Tuesday, January 11, 2011

Vietnam: Could persistent internal challenges like corruption be Vietnam's Achilles' heel?

By Denis Burke for ISN Insights
International Relations and Security Network (ISN)

Following almost a decade of breakneck economic growth , Vietnam seemed poised to join the ranks of middle-income countries before the global financial crisis hit. Its reputation continues to rise in international and regional circles, as evidenced by its stints as chair of both ASEAN and the UN Security Council. Though the Communist Party still holds the real power, Vietnam's advances in the market economy in the last two decades have propelled the economy forward and opened the country up, putting it on track to reach the nation's goal of full industrialization by 2020. However, the impact of the financial crisis, geopolitical shifts in the region, potential fall-out from climate change, human rights abuses and press freedom concerns continue to overshadow the country's progress.

Geopolitical wrangling

The expansion of China's influence and presence in the South China Sea since the 1970s has thrown the geopolitics of Southeast Asia into a state of flux, leading the US, India and Japan to explore their own positions there and to find ways of dealing with China's increased assertiveness.

Speculation is rife about the direction of power politics in Southeast Asia. The US is certainly eager to reassert itself in the area. Both Japan and India currently enjoy regional power status and will seek to protect those positions. As a conduit for so many vital shipping lanes, the interplay of interests between these four major powers leaves the South China Sea an area of value and strategic importance.

Vietnam's location makes it a natural point of control for the South China Sea. The former French colony's capacity to play well in international fora - notably ASEAN - and its relative political stability position it as a regional leader. However, the geopolitical concerns of the global players active in the region may ultimately force Vietnam to side more closely with one power over another, undermining some of the positive relationships it has built to date.

Territorial disputes have been resolved with a few exceptions; most notably, the Spratly Islands, which are claimed by China and several Southeast Asian nations. The islands lie in a potentially oil-rich area. Most recently the US involved itself in the dispute when Secretary of State Hilary Clinton suggested that the US could mediate talks over the islands. Though this has repeatedly been a point of - sometimes violent - contention between Vietnam and China, the relevant governments have resolved to fix the situation diplomatically and amicably, reflecting the generally positive relationship between the two countries.

Dealings with the other major players have also fared well. The US remains Vietnam's number one trading partner, while Japan is Vietnam's number one donor. Relations with India are generally positive with some ambitious long-term joint strategies including increasing trade, joint cultural and educational programs and Vietnam's backing of India for a permanent seat on the UN Security Council.

Internal machinations

While these international developments have the potential to upset Vietnam's growth as a regional power, internal problems such as pervasive corruption and the economic impact of climate change would appear to merit more urgent attention. Corruption remains a serious concern. Attempts to take disciplinary action have only confounded the problem - with high-level prosecutions on corruption charges proving to be cosmetic exercises with little real consequence to the systemic problems that exist. Freedom House found that academic, religious and media freedom are worryingly controlled. Human Rights Watch issued a damning assessment of the country's human rights record and perceived level of cooperation with UN rights experts in September 2009, citing detention of prisoners of conscience as one of Vietnam's worst abuses. Accession to the World Trade Organization in 2007 saw the introduction of wide-reaching and comprehensive intellectual property laws, but massive enforcement gaps mean that DVDs, software and books are pirated far more than the East Asian average.

Vietnam is also pegged to be one of the first major victims of climate change. Periods of drought - already too common in the country - are likely to grow longer. As sea levels rise, most of the Mekong delta could be submerged in water by 2030. Depleted fish populations - allegedly caused by damming further up the Mekong in China - have hurt the already struggling rural population left behind by the economic boom. China's stance on the Mekong, until recently closed and uncooperative, has become much more open and constructive, even extending invitations to representatives from Southeast Asia to tour the newly constructed Xiaowan dam and the older Jing Hong dam.

Vietnam's economic good fortune was driven by external forces such as foreign direct investment (FDI), donor funding and exports, making its exposure to the global financial crisis considerable. Despite a credible performance in 2007, Vietnam's stock market lost almost 70 percent of its value in 2008. While government officials have been eager to stress the successes of the domestic stimulus packages, the long-term outlook remains uncertain, though not critical. FDI has not gone away however, and even Vietnam's lower levels of growth in 2009 were impressive in a regional context.

The Southeast Asian nation's primary geopolitical concern is the stability and peacefulness of its immediate neighborhood to allow it to develop. Even considering the impact of the financial crisis there is not much in its way. Until now, great progress has been made through careful navigation of sensitive issues with other countries, a willingness and assertiveness in dealing with global players beyond the region and, crucially, a longer term stability that has escaped much of Southeast Asia.

Denis Burke works in media and communications in the NGO sector and researches and writes on Asian current political affairs.