Vietnam Politics February 2016


Vietnam: Reform and liberalization agenda to continue despite defeat of reformist Prime Minister

February 18, 2016

Following eight days of closed-door negotiations, the Communist Party of Vietnam (CPV) chose their country’s leaders for the next five years. At the 12th National Party Congress that was held on 20–28 January, 71-year-old Nguyen Phu Trong as General Secretary of the CPV was reelected for a second term. Prior to Trong’s reelection, there was great uncertainty regarding the outcome of the Congress and the implications it would have on Vietnam’s economic liberalization and relationships with China and the United States. Documents leaked prior to the Congress showed that there was a power struggle brewing between Trong and Prime Minister Nguyen Tan Dung.

Trong gained the upper hand against former pro-business, U.S.-friendly, Prime Minister Nguyen Tan Dung, who hoped to win the top post of General Secretary. 66-year-old Dung, who had broad support from business people, young Vietnamese, and an extensive patronage network within the party, was sent into early retirement after exceeding the party’s legal age and term limits. The faction supporting Trong was capable of convincing the 1,510 members attending the Congress that Dung’s anti-China rhetoric, mismanagement of state-owned enterprises as well as the quality of his leadership posed a threat to the CPV. His strongman leadership style was seen as incompatible with the party’s value of collective leadership and sparked fears of a surge of a strong leader similar to Chinese premier Xi Jinping. Trong, who also exceeded the legal age limit, was granted a special exemption to rule the country for a second term. The Congress also elected the 180 members of the party’s central committee, Chairman of the National Assembly, President and the 19 members of the all-powerful politburo, which includes the positions of Secretary General and Prime Minister. Dung will remain in power until the legislature approves his replacement later in 2016.

Even though Trong and Dung represented two fundamentally different wings of the party, analysts are confident that Vietnam’s political and economic course will not change significantly in the next five years. The speed to which state-owned enterprises will be liberalized, however, is perhaps the only element that could change with Dung out of power. The CPV will be broadly compliant with Dung’s agenda because CPV’s political leadership is well aware that the political survival of the party depends on greater economic prosperity and appeasing young Vietnamese that hold different values than the party’s old guard.

Robust economic growth has been key in stemming political opposition and domestic dissent. It also served to placate the views of the younger generations of Vietnamese who want closer ties with the United States, greater economic liberalization and are weary of China’s maritime ambitions in the South China Sea. Dung is credited for bringing record growth to Vietnam by deepening liberalization of state-owned enterprises, attracting foreign investment and fostering closer ties with the United States and the West. Even though Trong represents the old guard of the party and is considered an economic conservative and pro-China, he nonetheless oversaw the signing of the Trans-Pacific Partnership (TPP) free-trade agreement during his first term as Secretary General and held the first-ever meeting between a CPV Secretary General and the President of the United States in July 2015. The party’s Central Committee fully endorsed the TPP prior to the 12th National Congress even though TPP membership will force Vietnam to open its economy to foreign competition and make significant reforms in labor rights and other areas, which would erode the size of the government.

Vietnam will also be forced to sow closer ties with the U.S. to serve as a counterweight against Chinese territorial ambitions in the South China Sea. Vietnam has historically held strong trade and ideological ties with China, making China a natural ally. However, conflicting claims on the South China Sea have driven the states apart and have put Vietnam’s political leadership in an uncomfortable position. Despite diverging economic views between Dung and Trong, the CPV will end up following Dung’s path. Party leaders see economic and political pragmatism as the key to guaranteeing its success and hegemony in Vietnamese politics.

Author: Jean-Philippe Pourcelot, Economist

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