JaiMin
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Earlier this year on the sunny morning of April 30, several thousand members of the Communist Party of Vietnam, retired and current military personnel, and select foreign guests assembled in the center of Saigon (officially known as Ho Chi Minh City) to commemorate the 40th anniversary of Vietnam’s political unification. In the run-up to the event, party organizers had pulled out all the stops. An extended holiday was announced. Television and print media bombarded their audiences with interpretations of the anniversary’s meaning. Neighborhood loudspeakers across the country blared patriotic tunes and instructed households to display the nation’s flag. Propaganda brigades replaced billboard advertisements for soap powder and motorbikes with words and images honoring the “total victory” and the “complete liberation” of the south of Vietnam. The official ceremonies took place where the final moments of Vietnam’s four decades of anti-colonial struggle played out, just outside the gates of the former presidential palace of the American supported regime. Some of those present had stood in the same spot 40 years ago as the tanks of the Vietnam People’s Army crashed through the gates. A military band played the anthem of the Socialist Republic of Vietnam and Prime Minister Nguyen Tan Dung delivered a commemorative address. His remarks struck notes of solemnity and pride, invoking the profound sacrifices and pain the day recalled. The speech reflected the Communist Party’s confidence in its own version of history. The prime minister did not pass over American forces’ “innumerable barbarous acts,” but neither did he dwell on that theme. Notably absent from his remarks were even the faintest conciliatory gestures to the millions of Vietnamese who sacrificed and endured suffering on what some are inclined to call “the side that did not win.” It was a speech addressed largely to the party and its loyalists. In these respects, it was perhaps fitting that the official commemorations were held in a secure area. The country’s “liberators” were protected from its general public. Outward appearances have never been a particularly good guide for understanding Vietnam. They have been even less useful for understanding the political processes animating its ruling party. And yet it is clear that these are extraordinary times for the country. Four decades after the end of the American war, the Vietnamese and their ruling party confront a series of grand dilemmas about the country’s economic governance and its political direction; about the present scope and future of civil and social rights; and, not least, about its foreign relations and national security. By considering developments across each of these fields, we can begin to appreciate the complexities and contradictions facing the Socialist Republic, and better understand the mix of restlessness and hope permeating a country that appears finally to be emerging from its past.
FLAGGING PERFORMANCE
As recently as the early 1990s, Vietnam was overwhelmingly agrarian, largely isolated from world trade, and among the poorest countries in Asia. Today it is industrializing and globalizing, and has climbed into the crowded ranks of the world’s lower-middle-income nations. Its geographic location, young and inexpensive labor force, and improving access to regional and world markets make Vietnam an attractive destination for foreign investment, particularly for export-oriented industries. Saigon and its environs emerged first as the motor of the country’s industrial growth and accounted for some 40 percent of GDP by the late 1990s. Since then, industrialization has taken root in and around Hanoi and in a handful of other localities, while the rest of the country has taken on an increasingly peri-urban appearance. The nation’s economic performance and industrialization have been widely hailed as remarkable. From 1990 to 2010, Vietnam’s economy grew at an average annual rate of 7 percent—second only to China. Poverty has declined even more steeply than it has in China. In 1993 an estimated 59 percent of Vietnamese lived on less than one dollar a day. Today, that figure is below 15 percent. Brisk economic growth has permitted rapid gains in living standards, albeit from an extremely low base and unevenly across different regions of the country. Until fairly recently, inequalities in Vietnam were considered modest in comparison with other countries, including China, owing in part to relatively egalitarian distributions of land and essential services. Today, inequalities have intensified and growth remains geographically uneven. Even so, most Vietnamese have experienced significant improvements in their standard of living. This is reflected across a range of socioeconomic indicators, from household income to life expectancy. Economic growth has also permitted broader access to essential goods and services such as education and health, clean water, and electricity. In these respects, Vietnam’s economic turnaround within the past quarter-century has been remarkable indeed. Given its location and other fundamentals, the country is virtually assured of growing at 4-6 percent per year—rates most countries would envy. But all is not well. Since 2008, growth has slowed considerably. And if analysts, scholars, and policy makers agree on one thing, it is that Vietnam has performed below its potential over the past 10 years.
DREAMS AND BUSTS
A hazardous mix of undisciplined lending, opaque governance, and ill-conceived planning has done the country considerable harm. One manifestation is perhaps best characterized as “chaebol dreaming”—Vietnamese leaders’ tendency to obsess over replicating South Korea’s unique brand of rapid industrialization without having its nearly unique conditions in place. This dream has produced major busts. Among the most spectacular was the multi-billion-dollar bankruptcy of Vinashin, a state-owned shipbuilding venture and pet project of Dung’s. Vinashin’s collapse in 2010 plunged Vietnam’s economy into major difficulties and nearly cost Dung his job. Meanwhile, state planning for infrastructure projects has often constrained rather than aided growth. Two examples include a decision to place an expensive oil refinery in central Vietnam, far from demand, and the failure to develop adequate port facilities—instead, small and redundant ports were built along the entire coast. To make matters worse, state projects (with foreign investments or otherwise) and public services have been breeding grounds for corruption. The need for a more independent press is clear. In one recent case, the Ministry of Culture demanded the removal of the editor of a small circulation newspaper for retired state workers. His offense was a series of articles on a senior member of the government’s anti-corruption committee who was found to have used false claims to acquire multiple homes across several provinces. It is precisely this combination of political privilege and weak accountability that is constraining growth. Mismanagement of state enterprises is systemic. The state-controlled banking sector has only recently begun to rein in its prodigious lending, but not before it contributed to widespread over investment, under performance, and losses. Yet authorities still favor the state sector, both as a source of government revenue and as an opportunity for moneymaking, over and under the table. The country’s corruption, pervasive on both grand and petty scales, extends into the police force and social services, undermining social trust and limiting the access of those in lower-income groups to the services they need, such as education and health. Constraints on the supply of skilled labor have also limited growth. While the education system has expanded rapidly, longstanding weaknesses in higher education and in research and design have left Vietnam with few of the innovative capacities that facilitated the rapid industrialization of other countries in the region, including South Korea, Taiwan, and China itself. These weaknesses have limited Vietnam’s ability to move into the production of higher-value-added manufactured goods. Apparel, footwear, and frozen shrimp have their limits. The growing tourism sector will help pay the bills and create jobs, but will not suffice. Foreign investment in Vietnam illustrates the country’s promise but also its limitations. After Intel decided to invest $1 billion in a microchip factory in 2010, it soon discovered that workers needed extensive remedial training in the areas that Vietnam’s education system fails to cultivate: ready-to-use skills, critical thinking, problem solving, teamwork, and communication. If Vietnam is to succeed, it will need to do a better job of teaching those things at home.
THE COSTS OF PRIVILEGE
One might question whether these weaknesses in economic governance are overstated. At issue is what has been achieved versus what is possible— and whether Vietnam can learn from its mistakes. On the plus side, the economy continues to grow. Foreign investment is up as technology companies continue to make big bets on the country. Vietnam’s entrance into the Trans-Pacific Partnership, a major trade agreement under negotiation, as well as a bilateral 2015 trade pact with the European Union, promises to boost investment further and improve the access of Vietnam-based exporters to regional and world markets. A more skeptical view is that Vietnam appears to be needlessly settling into a lower-growth trajectory and a future of lingering socioeconomic shortcomings. Although poverty rates have declined over two decades, the poverty line itself is set low by international standards. In reality, large segments of the population live in a state of perpetual vulnerability, as is characteristic of low- and lowermiddle-income countries around the world. To its credit, Vietnam’s government has consistently promoted improvements in access to essential services such as education and health. But access to nominally public services beyond a basic level of provision requires formal and informal out-ofpocket payments that effectively exclude lowerincome households. Across the country the costs of services, housing, and food have continued to rise at a faster rate than incomes. Beneath the larger picture of economic growth and inefficiency is a gnawing sense that a toxic mix of self-interest, political privilege, and opaque governance is harming the country’s growth prospects. While elite privilege is hardly new to Vietnam, the spectacle of Bentley automobiles amid prevailing social vulnerability is difficult to square with the official ideology of social justice. Even many within the Communist Party accept that Vietnam’s economic dilemmas have deep political roots.
INTRA-PARTY PLURALISM?
Vietnam’s political system is complex and opaque, limiting the ability of even well-informed citizens to understand how their country works. What is clear is that elite members of the Communist Party are engaged in vigorous competition over the direction of the party and its approach to governance. The fact that Vietnam is not China deserves emphasis. Elite politics in Vietnam remains consensus-based. But the restrained approach of the past has given way to a more open struggle, albeit one not discussed in the state-controlled media. While Vietnam has its reform and conservative camps, the dividing lines are complicated, taking the form of competitive interest-group politics that pits certain sectors and individuals against one another in a constant struggle for influence. Defenders of the party reject this account. Yet even friendly critics express concern that the influence of self-interested groups within the Communist Party undermines the coherence of its leadership and thereby harms the country’s interests. While most aspects of the country’s elite politics remain opaque, rivalries within the Communist Party’s leadership are more transparent than even a few years ago. Since 2011, elite competition within the party has produced unprecedentedly public moments of political brinkmanship. The most striking instances of this phenomenon occurred at the party’s Sixth Plenum, in October 2012, at which the Politburo asked the Party Central Committee to vote on whether to subject the scandal-tainted prime minister to disciplinary action. Demonstrating both its independence and Dung’s considerable influence, the Central Committee resoundingly rejected the request, and required the Politburo to report on its own collective shortcomings.
Although the Communist-controlled National Assembly in 2013 reaffirmed the principle of eternal one-party rule, it did so after a drawn-out and very public debate about the adequacy of the constitution—a discussion energized by longstanding party members who are largely immune from direct prosecution. This debate raised the question of whether we are observing a breakdown of party discipline or the maturation of twenty-first-century intra-party pluralism. Dung, who has been prime minister since 2006, is something of an enigma himself. Damaged by his association with billion-dollar busts in the state sector and mistrusted by regime conservatives, he is nonetheless Vietnam’s most liberal and articulate statesman. At present, Dung is vying with others for a leading position in the party’s 12th Congress, which will convene in 2016. Whether he will succeed is a question now gripping the Vietnamese political scene.
[To be cont...]
FLAGGING PERFORMANCE
As recently as the early 1990s, Vietnam was overwhelmingly agrarian, largely isolated from world trade, and among the poorest countries in Asia. Today it is industrializing and globalizing, and has climbed into the crowded ranks of the world’s lower-middle-income nations. Its geographic location, young and inexpensive labor force, and improving access to regional and world markets make Vietnam an attractive destination for foreign investment, particularly for export-oriented industries. Saigon and its environs emerged first as the motor of the country’s industrial growth and accounted for some 40 percent of GDP by the late 1990s. Since then, industrialization has taken root in and around Hanoi and in a handful of other localities, while the rest of the country has taken on an increasingly peri-urban appearance. The nation’s economic performance and industrialization have been widely hailed as remarkable. From 1990 to 2010, Vietnam’s economy grew at an average annual rate of 7 percent—second only to China. Poverty has declined even more steeply than it has in China. In 1993 an estimated 59 percent of Vietnamese lived on less than one dollar a day. Today, that figure is below 15 percent. Brisk economic growth has permitted rapid gains in living standards, albeit from an extremely low base and unevenly across different regions of the country. Until fairly recently, inequalities in Vietnam were considered modest in comparison with other countries, including China, owing in part to relatively egalitarian distributions of land and essential services. Today, inequalities have intensified and growth remains geographically uneven. Even so, most Vietnamese have experienced significant improvements in their standard of living. This is reflected across a range of socioeconomic indicators, from household income to life expectancy. Economic growth has also permitted broader access to essential goods and services such as education and health, clean water, and electricity. In these respects, Vietnam’s economic turnaround within the past quarter-century has been remarkable indeed. Given its location and other fundamentals, the country is virtually assured of growing at 4-6 percent per year—rates most countries would envy. But all is not well. Since 2008, growth has slowed considerably. And if analysts, scholars, and policy makers agree on one thing, it is that Vietnam has performed below its potential over the past 10 years.
DREAMS AND BUSTS
A hazardous mix of undisciplined lending, opaque governance, and ill-conceived planning has done the country considerable harm. One manifestation is perhaps best characterized as “chaebol dreaming”—Vietnamese leaders’ tendency to obsess over replicating South Korea’s unique brand of rapid industrialization without having its nearly unique conditions in place. This dream has produced major busts. Among the most spectacular was the multi-billion-dollar bankruptcy of Vinashin, a state-owned shipbuilding venture and pet project of Dung’s. Vinashin’s collapse in 2010 plunged Vietnam’s economy into major difficulties and nearly cost Dung his job. Meanwhile, state planning for infrastructure projects has often constrained rather than aided growth. Two examples include a decision to place an expensive oil refinery in central Vietnam, far from demand, and the failure to develop adequate port facilities—instead, small and redundant ports were built along the entire coast. To make matters worse, state projects (with foreign investments or otherwise) and public services have been breeding grounds for corruption. The need for a more independent press is clear. In one recent case, the Ministry of Culture demanded the removal of the editor of a small circulation newspaper for retired state workers. His offense was a series of articles on a senior member of the government’s anti-corruption committee who was found to have used false claims to acquire multiple homes across several provinces. It is precisely this combination of political privilege and weak accountability that is constraining growth. Mismanagement of state enterprises is systemic. The state-controlled banking sector has only recently begun to rein in its prodigious lending, but not before it contributed to widespread over investment, under performance, and losses. Yet authorities still favor the state sector, both as a source of government revenue and as an opportunity for moneymaking, over and under the table. The country’s corruption, pervasive on both grand and petty scales, extends into the police force and social services, undermining social trust and limiting the access of those in lower-income groups to the services they need, such as education and health. Constraints on the supply of skilled labor have also limited growth. While the education system has expanded rapidly, longstanding weaknesses in higher education and in research and design have left Vietnam with few of the innovative capacities that facilitated the rapid industrialization of other countries in the region, including South Korea, Taiwan, and China itself. These weaknesses have limited Vietnam’s ability to move into the production of higher-value-added manufactured goods. Apparel, footwear, and frozen shrimp have their limits. The growing tourism sector will help pay the bills and create jobs, but will not suffice. Foreign investment in Vietnam illustrates the country’s promise but also its limitations. After Intel decided to invest $1 billion in a microchip factory in 2010, it soon discovered that workers needed extensive remedial training in the areas that Vietnam’s education system fails to cultivate: ready-to-use skills, critical thinking, problem solving, teamwork, and communication. If Vietnam is to succeed, it will need to do a better job of teaching those things at home.
THE COSTS OF PRIVILEGE
One might question whether these weaknesses in economic governance are overstated. At issue is what has been achieved versus what is possible— and whether Vietnam can learn from its mistakes. On the plus side, the economy continues to grow. Foreign investment is up as technology companies continue to make big bets on the country. Vietnam’s entrance into the Trans-Pacific Partnership, a major trade agreement under negotiation, as well as a bilateral 2015 trade pact with the European Union, promises to boost investment further and improve the access of Vietnam-based exporters to regional and world markets. A more skeptical view is that Vietnam appears to be needlessly settling into a lower-growth trajectory and a future of lingering socioeconomic shortcomings. Although poverty rates have declined over two decades, the poverty line itself is set low by international standards. In reality, large segments of the population live in a state of perpetual vulnerability, as is characteristic of low- and lowermiddle-income countries around the world. To its credit, Vietnam’s government has consistently promoted improvements in access to essential services such as education and health. But access to nominally public services beyond a basic level of provision requires formal and informal out-ofpocket payments that effectively exclude lowerincome households. Across the country the costs of services, housing, and food have continued to rise at a faster rate than incomes. Beneath the larger picture of economic growth and inefficiency is a gnawing sense that a toxic mix of self-interest, political privilege, and opaque governance is harming the country’s growth prospects. While elite privilege is hardly new to Vietnam, the spectacle of Bentley automobiles amid prevailing social vulnerability is difficult to square with the official ideology of social justice. Even many within the Communist Party accept that Vietnam’s economic dilemmas have deep political roots.
INTRA-PARTY PLURALISM?
Vietnam’s political system is complex and opaque, limiting the ability of even well-informed citizens to understand how their country works. What is clear is that elite members of the Communist Party are engaged in vigorous competition over the direction of the party and its approach to governance. The fact that Vietnam is not China deserves emphasis. Elite politics in Vietnam remains consensus-based. But the restrained approach of the past has given way to a more open struggle, albeit one not discussed in the state-controlled media. While Vietnam has its reform and conservative camps, the dividing lines are complicated, taking the form of competitive interest-group politics that pits certain sectors and individuals against one another in a constant struggle for influence. Defenders of the party reject this account. Yet even friendly critics express concern that the influence of self-interested groups within the Communist Party undermines the coherence of its leadership and thereby harms the country’s interests. While most aspects of the country’s elite politics remain opaque, rivalries within the Communist Party’s leadership are more transparent than even a few years ago. Since 2011, elite competition within the party has produced unprecedentedly public moments of political brinkmanship. The most striking instances of this phenomenon occurred at the party’s Sixth Plenum, in October 2012, at which the Politburo asked the Party Central Committee to vote on whether to subject the scandal-tainted prime minister to disciplinary action. Demonstrating both its independence and Dung’s considerable influence, the Central Committee resoundingly rejected the request, and required the Politburo to report on its own collective shortcomings.
Although the Communist-controlled National Assembly in 2013 reaffirmed the principle of eternal one-party rule, it did so after a drawn-out and very public debate about the adequacy of the constitution—a discussion energized by longstanding party members who are largely immune from direct prosecution. This debate raised the question of whether we are observing a breakdown of party discipline or the maturation of twenty-first-century intra-party pluralism. Dung, who has been prime minister since 2006, is something of an enigma himself. Damaged by his association with billion-dollar busts in the state sector and mistrusted by regime conservatives, he is nonetheless Vietnam’s most liberal and articulate statesman. At present, Dung is vying with others for a leading position in the party’s 12th Congress, which will convene in 2016. Whether he will succeed is a question now gripping the Vietnamese political scene.
[To be cont...]
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