Hanoi admits rift on reforms

Financial Times (London)
By Jeremy Grant in Hanoi

Vietnam's ruling Communist party yesterday admitted to a rift over the direction of reform, a rare confession casting doubt on Hanoi's ability to weather the Asian economic crisis.

The prime minister, Phan Van Khai, pledged not to revise this year's growth target of 9 per cent, a figure economists say is unrealistic, given erosion of exports, stagnating industrial output and an ailing financial sector.

The official Vietnam News quoted the premier as saying the government would not lower its ambitious targets for 2000 "despite second thoughts from many party officials about the doi moi [reform] process".

Signs of economic decline had "divided people into two camps of thought", with some calling for a slowing of reform because of the regional crisis and others saying a domestic slowdown was "healthy" after years of rapid growth.

Any public sign of disagreement in the party is rare. Hanoi always presents a unified party image despite a collective leadership that contains reformist, conservative and military opinions.

That balance has come under strain because of a two-year leadership succession struggle, resolved last month with the election of party general secretary Le Kha Phieu. But diplomats say the impact of the Asian economic crisis seems to have widened those fissures and is showing up weakness in the collective model.

"The consensus decision-making image that was always propagated is changing now. There is an indication a debate is taking place, and this is new," said Jean-Luc Berlasconi, a United Nations Development Programme economist.

Reformists broadly favour changes urged by the International Monetary Fund and World Bank to tackle the ailing financial sector, overhaul state enterprises and liberalise trade. But party stalwarts fear such moves could widen the gap between urban rich and rural poor, sparking social unrest.