Vietnam's New Leadership

Vietnam’s 500-member National Assembly convened on July 21 to formally select the country’s new leadership team for the next five years. The National Assembly’s role has largely been ceremonial because the country’s leadership was already determined behind closed doors at the Communist Party Congress in January. However, political reforms have empowered the legislative branch of the government and rumors swirled ahead of their voting that there could be some surprises. In the event, there were no such surprises.

Prime Minister Nguyen Tan Dung will return for a second five-year term. The prime minister and his team will now name a new cabinet that should include many new faces including younger leaders who have been elevated to the Central Committee during the lead-up to the Party Congress. The vote signaled continuity in Vietnamese economic, social, and foreign policies. Expect Vietnam to continue with its economic reforms, proactive foreign and national security policies, and interest in advancing stronger ties with ASEAN neighbors and strategic countries such as the United States, India, Japan, Korea, and the European Union. Guidance from the Party Congress suggests Vietnam has an interest in substantially deepening strategic ties with the United States, including further advancing military relations and intelligence sharing.

Before adjourning on August 6, the legislature is also expected to tackle such critical economic challenges as spiraling inflation and establish a committee to consider possible amendments to the country’s constitution (see http://blogs.voanews.com/breaking-news/2011/07/25/vietnams-national-assembly-meets-to-elect-new-president/).

Q1: Who are the key actors in the new leadership?

A1: There were no surprises in the leadership lineup. The team suggests significant cohesion and continuity of policy. Clearly, the party took serious stock of significant challenges during the selection process, including how to better address macroeconomic issues, tackle the out-of-control state sector in the economy, and manage very sensitive relations with China.

1. Nguyen Phu Trong, 67, who previously served as chairman of the National Assembly, was selected as general secretary of the Communist Party during the Party Congress in January. Regardless of the leadership changes announced in the current National Assembly session, he remains one of the most powerful figures in Vietnamese politics, both legally and in practice. Over the last decade, however, the general secretary’s role has become more focused on internal party matters, while the president and prime minister have been more actively leading the country and managing relations with foreign partners.
2. Truong Tan Sang, 62, was appointed by the National Assembly to replace retiring Nguyen Minh Triet as Vietnam’s president. Prior to his election, he had served since 2006 as a standing member of the Central Party Committee and had administrative control of the Politburo, running its day-to-day affairs. Upon accepting his new position, Sang nominated Nguyen Tan Dung for a second term as prime minister.
3. Nguyen Tan Dung, 61, was elected to a second term as prime minister with 94 percent of the National Assembly’s votes after weathering reportedly sharp criticisms from party leadership for his handling of the economy. Dung was first appointed prime minister in 2006. Dung is a former central bank governor and former deputy minister of interior from the southern-most province of Vietnam. He has led the country through significant economic reforms started under the Doi Moi initiative, but he has not been able to tackle the predominance of large and inefficient state-owned enterprises.
4. Nguyen Sinh Hung, 65, who served as deputy prime minister since 2006 and was also finance minister, was appointed chairman of the National Assembly. Upon assuming his new post, Hung immediately nominated Truong Tan Sang for the post of president.
5. Nguyen Van Giau, 53, governor of Vietnam’s central bank since 2007, was tapped to be the new chairman of the National Assembly's economic committee. He is expected to be replaced at the central bank by Nguyen Van Binh, currently one of five deputy governors.

A new cabinet is expected to be announced next week.

Q2: What challenges will the new Vietnamese leadership team face?

A2: The primary focus of the Communist Party and its leadership is survival. That means delivering significant public goods to the citizens of Vietnam—primarily in the key areas of economic growth, education, health care, and infrastructure—while maintaining strong control through socialist values. This has been a challenge for an economy now linked with global and regional trends; Vietnam is a member of the World Trade Organization and ASEAN Free Trade Agreement (FTA) and is party to six ASEAN FTAs with Australia, China, India, Japan, Korea, and New Zealand. Vietnam is also one of nine countries negotiating the Transpacific Partnership (TPP) agreement. Engagement with international markets has put a strain on a domestic economy still dominated by state-owned enterprises and a nascent capital market. Macroeconomic trends, especially inflation, have been difficult to manage while maintaining high growth rates sufficient to keep unemployment levels at a sustainable level in Southeast Asia’s third-largest country.

Vietnam’s battle against rising inflation, which is at its highest level since 2008, threatens to dislodge the country from its perch as one of Asia’s fastest-growing emerging economies and magnet for foreign investors. The inflation rate has risen for 11 straight months, reaching 22 percent in July and forcing a series of revised end-of-year economic forecasts by the central bank. The government has sought to hold down prices, cut spending, reduce credit growth, and cut imports, but with mixed results. The country’s newly appointed leaders will face pressure both domestically and from foreign investors to rein in inflation.

The recent uptick in tensions with China over conflicting claims in the South China Sea (or the East Sea, as the Vietnamese call it) will top the foreign policy agenda of the new leaders. Vietnam’s geostrategic sense of urgency relating to China has made it a proactive leader in ASEAN and has resulted in focused efforts to enhance ties with strategic countries such as India, Japan, and the United States. Vietnamese protesters have demonstrated against Chinese provocations for eight consecutive weekends as tensions between the communist neighbors continue to simmer. In recent weeks, representatives of the two nations have called for a peaceful resolution to the conflict, and Vietnamese authorities recently cracked down on protests in Hanoi before allowing them to resume at reduced numbers.

Q3: What is the role of the National Assembly and the new leadership in Vietnam?

A3: Vietnam’s Communist Party meets for a Congress every five years to determine the direction for the country’s policies and elect its leaders. The latest congress was held in January. Thus the appointments this week are largely formalities, because the leaders elected by the National Assembly were already widely known by Vietnamese and foreign observers. However, the National Assembly has become more independent-minded and assertive in recent years, often sharply criticizing the failures of government officials—for instance, addressing their seeming inability to put a brake on inflation. After the near bankruptcy late last year of state-owned shipbuilder Vinashin, which had amassed a debt of more than $4 billion, the National Assembly sharply criticized Prime Minister Dung, one of the company’s ardent supporters. One legislator even called for a no-confidence vote for the prime minister as a result. The vote was never held, but the message was clear.

Despite the National Assembly’s new-found independence, it is still dominated by the Communist Party and its leadership. Most legislators are members of the party.

Q4: Will the new leadership lineup impact U.S.-Vietnam relations?

A4: The answer is no. Expect high levels of continuity. The new leadership team has been engaged in reestablishing and expanding bilateral ties over the past five years. Vietnam and the United States should continue to work closely together on trade, as fellow participants in the TPP negotiations, and will continue to move ahead on expanding strategic ties, including military linkages and intelligence sharing. It is likely, however, that issues such as human rights and religious freedom will continue to be contentious. Over the last decade, U.S. and Vietnamese officials have developed relationships and deepened understanding, so progress on these more difficult issues, which is possible over Prime Minister Dung’s next term, will still face staunch challenges from party stalwarts who prioritize control.
American interests cannot be well represented without an ambassador in Hanoi. Unfortunately, several members of the Senate have held up the confirmation of veteran Foreign Service officer and ambassador-designate David Shear over concerns they have about United States adoption policies that relate to Vietnam. This approach is short-sighted and harmful to advancing bilateral ties and U.S. interests in Vietnam.

Ernest Bower is a senior adviser and director of the Southeast Asia Program at the Center for Strategic and International Studies in Washington, D.C. Gregory Poling is the Vietnam researcher for the Southeast Asia Program.

Critical Questions is produced by the Center for Strategic and International Studies (CSIS), a private, tax-exempt institution focusing on international public policy issues. Its research is nonpartisan and nonproprietary. CSIS does not take specific policy positions. Accordingly, all views, positions, and conclusions expressed in this publication should be understood to be solely those of the author(s).

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