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Vietnam Today Market Leninism

The global economy is forcing Hanoi to Tiptoe down a free market track. But can an aging, calcified politburo control the speed of change and keep business from reforming itself out of business

By Ben Bradlee Jr., Globe Staff

The Boston Globe – April 30, 2000, Sunday, Third Edition

HANOI – At certain times and in certain places, Vietnam’s capital still feels like a Cold War bunker. Vladimir Ilyich Lenin himself looms over a small park in the center of Hanoi. Street–corner loudspeakers play tinny music and blare out official pronouncements. Posters and banners exhort apple–cheeked workers to give their all for the national communist good.

But walk a block or two and you will pass such emblems of capitalism as a branch of the Bank of America, a store selling TV satellite dishes, and a travel agency advertising a 12–day Las Vegas getaway for $2,199. There are even Internet Cafes. Lenin and Las Vegas – communism and capitalism – live side by side in modern Vietnam. It is not always an easy coexistence, but even diehard Marxists here believe there is no other choice. The challenge for the regime a quarter–century after its army drove out the most powerful capitalist country on earth is to change, to embrace market reforms, but in doing so, not to lose control.

Unable to stay in its cocoon in the post–communist, Internet age, Hanoi has been forced to dip its toe in free–market waters and is grappling with such heretofore heretical concepts as competition, private banking, marketing, free trade, and foreign investment. It’s even considering launching a stock market.

But all this change and looking ahead doesn’t mean Vietnam won’t look back with pride on a day like today, the 25th anniversary of the fall of Saigon, now called Ho Chi Minh City.

“We have won two wars against the foreign aggressors,” said Dao Duy Quat, the throwback spokesman for the Central Committee of the Communist Party. “It’s a big achievement for the nation. The celebration will be to encourage the people in the transformation of the country.”

For US officials here, however, today is nothing to dwell on. “As far as I’m concerned, it’s a non–

event,” said Douglas “Pete” Peterson, the American ambassador and former Air Force pilot who was a prisoner of war in Hanoi for six and a half years. “We’re more focused on the future.”

Peterson’s vision of Vietnam’s future and Quat’s notion of his country’s transformation are melding in ways that would have been unthinkable just a generation ago.

The people of Hanoi live comfortably with the relics of a war that touched almost every family in the country. On a lake in the city is a plaque marking the spot where Senator John McCain was shot down on Oct. 26, 1967, then captured and made a prisoner of war for over five years. The plaque reads: “The Army and the people of Hanoi captured alive the criminal John Sidney McCain of the American Air Force, pilot of an A4 plane that was shot down.”

There is also the seedy and fraying Army Museum with signs posted in indifferent English, (“downstairs and right for more watching”) and the wreckage of a B–52 sticking out of a lake in the Ngoc Ha section of the city.

A part of the famed Hoa Lo Prison, better known to Americans as the Hanoi Hilton, still stands next to a new apartment and office complex. The developers were going to level all of the prison, until Vietnamese veterans objected because many of them did time there too under French colonial rule.

Inside, murals depict imprisoned revolutionaries, and a plaque tells how more than 100 of them pulled off a daring escape through the city sewers in 1945.

As for Americana, there are selected photos of the US prisoners with captions again written in slapdash English. One shows McCain, Peterson, and three others with this comment: “Though having committed untold crimes on our people, but American pilots suffered no revenge once they were captured and detained.” McCain, now back in Hanoi to mark the 25th anniversary, would take issue with that, having recounted the severe beatings he experienced at the hands of his captors.

Nevertheless, it is clear that the war is receding in the minds of the Vietnamese as much as in the minds of Americans. For half the country born after 1975, the war is largely an irrelevant mystery, and most older people seem ready to turn the page. The government generally is too, but it still takes great pride in displaying various monuments, museums, and shrines to its glorious victory over America.

With detente, however, Hanoi is toning down its rhetoric. For example, it has decided on increasingly benign names for the war museum in Ho Chi Minh City. Once known as the Museum of American War Crimes, it evolved into the Museum of War Crimes and is now merely the Museum of War Remnants.

A mural outside the museum depicts Americans inflicting murder and mayhem. Inside, there are photographs of US soldiers torturing Vietnamese during interrogations, holding them down, wrapping towels around their heads, then pouring water over the towel. Other photos show a Vietnamese prisoner being pushed to his death from an airborn American helicopter, and a GI carrying a head and torso. A US Army recruiter would blanch here. It’s not exactly “Be all that you can be” stuff.

In the large courtyard outside the museum, visiting schoolchildren laugh and climb on captured American tanks as if they were on a jungle gym. They swing from cannons as if they were trapezes.

About an hour’s drive northwest, there are similar interplays of mirth and reflection, as visitors explore the famed caves of Cu Chi. Perhaps the foremost symbol of Vietnamese perseverance and tenacity, the 150–mile network of tunnels in Cu Chi was used by the Viet Cong as a base from which to wreak havoc on the US 25th Infantry Division headquartered there. The tunnels, once top secret, are now proudly on display as a tourist site.

Thousands of Vietnamese children are taken to Cu Chi to learn about the legendary deeds of their forebears. Tourists come too. Tours begin with a propaganda film in an open–air, thatched hut featuring guerrilla mnanequins under a flag and picture of Uncle Ho. The narrator calls Cu Chi “a place of gentle and simple peasants” who were killed by “ruthless” American bombs. It shows girl soldiers honored for being “American killer heroes,” and a sign of the times saying that “every house is responsible for killing one American.”

The first tunnel was built in 1948, and the network took 20 years to complete. Built on three levels, the caves are tight and narrow, made for the slight Vietnamese. But some have been enlarged for any adventurous American tourist who cares to brave bats and crawl around in the dirt on all fours. Inside the tunnels are such attractions as a surgical room, a VC meeting room, and a banquet room.

Outside, there’s an exhibit of various booby traps used against US soldiers, displayed in front of a 50–foot–long mural showing hapless Americans getting ensnared. Visitors complete the tour by going to a firing range where they can pick up a captured M–16 and squeeze off a few rounds into the bush.

After fighting wars almost nonstop for 45 years, it is really only in the last decade that Vietnam has come up for air, opened its doors to the world, and had time to dwell on issues like its economy. There was the revolution of 1945 and the subsequent nine–year struggle against the French; the American war lasted until 1975; then came the invasion and occupation of Cambodia from 1978–1989, sandwiched around a border mini–war with China in 1979.

According to government figures, 1.1 million North Vietnamese or Viet Cong soldiers died in the French and American wars alone, and 2 million civilians were killed. The United States lost some 58,000 servicemen in Vietnam.

The period between the end of the American war in 1975 and 1985 is known in Vietnam as “the 10 dark years” because it was dominated by continued war, the often harsh melding of North and South Vietnam – notably in “reeducation camps” – and widespread hunger.

Much of the hunger was caused when the state botched the buying and distribution of rice, the staple of Vietnamese society. Grain stockpiles were allowed to waste or spoil, and output fell sharply. There was rationing and hyperinflation.

So in 1986, in a major departure from socialist orthodoxy, Hanoi acknowledged that running farms as collectives had failed, and for the first time it allowed farmers to buy or lease the land they farmed, then keep and sell what they harvested. Production has risen steadily ever since, and Vietnam has gone from being an importer of rice 15 years ago to becoming the world’s second largest exporter today.

In December of 1986 the government – prodded by Mikhail Gorbachev’s early reforms in the Soviet Union and believing its rice success could be applied to other economic problems – announced a new policy of Doi Moi, or renovation. The reforms, sometimes called “Market Leninism,” were still more Lenin than market, but for a communist state, still significant.

While Doi Moi has been popular as far as it’s gone, the Communist Party remains in power largely on the strength of its improbable victories over the French and the Americans, wars always framed as glorious struggles against invading foreigners. The party is still linked to nationalism.

But relatively few Vietnamese find it necessary to be card–carrying party members any more. Most who do live in and around Hanoi. Nationwide, only about 2 million belong, out of a population of 77 million, and in Ho Chi Minh City, less than two percent do so.

The Doi Moi reforms and a more consumer–oriented society have made people less reliant on the state and made it less relevant. There’s a growing sense of disconnect between the government and its people – especially the majority under 25. The generation gap between the populace and the aging Politburo, most of whom are in their ’60s, is substantial.

“Eighty–five percent of the population is under 40, and the other 15 percent, their whole lives were war,” said Peterson. “They had no clue that while they were under the rock, the world redefined independence to interdependence. But that 15 percent controls the government.”

Though Cold War–era passions have cooled, some in the Politburo still believe there is a malevolent, Western (read American) plot afoot called “peaceful evolution” bent on using a market economy, and degenerate cultural influences to undermine Vietnamese society – to achieve in peace what it could not in war.

“It’s a highly spirited phrase [that] they’ve concluded is our policy,” said Peterson.“It is not. Our objective is for Vietnam to be successful economically. We don’t care what form of government they have.”

One of the leading believers in the grand conspiracy of peaceful evolution is party apparatchik Quat.

“This is an attempt to damage socialism without waging war,” he said. “Our policy is to protect national independence and to protect socialism. They are trying to change our political system without waging the war.”

Quat said the textbook for peaceful evolution is “1999: Victory Without War” – by Richard Nixon. This book, published in 1988, before the fall of the Soviet Union, is a treatise on managing conflict by projecting economic power, military toughness, and ideological appeal. Pressed on who precisely was waging the peaceful evolution campaign, Quat said he wasn’t specifically accusing the United States, “just a scheme of imperialist elements.”

By 1990, when the Doi Moi reforms had been implemented and free–market buds were starting to bloom, foreign investors – led by Taiwan, South Korea, Singapore, Hong Kong, Australia, and France – began flocking to Vietnam with visions of riding the next “tiger” economy in Asia.

Momentum built through the early ’90s, powered by the United States’ lifting of its trade embargo with Vietnam in 1994, and a subsequent increase in aid from the World Bank and the International Monetary Fund. In 1995, Washington and Hanoi restored full diplomatic relations, and by 1996, foreign investment peaked at $8.6 billion, about a third of Vietnam’s gross domestic product. In the mid ’90s, Vietnam had the fastest–growing economy in Asia.

Though ostensibly hungry for foreign investment, Hanoi shot itself in the foot in 1996. Wary of creeping Westernization, the government ordered billboards advertising such products as Coca Cola and Heineken beer taken down, and decreed that on all signs, English words could not be larger than Vietnamese words.

The antibillboard campaign shook the confidence of foreign investors who were already tiring of corruption, red tape, and the lack of any coherent legal structure. More recently, the government’s continued refusal to sign a key trade agreement with the United States, and its announcement of a reduction in the work week from 48 to 40 hours, have also been deemed bad omens by investors. So the exodus has continued and by 1999, foreign investment had plunged to $1.6 billion. Even less is expected this year.

Looming large, as ever here, is China, though now more as an economic than a security threat. As Vietnam’s attractiveness to foreign investors diminishes, China’s grows, especially with its likely entry into the World Trade Organization. China is such a huge market, Vietnam risks becoming less relevant.

“China is big competition for us and to developing countries,” said Pham Chi Lan, executive vice president of the Vietnam Chamber of Commerce and Industry, a quasi government agency which provides training to the state’s embryonic private sector. “If we are slower than they are in accessing markets, it will be an opportunity lost for us.”

The government’s wistful plea that Vietnam no longer be considered “just a war, but a country” seems to have been at least partially heard. In the ’90s, Vietnam became a trendy tourist destination for backpack pioneers in search of adventure, twenty–somethings looking for the next Prague, and Americans on nostalgia trips searching for the real “Nam.” In addition, the movie “Indochine” – with its luminous photography and glamorous rendering of the French colonial heyday – is widely credited with giving tourism here a shot in the arm.

“In the 1990s, Vietnam was attracting a new generation of fantasists and dreamers,” wrote Robert Templer in “Shadows and Wind,” a book on contemporary Vietnam published in 1998. “The new arrivals were looking to wallow in nostalgia for places and times that had never been. They were drawn by their visions of ’Indochine’ and ’Nam,’ the mythical landscapes of the West’s past interactions with Vietnam…Vietnam in the 1990s is not just exotic, it is stylish… It is the place to be if you are young and adventurous and have a trust fund.”

But mixed in with the exotica are the modern realities of overcrowding, poverty, pollution, and unemployment.

With 77.3 million people, Vietnam is the 14th most populous country in the world. It is also the most densely populated in Southeast Asia with 205 people per square kilometer, twice the region’s average. With virtually no more land in the countryside to farm on, and few non–farming jobs in rural areas, people are flocking to the major cities for work. The average per capita annual income nationally is $376, according to the World Bank. In Hanoi, population 3 million with 10 percent unemployed, the average annual wage is about $900. In Ho Chi Minh City, with 5 million people and 7 percent out of work, it is $1,200.

When the communists took over Saigon in 1975, cars and motorcycles were banned and only bicycles were permitted, Hanoi–style. Now there are 2 million motorcycles and about 50,000 cars back in the city, the din from motors and horns is constant, the pollution sometimes overwhelming.

For the uninitiated, crossing the street in Ho Chi Minh City seems like a life–or–death experience. With no stoplights to speak of and virtually no let–up in the constant stream of traffic, you can wait all day to cross a major street. So a leap of faith is required: You plunge in and let them avoid you, rather than vice versa.

Other lasting images of Ho Chi Minh City: people exercising at city parks in the early–morning darkness to beat the 90–degree heat; cyclists wearing masks to fight back the noxious fumes; the scores of people who line up every work day for visas in front of the US Consulate; creeping Westernization at places like “The Super Bowl” a tacky strip mall featuring a 32–lane bowling alley, a Kentucky Fried Chicken, a supermarket and an arcade; and cranes suspended over half–completed office towers and hotels abandoned with the fleeing foreign investment.

Hanoi, long the far quieter refuge of Vietnam’s Marxist mandarins, is becoming more like Ho Chi Minh City every day, with growing traffic and commerce. What was once one of the most closed cities on the planet has become an eclectic mix of old–world communist kitsch, lingering French colonial charm, and jarring Western openness.

Last July, after three years of negotiations, the United States and Vietnam agreed in principle on a sweeping trade agreement that would lower tariffs, and establish trade and investment standards practiced in most nations. Vietnam is the only country with which America has diplomatic relations but no normal trade relations. The agreement would make it easier for American firms to do business here, and easier for Vietnamese companies to access US markets. Vietnam’s $470 million in exports to the United States would double under a trade agreement.

A signed trade deal would be a milestone in Vietnam’s flirtation with the free–market, and in its integration into the global economy. But since reaching agreement in principle, Hanoi has gotten cold feet and refused to sign the accord, explaining only that the details need to be further studied.

Most Vietnamese insist they want the agreement, but many American and Western observers are not so sure. They see Hanoi’s hesitation on the trade deal as a microcosm of the larger debate the Politburo is having behind closed doors over how quickly to expose the country to change, lest the fabric of traditional Vietnamese society unravel.

“Vietnam and the US are not negotiating a trade agreement,” said Thomas J. Vallely, director of the Vietnam programs at Harvard University’s Institute for International Development. “Vietnam is negotiating a trade agreement with itself: One side wonders whether they should join the world economy, and the other side wonders how they should join the world economy.”

Nguyen Minh Tu, director of the Central Institute for Economic Management, a government think tank, insists Hanoi does want the agreement. “The United States is so important for Vietnam,” he said. “Under the agreement, technology and management skills will be transferred here, and we’ll have access to the largest market in the world. Relations between us are sensitive because of our common history of the war. If economic relations are developed, it can help develop friendship as well.”

Other Vietnamese officials sound less certain.

“We understand the market economy is one of the big achievements of human beings,” said Quat, the central committee spokesman. “It creates a dynamism for people to be creative. But on the other hand, when you don’t manage it properly, it will polarize society, create inequality and conditions for individualization to develop. People may just rush out for money without caring about larger moral values.”

Added Bui Minh Phuong, chairman of the People’s Committee in Binh Duong province, near Ho Chi Minh City: “We have to develop this country with independence. We want slow but steady steps. Vietnam won’t sacrifice national independence for economic gain. We have to strike that balance. It’s difficult to find.”

Nike Inc., the footwear colossus, serves as a case study of how a trade deal would help both an American firm and Vietnam. Under a trade pact, Nike, which produces 20 million pairs of shoes a year at its five plants in Vietnam, would reduce its export duties from 20 percent to 8.5 percent.

Forty–five thousand people work for Nike in Vietnam, making it the largest private employer in the country. It exports $450 million worth of merchandise a year, and pays an average base salary of $55 a month, compared to $18 a month for the employees of state–owned enterprises. A company spokesman, Chris Helzer, said that if the US–Vietnam trade agreement is implemented, Nike would hire 55,000 additional people in Vietnam.

Despite the potential of foreign investment from the likes of Nike, economists agree that if Vietnam is to make strides in the free market, it is the domestic private sector which must grow.

According to the World Bank, the country has 2 million “micro–enterprises” of one to three employees; 26,000 small businesses of 5 to 10 employees, and fewer than 600 businesses with more than 100 employees.

“Foreign direct investment is important, but much more important is how to increase that 26,000 to 260,000,” said the World Bank’s director here, Andrew Steer.

Vietnam’s 6,000 state–owned enterprises serve as a significant brake against the development of a market economy. They employ only 1.7 million people out of a workforce of 40 million, but they control 70 percent of the natural and financial resources of the country and have access to a disproportionate share of investment capital. Only a third make a profit, while the rest require government subsidies.

Despite the drag they place on the economy, the state–owned enterprises are seen by officials as a vital tool in their maintaining power – and privileges.

“Within the Politburo now, the struggle is not so much about ideology as about vested interests,” said one prominent Vietnamese banker, who asked not to be identified. “The Communist Party is funded by state–owned companies. The party can’t pay its own members, so if you remove the state–owned companies, the party would lose its perks and benefits.”

Another liability to the economy is official corruption. Prodded by widespread complaints from foreign investors and Vietnamese alike, the government has cracked down on corruption, and there is now a mandatory death sentence for those caught stealing more than $27,000 from the state. At least 16 people had been sentenced to death under the law as of last year.

Tales of official corruption can now be found in Vietnam’s press, which has been granted more freedoms under Doi Moi. Official organs like the Vietnam News remain, of course, with their turgid, largely unreadable front–page accounts of visiting trade ministers from Turkey, and the like. But scores of other newspapers have sprung up in recent years that cover spicier staples like crime and celebrities. There has been a tabloidization of the Vietnamese press.

The most popular paper in Vietnam by far, with a circulation of 500,000, is the Police Weekly, a paper published by the police which takes no ads and writes only about crime. The police control the release of all crime news, of course, so they make sure that the Weekly gets a steady stream of scoops. The paper rails against outbreaks of so–called social evils like prostitution, drugs, gambling, and pornography, at the same time assuring readers that police have everything under control.

There is no censorship office, as such, where stories must be cleared before publication. But editors of all the newspapers are required to be party members, and there is self–censorship.

Along with some latitude for the press, the communist government, traditionally hostile to religion, has permitted a modest revival of spiritual life. Most Vietnamese practice forms of Buddhism, Taoism, Confucianism, or ancestor worship, and there are an estimated 7 million Catholics. Despite allowing some new freedoms, Hanoi still associates religion with superstition, and views it as a tool of “peaceful evolution.” Officials monitor all religions carefully, especially Catholicism.

The regime also keeps a watchful eye on Vietnam’s exiles. More than 1 million people fled the country after the fall of Saigon in 1975 and in succeeding years. Now there are about 2.5 million Vietnamese living overseas, nearly half in the United States, the rest mostly in France, Canada, and Australia. The overseas Vietnamese, or Viet Kieu, as they are known here, annoy Hanoi with their anticommunist fervor. But even in their absence they are an important economic engine for the country and they are allowed to return – provided they don’t cause any political problems.

According to Nguyen Viet Thuan, vice chairman of the Ho Chi Minh City Committee for Overseas Vietnamese, last year alone the Viet Kieu sent $1.3 billion back through banks, almost all of it concentrated in and around Ho Chi Minh City. He said 300,000 visiting exiles last year spent an average of $1,000 each, and often more using their credit cards. The exiles account for about half of domestic private investment in Ho Chi Minh City.

“We encourage them to come back and live, as well as do business here,” Thuan said. “We are willing to create favorable conditions for them to return. They are an integral part of Vietnam. One of our purposes is to help them understand that Vietnam has changed.”

Despite such efforts to reach out, Thuan estimates that only 5,000 Viet Kieu have moved back to the country since 1975.

Some who are returning are young people like David Thai in search of their roots. Born in Saigon in 1972, the son of a Frog Team member of the US Special Forces, Thai left the country with his family in 1974. He grew up in California and Seattle, eventually graduating from the University of Washington. Majoring in Asian–American studies, Thai grew more curious about his native country and decided to spend part of his senior year in Hanoi on an exchange program. Soon, he had opened a cafe on a lake in the heart of the city.

“Growing up, I’d never talked with my parents about the country and I spoke only rudimentary Vietnamese,” Thai said. “What I found was that Vietnam had evolved. The Viet Kieus were stuck in a time warp… Everything I thought I’d learned was 180 degrees from what I saw and experienced. I was told growing up that Hanoi was evil, they wore black masks, and carried AK–47s. But they were people, and they were welcoming. Now my best friend is from Hanoi. I can’t explain it, but I fell in love with Vietnam. Everyone in the States felt I’d lost it.”

On a visit home, Thai, 27, asked his father to set up a meeting with a group of exiles. By the end of the meeting, the exiles were asking him what opportunities there were for them in Vietnam. Thai now lives in Ho Chi Minh City, where he has launched a successful coffee export business.

“If I can send a message back home to the Viet Kieus,” Thai said, it would be, ’Don’t knock it till you try it. Give it a chance.’ It’s so much a part of you.”

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