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Resume Normal Relations With Vietnam

It's in the US diplomatic and trade interest to help Hanoi back into the global economy and thereby reward reforms

VIETNAM is once again making headlines in the United States. For 16 years, since the Vietnam war ended, the US has refused to deal with Vietnam on either a diplomatic or economic level. The only contact between the countries since that time has been with regard to humanitarian concerns, as the two attempted to reconcile painful issues left unresolved from the war. Over the past nine months, however, this contact has been expanded to include high-level discussions between officials from both countries. In recent weeks, the administration released a new proposal on US-Vietnamese normalization, which has led to a flurry of discussion on Vietnam in the media, in Congress, and among the public.

Normalization of relations with Vietnam has been postponed by successive administrations since 1975 for various reasons. The Bush administration has made it quite clear that normalization will only be considered in conjunction with a comprehensive political settlement in Cambodia, as well as continued cooperation on the POW/MIA issue. Vietnam has resisted the US call for a resolution of the Cambodia conflict by opposing the UN-sponsored peace plan, claiming it will allow the Chinese-backed Khmer Rouge t o return to power. The timetable for normalization released last month does not deviate from previous policy. By offering Vietnam detailed incentives to comply with the peace settlement, however, the proposal signals a new attempt by the administration to end the stalemate over Cambodia.

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Both countries have been adversely affected by the lack of relations. Vietnam, though rich in natural resources, is one of the poorest and most undeveloped countries in the world. The trade embargo imposed by the US on Vietnam in 1975 has succeeded in limiting development aid, multilateral loans, investment, and other sources of income needed for Vietnam's economic development.

The US has also been damaged by the fact that many countries do not recognize the US-imposed trade embargo. US companies are finding themselves at a disadvantage as many foreign concerns begin to invest and profit in Vietnam. Japan, Singapore, Australia, the United Kingdom, France, Italy, and the Netherlands have initiated trading and investment discussions with Vietnam. Indeed, Japan is now Vietnam's second largest trading partner after the Soviet Union.

Observers of Vietnam see the 1990s as a turning point for the country as its reform program continues, faces the collapse of communism around the world, and considers the declining influence of it patron, the Soviet Union. If normalization of relations were to occur, it could result in a resumption of mutually beneficial economic activity and could offer the US the opportunity to participate in a new balance of power in the region.

Under the leadership of Foreign Minister Nguyen Co Thach and General Secretary Nguyen Van Linh, Vietnam has been following a new foreign and economic policy since 1986. These leaders have undertaken Gorbachev-style reforms, called doi moi (renovation), that attempt to move the economy more in line with market forces and away from central planning, and that place an emphasis on attracting foreign investment.

Since the initiation of the economic-reform program, Vietnam has successfully entered the global economy by becoming an exporter of rice, rubber, meat, clothing, and coffee. The new reform program has encouraged Western-style economic reforms and economic development, and the the new foreign investment code - one of the most liberal in Asia - has also provided lucrative opportunities for trade and investment for nations not constrained by the embargo.

Many problems still exist, however. State enterprises still own the majority of the country's means of production, yet contribute very little to the national income. Many of the goods produced are not globally competitive because of poor quality. In addition, the investment climate still leaves much to be desired. Vietnam's infrastructure is weak, with such deficiencies as unreliable power supplies, and years under a socialist system have contributed to a poor work ethic.

The new world order is apt to have strategic and ideological implications for Vietnam's future. The Communist Party of Vietnam has attempted to retain its power over the country while the socialist bloc has crumbled internationally. Pressure has been building for the government to broaden its economic reforms to include political reform. Although Vietnam appears to be politically stable, there are signs that it could turn out to be fraught with the same political upheavals and reversals of policy China has experienced.

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A draft political report published by the Vietnamese Communist Party was reportedly released in mid-February 1991 to a highly critical response. The report concluded that the economic reforms initiated four years ago had led to significant progress; however, it also highlighted remaining problems such as inflation, unemployment, and falling living standards. The party appeared split on the significance of the report.

A liberal faction viewed the finding optimistically and were eager to continue with the reforms. The conservatives felt the report implicitly criticized the Communist Party for Vietnam's economic problems and expressed concern that the reforms are moving the country toward capitalism. In March, further pressure was added when a prominent Vietnamese intellectual called for the Communist Party to step down and ``return all authority to popularly elected organs and the state.''

Vietnamese trade with its largest trading partner, the Soviet Union, has been declining in recent years. Before 1991, Vietnam conducted approximately two-thirds of its trade with the Soviet Union. However, a new economic agreement between Vietnam and the USSR signed Jan. 31 will seriously cut trade and development aid. The new pact will also place strain on the Vietnamese economy by pricing exchanged goods at international market prices and demanding hard currency for all transactions. The new economic burden will undoubtedly speed Vietnamese efforts to attract other investors and trading partners, thereby strengthening its entry into the international economy.

As the Soviet Union has decreased support to Vietnam, the country has become increasingly in need of outside assistance. China has made repeated overtures to fill the gap left by the Soviet's departure. In January Vietnam responded by sending a delegation of high-level officials to visit China. The delegation was apparently invited to examine China's economic-reform program; however, discussion on reconciliation is believed also to have occurred.

These recent events show that the 1990s could indeed be a turning point for Vietnam, and for the US should relations be normalized. Normalization could prove beneficial to both countries for both geopolitical and economic reasons. As the global geopolitical balance of power shifts, normalization would find the US better positioned to help Vietnam become politically stable and free from the influence of the Soviet Union or China.

Normalization of relations would also ease the handicap that US business interests have been subjected to by the 16-year-old trade embargo with Vietnam. As the reform program progresses, Vietnam appears likely to become a new market for investment. Indeed, many observers believe it may become the next ``Asian miracle economy.'' Normalization would allow US businesses freely to compete for ventures in the country with the Japanese, European, and Asian states that have already been investing in and profit ing from the newly opened market.

Vietnam has proven willing to meet some of the US's conditions for normalization. By withdrawing from Cambodia, pledging further support on the POW/MIA problem, and allowing discussion on the emigration of Amerasian children, Vietnam has shown a desire to cooperate with the US and the international community. In addition, its economic reforms have indicated its intention to integrate into the global economic community. Normalization of relations would recognize Vietnam's efforts to cooperate and would e ncourage its transition to an economically healthy and politically stable force within the region.

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