Wall Street Journal
Tuesday - November 25, 1997

Vietnam's Restless Countryside

By ANYA SCHIFFRIN
Over the last few years Vietnam's economic reforms have stalled, and multilateral institutions are pressuring Hanoi to get back on track. Now it's Vietnam's peasants who are telling the government to get moving.

For almost six months the farmers of Thai Binh province--an area known for its Communist fervor and cited in song for its high rice yields--have been taking to the streets to protest high taxes and corrupt local officials. The demonstrations may be the largest in the country's recent history and, given the government's inability to address its problems, they could continue.

It is easy to forget how much Vietnam has lagged behind other parts of Asia. Shattered by decades of war and years of Marxist-Leninist economic policies, its people remain poor, telephones are a rarity in the countryside and infrastructure is in pitiful shape. Some 10 years ago Vietnam and China had the same per- capita income. Now China's stands at $750 while Vietnam is around $300.

Globalization may have made the world a village from which CNN reports current events in mind-numbing detail. But in Vietnam, towns that are just a few hundred kilometers away from Ho Chi Minh City or Hanoi are utterly isolated. The central government responded predictably to the protests: It imposed a news blackout on local press and banned foreign journalists from visiting the region. Thai Binh, located a mere 80 kilometers southeast of Hanoi, was totally sealed off. Vietnamese discussed the protests over breakfast at the noodle stalls that line Hanoi's streets, and diplomats at cocktail parties speculated about what was going on. But no one spoke with authority. Even now what actually happened, or how many people were killed, is not clear.

In September the government admitted to foreign journalists that there had been some "incidents" in Thai Binh and that local officials were being disciplined. This announcement was followed up with a four-part series in the Army's daily newspaper indicating that officials had levied fees on locals to finance infrastructure construction and that much of the money had been pocketed by corrupt cadres. A number of articles describing the achievements of the heroic province followed. Then this month newspapers announced that provincial governor and Central Committee member Vu Xuan Truong had been dismissed along with 50 other officials.

All of this means that Thai Binh's demonstrations probably are not the start of a mass rebellion against Vietnam's one-party state. But the protests point to the complete failure of the country to develop civil institutions and a way for citizens to redress grievances.

Vietnam's recent economic growth has been uneven and the peasants, who were traditionally the backbone of support for the party, have paid the price. As the government moved to liberalize the economy it developed a two-tier system for health care and education. This benefited city dwellers who could afford to pay for medical services and private schools for their children, but it hurt the impoverished farmers who were left without a safety net--flimsy though it may have been.

In a report on Vietnam issued this month, the World Bank warned that "Over half its population (is) classified as poor. Income disparities, particularly between rural and urban populations, are large and widening."

Central planning and state monopolies have kept Vietnam's farmers, who make up about 70% of the country's population, from sharing in the profits of the country's large rice exports. Rice production shot up after the first wave of reforms was inaugurated in the late 1980s. Vietnam is now the world's No. 2 rice exporter after Thailand, exporting 3.1 million tons of rice in 1996. But instead of allowing private trading companies and rice processors to export rice, Hanoi dictates that exports be done through state-owned food companies.

As a result farmers sell rice at prices far below market levels to middlemen who then resell it to state-owned food companies. These SOEs then often export the rice to customers found by private companies that don't have permission to export it themselves. This government meddling, economists say, means city dwellers benefit from artificially low rice prices while farmers are underpaid. More and more farmers are falling into debt and losing their land, even though officials have said helping them is a task of great urgency. The government has taken some small steps to liberalize the rice export market, but many economists would like to see the quota system, and the advantages it gives to the powerful state-owned companies, abolished altogether. Such changes would likely help the farmers of Thai Binh, a province that exports several thousand tons of rice a year.

Vietnam's poor but relatively egalitarian society has also been replaced by one in which government officials accept bribes with impunity. Everything from a passport to a job interview can be bought and strong central government control means there is no one to complain to. Indeed the peasants of Thai Binh who complained about abuses were apparently rebuffed. As the Nhan Dan newspaper described it: "when complicated incidents occurred at a village, hundreds of party members failed to act positively."

The media is state-controlled and does not expose corruption except in isolated cases when the government wants to make an example of someone. Local officials are often out to make a buck; organizations such as trade unions or the farmers associations are government-run.

No doubt frustrated, the farmers of Thai Binh must have felt they had little to lose when they took to the streets. Vietnam has a long history of peasant protest and the last decades have seen hundreds of incidents, although they are rarely reported in the local press.

What is different in Vietnam from other developing nations is that protests generally take place in the countryside rather than the cities. Thai Binh is an example of this: Some of the first uprisings against French colonial rule took place there.

Given the lack of political freedom in Vietnam, the government needs to at least be seen as delivering economic growth if it is to avoid losing support. And with almost half the population under 25, there are tens of millions of people out there who know they are poor and are waiting for things to get better. The government feels the pressure and talks often about the need for some reform, but has so far been unable to strike a Chinese-type bargain of allowing people to get rich even while it clamps down on human rights. Hanoi wants to have it both ways: It wants to maintain the "leading role of state-owned enterprises" and it wants to keep a lid on unrest. What happened in the Soviet Union is a Vietnamese bureaucrats' nightmare--this government says it wants change to be slow and led by the state.

As a result, Hanoi tried to solve Thai Binh's problems in its usual way: punishing people on both sides and keeping control of the media. Whether the army was called in is not known; some observers say a peasant army would never fire on other peasants.

The government has talked a lot about the evils of corruption and the importance of a "clean state apparatus." What is missing, however, is acknowledgment of the need for structural reform of the agrarian economy and an overhaul of domestic institutions. Western economists and multilateral organizations have been saying for years that Vietnam's private sector needs to be unleashed and that the state needs to stop micromanaging every aspect of economic development. Until the government gets the message--and responds to it--more Thai Binhs are to be expected.