Introduction
Employing a process-tracing method of analysis of new documentary evidence from the Vietnamese archives, I advance an interpretive claim on how early reformist ideas of a broad-based foreign policy including Vietnam's economic engagement with the West after the Paris Peace Accords (PPA) in 1973 came to dominate Vietnam's doi moi (renovation) foreign economic policy at the Sixth Party Congress in December 1986, hereafter referred to as the 1986 doi moi. It refers to a series of policy changes to reduce international isolation including a Foreign Investment Law in 1987; a declaration to withdraw troops from Cambodia by the end of 1989; and reconciliation with China, the United States, and the Association of Southeast Asian Nations (ASEAN) allies. I not only traced the origins of doi moi ideas to the PPA in 1973 but also made an inference regarding their causal role in shaping Vietnam's 1986 doi moi.
The existing scholarship on the 1986 doi moi has largely focused on the process of Vietnam's market-oriented economic reforms in the first half of the 1980s (Kerkvliet Reference Kerkvliet2005; Vasavakul Reference Vasavakul2019), but few, with notable exceptions of Tuong Vu's (Reference Vu2016) Vietnam's Communist Revolution: The Power and Limits of Ideology, David Elliott's (Reference Elliott2012) Changing Worlds: Vietnam's Transition from Cold War to Globalization, and Adam Fforde's (Reference Fforde2009) Economics, History, and the Origins of Vietnam's Post-War Economic Success, shed light on the underlying ideas that gave birth to the 1986 doi moi. The major debate about the origins of Vietnam's doi moi policy is whether it is an endogenous process, as Adam Fforde argued, or is Vietnam learning from the Soviet Union about economic reforms, as Tuong Vu emphasised. Fforde argued that the endogenous economic reality of “dualism”—that is the pre-existing condition of ‘plan-market balance’ uniquely characteristic of the DRV model of socialist economic development in the 1960s—produced internal force for economic liberalization leading up to the doi moi policy in 1986 (Fforde Reference Fforde2009: 495–5). Fforde wrote: “This dualism contributed to the subsequent establishment of the intellectual hegemony of reformist ideas, culminating in the official acceptance of doi moi at the December 1986 6th Party Congress” (Fforde Reference Fforde2009: 494). He further argued that “the evident success of the industrial liberalization” in the 1980s created “a state business interest” within the party's and government's organs that “could ally with reformers to push for political change” (Fforde Reference Fforde2009: 494). In his account, he acknowledged, however, that the economic crisis, combined with the sharp fall in external assistance in the late 1970s, facilitated the adoption of Decree 25-CP by the Vietnamese government in 1981, which legally permitted state-owned enterprises to participate in markets for list products (Fforde Reference Fforde2009: 495). While not disputing the inherent tendency of economic liberalisation, I argue that Fforde's account over-emphasised domestic factors to the extent that economic liberalisation in the mid-1980s was the ultimate outcome of a self-generated process of North Vietnam's economic system, and neglected the Vietnamese leadership's collective ideas on the foreign policy discourse in the context of changing great power politics.
In contrast to Fforde's argument, Tuong Vu downplayed the endogenous factors and argued: “Although it is true that the Vietnamese reform had many distinctive features, Vietnam's reformist ideas and policies followed closely those in the Soviet Union and at times gained traction thanks to events there” (Vu Reference Vu2016: 253). He asserted that Vietnam's doi moi ideas originated from the Soviet Union—that is, the Vietnamese learned from Lenin's ideas of the ‘New Economic Policy’ (NEP) in the late 1970s (Duc Reference Duc2012; Vu Reference Vu2016) and later from Gorbachev's ‘perestroika’ ideas, better known as the Soviet ‘“New Thinking’ (Vu Reference Vu2016: 245–247). Exclusively citing Huy Duc's (Reference Duc2012) Ben Thang Cuoc, Vu pointed out as evidence that:
after Vietnam signed the treaty of mutual defense and cooperation with the Soviet Union in 1978, teams of Soviet advisers and experts on socialist economics began to stream into Vietnam in 1979. While Soviet advisers advocated greater use of centralization and planning, Soviet academics introduced Lenin's New Economic Policy (NEP) ideas to Vietnamese policymakers who attended their classes on economic management. (Vu Reference Vu2016: 245)
Vu asserted that the spread of the NEP ideas to Vietnam in the late 1978–79 “likely influenced the decisions on economic reform taken by Vietnamese leaders at the Sixth Central Committee Plenum in late 1979. This Plenum admitted the mistakes made by the hasty march to socialism, acknowledged the useful role of the private sector, and granted autonomy to local governments” (Vu Reference Vu2016: 245–246). Emphasising the impact of ideological change under Gorbachev's ‘new thinking’ on Vietnam's own ‘new thinking or doi moi tu duy’, Vu further argued that:
the domestic economic crisis [in the late 1970s] pushed Hanoi to embrace market reform, which was accepted in no small part thanks to the enactment of similar policies in the Soviet Union. Ideological debates on reform were vigorous, resistance to reform was significant, and reformers would not have won the debates without literally Gorbachev's signature of approval. Gorbachev also helped the elements of liberal and realist worldviews to emerge in Vietnam to briefly challenge the reigning two-camp doctrine. (Vu Reference Vu2016: 258–259)
Other scholars who studied Vietnam's doi moi ideas ruled out Tuong Vu's thesis that Vietnam learned reform initiatives from the Soviet Union; for instance, David Wurfel correctly observed that “while the leverage derived from their massive aid program may have allowed the Soviets to give some boost to doi moi in 1986, particular initiatives for economic reforms in the Soviet Union were usually behind the Vietnamese. Nor did the inevitable tensions in the Soviet-Vietnamese relationships prepare the Vietnamese to be eager students of the Soviet tutors” (Wurfel Reference Wurfel, Turley and Selden1993: 47). In summary, Tuong Vu is partly correct that Vietnamese reformers learned by observing the Soviet Union and Eastern Europe's economic policy changes, but his assertion that “There is simply no evidence that Vietnamese leaders ever considered leaving the Soviet camp. They were pragmatic enough to yield to Soviet pressure in return for aid, but not pragmatic to the extent of imagining a future outside the Soviet bloc” (Vu Reference Vu2016: 234) does not hold up against the new documentary evidence explored below.
Emphasising the interactions between domestic and external factors, David Elliott contends that doi moi, which was the byproduct of a transformative change in collective ideas of the Communist Party of Vietnam (VCP), emerged amid the socio-economic crisis and the Third Indochina War between Vietnam, Cambodia, and China from 1978 to 1985. He wrote: “Although Vietnam's reforms were officially launched in 1986, their origins were back in the late 1970s” (Elliott Reference Elliott2012: 26). Elliott argued—which I subscribed to—that “the idea shift in Vietnam was essentially from socialist orthodoxy, sustained by conservative fear of change and obsession with regime maintenance […] to a broader, more traditional view of national interest as preserving and enhancing the status of Vietnam in the world and improving the welfare of its people” (Elliott Reference Elliott2012: 14–15). Like Elliott, Balázs Szalontai emphasised the external factors, especially Moscow's limited commitment to aiding Vietnam and strategic use of Vietnam's sole reliance on the Soviet Union, in the early 1980s, as a major drive for Vietnam's economic reforms and engagement with China and the West (Szalontai Reference Szalontai2008, Reference Szalontai, Kalinovsky and Radchenko2011). Relying on documents of Hungarian diplomats in Hanoi, Szalontai offered a revealing account of Hanoi's resentment at Moscow's unwillingness to meet Vietnam's economic needs in the early 1970s and 1980s, an account corroborated by Nguyen Co Thach's reports below. It is evidently clear that Hungarian and Vietnamese top diplomats shared similar frustration with Moscow's declining economic power and technological prowess, and began to envision its long-term relations with developed western countries.
However, this study departs from Szalontai's and Elliot's accounts by tracing the origins of Vietnamese reformist ideas to the early 1970s, well before the Chinese and Soviet reforms and opening to the West in 1978–79 and 1985–86 respectively, and more importantly, providing more details on the correlation between domestic and external shocks, which made it possible for reformist ideas to prevail over the military strength posture of the conservatives and their military-first allies within the Politburo in the preceding years leading to the Sixth Party Congress in December 1986.
Previously inaccessible archival evidence has revealed that reformist ideas of engaging the West to obtain advanced technology emerged as early as September 1973, just eight months after the conclusion of the PPA in January 1973. At this critical juncture, confident that political and military situations regarding the Vietnam War turned in their favour, the North Vietnamese leadership grew more confident in asserting their independent stance in economic and war planning. The intensified ideological conflict between the Soviet Union and China and their respective patrons sought reconciliation with the United States pushed the North Vietnamese to consider a more proactive approach to foreign policy. In this process, Hanoi reassessed North Vietnam's post-war economic recovery and modernisation. Notably, an innovative idea, certainly a radical one which marked a paradigm shift in Vietnam's foreign economic policy thinking at that time, was presented to the Politburo by Nguyen Co Thach, an influential vice-minister of foreign affairs who had earned the Politburo's trust for his advisory role during the last phase of peace negotiations with the United States in Paris in 1971–72. In a secret report to the Politburo in September 1973, Thach advocated the idea of broadening Vietnam's economic relations beyond the confines of the socialist bloc in response to the corrosive effects of the Sino-Soviet ideological conflict on international socialist solidarity between 1969 and 1973. Early reformists like Thach feared that Vietnam's dependency on the Soviet Union and China would only continue to increase its economic backwardness and dependency on more advanced socialist countries after the end of the Vietnam War. If North Vietnam's economy was to be integrated into the hierarchy of the Soviet-led Council of Mutual Economic Assistance (COMECON), it would surely be lagging behind even the eastern European countries. Luu Doan Huynh (Reference Luu, Westad and Quinn-Judge2006) is correct that “the struggle for national liberation and unification” in the 1960s and early 1970s was the highest priority for Hanoi's top leadership. However, the fact that the Politburo allowed Thach to conduct secret research on the world economy and engaged with his new ideas about foreign economic relations in its internal deliberations challenges Luu's assertion that “the officials who joined the two national wars of liberation were, for the most part, not capable of absorbing new ideas, owing to intellectual limitations, poor research and isolation, and many dare not challenge the views of their elders” (Luu Reference Luu and Bin2006: 90). It is important to discuss the international context that compelled the North Vietnamese leadership to explore an alternative to socialist orthodoxy.
Structural Change in the Socialist Bloc
After the PPA was concluded in January 1973, the prevailing view within Hanoi's leadership was that military victory over the U.S. ally, the Republic of Vietnam, in the south and therefore, national unification under the rule of the Vietnamese Workers’ Party (VWP) were within reach. In their post-war planning, Hanoi's economics-minded leaders like prime minister Pham Van Dong and his close ally, deputy prime minister Le Thanh Nghi turned their attention to the issue of socialist economic reconstruction and modernisation, but also anticipated greater reduction of aid from the Soviet Union and China after 1973. Massive material aid from the socialist bloc, especially China and the Soviet Union, was a major factor in North Vietnam's victory over the United States in 1965–1972, and the North Vietnamese became accustomed to the generosity of other socialist countries. In contrast, in 1973, economic reciprocity began to replace the “provide whatever the Vietnamese ask for” attitude in Beijing and Moscow. The intensified Sino-Soviet ideological conflict after 1969 further caused unprecedented disillusion among the North Vietnamese leadership about the future of international socialist solidarity.
In 1972, Hanoi had a front-row seat to the play of ‘realpolitik’ among great powers, namely the Soviet Union, China, and the United States. Hanoi's leaders were shocked by the reality that Moscow and Beijing were willing to relax their ideological solidarity with Vietnam in favour of their own strategic interests. According to Stephen Morris, who closely examined Soviet dossiers at the Soviet embassy in Hanoi in 1972–73, Hanoi's leaders were appalled by President Nixon's visit to Moscow in May 1972 in an attempt to cement the United States-Soviet détente. However, as Morris put it, “It was the U.S.-China rapprochement that the Vietnamese would perceive as treacherous” (Morris Reference Morris and Roberts2006: 412).
The Nixon administration's strategy was to exploit the Sino-Soviet rivalry in favour of its objective of withdrawing from Vietnam ‘with honour’, meaning the Democratic Republic of Vietnam's (DRV) acceptance of coexistence with the US ally, the Republic of Vietnam. To achieve this goal, President Nixon and his national security advisor, Henry Kissinger, sought to enlist Chinese and Soviet support to reduce aid to North Vietnam and pressure Hanoi to negotiate in favour of Washington's preferences. As Luu Doan Huynh revealed, Hanoi's leaders were increasingly concerned by Kissinger's secret visit to Beijing in July 1971 (Luu Reference Luu, Westad and Quinn-Judge2006: 89).
Beijing desired to end China's international isolation during the height of the Cultural Revolution and enlist the United States to oppose the growing military threat the Soviet Union posed to the People's Republic of China (Tudda Reference Tudda2012: 203). As Chris Tudda observed: “China's interest in rapprochement ultimately trumped its ideological alliance with North Vietnam” (Tudda Reference Tudda2012: 206). Likewise, according to Chen Jian, chairman Mao Zedong viewed the Soviet Union as the most dangerous socialist hegemon and justified China's rapprochement with the United States to check the Soviet aggression on China (Chen Reference Chen2001: 233). In 1969–1970, Beijing decided to reduce aid to Vietnam as China's economic crisis precipitated by Mao's Cultural Revolution brought the Chinese society and the communist state and party apparatus to the verge of collapse (Tudda Reference Tudda2012: 206). After the main port of Hai Phong was heavily minded by the United States in May 1972, Hanoi's leaders were further frustrated by China's delays in transshipment of massive material aids from the Soviet Union and other socialist countries via southern China by land; over 50 per cent of goods from other socialist countries were stuck in China between May 1972 and May 1973 (Path Reference Path2011: 529–530).
General Secretary Brezhnev desired to pursue détente with the United States as the Soviet Union had been in the state of economic decline, and the Soviet leadership was under intense pressure to improve both “guns and butter” domestically (Zubok Reference Zubok2009: 223). In 1972, Brezhnev began to reconsider the Soviet policy towards Vietnam from a strategic angle rather than a lofty ideology of proletarian solidarity with the Vietnamese. Vladislav Zubok wrote, “Between 1964 and 1971, the Soviet leadership subjugated its primary security interests, including direct negotiations with the United States, to the vaguely constructed cause of ‘proletarian solidarity’ with Communist Vietnam […]” (Zubok Reference Zubok2009: 224). Zubok argued that “détente for Brezhnev also became an important substitute for domestic reforms, the substitutes that obscured the already-present drift and decline in economy, technology, and science, and above all, in the ideological sphere” (Zubok Reference Zubok2009: 224). In May 1973, he became the first Soviet leader to visit West Germany, the country that Soviet propaganda had vilified for decades as the nest of neo-Nazism. Zubok wrote, “Brezhnev was thrilled by everything he saw, including his residence, Palais Giemnich, in the vicinity of Bonn, and his new BMW sports car, a gift from Brandt [Chancellor of West Germany]” (Zubok Reference Zubok2009: 229–230). The good relations between the two leaders translated into fruitful negotiations between politicians and industrialists. In material terms, the Soviet Union increased the supplies of oil, gas, and cotton in exchange for German equipment, technologies, and much-coveted consumption goods (Zubok Reference Zubok2009: 229–230).
In summary, the East-West structural changes in the early 1970s had a significant impact on Hanoi's view of economic relations with the West. After the PPA of January 1973, Hanoi's growing interest in economic cooperation with the “developed capitalist countries” was influenced by the fact that the Accords rendered such cooperation easier than before. The majority of ‘developed capitalist countries’ established diplomatic relations with the DRV during the months that followed.Footnote 1 In Southeast Asia, the ASEAN countries also changed their attitude from ideological and military confrontation to economic and diplomatic engagement with Vietnam; however, according to Nguyen Vu Tung, “[…]. Hanoi failed to see that by 1973, most ASEAN countries had decreasing faith in the United States” (Nguyen Reference Nguyen, Westad and Quinn-Judge2006: 117). As it turned out, small eastern European socialist countries like Hungary was a better alternative model for North Vietnam as early young reformists envisioned to engage capitalist Western countries.
Thus, while steadfastly holding the banter of the Marxist-Leninist ideology, Hanoi redefined economic relations with the socialist and capitalist blocs markedly in terms of ‘national interests and reciprocity’ as the new governing principles of conducting economic relations. While the socialist bloc, especially the Soviet Union and China, remained the main political and economic support of Vietnam, they could no longer provide massive non-refundable aid and advanced technology that North Vietnam would need for the economic development and modernisation it desired. There is, however, a silver lining: the Soviet Union's economic relations with Western Europe opened the way for the eastern European countries and North Vietnam to follow suit.
The Idea of Economic Engagement with the West
In late 1972, the State Planning Committee, a party-level organ in charge of economic planning, was instructed by the Politburo to draw a long-term plan for economic cooperation with foreign countries from 1973 to 1980 (UBKHNN, h.s. 17933). The task fell on the Economic Cooperation Department (Vu Hop Tac Kinh Te) of the Committee to conduct a study and propose a plan for economic cooperation. This department then emphasised the following in their study:
Economic cooperation with foreign countries shall guarantee our ownership, create favorable conditions for lifting up our independent and self-mastery spirit, enable the spillover effects of economic cooperation into other economic sectors. Such economic cooperation shall contribute to speedy economic recovery and development, lead to high economic growth, and allow us to accumulate advanced technology. By 1980, they speculated, Vietnam could shift from small-scale to large-scale production, meeting domestic needs and expanding export capacity. (UBKHNN, h.s. 17933: 14)
Clearly, the transfer of advanced technology to North Vietnam was given priority in forging economic relations.
Hanoi's top economic planner saw France, Sweden, and Japan as Vietnam's inroads into the capitalist bloc's reservoirs of abundant investment capital, advanced technology, and a new market for exports. Vietnam had a long diplomatic relationship with France and several young Vietnamese economics specialists were sent to visit France's industrial sites (UBKHNN, h.s. 17933: 10). The Vietnamese were impressed by France's advanced technology and modern industrial equipment. Hanoi expected that after liberating South Vietnam, France would desire more economic cooperation with a unified Vietnam. Japan was another capitalist country on Vietnam's target of economic engagement. The specialists at the State Planning Committee noted:
Japan's economy is driven by an advanced economic system backed by cutting-edge technology. It can supply modern equipment in a number of sectors including oil refinery, metallurgy, machinery, fabric production, and fishing industry. Japanese products are cheaper than those in Western countries, and the cost of shipment from Japan to Vietnam is also much lower because it is closer to us. (UBKHNN, h.s. 17933: 6; Luu Reference Luu and Bin2006: 89)
These economics experts were of the opinion that the Japanese expressed interest in purchasing Vietnam's raw materials and offering loans to Vietnam with a rather high interest rate of seven per cent (UBKHNN, h.s. 17933: 6). In June 1970, Unicoopjapan, a Japanese import-export corporation was invited by the North Vietnamese Ministry of Trade to visit Hanoi. The visiting Japanese representative invited a group of Vietnamese officials to visit Japan in September of that year. The State Planning Committee sent the Ministry of Foreign Trade's report to the Politburo, requesting permission to dispatch a ministry delegation to study the potential of economic cooperation with Japanese corporations. In its report to the Politburo, the ministry emphasised, “Japan is a capitalist country with a modern agriculture and its rice cultivation techniques produce high yield. Our visit shall focus on observing Japan's rice cultivation techniques and mechanization of agriculture, industrial crops, and animal husbandry and so on” (PTT, h.s. 8485: 1).
Hanoi also viewed Sweden as its main gateway to northern Europe. Sweden became the centre of peace movements and anti-US sentiment during the Vietnam War. In mid-1967, the Swedish people with the support of their Prime Minister organised a large anti-US protest in Stockholm, and that delivered a significant diplomatic victory to the North Vietnamese (Nguyen Reference Nguyen2005: 214). Hanoi's economic planners also utilised its good diplomatic relationship with Sweden to lure other Scandinavian and Western European countries to engage in economic cooperation with North Vietnam. Minister of Foreign Affairs, Nguyen Duy Trinh, in mid-1970, hailed the Vietnamese-Swedish diplomatic relations and Sweden's generous aid to North Vietnam as a major diplomatic victory in Hanoi's efforts to change the attitude of Western Europe towards this Communist nation (QH, h.s. 1214: 20). In another diplomatic move in favour of economic development, North Vietnam turned to the US war reparation for post-war economic reconstruction.
In a secret deal with Hanoi, the Nixon administration used a “carrot” to entice the North Vietnamese leadership to reach an agreement (Luu Reference Luu and Bin2006: 278–280). On 23 January 1973, Le Duc Tho and Henry Kissinger accepted a compromise—that is, the U.S. agreed to provide non-refundable aid worth US$3.25 billion, with an annual pledge of US$650 for the following five years, 1973–1977 (For more detail, see Luu Reference Luu and Bin2004: 117–118).Footnote 2 If Washington were to honour this pledge, this amount would have significantly reduced Vietnam's dependency on both the Soviet Union and China. However, the funding never came because Hanoi massively violated its commitment under the PPA—that is, Hanoi's recognition of the Republic of Vietnam as a legitimate state (Desaix Reference Desaix2002: 28). The State Planning Committee experts contemplated exploiting the economic conflict between the United States and Japan in favour of North Vietnam's national interests. They anticipated North Vietnam's access to loans with low interest rates, modern manufacturing equipment, and technology in the United States and Japan, which were not available in the Soviet Union and China (UBKHNN, h.s. 18025: 52–58).
Regarding the orientation of North Vietnam's foreign economic policy, the specialists at the State Planning Committee proposed to the leadership of the Party and government in 1973 the following idea:
First, in developing economic relations with other countries, we must do thorough research on the complex nature of international relations at present and exploit contradictions between great powers to serve our needs. We need to be skillful in using the support of one country to stimulate greater support from many other countries. Second, our economic cooperation shall be based on bilateral relations instead of multilateral ones. In international economic relations at present, if we only restrict our economic relations to one major country or a group of countries, then we would deepen our country's economic dependency on that country or that economic grouping [referring to the Soviet-led COMECON, emphasis added here]; this would prevent us from expanding cooperation with other countries. With capitalist countries, we will use their capital to import modern equipment, which the socialist countries cannot or are unwilling to provide, for manufacturing export products […]. Besides, we need to make efforts to establish our strong foothold in the markets of the capitalist countries, the sooner the better. (UBKHNN, h.s. 18025: 8–9)
After the PPA of January 1973, this group of reformists came to the consensus that the socialist bloc could no longer remain a reliable source for Vietnam's post-war economic development. As the Soviet Union tolerated the Eastern European countries’ economic relations with the West during the détente in the early 1970s, the Vietnamese reformists saw a new opening for expanding economic relations with western countries. At this critical juncture, Nguyen Co Thach, who headed the North Vietnamese group of experts during the last stage of PPA negotiations, played a central role in advocating economic engagement with the West. In his role as a senior assistant to the Politburo member Le Duc Tho, who was North Vietnam's principal negotiator in Paris, Thach pursued his personal interest in the subject of world economy and conducted significant research about Western economic systems (Vietnamnet 2016).Footnote 3 Since he was entrusted by the Politburo to research on issues related to the Paris negotiations and report directly back to the top leadership (Nguyen Reference Thach and Bin2004: 399), Thach had direct access to the Politburo and, therefore, had the opportunity to influence the thinking of Politburo members in a more profound way than his actual position would suggest. In one of his secret reports to the Politburo in September 1973, he argued that even the Soviet Union, which was the most technologically advanced superpower in the socialist bloc, was far behind the West in terms of technological advancement in 1973. Thach stressed that even the Soviet Union and other Eastern European countries sought to import modern technology from Western Europe to improve the quality of their products (PTT, h.s. 9061: 1–7). In his report to the Politburo in September of that year, Thach estimated that “the Soviet Union and Eastern Europe are 10 to 15 years behind the West in terms of technological development” (PTT, h.s. 9061: 1).
In Thach's analysis of the international political economy, a major shift in the US policy towards the Soviet Union and Eastern European countries occurred. US economic engagement with the Soviet bloc resulted from Washington's realpolitik pursuit of economic interests and political influence. In the short span of 1971–1972, Thach reasoned that the US and other capitalist countries in the West expanded trade and economic cooperation with the Soviet Union and other Eastern European countries because the US policy of economic sanctions against the socialist countries for the past 20 years (1951–1971) had failed. As a result, the West faced economic stagnation due to the lack of market access, shortages of raw materials, and cheap labour. Moreover, the increasingly fierce economic competition between the United States, Western Europe, and Japan in the early 1970s compelled the capitalist countries to reconsider their economic relations with some socialist countries. In another respect, the US desired to drive a wedge between the Soviet Union and Eastern Europe through economic inducement. Eastern European countries, for their vested interests, saw an opportunity to exploit such rivalry in their own favour (PTT, h.s. 9061: 2). Thach's analysis appeared to derive from a synthesis of a realist prescription of national interests and a liberal understanding of the interdependent nature of the world economy.
Furthermore, the eastern European countries’ economic engagement with the Western European countries made it politically easier for the North Vietnamese to contemplate and plot the course of their economic relations with the West. Notably, Thach advised his Politburo leaders that there was an opportunity to tap into a large reservoir of capital in the West for North Vietnam's economic development. “Since some Eastern European countries had already engaged in such economic cooperation with the West,” he argued, “Vietnam should not deprive itself of such an opportunity either” (PTT, h.s. 9061: 2). Purchasing licenses to use advanced manufacturing equipment from the West was most favourable for small countries like North Vietnam. As an example, Thach cited Hungary, which purchased a total of 131 technology licenses from Western European countries from 1968 to 1972 and sold 22 licenses of its own technology to other socialist countries. In fabric production, Hungary cooperated with Japan and provided cheap labour (one US dollar per hour compared to a minimum wage of 2.5 US dollars in the United States) in exchange for access to Japan's modern equipment. In short, Thach introduced to the Politburo the idea of liberating post-war Vietnam from socialist orthodoxy in favour of a more pragmatic approach to foreign economic relations.
In the ensuing years, Thach's idea of economic engagement with the West was supported by economics-minded officials in the State Planning Committee, which was in charge of economic planning for North Vietnam (UBKHNN, h.s. 18025: 50–51). Following the footsteps of the Soviet economic engagement with Western European countries, Vietnamese economic experts at the State Planning Committee in late 1973 advocated a change from the mentality of “passive reliance on foreign aid from China, the Soviet Union, and other Eastern European countries towards a more proactive foreign economic policy including economic cooperation with nonsocialist countries based on the principle of national interests” (PTT, h.s. 8996: 1–2). To back up their idea, they reported to the Politburo as follows: “Most recently, many statements by officials of the Soviet, Chinese and Eastern European governments indicated that they are looking into our ability to pay our debt to them, and proposed a new direction of economic cooperation based on mutual interests. We need to give up our outdated thinking of total reliance on the Socialist bloc” (PTT, h.s. 8996: 6–8).Footnote 4 To support modernisation and industrialisation of its economy for the five-year plan of 1973–1978, North Vietnam needed 2.3 billion rubles for new projects and one billion more for the projects under construction. On this matter, Hanoi's economic planners counselled the top leadership: “We cannot rely on non-refundable aid as we did [from 1955 to 1973]. The demand for developing economic relations is from now on based on the principle of ‘mutual benefits.’ Therefore, we must boost our productivity and export to pay for our import and long-term debt. We do not have any other ways” (PTT, h.s. 8996: 8). However, it took two simultaneous shocks—a major socio-economic crisis at home and the costly two-front war with Cambodia and China in the late 1970s and the early 1980s—for the idea of a doi moi foreign policy to gain wider reception within the Politburo.
The Impact of Vietnam's Socio-Economic Crisis & the Two-Front War
The first five-year plan (1976–80) after Vietnam's unification under the leadership of the VCP failed in 1978 with disastrous consequences. The plan's thrust, as deputy prime minister and Politburo member in charge of the country's economic affairs Le Thanh Nghi summarised, was as follows:
Our economic policy is to implement step by step socialist industrialization, expanding from small-scale to large-scale socialist production; to prioritize heavy industry development based on agricultural and light industry production. The plan is to integrate industrial and agricultural development into a modern industrial-agricultural system; simultaneously develop the central economy and local one, and then integrate them into one national economic system [….]; integrate economic development and national defense, which requires the broadening of our economic relations with other socialist countries and other countries on the basis of mutual interests and respect for each other's sovereign independence. (PTT, h.s. 611: 8)
In short, the plan focused on four sets of relations, between 1) industry and agriculture; 2) central and local economy; 3) economy and national defence; and 4) national economy and economic relations with foreign countries. At the same time, for heavy industry, Vietnam made efforts to manufacture machinery to increase productivity per person and use all the manpower available (22 million labourers) (PTT, h.s. 611: 9–11). The objectives were: 1) to stabilise and improve people's living standard; 2) to build a technical and material foundation of socialism; 3) to train cadres and workers to have a productive workforce; 4) to increase exports; and 5) to strengthen national defence. The centrally planned economy, as Le Thanh Nghi detailed, was to concentrate all its national energy on boosting agricultural production (rice farming, animal husbandry, fishery, and forestry) as the material basis for developing light industry and food industry (PTT, h.s. 611: 10). In short, Vietnam relied on strong agriculture as the basis for gradually industrialising the country. To achieve this, the central government wanted the local authorities (all 500 districts) to produce enough food supply to meet their local needs and contribute a large surplus to the state in order to build the country's industrial foundation (PTT, h.s. 611: 11). Many districts had to increase agricultural production to address food shortages at their locality and then expand production to generate enough surplus for the state. Le Thanh Nghi warned: “District authorities need to overcome the mentality of reliance on the Party Centre and outsiders [foreigners] for material aid” (PTT, h.s. 611: 10). Nghi was confident that within three years or at the latest, by 1980, his government would be able to solve the problem of food shortage, employ seven million people, and eradicate unemployment (PTT, h.s. 611: 16–27). However, at the end of 1977, Nghi aired his frustration to other members of the Party Central Committee that, “Our economic hardship at present has raised concerns among our cadres, party members, soldiers, and citizens” (PTT, h.s. 786: 1).
Assessing the country's economic health during 1976–77, Nghi summarised: “Our national economy is in the situation where our citizens’ hard work cannot produce enough food to feed their family; earning is not enough for expenses; and our export value is not sufficient for our import need” (PTT, h.s. 786: 2). In late 1977, he attributed Vietnam's economic hardship to the following five factors: 1) the existing weak economic foundations in both North and South Vietnam; 2) the huge loss of foreign aid after 1975; 3) a prolonged drought in 1977; 4) the government's failure to fully exploit the potential of manpower, land, natural resources, and technology available in the country; and 5) the wartime mentality of entitlement to foreign aid, and party cadres’ corruptive and self-preservation behaviours (PTT, h.s. 786: 2–5).Footnote 5
After 1975, Vietnam's economy suffered a combined annual loss of nearly 1.5 billion US dollars—one billion the US provided to the Republic of Vietnam and material aid worth 400–500 million rubles the socialist bloc shipped to North Vietnam each year during the Vietnam War. Nghi lamented to his comrades in the Central Committee of the Communist Party of Vietnam: “Now our annual import of material goods is worth nearly one billion U.S. dollars and rubles. The loss of 1.5 billion rubles and dollars left a huge hole in the national budget” (PTT, h.s. 786: 2). As a result, Vietnam suffered a serious imbalance of payments in its trade with other socialist countries. Worse, the 1977 drought severely affected agricultural production because half of the national revenue depended on the agricultural sector (PTT, h.s. 786: 3).
By the end of 1977, Vietnam was able to use only half of the full capacity of its labour force, land, machinery, and industrial equipment. Nghi called this “the biggest waste of national resources which created serious imbalances in other sectors of the economy” (PTT, h.s. 786: 9). As to why Vietnam failed to fully exploit such national resources and convert them into economic power, he explained:
For a very long time, we have planned our economy from the top to bottom according to the old way. Economic planning is based on the national budget, investment capital, and resource capacity (from spare parts, equipment, food, and goods), which in turn relied on our import. We used this data as the basis to determine expenses required to implement our economic plan and achieve production objectives. However, if the local authorities do not make efficient use of labor, land, forest, seas and other natural resources, and the available technological capacity to implement the plan, it would lead to the situation where local authorities relied on our import of spare parts and equipment from other countries to fill the gap. Evidently, our local authorities lacked initiatives and self-reliance, and they did not make efforts to address shortages at their locality. This problem has made it very difficult to narrow the gap between our import and export. (PTT, h.s. 786: 17–19)
To address this problem, the Politburo ordered economic planners at all levels to renovate the method of economic planning (doi moi cach lam ke hoach)—that is to plan economic production from the bottom up for 1978 starting at the district-level (PTT, h.s. 786: 19). Such doi moi (renovation) of economic planning here was a problem-solving mechanism to force the district-level authorities to maximise the use of natural resources available at their locality, thus reducing Vietnam's dependence on foreign aid and loans. This was the brainchild of deputy prime minister Le Thanh Nghi, but this idea was a conservative reform to the state's central planning. Nonetheless, he brought to the centre of the Politburo's discussion the chronic problem of Vietnam's economic inefficiency and poor quality of products, which in turn significantly curbed its exports to socialist countries. Nghi clearly blamed local authorities’ mismanagement of resources for Vietnam's increased economic dependence on foreign aid.
In 1977, Vietnam's economic hardship turned into a crisis. Vietnam's national revenue was sufficient to cover for all domestic consumption, but its export value only amounted to 31 per cent of its import, increasing from 20 per cent from 1975. Its national budget could cover only 63 per cent of the national spending, increasing from 45 per cent in 1975 and 54 per cent in 1976 (PTT, h.s. 786: 3). Clearly, Vietnam attempted to gradually reduce its heavy reliance on foreign aid by the end of 1977 by increasing its exports, which in turn relied on the exploitation of Vietnam's large labour force, land, and rich natural resources. A major socialist achievement, Nghi proudly told his comrades, was that from 1976–77, 500,000 citizens left the city to build new economic zones (PTT, h.s. 786: 4–5). In spite of such an achievement, by the end of 1977, the Vietnamese government was confronted with eight major economic problems. First, it could only use 22.1 million out of 23.5 million labourers, leaving over 1.4 million people unemployed, and the national revenue remained very low with an annual earning of only 640 VND per person (232.70 US dollars) (See Nguyen Reference Nguyen1985: 45).Footnote 6 Second, Vietnam's rice production fell short of the benchmark of 1.1 million tons; the government used up all the rice reserve and rice shortage remained a major problem (PTT, h.s. 786: 6). Third, consumption goods were scarce, and the circulation of goods in the market place was greatly reduced. Fourth, transportation sector remained weak, significantly affecting economic production, construction, and people's travelling. Fifth, basic construction increased sharply, but construction materials fell far short of the demand. Sixth, compared with the country's demand for imports, Vietnam failed to boost its export capacity, and investment capital remained scarce. For 1978, the government struggled to get a loan of 150 million US dollars to meet the country's import needs. Seventh, national revenue could only cover 63 per cent of the national spending. After using loans, the budget still fell short of 300 million VND. Eighth, Vietnam's gross domestic product increased by only two per cent, which was much lower than the rate of population growth (PTT, h.s. 786: 6).
In his last-ditch efforts to obtain funding to alleviate the economic crisis in 1977–78, vice-minister Nguyen Co Thach pressed the Carter administration to pay $3.25 billion that President Nixon agreed to provide under the PPA as a condition for the normalisation of US-Vietnam relations, but Washington rejected this condition. By September 1978, Thach agreed to the normalisation without preconditions. However, the then national security advisor Zbigniew Brzezinski, and Ambassador Leonard Woodcock who headed the US Liaison Office in Beijing, convinced President Carter to postpone the normalisation with Vietnam to avoid offending the Chinese (Desaix Reference Desaix2002: 134). Since early 1978, Washington and Beijing renewed their cooperation to confront the Soviet Union, which, from the Vietnamese perspective, was the main factor that derailed the US-Vietnam normalisation process in September of that year (Tran Reference Tran2003: 21–25). By mid-1978, China reduced its aid to Vietnam to an insignificant level as the territorial dispute and the mass exodus of Chinese residents from Vietnam climaxed in early 1978 (Path Reference Path2012: 1040–1058). As the Sino-Vietnamese dispute turned into open conflict in the first half of 1978, Hanoi took a strategic move to align itself with Moscow against Beijing.
In terms of national security, 1978 is certainly the turning point for a decisive shift from a focus on socialist economic development and diplomacy to the priority of addressing the existential threat China and its ally the Khmer Rouge in Cambodia posed to Vietnam. When China openly threatened Vietnam's national security in 1978, as Le Thanh Nghi explained to his comrades in July 1978, the Politburo decided that it was time for Vietnam to become an official member of the Soviet-led COMECON to obtain more support from the Soviet Union and other Eastern European countries (PTT, h.s. 10568: 4). From Hanoi's view, Moscow's unwillingness to provide all the aid the Vietnamese requested for stemmed from Vietnam's refusal to officially join the Soviet-led economic grouping till June 1978 (PTT, h.s. 10568: 5).Footnote 7 Therefore, he expected that Vietnam's official alliance with the Soviet Union would enable a greater flow of economic assistance from the Soviet bloc to alleviate Vietnam's socio-economic crisis.
Vietnam's invasion of Cambodia in December 1978 triggered China's invasion of Vietnam in February 1979. Vietnam engaged itself in a protracted two-front war—the occupation of Cambodia and war with the Cambodian resistance forces aided by China, the United States, and ASEAN, and the border war with China after 1979. The West swiftly responded by imposing economic sanctions against Vietnam, followed by international isolation of Vietnam. Thach later recalled that he “had argued for deep strikes followed by rapid withdrawal” but the powerful Central Military Commission's view of a comprehensive invasion, followed by occupation, of Cambodia had prevailed over his idea (Desaix Reference Desaix2002: 107; also see PTT, h.s. 15882: 16).Footnote 8 Beginning in 1980, a huge increase in military spending inflicted a huge toll on Vietnam's economic development. During the early 1980s, a huge amount of human and material resources was transferred from various ministries to the Ministry of National Defence in a Politburo-approved special war plan to prepare Vietnam for another Chinese invasion (PTT, h.s. 16327: 39–44).Footnote 9
It is difficult to pinpoint the impact of the two-front war on Vietnam's economy, but in May 1980, excessive military spending to the detriment of national economy arose as a major concern to the office of prime minister Pham Van Dong and the State Planning Committee. By May, vice-chairman of the State Planning Committee Tran Phuong reported to the Council of Government as follows:
Generally, most ministries and general-directorates have well executed their duty to mobilize technical and scientific personnel to prepare for war. 715 university graduates (compared to a total of 760 in the recruitment plan), 2,289 senior university students (although the plan was to recruit 2,275), and 623 (out of 905) high school graduates, and 2,200 (out of 2,280) technical workers have been mobilized in service of national defense. A total of 1,140 (out of 1,475) vehicles of various kinds were mobilized and transferred to the Ministry of National Defense. (PTT, h.s. 16381: 114)
Tran Phuong told prime minister Pham Van Dong:
This is the first time we have a special plan like this. Our cadres in various ministries lacked experience and our economy faced many difficulties, but during this first phase of mobilization, they performed quite well. They understood the meaning, significance and necessity of this plan. They have collaborated with the Ministry of National Defense and are prepared to mobilize resources as requested. (PTT, h.s. 16208: 115–116)
By September 1980, in northern Vietnam alone, the Ministry of National Defense mobilised over 80,000 of new soldiers (73,000 males and 8,100 females) and enrolled over 6,000 technicians, 2,194 last-year university students, and 914 university graduates (out of 1,250 in the government plan) in military service; a total of 3,530 vehicles, of which 3,120 were transport vehicles, were mobilised for military service (PTT, h.s. 16327: 40–41). In addition, 13,756 out of a total of 17,198 tons of material goods (from steel, copper, to aluminium) were reserved for military purposes; 4,282 tons of these material goods had to be imported from the socialist bloc (PTT, h.s. 16208: 65–66). By October of that year, the Office of the Prime Minister was struggling to meet the need for mobilising material and human resources for the military without negatively affecting economic production (PTT, h.s. 16208: 18–9). The trend of channelling resources from the economic sector into national defence continued unabated in the first half of the 1980s. During this period, despite massive aid from the Soviet Union and other Eastern European countries, Vietnam's economy continued to stagnate and suffer a growing import-export imbalance, driving the country into more debt to the Soviet bloc.
As foreign minister, Nguyen Co Thach attempted to steer Vietnam's foreign policy out of international isolation and protracted military confrontation in the early 1980s by advocating a gradual withdrawal of Vietnamese troops from Cambodia. Notably, in the summit of foreign ministers of the three countries (Vietnam, Laos, and Cambodia) in Phnom Penh on 12 April 1983, Thach reported to his Politburo with enthusiasm that “compared to the previous year (1982), our comrades, especially the Cambodian leadership, clearly see and understand the strengths of the solidarity among our Indochinese people, have more self-confidence, and believe in us more than before. Comrade Hun Sen did not feel at ease with our partial withdrawal of our volunteer troops in July 1982, but at this summit, he expressed his delight and confidence [regarding additional withdrawal of Vietnamese volunteer troops]” (PTT, h.s. 5575: 1–2). By 1985, Vietnam's costly engagement in the Third Indochina War with Cambodia and China undermined the conservative leaders' military-first priority and emboldened the early reformists, especially Nguyen Co Thach, to advance their ideas of doi moi foreign policy in 1986.
In his discursive representation of threat emanating from China, he warned his comrades: “We need to stay alert and remind ourselves of a new factor—that is, China is making efforts to enter and export products similar to those of Vietnam to the markets of other socialist countries in Eastern Europe, but the Chinese can export much larger quantity of goods with better quality, sell them at lower prices and deliver them timely than the Vietnamese can” (PTT, h.s. 5575: 53). From 1980 to 1985, the Soviet Union alone provided aid worth approximately 8.7 billion rubles, but Vietnam failed to increase its exports to the Soviet Union and other Eastern European countries. China's entry into those markets would further threaten Vietnam's export sector. In a nutshell, Thach warned that the risks of lagging behind other socialist nations technologically and economically, and the looming economic threat China posed to Vietnam's traditional market of the socialist bloc were paramount challenges after the Sixth Party Congress in December 1986.
At the Sixth Party Congress, foreign minister Nguyen Co Thach became the main architect of the 1986 doi moi. He declared in his speech to the National Assembly that one of the essential lessons learned from the 40 years of armed struggle against foreign powers is that Vietnam needs to “combine the strengths of the nation with the trends of the era” (PTT, h.s. 5607: 50). For Thach, the trend of the 1980s was the acceleration of technological revolution that transformed manufacturing technology and deepened economic interdependence in the world economy. He made the case that these trends opened up a new avenue for Vietnam to rapidly modernise its economy. He further explained, “To industrialize our nation in a realistic way, we need to create the most favorable conditions for our nation to raise its comparative advantage within the international division of labor, especially within the Council of Mutual Economic Assistance. That means Vietnam needs to extract advanced technology to modernize its industry, and export quality products at low prices” (PTT, h.s. 5607: 52). He proposed this idea to the Politburo in September 1973.
Conclusion
Thus far, as the conventional narrative has it, Truong Chinh, Nguyen Van Linh, and Vo Van Kiet are the real heroes of Vietnam's doi moi (renovation) economic policy. While this study does not dispute the existing claim, the overwhelming evidence above has indicated that many economics-minded officials at the State Planning Committee, the Office of the Prime Minister, and the Ministry of Foreign Affairs also played significant roles in shaping the reformist ideas. Notably, reformist Nguyen Co Thach's extraordinary influence over the historic doi moi foreign policy of 1986 from its origins to adoption is under-acknowledged in the conventional narrative and even in Vietnam's official history. Throughout his diplomatic career from the early 1970s to much of the 1980s, Thach played a uniquely crucial role in injecting the idea of relaxing socialist orthodoxy to economically engage the West to obtain advanced technology to modernise Vietnam's industry. After the PPA was concluded in January 1973, he redefined Vietnam's national interests in the context of changing great power politics and international economic relations characterised by increasingly interdependent economic transactions between the East and West. His personal interests in economic affairs, self-acquired knowledge of international economic relations, and the role of technological revolution in economic production certainly had a significant bearing on his idea of developing a broad-based foreign policy for post-war Vietnam. His proximity to the Politburo enabled him to discreetly inject his idea, however radical it was in 1973, into the internal deliberations of this top decision-making body. In the early 1980s, as foreign minister, Thach advocated economic development and modernisation as viable alternatives to the protracted military confrontation with China and shifted the debate to China's economic threat to Vietnam down the road. As the costs of Vietnam's protracted war with China and occupation of Cambodia sharply increased and inflicted a heavy toll on Vietnam's economy, reformist ideas gained stronger support of the old guards and shaped Vietnam's 1986 doi moi.
The broader implication of this study is that the practice of discreet internal deliberations within the Politburo tolerates the competing foreign policy ideas in foreign policy decision-making of the VCP. When changes in domestic and international circumstances occur, the Politburo would reexamine the competing policy ideas and make a collective decision. The origins of Vietnam's 1986 doi moi dates back to late 1973 following the conclusion of the PPA to end the Vietnam War in January of that year. The impetus for the North Vietnamese leadership to explore an alternative way to socialist orthodoxy were: 1) the intensified Sino-Soviet rivalry followed by China's rapprochement and the Soviet Union's détente with the United States; 2) the replacement of non-refundable aid with the principle of reciprocity in Vietnam's economic relations with other socialist countries; 3) the trade conflict between the three economic centres of the capitalist system, namely the United States, Western Europe, and Japan; and 4) the Soviet Union's toleration of the eastern European countries’ economic transactions with Western Europe. These external constraints and opportunities also opened up space for alternative foreign policy discourses. Early foreign policy entrepreneurs and reformists like Nguyen Co Thach who had direct access to the Politburo championed the idea that Vietnam should engage the West economically to obtain advanced technology while continuing to rely on the Soviet bloc as the main support base. However, it took the economic crisis in the late 1970s and the disastrous two-front war with China and Cambodia in the early 1980s for the reformists’ foreign policy idea to gain the Party's support.
