silenced or they lose their jobs or they are dismissed from the party, and some are even put in jail."

Reform: subtle and nuanced

There are no opposition parties in Vietnam, and no plans for any, but Brigham says "political reform goes on there every day in subtle, nuanced ways."

The National Assembly, for example, passed a law a few years ago forbidding officials from investing in "rent-seeking ventures," a stroke aimed at reducing corruption.

"That's pretty forward-thinking," he said.

Another change eases restrictions on who can hold housing permits. Indoctrination classes have been terminated. Domestic travel permits are no longer required.

All of which is to say that Vietnam is changing, but at its own pace, and on terms still dictated by the Communist Party.

"If you expect change as we recognize it in the West, you'll be frustrated by the pace," says Brigham. "But it's a dynamic society. I hope Vo Van Kiet and the other reformers keep their courage up."