History

Presidential Palace in HanoiFor many years, Vietnam formed part of the French colony of Indochina, along with Cambodia and Laos. With Vichy French agreement, in 1941, the Japanese occupied Vietnam during their World War II sweep through South-East Asia. The resistance to the Japanese was led by the Indochinese Communist Party, formed by Ho Chi Minh in 1930, and its armed wing, the Viet Minh.

Following the Japanese defeat in 1945, the Communists proclaimed the Democratic Republic of Vietnam. In 1946, France sent a large expeditionary force to re-establish their control. After eight years of fierce fighting, the struggle ended in the defeat of the French garrison at Dien Bien Phu.

The Geneva Agreement in 1954 provided for the temporary partition of North and South to be re-unified in 1956, following general elections. The Western powers, well aware that the Communists would comfortably win any legitimate poll, maneuvered to prevent it from taking place, while a Western-backed government under Ngo Dinh Diem was installed in the south and bolstered as far as possible. The Communists began an insurgency in the south to overthrow what they perceived as a puppet regime.

The Americans, who had taken over from the French as the lead Western power in Vietnam, responded by sending increasing numbers of military ‘advisers’. By 1962, their numbers had reached 12,000 and the stage was set for a full-scale war between the southern Communist guerrillas (known as the Viet Cong), the North Vietnam Army and their backers in China and the Soviet Union on one side, and, on the other side, the Americans and the ARVN (the South Vietnamese army). In 1973, with their political will to continue the war at an end, the Americans withdrew.

Vietnam was reunified three years later, with the victory of the Communist forces and the establishment of the Socialist Republic of Vietnam. The Vietnamese army, the strongest in South-East Asia, has since clashed with Chinese troops and undertaken a full-scale invasion and occupation of Cambodia to drive out the genocidal Khmer Rouge regime.

Vietnamese troops withdrew from Cambodia in September 1989. Freed of this burden, Vietnam was able to concentrate on rebuilding its own economy, having introduced a home-grown version of perestroika, known as doi moi.

The Vietnamese economy suffered from the withdrawal of aid and subsidized goods from the former USSR and from Eastern Europe, as well as the continuing US-organized trade boycott instituted after the US withdrawal.

In 1991, changes among the Communist Party’s top leadership indicated that the party was determined to pursue a reformist economic program while keeping many senior military men in key positions.

An essential precursor to this was an improvement in political relations with Vietnam’s near neighbors. A closer relationship, culminating in full membership, was forged with the Association of South-East Asian Nations (ASEAN). The economic dividends were clear in as much as six of the top seven foreign investors in Vietnam were ASEAN members. As a result, outstanding territorial disputes, including the Spratly and Paracel Islands and exploration rights in the Tu Chinh basin, have become manageable, even where no formal settlements have been negotiated. Relations with Vietnam’s two historic enemies, China and Cambodia, have also undergone substantial improvement. Relations with a more recent foe, the USA, eased after President Clinton disposed of the American trade embargo on Vietnam in February 1994. Full diplomatic relations were restored the following year.

Reforms have resulted in rapid economic growth in the last decade (see Economy) but there has been no parallel development in the country’s political environment: the Communist Party has no intention of relaxing its hold on political power for the time being. In April 2001, the party chose a new general in Nong Duc Manh, who consequently began a crackdown on dissident and ‘unauthorized’ literature. Nong is one of the triumvirate that now govern Vietnam, along with Prime Minister Phan Van Khai and President Tran Duc Luong. The party is concerned by corruption among senior officials as well as the growth of religious fervor among the population. At the beginning of 2004, an outbreak of a virulent form of avian flu threatened serious political and economic problems for the whole of south-east Asia, including Vietnam. A year later, at the beginning of 2005, sporadic cases of the influenza once again re-emerged. This is a health concern that officials are keen to monitor closely.

Government
The present constitution, promulgated in 1992, asserts the political supremacy of the Communist Party of Vietnam. The 496-member National Assembly is responsible for legislation. The Assembly is elected every five years from candidates proposed by the CPV. Executive power is exercised by the Council of Ministers. The Assembly elects a president, who acts as head of state and also appoints a prime minister from among the members of the Assembly. The prime minister leads the Council of Ministers, the members of which hold executive power.

Economy
The economy of Vietnam was devastated by 30 years of war up to 1975, after which policy errors and a USA-enforced trade boycott combined to stifle development. Since the end of the boycott in 1994, and the introduction of liberalizing and deregulating measures by the government, the Vietnamese economy has undergone significant growth of around 8 to 9% annually. While battlefields and other relics of our military history remain popular tour destinations, Americans will find that Vietnam has become a vibrant and modern country in the decades since our conflict ended.

The 1997 Asian financial crisis put a temporary brake on the economy but annual growth has since recovered to 8.4% in 2005 despite downward pressures on the economy from SARS, avian influenza and rocketing oil prices. The average inflation rate was 4.4% between 2001 and 2004, although it jumped to 8.3% in 2005, and unemployment has hovered around 6 or 7% for a few years with a small drop to 5.5% in 2005.

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