Hanoi's Coming-Out Party

July 1, 2008

Hanoi's Coming-Out Party

Once a fierce adversary, Vietnam’s booming economy is making it a global player. Washington is starting to take note and forge stronger ties—and that’s a good decision.

Today the United States hands over the presidency of the UN Security Council to Vietnam. Exactly one week earlier, Vietnamese Prime Minister Nguyen Tan Dung paid an official visit to the White House. This has become somewhat of an annual ritual since 2005, when Phan Van Khai became the first Vietnamese head of government to be welcomed there since the Vietnam War. Although the timing of the two events was coincidental, they show that Washington and Hanoi are growing closer-and that Vietnam is becoming a major global player. Now, it seems, would be a good time to forge stronger ties with our former adversary.

Writing in the Wall Street Journal Asia in late May, Senators John McCain (R-AZ) and Joseph Lieberman (I-CT) made the case for engaging Vietnam:

The next American president will inherit a set of alliances and friendships in Asia that are already in good shape . . . Our core alliances with Japan, South Korea and Australia have never been stronger; relations with old friends in Southeast Asia like Singapore are excellent; and promising partnerships have been forged in recent years with friends like India, Vietnam and Indonesia. The next president must expand on these achievements with an ambitious, focused agenda to further strengthen and deepen these relationships. Putting our alliances first, and bringing our friends into greater partnership in the management of both regional and global affairs, is key to meeting the collective challenges we face in a changing Asia and in a changing world.

That's sound, realist advice for Washington, where some lawmakers see Vietnam exclusively through the lens of its human-rights record. It's also good news for Hanoi, which has come a long way since the fall of Saigon in 1975. For the better part of the two decades after the U.S. withdrawal, Vietnam was an economic basket case. Its best-known export was its woebegone citizens, millions of which risked their lives fleeing political repression and economic stagnation aboard rickety vessels-many of which ended up at the bottom of the South China Sea. But since the government abandoned collectivization for market forces in 1986, the transformation has been dramatic. Things have improved so much that many of the "boat people," and even more of their offspring, have returned.

On the brink of famine when the Soviet Union ceased its subsidies, Vietnam is today the world's second-largest rice exporter, second-largest coffee producer and largest exporter of robusta beans. Over the past decade, annual economic growth has averaged 7.5 percent, driven by manufacturers ranging from small textile firms to Intel's new $1 billion semiconductor facility. And unlike their Chinese neighbors, the Vietnamese have done a fairly credible job of poverty reduction and maintaining social cohesion. For example, Vietnam's Gini coefficient, a measure of wealth inequality, has remained steady around thirty-seven, whereas China's, currently ten points higher, has edged upward. The explanation seems to be the sustained expansion of Vietnam's middle class, coupled with a drop in the poverty rate to under 14 percent last year from more than 75 percent in 1990-an achievement the World Bank called "one of the most successful anti-poverty campaigns ever." Some 90 percent of homes now have power; almost all children at least begin secondary education, with some two-thirds completing it; a national unemployment-insurance plan is due to be introduced next year.

On a macro level, the country's currency reserves have been literally doubling by the year. There is little doubt that the government will meet its goal of turning Vietnam into a medium-income country by 2010 and probably succeed at transforming it into a modern industrial nation by a decade after that. And unlike most other industrial nations, Vietnam is not in an energy-deficit situation: the country accounts for only 1 percent of the oil demand in the Asia-Pacific region, while producing 4.5 percent of its supply in nine offshore fields (a tenth will begin production in the coming months). According to the U.S. Energy Information Administration, the 600 million barrels of proven reserves which Vietnam is usually credited with is likely to increase significantly in coming years, since the country's waters are relatively unexplored. The Vietnam Oil and Gas Corporation (PetroViet) has begun using its earnings to diversify its position by buying modest stakes in other emerging producers.

More recently, Vietnam has begun to seek a diplomatic profile commensurate with its burgeoning economic heft. In Senate testimony earlier this year, Assistant Secretary of State for East Asian and Pacific Affairs Christopher Hill described Vietnam as "increasingly influential in the Association of Southeast Asian Nations (ASEAN) and the Asia-Pacific Economic Cooperation (APEC)." In 2006, Hanoi hosted the APEC summit. At the beginning of 2007, Vietnam acceded to the World Trade Organization. Vietnam has also become actively involved in a wide range of issues at the UN, some quite far afield from its traditional spheres of interest. Vietnam's UN ambassador, Le Luong Minh, even chairs the Security Council sanctions committee overseeing Sierra Leone.

In March, Hanoi broke with its traditional foreign-policy emphasis on abstaining from encroachments on the sovereignty of third-party states by voting for a new round of sanctions against Iran. A month later, in another departure from Vietnam's past policy of noninterference, Deputy Foreign Minister Pham Binh Minh called for increased financial and logistical support for peacekeeping forces in Sudan's Darfur region and the former Somalia. Prime Minister Dung has affirmed that Vietnam is prepared to assume its place in international peacekeeping. And not only did Vietnam participate in the international donor conference for Iraq held in Stockholm in late May, its UN representatives backed the U.S.-drafted Security Council statement on the situation there during debates last month.

A year ago, I argued here that Vietnam's new prominence presents the United States with "a unique opportunity not only to promote our ideals about free peoples and markets in a society that is opening up, but also to advance our national interests in a geostrategically pivotal region." The private sector is already leading the way: in 2006, bilateral U.S.-Vietnam trade totaled $9.6 billion and more than seventy-five thousand Americans visited the Southeast Asian country. There are encouraging signs that some in government, especially in the Pentagon, are starting to seize the strategic initiative.

In June 2005, Vietnam signed an agreement allowing it to participate in America's International Military Education and Training programs for the first time, subsequently receiving funds for English courses for Vietnamese military officers. In June 2007, Vietnamese observers took part for the first time in annual naval exercises organized by the U.S. Navy with six other Southeast Asian states (Brunei, Indonesia, Malaysia, the Philippines, Singapore and Thailand). Last year, Vietnam hosted five U.S. Navy vessels, including two ships from the Seventh Fleet, the first time armed American vessels had entered the country during peacetime. Interestingly, returning home from a port call in November, two of those American ships sought refueling and refuge from an approaching storm in Hong Kong's Victoria Harbor. They were denied entry by Chinese authorities.

After meeting with President Bush last week, Prime Minister Dung said his government "took note with great pleasure of rapid development in the Vietnam-U.S. relationship toward a friendly and constructive partnership, multifaceted cooperation on the basis of equality and mutual respect and mutual benefit." No matter who wins in November, the next administration will need to build on this foundation, reinforcing ties with a country which was a dogged adversary in war but which, in peace, has proven an increasingly significant geopolitical actor.


J. Peter Pham is Director of the Nelson Institute for International and Public Affairs at James Madison University and a senior fellow at the Foundation for the Defense of Democracies.