Another Vietnam Quagmire

International Economy, The, Jan, 2001 by Dana R. Dillon

Hanoi will move slowly toward market reforms despite a new U.S. trade pact.

President Clinton didn't visit Hanoi last November to hobnob with communists. He traveled to Vietnam hoping to exorcise the demons from the relationship between the most powerful country on earth and the Third World nation that dealt them a humiliating military defeat. Relations between Washington and Hanoi have been haunted by that war for twenty-five years, a period much longer than the time it took the United States to establish amity with Germany and Japan, against whom wars were fought at the expense of far more American lives. By visiting Vietnam, Clinton hoped to raise the diplomatic bar so that subsequent visits by American business executives and politicians will no longer be groundbreaking, but routine. For Vietnam, a visit from the sitting President of the United States was more than just a symbolic gesture; it was an attempt to make a historic agreement genuine.

There were, however, deeply symbolic gestures to be made in Vietnam. Clinton visited the site where the Joint Task Force Full Accounting (JTFA), the Pentagon team responsible for recovering the remains Of missing Americans, was investigating a possible American plane crash. Recovering Americans still missing from the war is a process that the United States must complete for its own sense of closure. Another objective was to bring to bear the symbolic power of the President of the United States as the fountainhead of freedom and democracy. Using Ronald Reagan's trip to the Soviet Union in 1988 as a model, Clinton gave a speech live on Vietnamese television. Unfiltered by state propaganda, Clinton imparted his message of freedom and hope for the future directly to the people of Vietnam. Although his remarks may appear insignificant, Ronald Reagan delivered a similar speech in May 1988, and a year later the Soviet Union was no more. Though words alone were not enough to conquer communism, it served to inspire the forces that led to the demise of the Iron Curtain. Clinton's success in bringing his message was evident from the thousands of people who crowded the streets with the fervor reserved for pop icons just to catch a glimpse of the American President.

The most important objective, however, was to open up a communist economy fearful of American trade. In July 2000, the United States and Vietnam signed the first trade agreement since normal diplomatic relations were restored in 1995. For Hanoi, the agreement is a welcome advance, in effect building on initial economic reforms it made in the mid-1980's. Increasing trade will help liberalize Vietnam's state-controlled economy and possibly act as a catalyst for considerable change in the country's social and political institutions. Furthermore, congressional approval of the trade agreement and the establishment of annual or permanent normal trade relations with the world's twelfth largest country will offer American businesses greater access to seventy-six million consumers in Vietnam.

Many Americans felt that Clinton was unacceptable as the initial harbinger of good will to communist Vietnam because of his record of dodging military service during the war. That is why Clinton used surrogate messengers, Vietnam War veterans such as Senator John McCain (R-Az.) and U.S. Ambassador to Vietnam Douglas "Pete" Peterson, to lead the efforts to reestablish normal relations between Washington and Hanoi. In a speech announcing the resumption of diplomatic relations in 1995, Clinton referred to the hoped-for benefit of the relationship as a "peaceful evolution." It took no time for American businesses to flood into Vietnam, setting up local offices in anticipation that it would become the next "Asian tiger." Investors looked towards a highly educated populace--with a 91.9 percent literacy rate--and a strong work ethic as reasons to be optimistic.

Unfortunately, economic progress did not materialize because the Vietnamese government was extremely reluctant to open its country to forces that it feared would corrode its hold on power. The result was a drop-off in new licensed foreign investment in Vietnam from a high of $8 billion in 1996 to $800 million in 1999. Consequently, Vietnam's centrally planned economy remained reliant on profligate state-owned enterprises that received subsidized loans from government-owned banks. Just as Clinton's efforts to normalize relations with Vietnam were criticized by some veterans groups in the United States, north Vietnamese veterans of the war are the staunchest conservatives and fear economic reform the most. Hanoi's haphazard approach to opening the economy was symptomatic of the deep division on economic policy within the ruling communist party. While economic reformers sought more trade with the West, many hardliners remained suspicious of the West's motives. Some leaders mired in antiquated communist ideals had even characterized the President's description of a "peaceful evolution" as an insidious American plot to "win the peace." This assertion demonstrates not only a harmful naivete about the world economy, but also an anti-American frame of mind.