Shared wariness over China is the main reason
the U.S. and Vietnam have embraced each other. But it shouldn’t be the only
one.
Riding
on the back of a motorbike is probably the best way to see Vietnam’s
capital. The hair-raising experience
lets you feel the energy on the street, the incessant buzz of small businesses,
the informal sidewalk kitchens, and the surprisingly large numbers of Western
tourists gawking at the fading yellow French colonial architecture. Compared to
other economies in Asia, Vietnam seems a sure growth bet for the next quarter
century. Yet capitalizing on that potential will task the government even as it
eyes closer relations with its erstwhile enemy, the United States.
The
plethora of goods, restaurants, and crowds make it easy to forget this is still
a Communist-run country. Everywhere one looks, newlyweds in their wedding best
pose for pictures, dotting major parks or central Hoan Kiem Lake, or clustering
in front of the majestic Opera House. Officials in Vietnam seem genuinely
interested in dialogue, while people on the street are invariably helpful. They
pepper a visitor with questions, seeking answers about development or trying to
understand what’s going on in America.
This
country of 87 million has a median age of 27 years, and over 60 million of its
people are between the ages of 15 and 65.
Its nominal GDP per capita, according to the World Bank, was $1,224 in
2010, about a quarter of the size of
China’s, but has been growing rapidly over the past decade thanks to steady
growth in GDP, including a 6.8 percent growth rate in 2010. Even though China
is Vietnam’s largest trade partner, trade between Vietnam and the United States
increased more than six-fold from 2002 to 2010, to $18.6 billion.
Most of
the Vietnamese business and trade officials I talked with were eager for
Vietnam to have greater access to world markets and the modernization that it
would force on Vietnam’s export sector. There was particular interest in
discussing whether Vietnam, with its nearly 3,500 kilometers of coastline, can
become a major logistics center for Asia. In general, officials openly
acknowledge economic problems, including a volatile 18 percent inflation rate
and the need to move up the value chain in production. A recent consultant
group study flagged dangers to growth in Vietnam at the macro level, calling
for more reform. But demand at the micro level is what will keep the economy
humming.
Officials
are also aware how future economic performance is tied to higher education, and
of the need to adequately fund their growing universities. I visited one of
Vietnam National University’s campuses, where the upbeat energy of the students
stood in stark contrast with the run-down and utilitarian buildings.
The
Vietnamese have successfully merged the past and future in the footprint of
Hanoi. While much of the city retains its colonial charm, perhaps the most
prominent symbol of development stands at the site of the old Hanoi Hilton, the
downtown French prison that became notorious in America for housing downed U.S.
airmen during the war. Only about a fifth of the original Hoa Lo Prison
remains, and is now a museum. Covering the rest of the site, and looming over
the old barracks and entry gate is the Hanoi Towers complex, hosting a Western
hotel and high-end goods shops. Yet still surrounding it are temples, small
coffee shops, “Made in Vietnam” clothing stores, and storefront restaurants.
A
shared wariness of China has been the major reason for the United States and
Vietnam to explore closer ties. Yet despite strategic concerns, the biggest
obstacle to closer Washington-Hanoi ties remains politics. In particular, the
two governments remain years apart on human rights issues, as well as on
freedom of expression for political and religious purposes. The Communist Party
shows no signs of relaxing its political hold, and is quick to squelch overt
political criticism. But that doesn’t seem to impinge particularly much on how
individuals choose to engage in economic activity. U.S. officials I talked with
stressed the need to move slowly, not only to deal with these problems, but
also because the Vietnamese remain extremely wary of getting too close to the
United States and then being sacrificed on the altar of Sino-U.S. relations.
Washington's
relationship with Vietnam may be one of its most delicate, yet important in the
coming decades. As long as U.S. leaders are realistic about the limitations,
there’s a huge area to fill with development assistance, security discussions,
and trade. The welcoming attitude of Vietnamese towards Americans only
reinforces the feeling that this is one country whose energy Washington should
embrace.
Michael
Auslin
Business & Investment Opportunities
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