Stressing continuity rather than economic reform, Vietnam's new bosses look a lot like the old bosses

By Tim Larimer /Hanoi

Three years ago, vietnam appeared to be moving into the fast lane in the race to catch up with its neighboring Tiger economies. But today, reforms have sputtered to a halt, foreign investment is on the decline and shock waves from wobbling currencies of those very same tigers threaten to throw Vietnam back into low gear. So a change in the Communist Party leadership--the first in six years--has been awaited with great anticipation. Yet if Vietnam is like a car stalled on the side of the road, last week's moves amount to switching drivers when what is really needed is a mechanic.

"The key word in Vietnam is continuity," said a newly elected youthful legislator who sounds much like his elderly predecessors. "There won't ever be radical change." Such talk diminishes hope that younger and better-educated leaders will accelerate economic reforms. The technocrats promoted to the top government jobs, Prime Minister Phan Van Khai and President Tran Duc Luong, along with their deputies, are not military men like the leaders of the previous regime, but their administrative abilities remain to be seen. Khai, 64, was trained as an economist in the former Soviet Union; Luong, 60, is a geologist. "Their legitimacy will have to be based on performance," said a Western diplomat.

They will be graded on how they respond to what one senior government economist calls "a stormy time for Vietnam." The banking system is in turmoil over bad loans, corruption is widespread and unemployment is on the rise. Currency devaluations in other Asian countries threaten to make Vietnam's exports, from rice to TVs, too pricey. Overseas investment, which has pumped $11 billion into the economy, is in the words of one normally chipper government minister "at a standstill." "People are still here," said Harold Fiske, an American lawyer in Hanoi. "But you don't see new projects or new delegations coming to look things over." Frustrated with delays in reforms, donors such as the World Bank and International Monetary Fund may impose restrictions on future grants. "None of these problems is unsolvable," says a government economist. "Vietnamese are clever enough to know what to do. We just have to be allowed to do it."

In fact, successes from the first stabs at reform have increased people's expectations. Simply having enough food to eat is no longer sufficient. "While people's incomes were rising, they could accept some corruption," said a Hanoi economist. But increasing aspirations, economic sluggishness and government malfeasance have proved to be a combustible mix.

In Thai Binh province, 80 km southeast of Hanoi, thousands of farmers, laborers, pensioners and war veterans protested for several weeks over taxes, financial abuses and scandal among local officials. This rice-rich province in the Red River delta, home to some of the country's staunchest socialists, has been off limits to foreign journalists; time was denied permission to visit last week. Dozens of provincial officials, including Communist Party members, have been ousted; several have been arrested on corruption charges. One witness said villagers marched to a government office and demanded to meet with officials: "We were all poor five years ago. Now we notice you have become rich. Teach us how you did it so we don't have to be poor anymore." After weeks of silence, the official Party newspaper acknowledged the problems and said poorly trained officials were to blame, some of whom "could not overcome the temptation of money." The paper admitted that some homes had been burned down, but blamed such violent activities on "bad elements," ex-convicts who "took this opportunity to stir up the people."

Stirring the pot may be the catalyst Vietnam's leaders need to accelerate administrative and legal reforms. "Change in Vietnam is crisis-driven," says a Western diplomat. Indeed, the initial push to revamp the command economy came after the Soviet Union's patronage, which accounted for nearly half of Vietnam's gdp, disappeared in the late 1980s. There was unrest in rural provinces and food riots in some cities. Now, reformers see good news in the all the bad news: troubles, they think, will once again prod the government into action.

But when? Waiting for political maneuvering to beget change has become a sport in Vietnam. (Promoters of a charity bicycle race waited months to get permission for the event from a cabinet minister involved in a leadership shuffle.) The much-anticipated appointments won't end the waiting game, however. For one thing, a government obsessed with consensus is in fact increasing the number of political players at the top. One party official warned that Prime Minister Khai, while considered a pragmatic reformer, "won't do anything until he can consolidate his power." And the most important decision, who will head the Communist Party, won't be made until at least the end of the year.

Which means? "The same old story," says a Western diplomat. "Wait six months until there's a new Party leader. Then wait six more months until something else has to be settled."

TIME ASIA October 6, 1997 VOL. 150 NO. 14