FOCUS : Vietnam May Be Set to Inch Toward Capitalism

The National Assembly of Vietnam recently elected its first reform-minded prime minister, Vo Van Kiet, under the unified Communist government. An old-line Communist leader who began to favor reform while mayor of Ho Chi Minh City, the 69-year-old faces the challenge of bringing market reforms to a nation with a centrally planned, state-directed economy. The nation, where 85% of the people are agrarian and the average annual income is about $200, suffers from a number of economic ills. Douglas Pike, director of the Indochina Project at the Institute of East Asian Studies at UC Berkeley, spoke with free-lance journalist Sharon Bernstein about the likelihood of significant economic reform in Vietnam under Vo Van Kiet’s leadership.

Q: Is Vo Van Kiet really likely to institute economic reforms?

A: You never know with a new chief of state how they’re going to turn out, but he has a record of backing reform. We’re still trying to get a reading on how much change is really in the cards, but it’s clear to me that Vo Van Kiet is a reformer, that he is a person who is willing to take chances.

Q: What kind of political rivalries and issues will be at work when he takes over?

A: Politics in Hanoi are the politics of factionalism. We never understand exactly where these factions stand, but there was a great struggle over reform in 1986, and Vo Van Kiet was a front runner, although he was edged out. It is something of a desperate call that enough of the conservatives went along with him in this vote. They probably went against him in 1986.

The central problem they have had up until quite recently was over whether it was possible to have economic reform without making appreciative political reforms. That has pretty well been resolved now--everyone in Vietnam now wants change, and there is a general sense that authoritarian regimes can make considerable economic progress by retaining their authoritarian system, although you reach a point in economic development where you really cannot go much farther without making some fundamental political changes. The key is that they haven’t reached that point, so now they just have to argue about getting the economic machine going.

Q: Will he have the power to do what he wants?

A: In Vietnam at present, the prime minister is the chief figure, first among equals if you will, and that’s the job Vo Van Kiet is going into. But if it turns out that they are also revamping the constitution, it may be that this is a kind of hollow victory. Vo Van Kiet is being moved into the prime minister’s job, but there may be a president who will have much more power.

Q: What political obstacles does Vo Van Kiet face?

A: He’s up against those who say, “We agree with what you want to do, but it’s too risky.” Everyone wants change, but the farther you go up the ladder, the greater is the fear of instability. They interpret (the turmoil in) Eastern Europe as changes which got out of hand.

Q: What type of reforms are likely to be implemented?

A: They say they are going to allow what they call the market mechanism to operate. They insist that this is not the same as having a free market, but essentially that’s what it is. They are on the road to socialist capitalism or what the Chinese call the high road to socialism. These are all just semantic devices meaning a free market.

Vietnam is an agrarian economy--we’re not talking steel mills. About 85% of the work force is concerned with food production. It’s an agrarian economy, so what you’re talking about is changes on the farm.

What they are now committed to--and Vo Van Kiet is proof of this--is to take their hands off the farmers and allow the farmers to do what they want, grow what they want and market it the way they want to.

Q: Will it be difficult to develop the economy in Vietnam?

A: There are five major impediments to economic development in Vietnam. One of these is infrastructure--in terms of education. There is a lack of training. They need people who know how to make a computer chip.

The second problem is the top leadership itself. Power is concentrated in the Politburo--they make all of the decisions themselves--and there isn’t a single one of them that has the equivalent of a high school education. They don’t understand the workings of a modern technically oriented system.

They also have a problem getting a social consensus, which is a notion sociologists have that all people in a country have to have a general sense of what the country stands for and where it ought to go. Vietnam was two countries, and it still is two countries to a very large degree. Fourth, they need capital, vast amounts of capital. It costs about $7,000 per person to transfer a person from the farm to the factory, and their plans are to try to transfer 7 to 8 million people.

The fifth thing they need is amicable relationships with their neighbors, which they don’t have. They’re surrounded by enemies.

Q: Are there any signs that the United States is ready to lift its economic sanctions against Vietnam?

A: I think it’s moving in that direction. It’s contingent on some kind of a paper settlement in Cambodia. I wouldn’t be a bit surprised if that would come earlier this year.

But I would caution against the notion that either lifting sanctions or opening diplomatic relations will be a panacea. It will tend to encourage capital investment, it will permit technology transfer and would permit exchanges of personnel.

Q: What indications are there that those in the Politburo and others in Vietnamese politics really want economic changes?

A: What came out of (last week’s) Party Congress was a commitment to the principle that economics must be put into command in terms of making state policy. All decisions were to take kind of a second place to economic decision making. This originally came out of the 4th Congress in 1976 but was never respected: If the economy was really in command, they would not have pushed their whole middle class into the sea. They would not have invaded Cambodia. But it seems to me that now the economy is in command.