Vietnam, the world’s 13th largest country, has come a long way in a short time.
After defeating Washington in its attempt to subvert the fight for independence on the battlefield, Vietnam’s economy struggled to cope in the post-war era. General Giap may have out-manoeuvred the Pentagon, but Hanoi’s brand of state socialism could not deliver the goods and by 1981 40 per cent of the state budget consisted of subventions from Moscow.
This was not to last. The collapse of the Soviet Union and its empire saw those subventions fall to zero by 1991. But Vietnam was already moving on.
As early as 1979, spurred on by the economic crisis that resulted from Hanoi’s intervention in Cambodia – and its consequent invasion by China – agricultural reform set new low targets for rice delivery to the state, leaving any surplus available for sale in the market. Productivity boomed and demand soared.
State-owned enterprises started what came to be known as pha rao (fence breaking) as they began informal trading that by 1982 was estimated to comprise well over one-third of ther economy. Thus economic liberalisation was well under way before the “official” start of reform in 1986 and long before China and the Soviet Union even considered opening the door to industrial capitalism.
In 1986 growth and food production fell and the inflation rate approached 500 per cent. The fence breakers, armed with their economic successes and political influence, forced the Communist Party to abandon central planning and give the markets more of their head with the policy of doi moi (which means change to something new or renovation).
From that point on Vietnam has moved from strength to strength. By 1993 the US embargo had been lifted and the World Bank intervened to “help” with its controversial nostrums of privatisation, liberalisation and reform that, provided swallowed whole, brought offers of loans worth hundreds of millions of euros.
But Hanoi was neither to be bought nor, when bought, to stay bought. It was to be reform with Vietnamese characteristics in both pace and direction.
In 1999 it was made simple to establish private companies and, within five years, 160,000 were registered. By 2007 Vietnam had joined the World Trade Organisation and, in summer 2010, EU Trade Commissioner Karel De Gucht invited Vietnam to negotiate a bilateral Free Trade Agreement ahead of fellow ASEAN member states such as the Philippines and Indonesia who had slavishly followed every curious twist and turn of World Bank orthodoxy.
Success spins off good and bad as Vietnam: Rising Dragon illustrates. Tens of millions of people have been taken out of poverty, yet inequality has soared as the little red princes and princesses – the children of the party elite – have made the upper reaches of Vietnamese capitalism a thoroughly family business.
The environment has turned foul, with the world heritage site of Ha Long Bay, with its spectacular limestone towers, dying under the gaze of 1.5 million tourists a year. The sex trade is almost back to where it was when the United States was here and organised opposition and unorganised religion are equally frowned on by the authorities, while it’s a crying shame that the victims of Agent Orange remain uncompensated for the war crimes perpetrated against them and their parents.
Nevertheless it’s almost amusing that the complaints of Western economists that this is not how it’s meant to be done are being drowned out by the sound of cash registers ringing right across Vietnam.
Asian capitalism may yet find it has new worlds to conquer.
