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Major Powers and Vietnam

Major Powers and Vietnam

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Published by Dr. PANKAJ JHA

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Published by: Dr. PANKAJ JHA on Sep 10, 2009
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12/21/2012

 
Vietnam and External Powers: Reconfiguring Power Equations
 Dr.Pankaj Jha Associate Fellow Institute for Defence Studies and Analyses(IDSA) Email:pankajidsa@gmail.com
 Abstract 
Vietnam was the country which led to the tug of war for balance of power in the region of Southeast Asia. Also in due course of time it was involved in the Cambodian crisis which led to differencesbetween the erstwhile allies namely Soviet Union and China. In 1979 when the Cambodian crisis happeddue to opposite stance taken by USSR and China, US tried to make better relations with Chain and so therewas a complete turnaround in relations with China. This also promoted the fizzling of the anti china stanceby few of the countries of Southeast Asia namely Thailand and Singapore. Vietnam, in the post resolutionof Cambodian crisis phase, involved itself in the multilateral organisations like APEC, ASEAN and ARF.The dividends of such an engagement and the enhanced ties with China subsequently led to the rise of Vietnam. Prior to that the Doi Moi(economic liberlisation) initiative has put Vietnam into the path of economic growth. The robust economic growth of Vietnam in the post 2000 phase has made it a lucrativeinvestment destination for major powers and also got the investment form the regional ASEAN countries.How far Vietnam is going to sustain the arte of growth and whether with the induction in WTO, Vietnamcan forebear the economic guidelines of opening up is a matter of concern. Also the major powers havestarted seeing Vietnam as the next Dragon and a competitor to China. This might create problems betweenthe two neighbours but it is to be seen whether Vietnam maintains its neutrality or looks for externalsupport for its national security. The paper discusses the nitty gritty of such an involvement and the future perspectives of Vietnam economic and defence growth.
Vietnam was the country of contention between the two superpowers from 1905s to late1970s and with the defeat of US in the second Vietnam War and the Vietnamese assertionduring the Cambodian crisis which saw embarrassing skirmishes for China, one thing got veryclear that a new regional power had arrived in the Southeast Asian scenario. Vietnam thereafterhas connived with the major powers for peaceful resolution of the Cambodian crisis. The role ofVietnam with regard to induction into the ASEAN, APEC and ARF showed the constructivistpart of Vietnam which wanted to secure its economic and national security. The results of suchan engagement were the induction of the rest of the Southeast Asian countries into ASEAN.Also due to the growing strategic importance of Vietnam it got a seat in APEC and also ARF.This was at that time when China was slowly growing in importance and US started gettingapprehensive about the growth of China.In the last decade almost all the countries in the region and also extra regional powershave stared taking the stature of Vietnam as not only a communist country but as a country witha huge potential for economic growth and also as a country which can be counter balance toChina’s military growth. Though it would be not justified that Vietnam had acquired that Staturebut the increased investments and growing trade with almost all the international powers,Vietnam is sure to emerge as the next economic giant. China also has stared giving due weightage to Vietnam and the results have been the resolution of the boundary dispute and thedemarcation of the maritime boundary. The issue of Spratlys islands still looms large in thestrategic thinking of the southeast Asian nations but the role and the involvement of Vietnam incase of crisis is still not been decrypted. Vietnam on the other hand is making itself lucrative and
 
the recent spate of the investment promotion initiatives and the foreign direct investmentregulations has clearly demarcated the areas of interest for Vietnam. Vietnam with a steadyeconomic growth of 7/8 per cent in the last five years has arrived in the economic scene and therole of the external powers is what the paper would decipher. Vietnam though ahs not emergedas a very formidable regional power but has the remnants of benign the middle power.
Role of Vietnam as the Middle power
The term middle power itself raises few questions but if we go by the terminology used thenMiddle power are those which are located in the middle. The middle of what is not importantbeyond the requirement that it provides power. Power theoretically, could come from aninfinite number of sources. Practically, however, strategic territory, military or economicresources, ideology and/or level of relative economic development are commonly believed toprovide power in the contemporary world. Holbraad demonstrated, in his benchmark textMiddle powers in International politics, the problem of defining middle power. Holbraadresearch is based on the work of Martin Wight
1
. Small states were not able to maintainthemselves without external support whilst large states had a notable advantage over theirneighbours. By qualifying the security of states in relation to their need of the help of another,Giovanni Botero in his published work in 1589 found a link between the relative sizedetermined by security and behaviour of medium states. Botero’s concept of security includedthe idea of longevity. The medium state, he found, had the greatest potential longevity owing toits mediocrity. The longevity of the medium state, as theorised by Botero, results from itsposition within the hierarchy of states and is endangered predominantly by the failure of itsleader to recognise the limits of mediocrity. So a middle power is defined through theexamination of the security of that state. A state which is large enough to maintain itself withoutassistance form another, whilst not having notable advantage over its neighbours, allows for itsinclusion within the classification of middle power
2
.Vietnam because of its economicdevelopment, role and stature in international politics in general and region in particular aswell as other factors like population and military strength qualifies as the middle power.Vietnam has with greater economic growth and peace and stability has cultivated a better say inthe southeast Asian region and also contribute to the extension of its strategic interests becauseof the fact that economic statecraft have become an important component of strategic statecraftin the international politics especially in the aftermath of cold war and the ensuing phase ofglobalisation.
Vietnam’s Economic Resurgence
The economic development of Vietnam can be put in two phases which was before Doi Moi andafter Doi Moi to date. Prior to the Doi Moi phase, the period from 1976 to 1985 was that of slowrise in national income in the range of 3.7 per cent with a slow increase in agricultural; productionand even Industrial production increase not reaching the two digit mark. Even there was greaterreliance on the imported goods like rice and cloth. The debt was growing in both non convertibleand convertible currencies. By the year 1986 Inflation ahs reached up to 700 per cent
3
.In the spotDoi Moi Phase, during the 1986-90, five year plan government implemented three largeprogrammes for production of food, consumer goods and exports. The main motivation for thesepolicies was the renovation of the economic mechanism. In 1987, the government issued the lawof foreign investment in order to attract foreign capital to the country. The banking system was
 
also restructured as well as reorganised to cope with the new situation. Exports were encouragedby a reduced reliance on quotas and the issue of licences for export activity passed to the localgovernment rather than being controlled by central authorities. The results of these changes wereas follows:
GDP increased 48.2 per cent(an annual average increase of 3.9 per cent)
Agriculture: Paddy cultivation expanded from 18 million tonnes per year to 25 million tonnes(1991-95), shifting from importing rice to exporting rice.
Industry: Average growth of 13.5 per cent per year. This industrial development partially cameform the results of large investments in the past in heavy industries such as petroleum, electricitysuch as petroleum, electricity, cement, paper, steel. The increase in crude oil exploitation andcapacity by large factories have contributed significantly to the growth of industrial production.
Structural transformation: The share of sector I (Agriculture) has decreased while that of industryand services had increased while inflation also came down to 5 per cent mark by 1997.
US normalised diplomatic relations with Vietnam and Vietnam also signed a cooperationagreement on economic relations, commerce and technology with European Union and also joined ASEAN.Vietnam has slowly emerged from the war phase and has slowly evolved itself into a moremarket oriented economy since the launch of
Doi Moi
in 1986.The scenario has changed in the lasttwo decades since then and as per the 2006 statistics Vietnam has a GDP of US$ 60 billion whichhas been propelled by a growth arte of over 8 per cent in the last five years. The export andImport have surged to $39.6 billion and 44.1 billion in 2006 .China has been promoting trade withVietnam but still US, EU and ASEAN countries emerge as the largest markets for Vietnamesegoods. In political terms Vietnam has been rather stable and strong commitment has been shownby the ruling elite to bring reforms with regard to economy, governance and better investmentclimate. Also there has been greater urgency for wiping out corruption at all levels and generatingbetter internal party democracy as well as increasing transparency. Vietnam has been keen inenhancing bilateral trade relations with its neighbours and with the developed economies of theregion namely Singapore and Japan. Even in terms of break up of the ownership of the companiesthe major chunk of per cent which used to be in state owned domain has slowly been under thenon state sector. While State sector ownership has been 39.23 per cent, Non state sector has been45.61 while Foreign invested sector has been 15.17 per cent. Even in terms of marketcapitalisations in 2006 it has improved form 5 per cent to 23 per cent of GDP.But the growth ofVietnam has been posing problems also and opportunities as well. While Demand has outdonesupply and so Vietnam has been clamouring for investment in strategic sectors. Also Vietnamthough has been stated to have one of the high growth economies of Asia but most of itseconomic growth is underreported because about 30 per cent of Vietnam’s economy is informaleconomy and so even employment figures and add on GDP would be more than what has beenreported by various international agencies.These developments have spurred the interest of the developed countries in the world to invest inVietnam as well as look for strategic sectors. Vietnam has been looking for greater engagementwith the international economy and the membership of WTO has opened areas of greaterengagement with the international economy.

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