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Vietnam (07/03)For the most current version of this Note, see Background Notes A-Z. PROFILE OFFICIAL NAME: Geography People Government Economy PEOPLE Vietnam's approximately 2.3 million ethnic Chinese, concentrated mostly in southern Vietnam, constitute Vietnam's largest minority group. Long important in the Vietnamese economy, Vietnamese of Chinese ancestry have been active in rice trading, milling, real estate, and banking in the south and shopkeeping, stevedoring, and mining in the north. Restrictions on economic activity following reunification in 1975 and the subsequent but unrelated general deterioration in Vietnamese-Chinese relations sent chills through the Chinese-Vietnamese community. In 1978-79, some 450,000 ethnic Chinese left Vietnam by boat as refugees (many officially encouraged and assisted) or were expelled across the land border with China. The second-largest ethnic minority grouping, the central highland peoples commonly termed Montagnards (mountain people), comprise two main ethnolinguistic groups--Malayo-Polynesian and Mon-Khmer. About 30 groups of various cultures and dialects are spread over the highland territory. The third-largest minority, the Khmer Krom (Cambodians), numbering about 600,000, is concentrated near the Cambodian border and at the mouth of the Mekong River. Most are farmers. Other minority groups include the Cham--remnants of the once-mighty Champa Kingdom, conquered by the Vietnamese in the 15th century--Hmong, and Thai. Vietnamese is the official language of the country. It is a tonal language with influences from Thai, Khmer, and Chinese. Since the early 20th century, the Vietnamese have used a Romanized script introduced by the French. Previously, Chinese characters and an indigenous phonetic script were both used. HISTORY French Rule and the Anti-Colonial Struggle Vietnamese communists under Ho Chi Minh organized a coalition of anti-colonial groups, the Viet Minh, though many anti-communists refused to join. After Japan stripped the French of all power in March 1945, Ho Chi Minh announced the independence of the Democratic Republic of Vietnam on September 2, 1945. North and South Partition The 1954 Geneva agreement provided for a cease-fire between communist and anti-communist nationalist forces, the temporary division of Vietnam at approximately the 17th parallel, provisional northern (communist) and southern (noncommunist) zone governments, and the evacuation of anti-communist Vietnamese from northern to southern Vietnam. The agreement also called for an election to be held by July 1956 to bring the two provisional zones under a unified government. However, the South Vietnamese Government refused to accept this provision. On October 26, 1955, South Vietnam declared itself the Republic of Vietnam. After 1954, North Vietnamese communist leaders consolidated their power and instituted a harsh agrarian reform and socialization program. In the late 1950s, they reactivated the network of communist guerillas that had remained behind in the south. These forces--commonly known as the Viet Cong--aided covertly by the north, started an armed campaign against officials and villagers who refused to support the communist reunification cause. American Assistance to the South Reunification After reunification, the government confiscated privately owned land and forced citizens into collectivized agricultural practices. Hundreds of thousands of former South Vietnamese Government and military officials, as well as intellectuals previously opposed to the communist cause, were sent to re-education camps to study socialist doctrine. While Vietnamese leaders thought that reunification of the country and its socialist transformation would be condoned by the international community, this did not happen. Besides international concern over Vietnam's internal practices, the Vietnamese invasion of Cambodia in 1978 and its growing tight alliance with the Soviet Union appeared to confirm suspicions that Vietnam wanted to establish hegemony in Indochina. Vietnam's invasion of Cambodia also heightened tensions that already existed between Vietnam and China. Beijing, which had long backed the Khmer Rouge regime in Cambodia, retaliated in early 1979 by initiating a border war with Vietnam. Vietnam's tensions with its neighbors and its stagnant economy contributed to a massive exodus from Vietnam. Fearing persecution, many Chinese in particular, fled Vietnam by boat to nearby countries. Later, hundreds of thousands of other Vietnamese nationals fled as well, seeking temporary refuge in camps throughout Southeast Asia. The continuing grave condition of the economy and the alienation from the international community became focal points of party debate. In 1986, at the Sixth Party Congress, there was an important easing of communist agrarian and commercial policies. GOVERNMENT AND POLITICAL CONDITIONS The most important powers within the Vietnamese Government--in addition to the Communist Party--are the executive agencies created by the 1992 constitution: the offices of the president and the prime minister. The Vietnamese President, presently Tran Duc Luong, functions as head of state but also serves as the nominal commander of the armed forces and chairman of the Council on National Defense and Security. The Prime Minister of Vietnam, presently Phan Van Khai, heads a cabinet currently composed of four deputy prime ministers and the heads of 31 ministries and commissions, all confirmed by the National Assembly. Notwithstanding the 1992 Constitution's reaffirmation of the central role of the Communist Party, the National Assembly, according to the Constitution, is the highest representative body of the people and the only organization with legislative powers. It has a broad mandate to oversee all government functions. Once seen as little more than a rubber stamp, the National Assembly has become more vocal and assertive in exercising its authority over lawmaking, particularly in the recent years. However, the National Assembly is still subject to party direction. About 80% of the deputies in the National Assembly are party members. The assembly meets twice yearly for 7-10 weeks each time; elections for members are held every 5 years. There is a separate judicial branch, but it is relatively weak. Overall, there are few lawyers and trial procedures are rudimentary. The present 15-member Politburo, elected in April 2001 and headed by Communist Party General Secretary Nong Duc Manh, determines government policy, and its nine-person Secretariat oversees day-to-day policy implementation. Although there has been some effort to discourage membership in overlapping party and state positions, this practice continues. Four--Phan Van Khai, Nguyen Tan Dung, Le Minh Huong, and Pham Van Tra--of the Politburo members concurrently hold high positions in the government. In addition, the Party's Central Military Commission, which is composed of select Politburo members and additional military leaders, determines military policy. A Party Congress, comprised of 1,168 delegates at the Ninth Party Congress in April 2001, meets every 5 years to set the direction of the party and the government. The 150-member Central Committee, which was elected by the Party Congress, usually meets at least twice a year. Principal Government Officials Politburo (Ninth Party Congress Politburo, named April 22, 2001; listed in order of rank as of April 22, 2001) General Secretary--Nong Duc Manh Vietnam maintains an embassy in the U.S. at 1233-20th Street, NW, #400 (tel. 202-861-0737; fax 202-861-0917). ECONOMY Foreign trade and foreign direct investment improved significantly. The shift away from a centrally planned economy to a more market-oriented economic model improved the quality of life for many Vietnamese. Per capita income, $220 in 1994, rose to $372 by 1999 with a related reduction in the share of the population living in acute poverty. The striking economic progress that marked the 1990s slowed in the last years of the decade. Despite an impressive 23% rise in 1999's export performance to $11.5 billion, a sharp drop in new foreign investment commitments foreshadows slower economic growth than Vietnam experienced in the early 1990s. Government control of the economy and a nonconvertible currency have protected Vietnam from what could have been a more severe impact resultant from the East Asian financial crisis. Nonetheless, the crisis, coupled with the loss of momentum as the first round of economic reforms ran its course, has exposed serious structural inefficiencies in Vietnam's economy. Vietnam's economic stance following the East Asian recession has been a cautious one, emphasizing macroeconomic stability rather than growth. While the country has shifted toward a more market-oriented economy, the Vietnamese Government still continues to hold a tight rein over major sectors of the economy, such as the banking system, state-owned enterprises, and areas of foreign trade. Substantial reforms to create a sound banking system and privatize state-owned enterprises need to be speeded up. Without these reforms, Vietnam might not cope with a rising unemployment problem. Urban unemployment has been rising steadily in recent years, and rural unemployment, estimated to be up to 35% during nonharvest periods, is already at critical levels. Layoffs in the state sector and foreign-invested enterprises combined with the lasting effects of an earlier military demobilization further exacerbate the unemployment situation. The international community has told Vietnamese leaders that the situation calls for a bold new round of structural economic reforms. The country's leadership, however, has chosen to follow a less ambitious, slow-paced reform program. Overall systemic economic reform has been limited by both Vietnam's communist ideology and a bureaucracy which views reform as a threat to the status quo. The country's slow-paced reform has hindered Vietnam from progressing in tandem with regional competitors. The July 13, 2000 signing of the Bilateral Trade Agreement (BTA) between the U.S. and Vietnam is a significant milestone for Vietnam's economy. Pending U.S. congressional approval, the BTA will provide for Normal Trade Relations (NTR) status of Vietnamese goods in the U.S. market. Access to the U.S. market will allow Vietnam to hasten its transformation into a manufacturing-based, export-oriented economy. It would also concomitantly attract foreign investor interest back to Vietnam, not only from the U.S., but also from Europe, Asia, and other regions. Agriculture and Industry Paralleling its efforts to increase agricultural output, Vietnam has sought with some success to invigorate industrial production. Industry contributed 32.5% of GDP in 1999. However, most branches of heavy industry--cement, phosphate, steel, etc.--have stagnated or declined. State-owned enterprises are marked by low productivity and inefficiency, the result of a command-style economic system applied in an underdeveloped country. Foreign direct investment (FDI)--much of it gravitating to the new industrial zones in the south--is a new and dynamic feature of Vietnam's industrializing economy. Billions of FDI dollars from countries around the globe are helping to transform the industrial landscape of Vietnam. Foreign invested enterprises are also responsible for helping the country achieve large export gains recently. Another inflow of FDI is expected once the BTA is ratified by legislatures of both countries. Of late, Vietnam has achieved some success in increasing exports of some labor-intensive manufactures. Subsidies have been cut to some inefficient state enterprises. The government also has repeatedly stated its intent to "equitize" a significant number of state enterprises. However, only a relatively small percentage of remaining state enterprises have been equitized in recent years. Trade and Balance of Payments As a result of these reforms, exports expanded significantly, growing by as much as 20%-30% in some years. In 1999, exports accounted for 40% of GDP, an impressive performance in a recovering Asia. Efforts to control Vietnam's import growth have been fairly successful. In the last 4 years, import levels have remained fairly stable. For the second consecutive year, Vietnam had a balance-of-payments surplus in 1999. The country's balance-of-payments surplus has been due not only to robust trade performance but also to official development assistance and remittances from overseas Vietnamese. Vietnam's total external debt, accounting for 37.1% of GDP in 1999, is $10.6 billion. FOREIGN RELATIONS Vietnamese-Chinese relations deteriorated significantly after Hanoi instituted a ban in March 1978 on private trade, mostly affecting Sino-Vietnamese. Following Vietnam's December 1978 invasion of Cambodia, China launched a retaliatory incursion over Vietnam's northern border. Faced with severance of Chinese aid and strained international relations, Vietnam established even closer ties with the Soviet Union and its allies in the Council for Mutual Economic Assistance (Comecon). Through the 1980s, Vietnam received nearly $3 billion a year in economic and military aid from the Soviet Union and conducted most of its trade with the U.S.S.R. and other Council for Mutual Economic Assistance countries. However, Soviet and East Bloc economic aid ceased after the breakup of the Soviet Union. Vietnam did not begin to emerge from international isolation until it withdrew its troops from Cambodia in 1989. Within months of the 1991 Paris Agreements, Vietnam established diplomatic and economic relations with ASEAN as well as most of the countries of western Europe and Northeast Asia. China reestablished full diplomatic ties with Vietnam in 1991, and the two countries concluded a land border demarcation agreement in 1999. In the past decade, Vietnam has recognized the increasing importance of growing global economic interdependence and has made concerted efforts to adjust its foreign relations to reflect the evolving international economic and political situation in Southeast Asia. The country has begun to integrate itself into the regional and global economy by joining international organizations. Vietnam has stepped up its efforts to attract foreign capital from the West and regularize relations with the world financial system. In the 1990s, following the lifting of the American veto on multilateral loans to the country, Vietnam became a member of the World Bank, the International Monetary Fund, and the Asian Development Bank. The country has expanded trade with its East Asian neighbors as well as with countries in western Europe and North America. Of particular significance was Vietnam's acceptance into the Association of South-East Nations (ASEAN) in July 1995. Vietnam joined the Asia-Pacific Economic Cooperation forum (APEC) in November 1998 and also hosted the ASEAN summit the following month. Vietnam currently holds observer status in the World Trade Organization (WTO) and is applying for full membership. While Vietnam has remained relatively conflict-free since its Cambodia days, tensions have arisen in the past between Vietnam and its neighbors (especially China). Vietnam and China each assert claims to the Spratly Islands, an archipelago in a potentially oil-rich area of the South China Sea. Conflicting claims have produced over the years smallscale armed altercations in the area; in 1988 more than 70 people were killed during a confrontation between China and Vietnam. China's assertion of control over the Spratly Islands and the entire South China Sea has elicited concern from Vietnam and its Southeast Asia neighbors. The territory border between the two countries is being definitively mapped pursuant to a Land Border Agreement signed December 1999, and an Agreement on Borders in the Gulf of Tonkin signed December 2000. Vietnam and Russia declared a strategic partnership March 2001 during the first visit ever to Hanoi of a Russian head of state, largely as an attempt to counterbalance the P.R.C.'s growing profile in Southeast Asia. U.S.-VIETNAM RELATIONS U.S. relations with Vietnam have become deeper and more diverse in the years since political normalization. The two countries have broadened their political exchanges through annual dialogues on human rights and regional security. They signed a Bilateral Trade Agreement in July 2000, and are actively pursuing agreements in other areas. A cornerstone of relationship remains cooperation on the issue of Americans missing from the war in Vietnam. As of September 2000, 2,005 Americans, who were killed in action with bodies not recovered (KIA/BNR), remain unaccounted for in Southeast Asia, 1,506 in Vietnam. The U.S. Government is actively pursuing 1,363 missing Americans in Southeast Asia, including 913 in Vietnam. Since 1973, 578 Americans have been accounted for, including 412 in Vietnam. Since January 1993, the remains of 258 individuals have been repatriated, identified, and returned to their families, 140 in Vietnam. Additionally, the Department of Defense has confirmed the fate of all but 41 of 196 individuals who fall under the "Last Known Alive" (LKA) priority discrepancy cases in Vietnam. The United States considers achieving the fullest possible accounting of Americans missing and unaccounted for in Indochina to be its highest priority with Vietnam. Reflecting the growing diplomatic relations between the two nations, economic relations between the United States and Vietnam have changed dramatically over the past decade. In July 1993, subsequent to the opening of the U.S. repatriation office in Ho Chi Minh City, the U.S. dropped its objections to bilateral and multilateral lending to Vietnam. In February 1994, following substantial Vietnamese cooperation on POW/MIA issues, President Clinton removed the longstanding trade embargo on Vietnam. In March 1998, President Clinton granted a Jackson-Vanik waiver to Vietnam, which he has renewed in 1999 and 2000 for one-year periods. (a Jackson-Vanik waiver is required along with U.S. congressional approval of a bilateral trade agreement in order to grant Vietnam normal trading rights. This waiver must be renewed annually and is based on Vietnam's cooperation on emigration issues.) On July 13, 2000, the United States and Vietnam signed a Bilateral Trade Agreement which, following U.S. congressional approval, will fundamentally change Vietnam's trade regime and help liberalize its economy. Finally, in October 2000, President Clinton paid the first visit of a U.S. President to Vietnam since the end of the war. He was met by enormous crowds of well-wishers lining the routes of his visits in both Hanoi and Ho Chi Minh City. Increased trade between the U.S. and Vietnam, combined with largescale U.S. investment in Vietnam, evidence the maturing U.S.-Vietnam economic relationship. In 1999, Vietnam exported $655 million of goods to the U.S. and imported $291 million of U.S. goods. Similarly, U.S. interests continue to invest directly in the Vietnamese economy. During 1999, the U.S. private sector committed more than $120 million to Vietnam, becoming the seventh-largest foreign investor in the country. Principal U.S. Embassy Officials The U.S. Embassy in Vietnam is located at 7 Lang Ha, Ba Dinh District, Hanoi, Socialist Republic of Vietnam (tel. 84-4-772-1500; fax 84-4-772-1510). Principal U.S. Consulate General Official The U.S. Consulate General in Ho Chi Minh City is located at 4 Le Duan, District 1, Ho Chi Minh City, Socialist Republic of Vietnam (tel. 84-8-822-9433; fax 84-8-822-9434). For the most current version of this Note, see Background Notes A-Z. |
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