The United States and Vietnam

1995–2003: Reconciliation and Trade

Beginning in the early 1990s, the process of normalization involved a series of steady yet cautious steps whose pace was set by single-interest groups: the League of Families of Prisoners of War and Missing in Action families seeking to account for their missing loved ones, veterans seeking reconciliation, Vietnamese refugees wanting reunification with family members left behind, humanitarian and educational institutions, and American businesses seeking to export to Vietnam or to invest there. Vietnam was motivated primarily by its wish for access to US markets and by the importance of US support for admission to the world’s leading clubs, from Asia Pacific Economic Cooperation (APEC) to the World Trade Organization (WTO). Vietnam has also successfully pressed the United States to address some of its agenda of war legacy issues, such as funding to assist with dioxin removal from Agent Orange hot spots, including the Danang air base.

As bilateral ties strengthened in the late 1990s, the focus on both sides turned toward economic opportunities. The Bilateral Trade Agreement (BTA) was signed in December 2001, followed by textile, civil aviation, maritime, and nuclear energy cooperation agreements. Vietnam joined the WTO in January 2007 after tough negotiation of accession agreements with its major trading partners, including the United States.

Two-way trade between the United States and Vietnam was over $18 billion in 2010, according to US Census Bureau data. The United States is now Vietnam’s biggest export market. The official Vietnamese figure in 2009 for American registered capital in Vietnam was $9.8 billion, making up 45.6 percent of the total foreign investment in the country. The Chairwoman of the American Chamber of Commerce in Ho Chi Minh City projected in a speech in December 2009 that bilateral trade would double in the next decade. Major American investments include Intel’s $1 billion assembly and test facility in Ho Chi Minh City, which CEO Paul Otellini opened on October 29th. Intel’s investment marks a significant event in the country’s progress beyond garments and shoes to higher levels of manufacturing. Another American company whose investment in Vietnam exceeds $1 billion is Conoco Phillips, which explores and extracts oil in the South China Sea.

This healthy economic relationship has been accompanied by significant humanitarian and educational cooperation. In 2004, President Bush decided that Vietnam, which had taken a very responsible approach to the Severe acute respiratory syndrome (SARS) epidemic, would be the only Asian country to benefit from a special presidential fund for HIV/AIDS. In the educational field, the US government contributes more than 10 million dollars each year toward Fulbright and other programs in Vietnam, a greater amount than for any other country. Direct cooperation between universities in both countries has developed rapidly.

Post–2003: Strategic Dimension Added

Until 2003, this progress moved at a relatively slow pace. Important elements in each society remained wary or even opposed to closer ties. Complete normalization, including military, intelligence, and law enforcement cooperation, only became possible when each side began to see the other as useful in maintaining regional balance with China.

By the second half of 2003, both governments were doing some strategic reassessment. The concept of “hedging” relations with China against the uncertainty of how Beijing will use its new power and influence became an important component of US policy. Vietnam, with its long history of troubled relations with its huge neighbor, was seen by some Washington policy makers—especially in the Pentagon—as an obvious partner. At the same time, Vietnam was becoming concerned that China’s influence was rising in Southeast Asia while the United States appeared to be distracted in the Mideast. In July 2003, a plenary meeting of the Vietnam Communist Party produced a decision to upgrade ties with the United States, including taking the first steps in developing a defense relationship.

Vietnamese leaders informed us that they would now welcome major steps that they had long resisted. In rapid succession, Defense Minister Phan Van Tra visited Secretary Rumsfeld at the Pentagon in November 2003; ten days later, the first US Navy ship since 1975 visited Saigon Port; American access to top leaders became much easier; and the authors began a dialogue on strategic issues that Hanoi had previously considered off-limits.

This pattern of mutual engagement continued. Visits to Washington by Prime Minister Phan Van Khai in June 2005 and by President Nguyen Minh Triet in June 2007 were the first by, respectively, a Vietnamese chief and head of state. Presidents Bush and Obama reciprocated with visits to Hanoi. US Navy ship visits to Vietnam have become regular events and the two countries have signed military and law enforcement cooperation agreements that were stalled for years.

Growing Closer Since 2008

Since 2008 the pace of United States–Vietnam official interaction has noticeably increased. Many joint activities have also contained subtle (or not so subtle) signals of the two countries’ strategic convergence: two American Navy ships have been repaired in Vietnam; the United States and Vietnam have begun an annual Political, Security and Defense Dialogue; and Defense Minister Phung Quang Thanh visited the Pacific Command in Hawaii on his way to Washington, posing for press photos in a nuclear-powered submarine. At a time when Hanoi and Beijing were squabbling over competing claims in the South China Sea, the Vietnamese government took several very public actions to show it welcomed US presence in the region. In 2009, Vietnamese officers flew to the USS Stennis to observe flight operations on the South China Sea. The next year, officers and officials from Danang flew out to the carrier George Washington to observe operations in Vietnam’s Exclusive Economic Zone, and a few days later, boarded the USS John S. McCain to conduct the first joint naval engagement activities with the United States.

This uptick in military-to-military engagement has coincided with a period in which Vietnam used its 2010 chairmanship of the Association of Southeast Asian Nations (ASEAN) to encourage regional solidarity in response to China’s recently more aggressive assertion of claims to the Paracel and Spratly islands and the sea that surrounds them. The high point of this diplomatic effort occurred in July 2010 at the ASEAN Regional Forum Foreign Ministers meeting in Hanoi, when Secretary Clinton infuriated her Chinese counterpart by expressing Washington’s interest in supporting a multilateral effort to resolve the conflicting claims. Clinton (2010) said the United States opposed the “use or threat of force by any claimant.” The Foreign Ministers from Vietnam and other Southeast Asian countries one-by-one spoke in support of Clinton’s statement. Vietnam’s role in orchestrating this embarrassing moment for Beijing was not clear, but Beijing held the host country partially responsible.

The increased strategic alignment between Vietnam and the United States is an important development, but it should not be exaggerated. Vietnam will never want to be seen as part of an anti-China alliance. It will look over its shoulder to make sure Beijing is not unduly provoked. As a key Vietnamese foreign policy official once commented to the author about China, “They are very big, they are right next door, and they will always be there.” The Obama administration—similarly to the Bush administration before it—understands Hanoi’s sensitivity, which poses no problem for America’s overall strategy. An anti-China alliance is not America’s objective and Vietnam’s role in a policy of “hedging” will be a modest one.

While ties between Hanoi and Washington have markedly improved, they will continue to be constrained by the differences in our political systems. Though Hanoi values America’s role in maintaining a regional balance of power, Vietnamese leaders remain suspicious of American advocacy for democracy, human rights, and religious freedom. Pressure from Vietnamese American and human rights activists continues to generate Congressional and Administration attention on cases of repression of house churches, cyber activists and others who defy the one-party political order. As just one example of how human rights concerns can affect the relationship, in a February 3, 2010, press conference in Hanoi, the American Ambassador to Vietnam, Michael Michalak, stated in response to a question that “if the Vietnamese military wants to buy armaments from the US, we’d need congressional approval for that.” Michalak went on to explain that the human rights situation would be one of the factors that would be important in such a decision.

While differences will remain between the United States and Vietnam, the overall trend in bilateral ties is very positive, and that is good news for American businesses that seek to sell into the Vietnamese market. In a country in which the ruling party and government have enormous influence over trade and investment decisions, a businessperson can find that doors are more open and decisions more likely to fall the right way when Washington and Hanoi are on friendly terms. For example, a high-ranking Vietnamese official told me that the country’s decision in 2005 to give Lockheed Martin the contract to build and launch the country’s first satellite, a sensitive item, was an important symbol of trust and strong ties. On the US side, the Administration’s positive view toward the possible sale by American companies of coastal radar systems to Vietnam—equipment that can be used for both civilian and military purposes—is also a symbol of strategic trust and strong ties.

A constructive relationship seems likely to progress. The Vietnamese leadership continues to seek new foreign investment, integration with the world, and regional stability, all goals that require good relations with the United States. Washington will continue to value Vietnam’s dynamic economy, its increasingly sophisticated leadership, and its growing leadership role in Southeast Asia, a region that has Washington’s renewed attention.