By Major General P.K .Chakravorty (Retd)*
The United States finally left Saigon on April 30, 1975. Relations between the two countries saw an upward swing with the easing of sanctions by then president Bill Clinton in 1995 and opening of the US Embassy in Hanoi. Thereafter relations strengthened between the two countries, and today Vietnam is a member of the Trans Pacific Partnership. It has taken more than four decades for relations to be normalised leading to the visit of Vietnamese. Vietnam crossed the rubicon – with Nguyen Phu Trong, the General Secretary of the Communist Party, meeting President Barack Obama at the White House on July 7, 2015. The meeting signified the new trade and security relationship between the two countries. The two countries are moving close informally to tackle issues in the South China Sea. The US, much to the displeasure of China, has always spoken of freedom of navigation in the high seas. The present meeting is a step forward in easing strategic tensions in the South China Sea.
Situation in Vietnam
The Communist Party of Vietnam elected the Eleventh Party Congress in 2011. The tenth plenum of the Party Congress was held in January 2015. Right from the inception of this Congress the leadership has demonstrated its flexibility within its framework. The party has started gauging public opinion by limited voting on key issues affecting the country.
The party firmly remains wedded to its core principles. The present General Secretary of the party has emphasised the need to revamp governmental framework, policies, structure and system, fight against red tape and corruption as also make the government more efficient. The party would like to steer the Vietnamese market economy with a socialist orientation. In this field they would like state owned enterprises to run efficiently and be sustainable.
With regard to foreign policy, the Communist Party of Vietnam would like to continue a multilateral foreign policy. The Chinese oil rig incident in May 2014 and current naval exercises in the South China Sea as also China’s pressure over issues pertaining to the South China Sea will not see Vietnam deviate from its principled approach on foreign policy. Neither is an alliance with the United States on the cards nor is China being declared an adversary.
However, a new security relationship is beginning to shape with the United States. The year 2015 is proving to be a challenging one for Vietnam to revitalise its economy and to manage its external relations smoothly.
It is pertinent to note that Vietnam organised the 132nd Inter Parliamentary Union Meeting from March 28 to April 1, 2015 in Hanoi which was attended by parliamentarians from 133 countries. The meetings were extremely successful. The subjects discussed pertained to water resources, threats to peace and aspects of security, including cyber security. The meetings focussed on the common theme of ‘Sustainable Development Goals: Turning Words into Actions’. Vietnam was praised for immaculate organisation as also the country was an exemplary model in terms of poverty reduction, disaster mitigation, sustainable development and has taken steps towards combating climate change. The delegates agreed to these issues and the joint statement primarily mentioned these aspects.
Management of Challenges
The recently conducted Inter Parliamentary Union reflected Vietnam’s globalised approach. This is due to the steps taken by Vietnam to liberalise its thoughts over the last 29 years. The Vietnamese have strained every sinew to follow a market economy leading to the development of the country since 1986.
Vietnam made a shift from its highly centralised planned economy to a socialist modelled market economy. Over this period the economy has seen rapid growth rising to a nominal GDP of $188 billion and nominal per capita income of $2,073. A bilateral trade agreement signed with the United States (US) on July 13, 2000 permitted Vietnamese goods to enter the US market. In 2001, the Communist Party of Vietnam approved a 10 year economic plan and enhanced the role of the private sector. Vietnam was officially became a member of the World Trade Organisation on January 11, 2007. This further liberalised the economy but Vietnam had to face stiff competition in exporting its goods. Despite this Vietnam continued to maintain a steady growth between 5 to 7 percent.
Currently the government has set out a growth rate of 6.2% for 2015. Further, inflation will be maintained at 5% resulting in reduction of poverty by another 1.7 % and creation of additional 1.6 million new job opportunities. The rise recorded in recent months is driven by strong exports and a booming manufacturing sector. Experts feel that to reach a growth rate of 6.2% there would be a need to boost investment to the tune of 33-35% of GDP. Further Vietnam is pushing ahead with its plan of disinvesting its 1,000 state owned enterprises. The Ministry of Planning and Investment was asked by the government to withdraw its proposal for using the state budget to settle bad debts of state-owned enterprises. It is estimated that the bad debt works out to $80 billion.
Further the government wants to tackle corruption which exists in finance, banking, land management, natural resources exploitation and public investment. Despite these irritants the Vietnamese economy has stabilised. The forecasts predict that in the short run Vietnamese economy will grow at a slightly slower speed and will accelerate to high growths in the long run once the shortcomings are addressed.
Vietnam’s security depends on the resolution of the South China Sea dispute with China. The General Secretary of the Communist Party of Vietnam Nguyen Phu Trong visited China in the second week of April 2015. On April 7, 2015 he held discussions with the Chinese President Xi Jinping. A joint communiqué reported by Chinese news media Xinhua stated that both countries had discussions on issues pertaining to the South China Sea. The two countries agreed to use the existing border resolution mechanisms to look for a basic and lasting resolution which both countries should accept. It is pertinent to note that both the countries have resolved their land border dispute by 1999 and are capable of solving problems amicably.
However, China has been claiming almost 90 percent of the South China Sea which has compelled the Philippines to go to court and Vietnam placing its troops on the Spratly islands. Vietnam in conjunction with other members of the Association of Southeast Asian Nations (ASEAN) wants a Code of Conduct which will enable freedom of navigation in international waters. The claims of these countries must be peacefully settled and there should be no forceful occupation or transgression in these disputed waters. The United States has supported its stance by declaring the need for freedom of navigation in the high seas.
Assistance by India
Vietnam is a strategic partner of India and friendship between the two countries is intensifying exponentially. India has offered 18 Lines of Credit and is helping Vietnam in its economic development. Vietnam has been gracious to offer us oil sites for exploration in the South China Sea. The detailed plan for Tatas to build a thermal power plant at Soc Trang costing around $1.8 billion is being finalised. India is also trying to improve the bilateral trade between the two countries.
India has taken a positive stand on the freedom of navigation in international waters which lends support to all countries having maritime claims in the East China Sea and South China Sea. India has clarified this issue in numerous forum and stated that maritime disputes should be settled as per International norms. India has been careful in exploring oil in South China Sea in areas away from the Nine Dash Line. This has ensured that there is no exploration in disputed areas.
China currently continues to assert her claims particularly at the tactical level despite her peaceful strategic reassurances. This has led to strategic cooperation between India, Japan, Vietnam, Australia and the US. Vietnam and India are managing their challenges smoothly.
Vietnam has been managing its challenges in 2015 effectively. This has resulted in higher economic growth rate and an incident free situation in the South China Sea. Further Vietnam has demonstrated its capability to conduct the 132nd Inter parliamentary Union meeting attended by 133 nations successfully. This indicates its strength to understand the nuances of diplomacy along with economics and strategy. The meeting between the US president and the General Secretary of the Vietnamese Communist Party marks a high point in the strategic relations between the two countries.
*Major General P.K .Chakravorty (Retd) is a former ADG Artillery, has served as the Defence Attaché in Vietnam from 1996 to 1999 and closely observes issues in the Asia Pacific.. He can be reached at [email protected]