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Carlyle A. Thayer: Vietnam - Development, Democracy and the APEC Process

Carlyle A. Thayer(*)

Introduction

I would like to thank Amnesty International and the Vietnamese Community in Australia (Cong Dong Nguoi Viet Tu Do Uc Chau) to the invitation to be here today to share my views with this audience.(1)

As we meet today some ten thousand foreign delegates and officials are now gathering in Hanoi in a series of high-level meetings associated with the 14^th Leaders Summit of the Asia Pacific Economic Cooperation (APEC) forum. The purpose of APEC is to facilitate economic growth, cooperation, and trade and investment in the Asia-Pacific region. APEC members account for 40% of the world’s population, 47% of global trade, and 60% of world GDP (gross domestic product).

The APEC process also includes a series of meetings by key world leaders held on the margins of the official APEC programme. In addition, five heads of governments, including the presidents of China, Russia and the United States and prime minister of Japan will be making separate official state visits to Vietnam.

The official APEC process does not ordinarily address human rights and religious freedom issues. On 16^th November the 18^th APEC ministerial meeting concluded its two-day meeting with a 29 page Joint Statement. Human; rights was not considered under its eighteen headings, although human security issues were addressed (counter-terrorism, health [pandemics, Avian flu, influenza], energy security). The Joint Statement also touched on anti-corruption and transparency and sustainable development.

Ordinarily human rights and religious freedom issues would be left to an informal gathering of civil society non-governmental organizations (NGOs) that meet in parallel with the official summit. But not in communist Vietnam. Not only will these voices be silenced, but the Vietnamese government has banned public demonstrations and cordoned off the homes of leading dissidents. Security agents have posted signs in English reading ‘no foreigners.’ Police have set up tables outside the homes of dissenters and/or blocked off the streets and lanes leading to their residences. So it is right that civil society groups like Amnesty International should raise their concerns about human rights issues and lobby Prime Minister Howard. The Canadian prime minister has met with Vietnamese leaders and raised human rights concerns. It is hoped that Prime Minister John Howard will do the same.

The object of development in any state should be directed towards human security - the improvement of the lives of all citizens especially those at the bottom end of the socio-economic scale who have been marginalized in the course of rapid economic growth. The efficiency of sustainable development is dependent on a number of factors including government capacity, transparency, the rule of law, and the free flow of information including freedom of expression.

My purpose today is to identify serious constraints in the development process in Vietnam’s one-party state. I intend to speak to three major issues: the new leadership, corruption, and the APEC process.

Leadership

It is time for a reality check on political reporting about Vietnam. If the international media are to be believed, Vietnam has jettisoned its old guard and promoted a young generation of reformers from the country’s economically vibrant south. Vietnam’s new state president, Nguyen Minh Triet, is the face of this revolution. Triet hails from the southern province of Song Be, where he oversaw its emergence as one of Southeast Asia’s most attractive destinations for foreign investment. He was appointed alongside another southerner, Nguyen Tan Dung, - recently named prime minister - the youngest person to ever hold this post since 1975. But these encouraging marks do not mean that their government is cut from a different cloth, or that economic reforms will necessarily accelerate under their stewardship.

As in neighboring China, the buzz of economic progress in Vietnam has obscured the fact that the political system remains largely unchanged. Triet, Dung, and their Politburo colleagues are all products of Vietnam’s Leninist political system and its style of collective leadership. Vietnam’s new leaders have been selected because they are judged by other party members as loyal to the party line. Lately this line features new commitments to anti-corruption and gradual market reforms, but it is still conservative. The leadership is bound by party dictate to promote a “market economy with a socialist orientation,” which means state control of strategic sectors of the economy and limitations on the influence of private entrepreneurs. Triet and Dung are economic reformers to the extent that they will pragmatically work to implement Vietnam’s international obligations, including the requirements of membership in the World Trade Organization.

Both the president and the prime minister accept the dictum that political stability (read: keeping the communist party in power) is the basis for economic growth. The appointment of ideologue Nguyen Phu Trong as head of the National Assembly clearly indicates that Vietnam’s legal and administrative reform will discourage political pluralism. What is often overlooked is that the national assembly chairman arguably holds more power than the state president The role of state president is largely ceremonial while the chairman of the national assembly has the ability to shape the legislative agenda. The national assembly has emerged as an increasingly influential body by its ability to grill ministers and amend legislation.

Ultimately, Vietnam’s new political leaders are accountable only to the Politburo and Central Committee, from which their power derives. The problem with injecting vitality into Vietnam’s leadership ranks is that party members are only eligible for the top party and state posts after serving a full five-year term on the Politburo. This rigidity results in only a small pool of tried-and-true adherents qualifying for promotion. They are chosen by a 16-member Politburo that is largely old and conservative: it is quite normal for one-third to one-half of the Politburo to retire at each National Party Congress.

This is not to say that Triet and company are incapable of changing the status quo. In some ways, the rise of Triet does signify changes afoot in Vietnamese politics. After all, he played a high-profile role in exposing a corruption scandal: as party secretary of Ho Chi Minh City in 2002, - involving Nam Cam, the leader of a criminal syndicate, who had allegedly corrupted the Ho Chi Minh City police force and bribed high-level state officials [it was an outside task force that did the investigation and prosecution]. The public’s recent outcries over official corruption, and the government’s acknowledgment that it must clean house to stave off disorder, represent a modicum of accountability being introduced into Vietnam’s one-party system. And the elevation in April of Triet, with his burnished anti-corruption credentials, to the presidency shows how seriously the government is taking the problem.

Overall, however, Vietnam’s new leadership appointments do not signal any dramatic change from the past.

The appointment of Triet and Dung to the top state posts is viewed by some analysts as part of a trend of rising southern representation in the highest leadership levels. It is noted, for example, that southerners comprise half of the members of the Politburo selected in April. This new regional balance is said to represent a new emphasis on southern values like capitalism and hi-tech growth, and a rejection of Vietnam’s ossified system whereby each of the top three leaders represent one of Vietnam’s three regions.

A closer look at the new leadership, however, reveals that a rough balance between north and south and between the three regions has been maintained. Triet and Dung are from the south, but the party secretary general, Nong Duc Manh, and the chairman of the National Assembly, Nguyen Phu Trong, are from the north. Of the three deputy prime ministers, Pham Gia Khiem is from the north, while Nguyen Sinh Hung from the center and Truong Vinh Trong is from the south.

Whatever initiative the president might have in launching reforms, moreover, would be stymied by the limitations of his power. He must share that with the party general secretary, prime minister and the national assembly chairman. If the country does marketize its economy on a level currently being predicted in the media, it will be the result of a long and slow process of consensus-building (and infighting) amid the Politburo. There may yet come a day when the Politburo itself realizes that its stranglehold on power is untenable. But until then, it is now safe to say that Vietnam has not shed its Leninist political armor.

Corruption

A major corruption scandal in Vietnam took center stage at this April’s carefully choreographed 10th Party Congress in Hanoi. Even the government publicly professed concern. In his opening address to the delegates, Secretary General Nong Duc Manh said widespread graft is “one of the major risks that threaten the survival of our regime.” Still, Vietnam’s leaders don’t seem to realize that they can’t get to grips with the problem without addressing its source: Their one-party rule.

The significance of the latest scandal goes far beyond the amount involved--namely, more than $7 million embezzled by top officials in a division of the Ministry of

Transport and Communications known as Project Management Unit 18 (PMU 18). This was no run-of-the-mill corruption ring, which is probably why the Vietnamese media was given the rare freedom to report the revelations. The money was stolen largely from the World Bank and Japan, which in turn, were funded by domestic taxpayers. Theft like that may make foreign donors think twice before committing further funds. Even more important was the extremely high-level nature of the officials implicated.

Vietnamese press reports reveal a group of well-connected party officials whose corruption ring boasted tentacles throughout Vietnam. Among those implicated are outside contractors, provincial officials and fixers who provided bribes to state-audit agents, police and court officials. The ring also reportedly extended upward from the transport ministry to other more powerful institutions, including the Ministry of Public Security and the Government Office [it is a ministerial level state body].

Already, the minister of transport and his deputy have been forced to resign. [the vice minister for being directly involved, the minister because he had oversight responsibility] But in a particularly embarrassing twist for the leadership, two of the senior officials implicated in the corruption ring had been endorsed by the Central Committee as candidates for “election” to this powerful party body. After the scandal broke, their nominations were quickly revoked before the April 18 opening of the 10th Party Congress, at which the new Central Committee was chosen.

That alone was enough to cast a shadow over a Congress the Party had hoped would shine the spotlight on the country’s impressive economic performance. Like their Chinese counterparts, Vietnam’s Communists have long since abandoned ideology in favor of rapid economic growth as the key to their survival. It’s worked, so far. Over the past five years, Vietnam’s GDP has grown just under 8% annually. Vietnam has also begun to attract record amounts of foreign direct investment. The recent visit by Microsoft founder Bill Gates offered further evidence that the country is beginning to be taken seriously as an emerging economic powerhouse.

But all these achievements have been swept aside for the moment by the PMU 18 scandal. In one recent revelation, it emerged that the son-in-law of Manh, the Party’s secretary general, had worked for PMU 18, although there was no indication he was involved in the corruption ring. The timing of this revelation, coupled with the unprecedented play being given to PMU 18 revelations in the normally tightly controlled Vietnamese media, suggests that some in the Party are using the scandal to try to undermine the current leadership.

That would be par for the course in Vietnam, where anti-corruption campaigns have long been used as a political football, so hindering any serious attempt to get to grips with the problem. For those leaders seeking another term in office, taking a tough public stance against corruption serves to bolster their public image. Other leaders have jumped on the anti-corruption bandwagon to advance their careers and to hobble their opponents. [rumors that the son of former prime minister Vo Van Kiet was involved in shady dealings surfaced two congresses ago; former Politbuto member and Minister of Defense, General Van Tien Dung’s wife was alleged to take “ten” percent; rumours of corruption have circulated about Nguyen Van An and his connections to the Nam Cam criminal syndicate].

The Party’s track record gives no grounds for optimism that the current drive against corruption will be any more successful than its previous attempts. After all, the Party first identified corruption as one of the four major dangers confronting its rule in 1994 [at its first and only mid-term party conference. Party statutes made provision for such a conference in between two national congresses]. But 12 years and two Party Congresses later, high-level corruption remains as entrenched as ever.

Simply dealing with individual cases as they arise will not solve the problem. Large-scale corruption in Vietnam centers on patronage networks of high-ranking party officials, their families and in laws. Generally, these networks remain outside the law. When excesses are discovered, they are dealt with by the party behind closed doors. For example, twelve members of the outgoing Central Committee have been disciplined by the party for their involvement in corruption. But few have been formally charged and tried in court. Even when they were, the cases received only cursory mentions in the state-controlled media, in stark contrast to the blitz of publicity that followed the PMU 18 revelations. [It is usually lower level party officials, such as a deputy minister not on the Central Committee, who are put on trial].

Vietnam and the APEC Pprocess

Vietnam has a unique chance to showcase itself this weekend as a country that’s ready to integrate into the global economy and respect its rules. But that opportunity is in jeopardy because of two recent controversial cases which raise serious doubts about the country’s commitment to the rule of law.

That’s particularly pertinent as Vietnam prepares to enter the World Trade Organization. Earlier this month, the global trade body’s General Council formally approved the terms for Vietnam’s accession as the WTO’s 150^th member. Today, U.S. President George W. Bush and other leaders from the 21-member Asia-Pacific Economic Cooperation forum will hold the14^th leadership summit.

Plans by President Bush to endorse Vietnam’s membership of the WTO in Hanoi have been momentarily set back by a series of embarrassing episodes. First, Florida Senator Mel Martinez threatened to hold up the bill granting Permanent Normal Trade Relations (PNTR) status until Vietnam freed one of his constituents from detention. The case involved Mrs. Thong Nguyen “Cuc” Foshee, a Vietnamese-American, who was accused of plotting to overthrow the Communist regime had been held in detention since September 2005. She is an activist in the Government of Free Vietnam, a group which campaigns against the Hanoi government.

Vietnam quickly staged a one day trial and found Mrs. Foshee and six other defendants guilty. They were given 14 months sentences, virtually equivalent to the time they spent in detention. After Mrs. Foshee apologized, the Vietnamese released her and she is now safely back in the United States.

PNTR Status

Second, in order for the United States President to give its assent to Vietnam’s membership in the WTO, Congress must first grant Vietnam PNTR status. Voting on this bill was put off during the mid-term congressional elections. Then this week the Administration suffered am embarrassing set back when congress resumed in a lame

duck sitting to quickly pass a back log of legislation under a suspension rule permitting no debate but requiring a two-thirds majority. When the PNTR bill was put to the House of Representatives, it received a majority vote but well short of the two-thirds necessary. Republican managers then stated they would bring up the bill later this week under ordinary rules requiring a simple majority. This vote has now been put back to early December.

Vietnam is not yet a formal member of the WTO. Its National Assembly must pass required legislation and deposit it with the WTO secretariat in Geneva. Vietnam will become a member thirty days later. It is likely but not entirely certain that the US Congress will pass the PNTR bill prior to Vietnam’s entry into the WTO. If not, the US will have to invoke a “non-application” clause, acknowledging that it is not in a position to apply the WTO’s rules in its dealings with Vietnam.

With more than 250 U.S. businessmen, many from Fortune 500 companies, accompanying President Bush, this visit was designed to set the seal on a new era in U.S.-Vietnamese ties.

Both the Foshee case and the debacle over PNTR legislation have cast a shadow over what was meant to be Vietnam’s crowning moment – the APEC summit and an official state visit by the President of the United States.

The Foshee case raises serious questions about Hanoi’s ability to manage its domestic and international agendas. After all, even if Ms. Foshee did try to stir up anti-government sentiment during her visit, that’s hardly a crime in most countries. In any event, expelling her would have done far less damage to Vietnam’s international image than her prolonged period of detention and then a one-day show trial.

ABN-AMRO

The same is true of the other case to raise serious doubts about Vietnam’s commitment to the rule of law - the travails of the Dutch bank ABN-AMRO. Two of its employees have been detained without trial since March, and two more since July. In all four cases, their only offense was to handle foreign-exchange transactions with the Industrial and Commercial Bank of Vietnam, which resulted in $5.4 million in losses for the state-owned bank.

Vietnamese authorities claim that, since the Incombank employee responsible for these trades wasn’t licensed to carry out this type of foreign-exchange transaction, the ABN-AMRO employees were at fault in dealing with her. As a result, they’ve demanded that the Dutch bank “compensate” Incombank for the loss-making trades before the detained employees will be released.

That’s caused considerable alarm among foreign businessmen in Vietnam, concerned about police heavy handiness in what appears to be a routine banking dispute. But the real issue is whether Vietnamese commercial officials are capable of operating under the rule of law in dealing with foreigners--and taking responsibility for their own actions.

The ABN-AMRO case illustrates how Vietnamese officials continue to be addicted to vestiges of the former centralized command economy. In other words, the state is seen as the source of rent, regardless of whether or not an enterprise is well run.

In the past, that rent was collected through large-scale corruption. Now, foreign investors are increasingly seen as a more profitable target for extortion. But this rent-seeking mentality undermines the effective operation of market forces, as Vietnamese companies use the coercive power of the state to try to settle disputes with foreign investors.

Law thus becomes an instrument to be used to extract rent from the foreign partner. That was demonstrated again earlier this month, when Prime Minister Nguyen Tan Dung issued a directive suggesting ABN-AMRO should repay the $5.4 million if the Dutch bank wants its staff to be treated leniently.

With both the Foshee and ABN-AMRO cases indicating continuing weakness in Hanoi’s commitment to the rule of law, foreign investors may want to continue thinking twice. For all the hype over WTO accession and the APEC summit, Vietnam is likely to remain a difficult--and unpredictable--place to do business for many years to come.

Conclusion

Changing the Vietnam Communist Party, which rejects the separation of powers and relies on arbitrary one-party rule, is crucial. A tiny unelected leadership controls the executive, legislature and judiciary. These bodies do not operate independently from the party and can only act when high-level leaders give the go-ahead, making the exposure of corruption a highly politicized and arbitrary affair. The only way effectively to address entrenched corruption is to create autonomous institutions independent of the party that can investigate, prosecute, adjudicate and punish corrupt officials no matter what their rank. The press also needs to be freed to play its role to report on corruption without fear or favor.

But that would require Vietnam’s Communists giving up their monopoly on the instruments of power, something today’s leaders remain unwilling to contemplate. While continuing corruption may be a threat to the party’s grip on power, tackling it properly would pose an even bigger threat. It is only when Vietnam has human rights and democracy that it can achieve sustainable economic development and human security. ^*Professor of Politics and Director of the UNSW Defence Studies Forum, School of Humanities and Social Sciences, University College, The University of New South Wales at the Australian Defence Force Academy, Canberra. This paper was slightly revised on November 20, 2006.

¹The last time I addressed a gathering of this nature was sixteen years ago; see Carlyle A. Thayer, ‘Vietnam: Political and Social Change in the Last Five Years,’ Paper to Conference on Vietnam: Which Way Now, sponsored by Asia-Pacific Research Institute, Macquarie University, Sunny Brook Travelodge Convention Centre, Warwick Farm, New South Wales., February 27, 1993.

including government capacity, transparency, the rule of law, and the free flow of information including freedom of expression.

 

^*Professor of Politics and Director of the UNSW Defence Studies Forum, School of Humanities and Social Sciences, University College, The University of New South Wales at the Australian Defence Force Academy, Canberra. This paper was slightly revised on November 20, 2006.

¹The last time I addressed a gathering of this nature was sixteen years ago; see Carlyle A. Thayer, ‘Vietnam: Political and Social Change in the Last Five Years,’ Paper to Conference on Vietnam: Which Way Now, sponsored by Asia-Pacific Research Institute, Macquarie University, Sunny Brook Travelodge Convention Centre, Warwick Farm, New South Wales., February 27, 1993.

 

Carlyle A Thayer Professor of Politics and Director UNSW Defence Studies Forum The University of New South Wales at the Australian Defence Force Academy c.thayer@adfa.edu.au Paper to Forum: Vietnam: Development and Human Rights Co-organised by Amnesty International and Vietnamese Community of Australia Trung Tam Van Hoa va Sinh Hoat Bonyrigg, NSW November 18, 2006