The Road to Doi Moi 1986

The Road to Doi Moi 1986

This chapter delves into the historic period of the mid-1980s when the Doi Moi (renovation) policy, adopted by the Sixth Party Congress of the CPV in December 1986, marked the most transformative transition in Vietnam's modern political history from the Marxist central-planning model to a market-oriented economy. In the realm of international relations, Vietnam's perspective shifted from the Cold War "two-camp" worldview, that is, the zero-sum competition between socialism and capitalism, to a broad-based multidirectional foreign policy. The existing scholarship on this subject offers a dichotomous explanation of the emergence of Doi Moi in 1986, either internal economic and political causes or external pressure:¹ the erosion of Soviet economic and political power and the cost of Vietnam's occupation of Cambodia and economic sanctions imposed by the West.² Is Doi Moi an internal process of change or the effect of external pressure for change? Then there is a debate between the ideational shift toward and material causes of Doi Moi.

The two important debates about the Doi Moi policy have been unresolved. First, it was between the proponents of ideology and those of the material consequences as the cause of Doi Moi.³ Most recently, an ardent proponent of this theory is the political scientist Tuong Vu. He writes, "Studies of economic reform in Vietnam since the late 1980s have downplayed the influence of foreign ideas or models on the event. Although it is true that the Vietnamese reform had many distinctive features, Vietnam's reformist ideas and policies followed closely those of the Soviet Union."⁴ The most prominent reformist leaders who translated these reform ideas into policies are, according to conventional wisdom, Truong Chinh, Nguyen Van Linh, and Vo Van Kiet. Second, as Elliott put it, Doi Moi is "either part of a self-generated process, driven by impersonal forces rather than considered policy, or a societal transformation taking place at the grassroots level, independent of any formal, governmental design—or both."

I argue that impersonal domestic and external forces (the protracted economic crisis and rising cost of two-front war in Cambodia and against China) in 1979-85 made it possible for reformist ideas to prevail over continued war and a state-planned economy. Beginning in 1978 as a result of the economic crisis (as discussed in chapter 2), growing popular discontent with the party facilitated it. Competing ideas within Vietnam's political class matter, but it took the impersonal domestic and external forces to lead one set of ideas to prevail over all others. I also argue that Nguyen Co Thach was the earliest, most consistent, and strongest advocate for economic reform and opening to members of the old guard, namely, Le Duan, Truong Chinh, Pham Van Dong, Le Thanh Nghi, and Le Duc Tho, after the PPA was concluded in January 1973. Then vice-minister Nguyen Co Thach, whom the Politburo entrusted to do research on the Soviet Union's and Eastern European countries' economic relations with the West during the US-Soviet détente (1972-73), took a great interest in how to modernize Vietnam's economy after the Vietnam War. And it was Thach, who had the tenacity to speak frankly to the Politburo about the need for Vietnam to adapt to an increasingly interdependent world economy in which advanced technology, economic efficiency, and competitiveness were intertwined and decisive to avoid economic backwardness and overdependence on China and the Soviet Union. He was able to do so in part because he had the backing of the economically minded leaders Pham Van Dong and Le Thanh Nghi and had earned the trust of Le Duc Tho, for whom he worked as a senior adviser and assistant during the US-Vietnam negotiations to end the Vietnam War in the early 1970s.

Evidence from internal discussions within the inner circle of the Vietnamese leadership presented in this chapter corroborates Tuong Vu's argument that Vietnamese reformists keenly observed and learned reform practices and ideas from the Soviet Union and Eastern Europe from the 1970s to the mid-1980s. However, this explanation is incomplete. The Vietnamese knowledge of Soviet reformist ideas could only be pulled together into a concrete policy by the gravity of the material forces, that is, domestic economic imperatives and external systemic pressures that had built up since the Fourth Party Congress in December 1976 and explosively converged in the mid-1980s. Drawing on new documentary evidence from the Vietnamese archives, I argue that the either/or arguments failed to capture the complexity of what happened because their respective explanations were too simplistic. My account expands Elliott's multi-causal, multilevel framework, which recognizes the complexity, the nature of incremental changes, and the convergence of changes at the individual, domestic, and international levels. Those interrelated factors were the changes in political leadership with the rise of reformist leaders in Vietnam, the domestic economic distress and political fallout in Vietnam, and the changes in the Soviet Union under the reformist leader Mikhail Gorbachev. Unlike Elliott's, however, my argument stresses material forces as the most important cause of the collective ideational changes on the eve of the Sixth Party Congress in December 1986 while ideational factors, particularly the Vietnamese knowledge of reformist ideas acquired from the Soviet Union, as Tuong Vu argues, allowed the reformists to push their ideas to the front and center of Vietnam's foreign policy decision making. The change in collective ideas, which culminated in the Doi Moi policy of 1986, was a self-generated process driven by domestic and external forces, which in turn propelled reformists and their ideas into the center of foreign policy making. It is the convergence of domestic and external imperatives in the first half of 1980s that caused the reformist ideas to prevail over the status quo of continued military confrontation with China and nation building in Cambodia.

The result was, as Benedict J. Tria Kerkvliet argued, “worsening economic conditions and widespread rural yet unorganized discontent [with the party] in the form of resistance to the state-imposed collective farming strengthened arguments in national offices that concessions to household farming were the sensible course to take.” As pointed out in chapter 2, popular discontent with and resistance to the party, which manifested in thousands of complaints against the widespread corruption of local party officials in 1978, alarmed the top party leadership. As Hanoi’s top economic planner, deputy prime minister and chairman of the State Planning Committee Le Thanh Nghi acknowledged the problem of local party officials’ widespread practices of ballooning the amount of resources needed to meet the central government’s quotas in late 1977. In 1978 Nghi called for economic decentralization, which would allow city and district party leaders to plan their own economies with the central government’s guidance and supervision. The convergence of these factors forced the top Vietnamese leadership to tolerate local “fence breaking” in the south, of which the most prominent leader was Ho Chi Minh City’s party secretary Vo Van Kiet in the early 1980s.

By mid-1980s, external forces led to greater support for reformist ideas than for the conservative and military-firsters’ status quo policy of a centrally Planned economy and military confrontation with China. Doi Moi occurred in 1985–86 because the prolonged economic crisis and poverty inside Vietnam were dire and the time was “ripe” for Vietnam to change course toward economic reforms and opening to adapt to the prevailing global forces of the technological and scientific revolutions. The Soviet bloc's demand for reciprocity in economic relations with Vietnam, meaning that Vietnam's imports of raw materials from the bloc would depend on its export capability, coupled with China's entrance into the market of the Soviet bloc, threatening Vietnam's exports, compelled Vietnam to quickly improve its economic efficiency and competitiveness even in the socialist bloc's market. By mid-1980s, the Vietnamese collective leadership came to the sobering conclusion that economically lagging behind other countries, especially China, threatened Vietnam's economy and national sovereignty and, by extension, the political survival of the CPV. Without the convergence of these material imperatives at the domestic and international levels at one critical juncture (in 1985), the ideas of Vietnamese reformists like Chairman of the State Planning Committee Vo Van Kiet and Foreign Minister Nguyen Co Thach could not have prevailed over the status quo. By no means do I claim that the reformist ideas did not matter. But if the focus here is about causation, then these ideational concepts were not independent of domestic and external material imperatives.

As I discuss in more detail below, the origins of these reformist ideas can be traced back to the PPA between Vietnam and the United States between 1968 and 1973, during which an outgoing and open-minded vice-minister of foreign affairs, Nguyen Co Thach, directly injected his ideas about economic reform and opening to the West in order to obtain advanced technology and modern industrial equipment into the inner circle of the Vietnamese leadership, the Politburo. However, such ideas were muted or brushed aside by the conservative Marxist-Leninist ideologues for more than a decade, during which the old wartime mentality of Stalinist-style state central planning and heavy reliance on foreign aid (mainly from China and the Soviet Union during the Vietnam War, 1965-73, and then mostly the Soviet Union after 1975) was too slow to change.

It is hardly surprising that collective ideas in any country change slowly and only shift dramatically after a series of systemic shocks or crises. Not only that, but the military-first faction dragged Vietnam into a costly two-front war in Cambodia and with China for seven years (1979-85). During this period, despite massive aid from the Soviet bloc, Vietnam's economy continued to be inefficient, suffered a growing import-export deficit, and drove the country into excessive debt.

The Rise of the Reformists, 1985-86

Beyond Indochina were Vietnam's great power allies, the Soviet Union and Eastern Europe, the most important sources of Vietnam's economic development and modernization for its next FYP, 1986–90. The year 1986 was a pivotal one, for it ushered in the Doi Moi policy, which set Vietnam on the course of transformative economic reform, although the ground already had been shifting toward this trend a year earlier. In March 1985, the Foreign Economic Relations Research Group (To kinh te doi ngoai) of the Council of Ministers, under the leadership of the council vice-chairman Vo Van Kiet, published an important and comprehensive study of Vietnam’s foreign economic relations with the socialist bloc, nonsocialist developing countries, and the developed capitalist bloc. This report reveals the top Vietnamese planners’ view of Vietnam’s position within the changing international economic situation in the second half of the 1980s. The Research Group concluded, “For the 1986–90 five-year plan, Vietnam could no longer rely on the Soviet Union and Eastern Europe for vital nonrefundable aid, and economic reciprocity (mutually beneficial economic transactions) would become the new principle of Vietnam’s economic relations with the Soviet Union and other members of the Council of Mutual Economic Assistance.”

The Research Group argued that Vietnam's export expansion during the next five years would require economic efficiency and modern industrial equipment—a greater output with less use of labor and energy, the restructuring of its economic system, and the application of technological innovation to the manufacturing of goods to reduce the cost of energy. Increasing economic efficiency and export volume required economic reform at home and a broad-based foreign economic policy beyond the socialist bloc. That meant that Vietnam needed to develop economic relations with developed capitalist countries.

From 1975 to 1985, after its national unification, Vietnam's economic and security reliance on the Soviet Union increased steadily as Sino-Vietnamese relations plunged into war and military confrontation after the Chinese invasion of Vietnam in February 1979. Looking back at this turbulent decade, the Vietnamese viewed themselves as the victims of Chinese aggression and concluded that an alliance with the Soviet Union was necessary to counter the China threat. However, by 1985 Hanoi's economic planners were increasingly alarmed by the steady decline of Soviet economic power and economic deterioration in the COMECON countries, which were accumulating mounting debt to Western European countries.

Hanoi's economic planners divided the decade 1975-85 into three periods of Vietnam's economic relations with the Soviet bloc. During the first period,from 1975 to 1978, when China openly opposed Vietnam, the Soviet Union canceled Vietnam's wartime debt and additionally provided a large loan of 2.4 billion rubles at low interest rates. However, in Hanoi's view, the relations Between the Soviet Union and Vietnam during this period were not as closely connected as Soviet relations with other Eastern European countries. Vietnam’s foreign policy did not always align with that of the Soviet Union.

As the Research Group summarized in March 1983, “Although the Soviet Union and other socialist countries increased their economic assistance to us during the period 1975–78, compared to a decade earlier, their total aid package was inadequate to compensate us for the loss of Chinese aid during this period.”

During this period, Hanoi’s leaders believed that because the capitalist and nonsocialist countries wanted to limit the influence of the Soviet Union and China in Vietnam, Indochina, and Southeast Asia as a whole, Vietnam was granted loans totaling US$950 million from these countries and various international financial organizations.

Hanoi’s economic planners viewed the period of 1975–78 as a regrettable missed opportunity to further develop economic relations with advanced western countries beyond the “exploration” (tham do) of business opportunities by Sweden, France, Australia, and Japan and postwar “humanitarian aid” (vien tro nhan dao) from international organizations, including the Food and Agriculture Organization of the United Nations and the United Nations Children’s Fund (UNICEF).

Nonetheless, the loans from these nonsocialist countries made a significant contribution to Vietnam’s agriculture, fisheries, and basic development, including the improvement of irrigation systems, reforestation, the seafood industry, and cement production.

To meet the goals of production, construction, and living standards set in the 1986–90 FYP, the need to import raw materials, fuel, construction materials, and equipment and parts would increase significantly. Compared to 7.5 billion rubles in 1981–85, total import costs for 1986–90 were projected to be approximately 10 billion rubles, of which 6 billion would be used to pay for imports of four main items: fuel, steel, fertilizer, and cotton.

The Soviet Union and other members of the COMECON agreed to allow Vietnam to import goods worth 5.5 to 6 billion rubles on the condition that Vietnam would be able to export goods to them worth 3.5 billion rubles. Vietnam had to secure additional capital of US$4 to 4.5 billion from nonsocialist financial markets.

Yet, from 1986 to 1990, Vietnam had to pay a debt of 2.8 billion rubles (2.4 billion in principal loans plus 400 million in accrued interest) to the socialist bloc, as well as an additional debt of US$1.9 billion (US$1.35 billion principal plus US$550 million in accrued interest) to the nonsocialist bloc.

This staggering amount of accumulated debt was indicative of Vietnam’s growing trade deficit with other countries, which stemmed from its economic inefficiency, low-quality products, and, more important, the ever-growing detrimental effects of its “all for the frontline” mobilization for the two-front war in Cambodia and with China in 1979–85.

During the third period (1981-85), Vietnam received a generous aid package worth 4.5 billion rubles, twice the amount given to Vietnam during the preceding five-year period, from the Soviet Union and other COMECON countries.25 The Soviet aid was meant to cover not just the major items, including raw materials, fuel, parts, and industrial equipment, that the Soviets had provided to Vietnam in the late 1970s, but it also paid for items that Vietnam had previously imported from the capitalist and nonsocialist countries, including steel, fuel, fertilizer, cotton, vehicles, tractors, and construction equipment.

Notably, however, during the period 1981-85 the Soviet Union and other COMECON countries pressured Vietnam harder to develop mutually beneficial economic relations and significantly increased its exports to restore the export-import balance. Furthermore, although the Soviet Union and other COMECON countries allowed Vietnam to import significantly more goods than it exported, they imposed regular interest rates on Vietnam's loans and shorter deadlines for repayment of those loans. In addition, they imposed higher prices for the goods Vietnam imported from them and a higher standard of quality for goods Vietnam exported to them.27 In 1984-85, China began economic cooperation with Eastern European countries, exporting labor-intensive products similar to what Vietnam did.28 Vietnam’s top economic planners saw this growing trend as an economic threat China posed to its markets in Eastern Europe.

After 1983 Vietnam saw positive signs of resuming economic exploration with the nonsocialist and capitalist countries, starting with small-scale economic cooperation in a number of fields. In a March 1985 report, the reformists informed the party leaders that “capitalist nations and international economic organizations refused to enter into large-scale economic cooperation with us because of political issues [US economic sanctions against Vietnam] and regional conflict [Vietnam’s military presence in Cambodia].”

The Fifth Party Congress in March 1982 elevated Vietnam’s export sector to a strategic objective as increased agricultural production had stabilized people’s livelihoods.31 In April the reformist Vo Van Kiet was promoted to the chairmanship of the State Planning Committee and appointed deputy prime minister, replacing Nguyen Lam. Even in 1985, Vietnamese reformists like Vo Van Kiet were frustrated that the Party’s collective ideas were too slow to permeate the party and government apparatus and be translated into actions and policies at various levels below the top echelon of the party and government.32 The Research Group, under Vo Van Kiet’s leadership, wrote in 1985:

From the beginning (after Vietnam’s national unification in 1975), we did not recognize the reality that our economic relations with other countries were based on the principle of mutual interests, reciprocity, and loans with interest. We did not clearly understand the important, strategic, role of our export sector in developing the economy from small-scale to large-scale socialist production, in increasing imports, and in building the material and technological foundations of socialism. Our psychology of reliance on outsiders was deep, widespread, and resistant to change. Because of that, we were not able to exploit our strength and potential in our country to widen our economic relations with other countries, particularly to increase our exports. We did not see as important investments in building infrastructure and material foundations in service of large-scale exports. We were too slow to determine the necessary policies and measures to strengthen our export sector.

This statement was evidently a thinly veiled criticism Vo Van Kiet and his economic team leveled against his predecessor Le Thanh Nghi, who was by no mean a conservative but an economically minded leader. And the criticism did not stop there. Kiet’s Research Group also criticized the conduct of Vietnam’s foreign economic policy under Le Thanh Nghi’s leadership. The ill-conceived import-export plans and the disconnect between foreign economic relations and the objectives of Vietnam’s national economy prevented Vietnam from exploiting the economic potential of its abundant labor, land, and natural resources to boost its exports to friendly markets in the Soviet Union and other Eastern European countries.

In the agricultural sector, which was the most important sector for the first FYP (1976–80), outside assistance failed to bring it from small-scale to large-scale production because there was a mismatch between imported goods and the actual domestic needs of Vietnam. For instance, for 1976–80, Vietnam imported tractors in excess of its real need while falling far short of fertilizer and pesticides, which were important to boost production. For 1975–80, imports of machinery and equipment were too large (almost 15,000 tractors, 13,000 transport vehicles, and 2,000 excavators). The massive imports of machinery and equipment were in enormous excess of the domestic need and the country’s ability to use such equipment at that time, leading to a significant waste of resources. However, in reaction to that, from 1981 to 1984, imports of machinery and equipment such as tractors, excavators, and bulldozers were reduced by more than 90 percent. Additionally, the imported machinery and equipment were not complete, and shortages of spare parts further reduced their use, worsening waste over time.

In the industrial sector, Vietnam used up an enormous amount of foreign aid to build too many big and expensive projects and imported too much heavy machinery, construction materials, and manufacturing equipment. For example, Vietnam imported too many transport vehicles and big excavators and built six cement factories, each with a capacity of producing one million tons of cement, and dozens of concrete factories. These did not suit Vietnam’s economic development stage, which was heavily dependent on agriculture and light industry.

The Research Group reported, “The dire consequences of these mistakes in economic planning, that is, too many big and expensive projects incompatible with Vietnam’s real economic development needs, led to the widespread waste of capital, time-consuming construction, slow mobilization of resources, and costly economic inefficiency. Factories meant to produce major products such as fertilizer, coal, and construction equipment and materials begun in the years 1975-76 remain under construction in early 1985 and are unlikely to move into production by the end of the year.”

Concerning exports, for the first FYP after unification (1976-80), Vietnam’s total export value was 1.5 billion rubles and US dollars, and it doubled, "amounting to 3 billion rubles and US dollars during the second FYP (1981–85). As Vo Van Kiet’s Research Group summed it up, 'Although Vietnam was able to gradually bridge the gap between exports and imports, the discrepancy remained very large,' referring to import value far in excess of export value. The group pointed out that the system of exports was never renovated or improved; Vietnam exported everything it could, and the improvement of product quality was too slow. As a result, Vietnam did not have exportable products in large quantities that could compete in the world market; a number of Vietnam’s products were actually at risk of losing market value."

"Vietnam’s exports and imports were not in sync with each other, and as a result, the exports did not serve as the foundation for the import sector while imports failed to ensure that certain raw materials and equipment necessary to produce goods for export were not depleted."

"During the decade after unification (1975–85), Vietnam’s imports relied on loans and nonrefundable aid from both socialist and nonsocialist countries. The import sector was very important and significantly affected the stability of economic production and construction in the postwar decade. During this decade, Vietnam’s imports did not increase much; it was actually forced to decrease its imports of very important items like spare parts and industrial equipment after the invasion of Cambodia in late 1978 when the capitalist and nonsocialist countries eliminated aid and imposed economic sanctions on Vietnam. As a result, shortages of spare parts and equipment had a significant negative impact on production, construction, and livelihoods in Vietnam, especially in 1983–84."

As Vietnam's top economic planners crafted their third FYP (1986-90) after unification, one of the major considerations was the changing configuration of international economic power, with the Soviet-led COMECON facing an alarming number of major economic problems. There were three areas of great concern to the Vietnamese. First, the COMECON countries faced growing shortages of energy and raw materials and therefore had difficulty meeting the needs of their national economies. Second, they suffered an enormous balance of payments deficit. Third, they were confronted with shortages of food. In the Vietnamese view, except for the Soviet Union, members of the COMECON had never been able to secure sufficient energy sources and raw materials—these are two of the major decisive factors in a country's economy—to meet their needs. In the Soviet Union, oil reserves in the heart of Europe gradually were depleted, and oil production had to be moved to remote regions on the country's northern and eastern frontiers, increasing the cost of oil extraction due to difficult geography and transportation. To complicate matters, the price of fuel and raw materials on the world market increased significantly, and imports of such scarce resources from developing countries were expected to drop as well. As a result, COMECON countries were forced to mobilize strategic resources inside each country and deepen their participation in the international division of labor (phan cong quoc te) to meet their national needs and increase their efficiency in using fuel and raw materials. The entire production system had to be renovated to consume less energy but increase output by importing advanced energy-efficient technology from the West.

In foreign economic relations, the socialist bloc, from the perspective of Hanoi’s economic planners, had difficulty producing such modern technologically powered equipment, food supplies, and some kinds of mineral resources. Moreover, in the past, the Soviet Union had exported raw materials to other members of the COMECON at prices lower than the market price, but from 1985 on the Vietnamese anticipated a decline in the Soviet ability to do this. In addition, by 1985 all COMECON countries faced difficulties in securing sufficient food supplies.

The Vietnamese economic planners informed their top leadership that all these external economic pressures mandated that Vietnam, like the other COMECON countries, must increase the efficiency of its national economy while increasing savings to address shortages of labor, energy, and raw materials; a lack of capital investment, and demands for infrastructure improvement and environmental protection.

Vietnamese economic planners counseled their leaders that Vietnam should implement the economic reforms being adopted by Eastern European countries. These reforms (1) applying advanced science and technology to increase the quality and quantity of products to save energy and raw materials, (2) changing the economic system to one that used less energy and stronger alignment with socialist economies, (3) integrating the international division of labor to create professions and skills appropriate for society's needs, (4) enacting policies to conserve energy and raw materials, and (6) reforming labor organization and economic management to conform to the country's development level and production capabilities.

However, Vietnam had no alternative but to continue to rely on the Soviet Union as long as the West refused to lift economic sanctions. The lifting of economic sanctions was conditional upon Hanoi's complete withdrawal of the Vietnamese occupying forces in Cambodia. Faced with economic sanctions by the West, the Soviet Union remained the main source of capital, fuel, raw materials, equipment, and technology and the largest market for Vietnam's exports.

On June 27, 1985, General Secretary Le Duan visited the Soviet Union, and Moscow pledged to increase economic assistance to Vietnam by doubling the

amount offered during 1981-85, totaling 8.7 billion rubles in loans. In return, the Vietnamese leadership completely supported Moscow’s foreign policy line.46 Although the Vietnamese leaders were well aware of the economic decline of the Soviet bloc, they were stuck with it for the long haul. In 1986-90, the Soviet Union, on the one hand, continued to offer Vietnam, Cuba, and Mongolia preferential trade status.47 On the other, the Soviets and other Eastern European countries insisted that Vietnam broaden mutually beneficial economic cooperation with them based on the principle of reciprocity.48 To boost its exports to the Soviet bloc, Vietnam was to concentrate on a number of sectors, including agriculture, the food industry, forest products, logging and wood processing, seafood, the garment industry, light industry products, mining, and oil production.

Vietnam's projected imports of raw materials, especially fuel, for 1986-90 was nearly 10 billion rubles and US dollars, equal to the previous decade (4.6 billion rubles and dollars in 1976-80 and 5 billion in 1981-85).50 Imports of fuel were to increase from 8.5 million tons (1981-85) to 15 million (1986-90).51 Vo Van Kiet's Research Group projected that to meet Vietnam's import needs and enable the socialist bloc to pay any of its creditors in 1986-90 (2.8 billion rubles to the socialist bloc and 1.9 billion US dollars to nonsocialist countries), the Vietnamese government would have to increase its export capacity up to tenfold or to a gross value of 6.5 to 7 billion rubles for 1986-90.52 For 1985-90, the group proposed an export plan as follows: (1) agricultural products worth 3 to 3.5 billion rubles, (2) seafood worth 800 million rubles, (3) forest products worth 250 to 300 million rubles, (4) handicraft and light industry products worth more than 2 billion rubles, and (5) mineral resources worth 300 to 350 million rubles. If this export target were achieved, Vietnam's export value would be roughly 7 billion rubles. Besides exports, the Research Group counseled the Vietnamese government to strengthen its service sector, including financial services, tourism, and the commercial air industry, to accumulate between 400 and 500 million rubles.

In summary, 1985 marked significant domestic and international changes that provided additional impetus for reform and opening in Vietnam. Domestically, the detrimental effects of the two-front war on Vietnam's economy was enormous in spite of massive aid from the Soviet bloc, not to mention the human cost; the war clearly had reached a stalemate, and war weariness was widespread in Vietnamese society. Within the party and government, the prevailing strategic thinking shifted toward economic reform and opening, meaning broad-based foreign economic relations beyond the Soviet bloc. The Soviet Union's economic reforms under Mikhail Gorbachev's “new thinking” in 1985 lent support to reformists within the CPV. Globally, in 1985, the pendulum of technological revolution had also swung in the direction of the West, and as the Soviet bloc was struggling economically, the new principle of economic reciprocity had replaced the nonrefundable aid. China's exportled growth under procity had replaced the nonrefundable aid. China's export-led growth under Deng Xiaoping's reform policy threatened Vietnam's export market in Eastern Europe, adding another layer of the China threat to Vietnam's national security.

The Origins of Doi Moi Ideas

In his seminal book Changing Worlds: Vietnam's Transition from Cold War to Globalization, international relations scholar David W. P. Elliott referred to Foreign Minister Nguyen Co Thach as "one of the leading reform voices of the 1980s."54 I agree with Elliott and further argue that Nguyen Co Thach played a more crucial role in shaping the decision-making process leading to the adoption of the Doi Moi policy in 1986 than did Nguyen Van Linh and Vo Van Kiet, who are conventionally known as the heroes of Doi Moi.

In July 1986, in his lengthy report to the National Assembly, vetted by the Politburo of the Party Central Committee, Foreign Minister Nguyen Co Thach made a strong case for the need to adopt economic reform in order to adapt to the changing configuration of the global political economy.55 Six months later, in December 1986, during the Sixth Party Congress, Thach presented another report on world politics and Vietnam's foreign policy to the National Assembly, making a more forceful case for a rapid shift toward economic reform at home and a broad-based foreign economic policy in "the age of technological revolution," to use Thach's own terms.56 With the two detailed reports, Foreign Minister Nguyen Co Thach was entrusted by the Politburo to explain Vietnam's foreign policy to the National Assembly within the framework of the Politburo's political report presented at the Sixth Party Congress. What is striking in the December 1986 report is a direct reference to "a major shift in socioeconomic strategies in the socialist bloc, which developed out of basic changes in thinking, particularly economic thinking."57 Thach began by highlighting "the revolutionary reorientation of the socioeconomic strategy" of the Soviet Union and other Eastern European countries at the Twenty-Seventh Congress of the Communist Party of Soviet Union concluded on March 6, 1986.

Notably this new thinking emerged from the socialist bloc's deeper recognition of the political influence of the basic changes in global economic foundations. The new phase of technological and scientific revolution that began in the 1970s and continued up to the present has brought about a new and powerful transformation in global production forces, completely changed the global economic system, increasingly widened and deepened the process of internationalizing economic life and the division of labor, and heightened the level of trade and economic cooperation in the world. The global economic foundation is actually one whole body (mot tong the) in which every country's economy and every economic system is an inseparable part. Two opposing economic systems (capitalist and socialist) can simultaneously compete as well as closely cooperate with each other. This technological and scientific revolution and the trend of internationalization of economic life are so forceful that they will compel all nations, big or small, capitalist or socialist, to change their respective economic structures and management systems and rethink their socioeconomic strategies in order to reap the benefits of this global economic transformation to advance the development of their national economies and avoid the danger of lagging behind (bi tut lai) and falling deep into a situation of underdevelopment (lun sau trong tinh trang lac hau).

Foreign Minister Nguyen Co Thach, in early 1986, forcefully convinced Vietnam's top foreign policy decision makers to shift from the two-camp worldview—the theoretical and philosophical question of who prevails over whom in the zero-sum competition between capitalist and socialist systems—to a broad-based foreign policy, especially in foreign economic relations. In the journalist Huy Duc's account, it was Foreign Minister Nguyen Co Thach, not those who were in charge of economic planning, who was the first member of the Politburo to have a thorough understanding of the market economy and to have compiled Politburo Resolution 13, which set in motion a historic shift to a multidirectional foreign policy. As foreign minister, Thach was a leader who was keen on bringing back to Vietnam intellectuals who understood the market economy. According to Duc, in a Politburo meeting on February 19-20, 1986, Thach bluntly told the entire Politburo, "The economic strength of socialism and the dictatorship of the proletariat cannot go in opposition to economic laws (quy luat kinh te). If we follow the economic law and know how to take advantage of that law in favor of socialism, then we can develop based on the strength of the economic law."60 Here he was recasting the applied social Darwinism of the late nineteenth century to push for reforms in Vietnam if the CPV and its socialist revolution were to survive in an economically interdependent world.

Although Nguyen Co Thach has been credited in history as one of the leaders who reoriented a multidirectional foreign policy, his exact role was not known until now. Thach himself never publicly claimed to have been a key mover and shaper of the Doi Moi policy in 1986. Now there is revealing evidence that Thach was a strong and consistent advocate for economic reform within the inner circle of the Vietnamese leadership since the PPA of January 1973, and his central role in policy making led to the adoption of the Doi Moi policy in 1986.

During a historic negotiation between the DRV and the United States between 1968 and 1973 to end the Vietnam War, then Vice-Minister Nguyen Co Thach was a close aide to the chief negotiator, Le Duc Tho, and served as head of the Vietnamese experts group. In addition, he had another secret mission: directly assisting the Politburo in following the negotiation process and researching the inconspicuous economic relations between Western and Eastern Europe.61 In short, he was the eyes and ears of the Politburo.

In a top secret report entitled “A Number of Situations about Economic Cooperation” between the Soviet Union and Eastern Europe—actually educated if one were to peel back the Communist jargon—Politburo members about economic relations between the Soviet-led economic bloc, COMECON, and some Western European nations. Thach told Politburo members that in spite of the ideological and political conflicts between the two blocs during the Cold War, economically the two sides were trading with each other.62 Very early on, on the eve of the PPA in January 1973, this young diplomat took a particular research interest in market economies and the transformative role of scientific and technological advancement in the global economy. Thach's research interests could have been perceived as revisionist, if not reactionary, by the conservative ideologues, who firmly viewed Cold War international relations through their two-camp lenses at that time. Yet, with direct access to the Politburo, Thach cautiously crafted his reform ideas into a report about the Soviet Union’s and other Eastern European countries’ economic relations with the capitalist West, suggesting that if the Soviets did that in order to find a shortcut to communism faster, then Vietnam should follow suit. In his September 1973 report to the Politburo, he wrote that the Soviet Union and Eastern European countries

desire to develop fast, strengthen their economic foundations, and accelerate the process of development especially the quality of products. The Soviet Union and Eastern Europe are five to ten years behind the West in terms of technological development. The Soviets and Eastern European countries set the goal of catching up with the West and taking the lead in technological development in about ten to fifteen years. To meet that goal, they need to strengthen investment, renovate equipment and expand scientific research, and apply (scientific findings) effectively . At the same time, they are taking the opportunity to attract capital investment and modern technology from western countries .

Thach further reported to his leaders that in 1972-73 the United States and other capitalist countries widened their economic relations with the Soviet Union and other Eastern European countries, ending the twenty-year economic sanctions against the eastern bloc from 1951 to 1971. This new trend resulted from the market crisis, oil crisis, and shortages of raw materials and cheap labor, accompanied by stiff economic competition in the West especially among Western Europe, Japan, and the United States. In addition, the economic cooperation between East and West was mutually beneficial.64 Thach had the tenacity to explain to the Politburo how the global political economy works. He wrote, “The US shift from economic sanctions to economic cooperation with the Soviet Union and Eastern Europe was first and foremost an imperative of economic interests. But at the same time it served the US political objective of transitioning from the policy of confrontation to peaceful coexistence between the East and West. And the Soviet Union and Eastern Europe knew the imperialist clique's political motive behind such their economic transactions with the West. They put political and ideological differences aside and prioritized importing modern technology from the West to modernize their economies, increase production efficiency, and raise the quality of their products.”

In his September 1973 report, Thach counseled the Politburo that Vietnam must reorient its foreign economic policy from heavy reliance on the Soviet and Chinese nonrefundable aid to loans, purchases on credit, and manufacturing joint ventures with both advanced socialist and capitalist countries to import modern machinery and industrial equipment.66 Simply put, he suggested diversification of Vietnam's foreign economic relations beyond the socialist bloc. His economic vision after the PPA was for Vietnam to have a more economically independent and efficient foundation that could accelerate its economy from small- to large-scale production. He reasoned:

"Importing modern technology and equipment is extremely important for economic development. If we want to speed up economic development, we must increase exports, which requires importing modern equipment. For instance, for Hungary to increase its gross domestic product to 6 percent annually, it had to increase its exports by 12 percent annually. ... We need to use the products we manufacture to pay for imports of modern equipment. Besides a number of projects, including seaports, irrigation systems, and power plants, [we] need to tightly connect our imports of modern equipment to our exports, using the products from those factories to pay down our import debt." To achieve this vision, Thach further counseled the Politburo, “We continue to rely on the advanced socialist countries as our main base of support, but at the same time we must take the opportunity to import modern technology from the capitalist countries. We need to take advantage of the opportunity to demand that the Americans pay compensation for their war of destruction to Vietnam, of the market crisis and fierce economic competition in the capitalist world, and of the rivalry between major powers in Indochina and Southeast Asia.”68 His strategic thinking reflects a realist worldview par excellence and well ahead of his time. As it turned out, it took more than a decade for his ideas to take root and be accepted as the prevailing collective ideas of the Politburo in 1985, on the eve of the Sixth Party Congress in December 1986.

The convergence of domestic and external forces that culminated in 1985 set Vietnam on a pathbreaking course toward economic reform and a broad-based foreign economic policy. In part, the deteriorating health and natural death of the most powerful leader of the conservative and military-first camp, Le Duan, the party secretary, died on July 10, 1986. Before he died, he put Truong China , a conservative turned reformist, at the helm of the party Politburo. The transition was not without opposition. In December 1985, Le Duc Tho, Le Duan's longtime ally, persistently encouraged the dying Le Duan to name him as his replacement.89 Le Duan made clear his distaste for Le Duc Tho's audacious ambitions by instructing him to stop chairing Politburo meetings. In April 1986, just before the Sixth Party Congress commenced, Le Duc Tho and his wife went to Le Duan's bedside to ask for his support. Le Duan scolded Tho, saying, "You are strange. I already rejected [your request] ... I said Truong Chinh."90 The most plausible explanation as to why Le Duan came to favor a conservative turned reformist like Truong Chinh over his long-term ally Le Duc Tho as the next party secretary has to be found in Truong Chinh's dealings with Vietnam's economic crisis since the Fifth Party Congress in 1982. Le Duc Tho's military allies, General Van Tien Dung and Chu Huy Man, who were the war hawks in the military-first faction, lost party support and their Politburo seats at the Sixth Party Congress in December 1986. Two other leading members of the military-first faction died in 1986. General Hoang Van Thai suddenly died on July 2, just months before the congress, and General Le Trong Tan died on December 1.71 General Le Duc Anh, however, emerged from his command of the Vietnamese troops in Cambodia as a rising star in the military. One of his signature military strategies was to drive Cambodian resistance forces into Thai territory in the summer offensives of 1984-85, and he also carried out the KS project in 1985, in which tens of thousands of Cambodian youths were forced by the PRK regime to clear eight hundred kilometers along Cambodia's border .

with Thailand so it could be planted with land mines and other barriers to prevent the Khmer Rouge forces from returning. According to former Vietnamese ambassador Ngo Dien's estimate, nearly 7 million workdays were dedicated to the completion of the K5 project. General Le Duc Anh hoped to enable the Cambodian armed forces to gain strength and allow the Vietnamese troops to withdraw from Cambodia by the end of the 1980s.

According to the reformist Phan Van Khai, a member of the Party Central Committee in 1986, Truong Chinh reformist ideas and his determination to change the party's thinking between 1982 and 1986 had received growing support from the majority of party members.73 Six months later, in December 1986, a reformist leader, Nguyen Van Linh, replaced the elderly Truong Chinh as party secretary. Nguyen Van Linh appeared to be a compromise candidate between reformist leader Truong Chinh and conservative leaders Le Duc Tho and Pham Hung, with the support for Linh by Prime Minister Pham Van Dong.74 In 1985, it was Truong Chinh, who reintroduced Nguyen Van Linh into the Politburo and restored the rest of his other portfolio as a permanent member of the General Secretariat, a position a conservative, To Huu, wanted.

At the Tenth Plenum of the Fifth Party Central Committee in May 1986, the internal struggle between the conservatives and reformists in the economic sphere ended in a further victory for the latter. Deputy Prime Minister To Huu and other conservatives lost their seats in the Council of Ministers.76 The Eighth Plenum of the Fifth Central Committee voted to reinstate Nguyen Van Linh as a member of the Politburo and restore his previous party portfolio. New policies dealt head-on with basic inefficiencies in the economy, and the logical starting point was to reexamine the mistakes for the past ten years from 1975 to 1985.

At the policy level, the March 1985 report of the Foreign Economic Relations Research Group, under Vo Van Kiet's leadership at the Council of Ministers, called for a radical change in economic thinking, washing away the old wartime thinking that led to an overreliance on foreign aid, wasteful practices, economic inefficiency, bureaucratic bottlenecks, and a disconnect between import and export plans.77 Three major past mistakes cited in that report were "knowledge" (nhan thuc), "orientation" (chu truong), and "import and export." First, after a two-decade-long war, the Vietnamese leaders were too slow to recognize that economic relations with other countries, including the socialist ones, were based on the principle of "mutual interests, reciprocity, and loans that must be paid back."

We failed to recognize the strategic relationship between exports and imports, which in turn affected our ability to transition from small-scale to large-scale production; we did not understand the relationship between exports and building the material and technological foundation of a socialist economy. We were steeped in the wartime mentality of passively relying on outsiders and slow to recover. Because of these problems, we have not fully exploited the economic potential of our domestic resources and strengths to expand economic relations with other countries. Especially, we failed to increase exports, did not see the importance of building a material foundation in service of large-scale exports, and were slow in issuing policies and measures to boost exports.

Second, for the reformists in 1985, there was a disconnect between Vietnam's foreign economic policy and the country's economic development objective of the previous ten years, causing a failure to adequately exploit the country's economic strengths, including a large labor force, land, natural resources, skills, and existing production capacity to concentrate on building the most important pillars of the economy. For instance, in 1976-80 Vietnam imported too many tractors and other agricultural machinery, but the most important goods, especially fertilizers and pesticides to guarantee the success of production plans were in short supply.80 During this period, Vietnam imported nearly 150,000 tractors, more than 130,000 heavy-duty trucks, and 2,000 rice mills; these massive imports of agricultural machinery far surpassed country's need for and capacity to use them, while consumption goods and food were in short supply.

Third, Vietnam's exports were not sufficient to guarantee basic imports of raw materials, and the trade deficit, though gradually reduced, remained very large during the 1975-85 period.82 Vietnam owed the socialist bloc 2.6 billion rubles (2.4 billion in original loans and 200 million in accrued interest) by 1985, and payment was due in the next five years, 1986-90. In addition, Vietnam failed to repay 200 million rubles in 1981-85. It also owed the nonsocialist countries a total of US$1.9 billion (an original loan of 1.35 billion and accrued interest of US$550 million). Thus the total amount of Vietnam's national debt to be paid in 1986-90 was 2.8 billion rubles to the socialist bloc and US$1.9 billion to the capitalist and nonsocialist countries.83 In addition, Vietnam's import need for 1986-90 was estimated to have increased from 7.5 billion rubles in 1981-85 to 10 billion rubles, of which 6 billion were used to import four important items, namely, oil (increasing from 8.5 million tons in 1981-85 to more or less 15 million tons in 1986-90), steel (1.8 million tons in 1981-85 slightly dropping to 1.3 million tons in 1986-90), fertilizer (from 13 million tons in 1981-85 to 6 million tons in 1986-90), and cotton (320,000 tons in 1981-85 to 237,000 tons in 1986-90). Vietnam expected to get loans of 5.5 to 6 billion rubles from the Soviet bloc and had to find an additional loan of US$4 to 4.5 billion if it was to finance its imports.

import goods from the nonsocialist market.84 This group of economists from the Council of Ministers recommended increased efforts to expand trade from the Soviet bloc while creating conditions favorable for mutually beneficial economic relations with nonsocialist countries.

With respect to foreign economic policy, Nguyen Co Thach's 1986 foreign policy report more forcefully stressed the inherent transformative changes in the global economic configuration that compelled Vietnam to adopt economic reforms or else risk lagging behind. The Vietnamese learned a crucial lesson by closely observing international politics in the mid-1980s during which great power relations among the Soviet Union, China, and the United States were characterized by both conflict and cooperation. In other words, ideological conflicts between nations did not necessarily prevent them from engaging in mutually beneficial economic relations in an increasingly internationalized global economy. As Thach explained to his comrades at the National Assembly in 1986, the global economy was "one whole body" of which Vietnam's economy was a part, and Vietnam had to reform quickly and adopt broad-based economic relations to avoid being left behind.

Due to increased economic internationalization, all Party Congresses of the COMECON countries agreed on the following basic socioeconomic strategies:

(1) obey the objective law of technological and scientific evolution.

(2) completely change the production structure.

(3) reform the management system by putting an end to bureaucratic centralism and subsidies (tap trung quan lieu bao cap) and replacing them with self-supporting enterprises and a socialist market economy.

(4) promote business initiatives and human capital, and

(5) mobilize and broaden economic levers in the country.

During the summit of the COMECON countries in November 1986, the general secretaries of the Party Central Committees issued a joint resolution to change the entire structure of economic cooperation within the COMECON bloc to one of strengthening joint corporate ventures and specialization in sectors that required the application of advanced technology.

Thach told his comrades, “In international economic relations, other socialist countries have now given up the old thinking and opened economic relations with Western Europe and participated in the GATT [General Agreement on Tariffs and Trade] and IMF [International Monetary Fund] to allow their domestic enterprises to directly participate in the global market.”

Thus, the ideas of reform and opening behind Vietnam’s Doi Moi policy, as this internal report shows, were accepted by the top leadership in 1985–86. This occurred because Vietnam had arrived at a critical historical juncture where the domestic shift from a foreign-aid-dependent mentality to economic reform thinking converged with external shocks; that was the Prevailing new thinking about economic strategies in the Soviet Union and other COMECON countries and the advent of the technological revolution. The new thinking that emerged in the Soviet Union in 1985 lent support to the indigenous ideas of the reformists in Vietnam who sought ways to make Vietnam’s economy more efficient and competitive.

Thanks to reform initiatives in 1986, the initial economic payoffs in the Soviet Union and other Eastern European countries further incentivized Vietnam’s collective ideas about economic reforms. Foreign Minister Nguyen Co Thach told his comrades at the National Assembly, “The total production output in the socialist bloc in 1986 is predicted to increase to 4 percent from 3.2 percent in 1985. The gross national product of the Soviet Union for the past ten months of 1986 increased to 4.3 percent, exceeding the projected growth of 3.9 percent. Soviet industrial production rose to 5.1 percent, exceeding the projected growth of 4.3 percent. Labor productivity in the Soviet Union increased to 4.8 percent from the projected target of 4.1 percent for the whole year. This economic growth was the highest in nine years. Likewise, economic growth in East Germany, Bulgaria, and Czechoslovakia also met or exceeded their targets.”

In 1985–86, reformists pushed the idea that the risk of economically lagging behind China and other ASEAN countries posed a greater threat to Vietnam’s national security in the future than the Chinese military threat. In Nguyen Co Thach’s view, by the mid-1980s, the Cold War ideological fault line not only had given way to growing economic interdependence in which science, technology, and free markets were driving trade across national and ideological boundaries but had also succumbed to realpolitik in international relations where strategic interests prevailed over ideological affinity. In the political report of the Sixth Party Congress, one of the four lessons learned from forty years of national struggle for independence was “combining the strengths of the nation and the era,” which was described as part of Ho Chi Minh’s diplomatic thought.

This principle, Thach argued, required that Vietnam correct its course of action according to the global trend. The underlying philosophical premise, as Thach reasoned with his colleagues, is that mankind has evolved according to the prevailing law of nature, which in turn determines the trends of existence and development of mankind in the world. Any nation that follows the prevailing trend and evolutionary law in history tends to grow strong. On the contrary, Thach argued, even a country as powerful as the imperialist United States of America, when it went against the prevailing trend and evolutionary law at the time, became weak and eventually met its defeat in Vietnam.

Adapting this philosophical belief to the stage of Vietnam's socialist economic development, Thach maintained:

To reach socialism fast from small-scale to large-scale production, we must go through the capitalist development phase of socialism, and we need to tightly combine our national strengths and those of the era. The technological and scientific revolution in the global economy in the 1980s has opened up a path for us to industrialize our economy quickly, faster than the global industrialization process that occurred two hundred years ago. On the contrary, the penetrating transformation in technology and science and global economic structure is putting our country, and other less-developed countries, in great danger because if we fail to economically develop fast enough, the gap between our less-developed country and the developed ones will further widen, and consequently the hazard of our economic underdevelopment will become a threat to our political stability, security, and national defense.

Thach proposed that Vietnam should invest aggressively in science and technology to turn the technological revolution into a locomotive of economic modernization. He believed that Vietnam should start by carving out an economic niche for itself in the COMECON bloc, and the most favorable position for Vietnam in the international division of labor was the production of "cheap and high-quality goods." Furthermore, although we prioritize its relations with the Soviet Union and other socialist countries, we have to open up economic relations with other countries as the trend of internationalization of global economy dictates.

However, from 1986 to 1990, the Soviet Union and other Eastern European countries remained the most reliable and strongest supporters of Vietnam's economic reforms. During this period, the Soviet Union doubled its financial support with a total loan of approximately 8.7 billion rubles while Eastern Europe pledged approximately the same level of financial aid as it did during 1981-85. In addition, sympathetic to Vietnam's economic difficulties, Moscow decided to provide Hanoi with supplementary aid, including food, fertilizer, fuel, and consumption goods, which covered 90 percent of the total amount in the agreement.

However, for many years Vietnam failed to increase its exports to the Soviet Union and other Eastern European countries to compensate for its large numbers of imports from them. Thach warned his comrades, "Besides the negative impact of our inability to increase exports in our economic relations with the Soviet Union, we must calculate and be mindful of a new factor—China is flooding the Soviet and Eastern European market with many products identical to ours but in much larger quantities with better quality, cheaper prices, and more timely delivery From Hanoi’s vantage point, the threat emanating from China before the Sixth Party Congress in December 1986 had more of an economic nature than China’s outright military attacks on Vietnam. As Thach explained, “China wants Vietnam’s economic difficulties to worsen, which in turn would create internal divisions in our society, and our country would plunge into a serious political crisis. Our enemy [China] at the same time has increased military pressure along the border and heightened its propaganda to further divide and weaken us internally.

Since 1983, Vietnam had faced a China that was aggressively making inroads into markets in the Soviet bloc and undercutting Vietnam's exports to those markets. As relations between China and the Soviet Union improved, China gained access to its markets. Under Deng Xiaoping's leadership, China continued to amass capital strategically and advance technology to speed up the modernization of its economy. At the same time, China desired Soviet technological equipment and the markets of the Soviet Union and Eastern Europe. China's relations with the Soviet Union and Eastern Europe improved in 1985 as the Soviets exploited the conflict between China and the United States in their favor. To entice China, the Soviets agreed to help restore Soviet industrial projects of the 1950s, and the State Planning Committees of the two countries signed a long-term economic cooperation agreement in 1986.96 Thach further maintained, "In 1986, China's main strategy was to take advantage of the conflict between the Soviet Union and the United States, between the West and East, and between revolutionary and antirevolutionary forces. In general, China avoided siding with one side against the other side."97 Given China's economic statecraft in service of its economic modernization, top Vietnamese diplomats such as Nguyen Co Thach were confident that the Chinese leadership would have to negotiate with Vietnam when the military confrontation between Vietnam and China reached a stalemate. In the ninth round of negotiations between China and the Soviet Union and at the Sixth Party Congress in December 1986, Vietnam made clear its intention to negotiate with China to solve the Cambodian problem and create peaceful coexistence with China.

It was the fear of being slowed down in their economic development, combined with the reformist leaders' articulation of economic backwardness as a threat to national security that compelled the military-first faction within the CPV to retreat from continued military confrontation. The ideas of leaders of the reformists or economy-firsters, like Foreign Minister Nguyen Co Thach and chairman of the State Planning Committee Vo Van Kiet, did not prevail by defeating the conservative and military-first faction. Specifically, their ideas about economic reform and political and diplomatic solutions to the Cambodia problem did not replace but rather built on military strategies and victories, which the reformists themselves attributed to Vietnamese military leaders like General Le Duc Anh, who commanded the Vietnamese army in Cambodia. It is not historically accurate to describe Vietnam's Doi Moi policy in 1986 as a single successful reform that completely replaced the formerly failing Marxist central-planning model or the reformists' economic engagement totally defeating the conservatives and military-first faction. Members of the military wing of the party and government were recognized for their major military victories during the summers of 1984-85 on the Cambodian battlefield in the southwest and for preventing China from launching another military invasion of Vietnam from the north, also referred to as the "second lesson" China threatened to teach Vietnam.

Vietnam's major military offensives against the Cambodian resistance forces inside Cambodia and Chinese military positions along its northern border in 1984-85 were designed to project an image of military strength into Vietnam's diplomacy. In its first six-month report on foreign affairs in 1986, the Vietnamese Ministry of Foreign Affairs wrote:

After the severe military defeat of the Khmer reactionary forces in the two summers of 1984-85 and China's failure to teach us "a second lesson" during the past six years, the Chinese expansionists now pushed the Khmer reactionary forces to launch a campaign of destruction inside Cambodia, including using the pretext of "national reconciliation" to strengthen their psychological warfare and conceal their hidden agents within the masses... However, the Cambodian armed forces together with the Vietnamese volunteer troops have bravely defended the PRK and built border defenses [known as K5 project] along the Thai-Cambodian border.

The Vietnamese leadership was confident that by 1986 the PRK, with the help of the Vietnamese troops, would decisively thwart China's attempt to topple the Phnom Penh regime.

On the basis of this military victory and within the context of international politics shifting from confrontation to dialogue and peaceful coexistence in 1985-86, reformists like Nguyen Co Thach launched a diplomatic offensive to compel China to approach the negotiating table to find a solution to the Cambodian problem. Hanoi's public diplomacy throughout 1985 was designed to crystallize Vietnam's intention to completely withdraw all its troops from Cambodia.

In 1990, hoping to undermine China's strategy of using the presence of Vietnamese troops in Cambodia to maintain a united front against Vietnam in Southeast Asia and to bog Vietnam down in costly and protracted guerrilla warfare in Cambodia.

Despite of costly military intervention and national building in Cambodia and assistance to Laos, Vietnam was not prepared to relinquish its influence in those countries. To the reformists, the status quo policy of nation building in Cambodia while fighting the China-supported Cambodian resistance forces there and China along the northern border became clearly untenable and very harmful to Vietnam's economy by 1984-85. Along came the idea of establishing a Vietnam-led Indochinese economic bloc of to strengthen mutual assistance and maintain socialist solidarity among Vietnam, Cambodia, and Laos.

The Abandoment of Vietnam-Led Indochinese Regionalism

Three years after the summit of the three Indochinese countries in Vientiane in February 1982, Hanoi's top economic planners were much less enthusiastic about the idea of Vietnam-led economic integration in Indochina, preferring the more economically beneficial bilateral relations between Vietnam and its two smaller neighbors Cambodia and Laos. On January 12, 1985, in a top-secret memo to the secretariat of the Party Central Committee and other executive branches of the government, the Council of Ministers revealed its frustration with the slow progress in economic integration of the three countries. It was at this point that the Politburo instructed the State Planning Committee and the CECC-Laos and Cambodia to focus on strengthening Vietnam's economic cooperation with Laos and Cambodia based on the principle of "equality, fraternity, mutually beneficial (transactions), [and] preferential trade agreements with each other" and to optimize the effectiveness of Vietnamese assistance to the two countries so that they would be more self-reliant.101 After 1986 Vietnam focused on bilateral trade with Cambodia and later to Laos by 1985.

What explained such a shift in Vietnam's foreign economic policy toward Cambodia and Laos? The answer lies in the systemic underdevelopment and deep poverty in the three countries. In other words, a poor Vietnam simply did not have enough economic power to shoulder the growing burden of lifting up its two poorer neighbors to create a strong and economically integrated bloc as anticipated by Hanoi's top economic planners in early 1982. In 1983-84, Vietnam

about economic reform and political and diplomatic solutions to the Cambodia problem did not replace but rather built on military strategies and victories, which the reformists themselves attributed to Vietnamese military leaders like General Le Duc Anh, who commanded the Vietnamese army in Cambodia. It is not historically accurate to describe Vietnam's Doi Moi policy in 1986 as a single successful reform that completely replaced the formerly failing Marxist central-planning model or the reformists' economic engagement totally defeating the conservatives and military-first faction. Members of the military wing of the party and government were recognized for their major military victories during the summers of 1984-85 on the Cambodian battlefield in the southwest and for preventing China from launching another military invasion of Vietnam from the north, also referred to as the "second lesson" China threatened to teach Vietnam.

The Vietnamese leadership was confident that by 1986 the PRK, with the help of the Vietnamese troops, would decisively thwart China's attempt to topple the Phnom Penh regime.

The Abandoment of Vietnam-Led Indochinese Regionalism

was able to organize interagency coordination, namely, the economic and cultural committees for the three countries, and synchronize economic planning. Overall trade among the three countries remained very low, falling far short of Hanoi's expectations, and Vietnam's burden of aid to Laos and Cambodia continued unabated.

Dang Thi, Chairman of CECC-Laos and Cambodia, reported to the Council of Ministers on November 11, 1984, that after the summit of the three Indochinese countries in Vientiane in February 1983 the three economic and cultural committees of Laos, Cambodia, and Vietnam speedily established organizational mechanisms to deepen economic integration of the three countries. Most notable among those mechanisms were organizing the structure of economic relations among the three committees, drafting a joint economic cooperation plan for 1984-85, planning research efforts for the 1986-90 economic plan, creating a subcommittee for transportation, and deciding on principles governing trade, labor, imports and exports, currency exchange, and payments.

Besides these accomplishments, there emerged a myriad of issues ranging from Vietnam's aid burden in Laos and Cambodia, the growing cost of training Cambodian and Laotian officials and Vietnamese experts working in Laos and Cambodia, and Vietnam's debt to Cambodia,

Vietnam's debt to Cambodia became a sensitive issue in early 1985 and came to the attention of Hanoi's top leadership. Since 1979, due to the shortages of consumption goods and food in Vietnam, the Vietnamese government, with the Cambodian government's approval, used some of material aid given by the Soviet Union and other socialist countries and recorded it as a Cambodian loan to Vietnam. Vietnam's prolonged delay in paying Cambodia back negatively affected Vietnam's image of assisting Cambodia as Hanoi's leaders desired Cambodian gratitude and recognition of Vietnam's vital assistance to the its revolution.103 Dang Thi, in a report to the Council of Ministers, dedicated a lengthy section to detailing the sensitivity of Vietnam's debt to Cambodia. He wrote, "Besides providing [food] for us [Vietnamese troops and experts] to consume in Cambodia, our Cambodian comrades allowed us to consume some rice, flour, and beans that other socialist countries gave Cambodia and transshipped via Vietnam. We have paid back some, but up to early 1984 we still owe Cambodia 7.089 million rubles and 13 million riels. In 1984, we can only pay back roughly 10 percent of the total amount. Our Cambodian comrades have expressed their hope that we will soon pay them back in goods. For the past several years, we have not done that."104 In 1985, Dang Thi also proposed that the Vietnamese government allocate 400 million VND, in addition to repaying the financial loan (mentioned above), in order to pay for the balance of goods Vietnam owed Cambodia.

At the meeting with the CECC-Laos and Cambodia, the State Planning Committee, and other concerned authorities on January 3, 1985, the Standing Committee of the Council of Ministers instructed that Vietnam's debt to Cambodia be divided into two categories: (1) material goods from other socialist countries that Cambodia had given to Vietnam and (2) food supplies the Cambodian government had allocated to feed the Vietnamese occupying troops.106 The State Planning Committee, together with other concerned ministries such as Finance, Food and Material Supply, Internal Trade, and Transport, were scheduled to arrange payment of the first category of debt to Cambodia. Yet the second category of debt—food supplies, including rice and meat consumed by the Vietnamese troops and security forces in Cambodia—was to be left to the CECC-Laos and Cambodia and the leadership of the Vietnamese experts in Cambodia to be negotiated with the Cambodia government.107 The term negotiation here implies that Vietnam's debt to Cambodia was to be nullified because it was used to feed the Vietnamese troops and experts that were helping the Cambodian government strengthen its national defense and economy.

During 1983-84, the Vietnamese government allocated more than one billion VND for the CECC-Laos and Cambodia. And during these years, Vietnam's bilateral economic assistance to Laos and Cambodia was used to ensure that their foreign policies helped each other address urgent economic problems. During this period, the three countries provided experts, training of cadres, and basic evaluation to increase production and exploitation of agriculture, forests, and fisheries; to develop small industries; and to address the shortages of consumption goods. In 1983-84, Laos and Cambodia requested—and Hanoi agreed—that Vietnam annually dispatch 3,500 professional and technical experts (this figure excluded Vietnamese cadres who helped Cambodia and Laos at the party level). One thousand Vietnamese experts were dispatched to Laos and 2,500 to Cambodia. The majority of these experts were in the fields of agriculture, fishing, health, education, economic management, public security, and national defense. In addition, Vietnam annually provided scholarships to a large number of Cambodian and Laotian students and officials, between 6,500 and 7,000 (4,000 from Laos and 2,500 to 3,000 from Cambodia, per year), to receive training in Vietnam. Vietnam also sent a large number of trainers and professors to the two countries. Although the Cambodian and Laotian governments praised and never ceased to show their gratitude to the Vietnamese leaders for their significant contribution

To the developing countries, the soaring cost and burden of Vietnam's aid to its two brotherly neighbors emerged as a contentious issue within the inner circle of the Vietnamese leadership.

Moreover, Vietnam shouldered the huge burden of transshipment of material aid from the Soviet Union and other socialist countries to Laos and Cambodia, registering between 150,000 and 170,000 tons passing through Vietnam every year. That quantity included 40,000 to 50,000 tons of fuel transported to Laos annually via a pipeline. Vietnam took responsibility for helping transporting goods it bought from Laos to Vietnam. For instance, in 1984, out of 70,000 tons of plaster (construction material) purchased from Laos, the Laotian government could only transport 15,000 tons to Vietnam, so the Vietnamese Ministry of Transport had to bring the rest to Vietnam at its own expense.112 Similar burdens existed in the Vietnamese-Cambodian dyad with respect to the transshipment of foreign aid and transportation of commercial goods in that the Vietnamese had to assume much greater responsibility and bear more of the expense.

Dang Thi told the Council of Ministers that many problems emerged with the transshipment of foreign aid to Cambodia and Laos and the transportation of commercial goods. These problems ranged from goods being scattered about, misplaced, or damaged to other negative phenomena, including theft and looting. This problem caused growing friction between the Vietnamese and the Cambodian and Laotian authorities. Vietnamese transport units also faced increased difficulty with shortages of spare parts and fuel, bad roads, and security threats in remote areas, especially in Cambodia. All these obstacles further increased the cost of transport for Vietnam.113 Moreover, Vietnam's assistance in the areas of road construction, irrigation, and storage and house construction also fell short of its plan and suffered delays due to Vietnam's own shortages of raw materials, fuel, spare parts, and modern equipment for these construction projects.114 One can only infer from Dang Thi's frustrating report that the Vietnamese leaders were not pleased with their increased burden of transshipment and transport of Laotian and Cambodian goods.

Yet Vietnam also gained a trade benefit, though modest, from exchanges of its industrial products for agricultural products, forest products, and other specialties. Laos and Cambodia benefited from trade with Vietnam. Vietnam helped Laos and Cambodia by importing the majority of goods that were not of high quality and failed to meet the standards of export to the Soviet Union and Eastern European countries.115 And bilateral trade turnover remained very low, recording 5.5 million rubles per year (Vietnamese-Laotian trade amounted to 3 million rubles and Vietnamese-Cambodian trade 2.5 million rubles). The main The reason for this is simply that the three countries produced similar goods, leaving only a small number of tradable items. As Dang Thi lamented, "Cambodia and Laos had great products like rubber, coffee, and fruit, but their governments did not receive sufficient goods from their people to exchange for those products, and their economic organization was poor. As a result, they faced difficulty in mobilizing and collecting such products for export. For our part, we run short of goods to exchange for those products from Cambodia and Laos."116 In Dang Thi's evaluation, "Cambodia and Laos desired to enlarge official economic cooperation with Vietnam and placed great hope and confidence in Vietnam, but our economic difficulty limited our ability to do so."117 He further stressed that unofficial cross-border trade at the local level had increased much faster than the official trade among the three countries since 1979. He asked the Council of Ministers to look into the policy of encouraging mutually beneficial cross-border trade between local authorities as Cambodia and Laos desired local trade between border provinces. He further suggested that the central government provide raw materials and equipment to local enterprises to increase the production of consumption goods to trade for other goods from Cambodia and Laos deemed important for the local economy of provinces along the border.

Up to 1985, the CECC-Laos and Cambodia was Vietnam's top agency for dealing with economic cooperation between the two countries. This committee received capital for investment and a budget for expenses from the central government and made its own decisions quite independently; it was required only to consult the State Planning Committee. However, Deputy Prime Minister Vo Van Kiet, who was also chairman of the State Planning Committee, proposed in a letter dated August 9, 1985, to Prime Minister Pham Van Dong that from 1986 onward, the CECC-Laos and Cambodia would serve under the State Planning Committee, which would oversee the central economic planning for cooperation with Laos and Cambodia. In his reply on August 13, 1985, Prime Minister Pham Van Dong, who was also chairman of the CECC-Laos and Cambodia, agreed with Kiet's proposal.119 The diminishing importance of the idea of Vietnam-led economic regionalism in Indochina after 1986 demonstrated the rise of a leading reformist, Vo Van Kiet, within the Council of Ministers and his power as chairman of the State Planning Committee and vice-chairman of the council.

In 1985 Vietnam's nonrefundable aid to Laos and Cambodia was substantial reduced to an insignificant level while Hanoi continued to provide substantial technical support and training to its two socialist neighbors as part of its efforts to prop up client regimes in Cambodia and Laos. Vietnam's Council of Ministers decided to allocate 1.260 billion VND for aid to Laos and Cambodia; 950 million VND, of which 650 million was loan, was for Laos, 150 million VND was for nonrefundable aid to Cambodia, and 160 million VND was allocated to service economic cooperation between Vietnam and Cambodia.120 In addition, 400 million VND was allocated to pay the old debt to Cambodia.

Most of the Vietnamese aid to Laos and Cambodia in 1985 was concentrated in three areas: (1) basic assessment, research, and design for various projects in the fields of agriculture, forestry, fisheries, irrigation, hydropower, transportation, and so on; (2) basic construction (irrigation systems, hydropower, bridges, hospitals, schools, and so on; (3) training in Vietnam of 4,500 Laotian students and cadres from various fields in 1984-85 (Vietnam accepted 1,100 more in 1985-86).

By November 1984, there were a total of 2,610 Cambodian cadres receiving training in Vietnam, of which 600 were in economic and cultural fields, 1,710 from the PRK's Ministry of Defense, and 300 from the Ministry of the Interior. For 1985-86, Vietnam agreed to train 1,992 Cambodian government and party officials, including 1,411 trainees from Cambodia's two key sectors (311 from the economic field and 1,100 in military affairs), 169 cadres from the Party Center, and 312 midlevel officials and technicians. Moreover, as requested by Laos and Cambodia, Vietnam in 1985 dispatched 120 Vietnamese experts for long-term stays and 1,000 experts in the field of agriculture in Laos. Vietnam also dispatched 846 short-term experts to Cambodia, and 150 rounds of experts were to be sent to Cambodia to train Cambodian officials on the spot. In addition, 700 Vietnamese experts from the party and armed forces were to be sent to Cambodia that year.

In the field of economic cooperation in 1985, Hanoi directed its support for Laos and Cambodia toward exploitation of natural sources for import to Vietnam. For instance, Vietnam provided Laos with technical support to produce 200,000 tons of plaster (construction material) per year. In 1984 it bought 60,000 tons of plaster from Laos and planned to purchase 100,000 more in 1985. Vietnam planned to help Laos increase its extraction of minerals up to 200,000 tons per year in 1987-90.123 The second area of economic cooperation with Laos in which Hanoi was interested was logging and wood processing. Laos and Vietnam agreed to produce between 15,000 and 20,000 cubic meters of high-quality logs in 1985. In Cambodia the Vietnamese authorities in the southern provinces of Long An, Dong Nai, Cuu Long, Quang Nam, and Da Nang were put in charge of cooperating with their Cambodian counterparts in the area of forestry. For 1985 Vietnam planned to import from Cambodia nearly 10,000 cubic meters of high-quality logs (from Kampong Thom 10 cubic meters of logs per day, from Kampong Speu 10 cubic meters of logs per day, and from Kratie 6 cubic meters of logs per day).

For 1986-90, Vietnam expected to continue the course of bilateral economic cooperation that had brought about mutual benefit. Vietnam would provide expertise and sophisticated equipment to improve agricultural production and irrigation systems, grow rubber, exploit forests and process wood products, increase fish extraction, and upgrade transportation in Cambodia and Laos.125 In return, Vietnam would take a share of those products or enjoy access to such products at a price below market rate. In 1985 the best Hanoi's top economic planner could hope for was to continue to "do research" on the economic strategy and the potential of economic integration of the three countries for the next FYP, 1986-90.126 Thus, the vision of Vietnam-led economic regionalism remained far-fetched, if not completely scrapped, by 1985, a year before Vietnam was about to enter its transformative era of Doi Moi. Vietnam's economic assistance to Cambodia and Laos dropped significantly in the 1986-90 period.

On foreign policy, the Politburo of the CPV convinced the Politburo of the Kampuchea People's Revolutionary Party during a summit in Hanoi on August 9-10, 1985, to agree to Hanoi's plan to withdraw all Vietnamese troops from Cambodia in 1990.127 It was a decisive shift to the strategy of a diplomatic offensive after the major victory of joint military offensives against the Cambodian resistance armed forces in the summers of 1984 and 1985. On August 13, the secretariat of the Party Central Committee dispatched Foreign Minister Nguyen Co Thach to Vientiane to inform Kaysone Phomvihane, general secretary of the Laos People's Revolutionary Party, of the content of the meeting, and Phomvihane completely agreed with Hanoi's strategy. After receiving instructions from Le Duan, Truong Chinh, Pham Van Dong, and Le Duc Tho, the Eleventh Conference of Foreign Ministers from the three Indochinese countries took place in Phnom Penh on August 15-16 to assess the development of the three countries' struggle during the previous six years (1978-84) with special attention to the years 1984-85. In addition, the conference agreed on the direction and strategy of diplomatic offensives in 1985-86. The three countries were pleased with the political and military victories in the summers of 1984 and 1985 in Cambodia and the Laotian people's victory against Thailand's territorial aggression in three provinces of Laos. Hanoi took note of the two countries' gratitude toward the Vietnamese and their recognition of the big role that emerged from the victories in Cambodia and Laos.128 In a secret report that emerged from the

Eleventh Conference of Foreign Ministers—the Vietnamese believed—and their Cambodian and Laotian comrades agreed that they had defeated China's attempt to "teach Vietnam a second lesson" both in Cambodia and the battlefield along the Sino-Vietnamese border during the previous six years. They were also optimistic because since 1985 Sino-Soviet relations had shifted from confrontation to negotiation.

The leadership of the Vietnamese MOFA believed that Vietnam's diplomatic offensive after 1985 was important, timely, and suitable after the six-year military confrontation had ended in a stalemate and a political solution to the Cambodian problem was inevitable. The two-pronged strategy of complete withdrawal of Vietnamese troops from Cambodia in 1990 and the PRK leaders' explicit expression of their desire to negotiate with the Cambodian resistance forces was timed to go into effect before Vietnam's planned dialogue with Indonesia and the United States in August 1985, a United Nations General Assembly meeting in September, and an American-Soviet summit in November.129 This strategy was designed to undermine Thailand's and China's most lethal diplomatic weapon—the presence of the Vietnamese occupying force in Cambodia—and drive a wedge between China and ASEAN and between a more cooperative Indonesia and anti-Vietnam hawks, including Thailand, Singapore, and Malaysia, in this regional organization.130 The grand objective of Vietnam's diplomacy offensive was to bring all the major powers involved to the negotiation table to find a political solution to the Cambodian conflict and restore peace and stability in Southeast Asia. The Vietnamese believed that negotiations would bring the regional peace necessary for Vietnam, Laos, and Cambodia to focus on building their respective economies and ward off economic threats from China and the American-Japanese alliance.

In 1986 the reformist leaders won the argument that China posed a long-term economic and political threat to Vietnam's national security, a major shift from the conservatives' and military-firsters' status quo of military confrontation with China and military intervention in Cambodia. In mid-1986, Nguyen Co Thach delivered a fifty-seven-page foreign affairs report to the National Assembly. In this report, he fired the first shot, warning his colleagues of China's future economic threat to Vietnam and the end of the Soviet Union's generosity. He stated,

For the past five years (1981-85), the Soviet Union provided Vietnam with a total of about 8.7 billion rubles in capital, doubling the amount of the previous five years (1976-80). In addition, Eastern Europe provided more or less the same amount of aid as they did during 1976-80. In addition, the Soviets provided additional food supplies, fertilizer, fuel, consumption goods, and so on. The combined aid from the Soviet bloc covered 90 percent of the total amount pledged. That is valuable assistance. However, we have not fulfilled our duty properly [as a worthy economic partner] as we did for many years. Besides the adverse effects of their trust in us as a reliable economic partner, we need to awaken ourselves to, and remind ourselves of, a new factor—that is, China is making great efforts to enter the market of our socialist brother countries. The Chinese entered those markets with a diverse array of goods, most of which were similar to our products, but they can supply those goods in larger quantities; with better quality, better packaging, and cheaper prices; and in a timely manner.

Thach concluded his report to the National Assembly by stressing this.

The Sixth Party Congress restored Vietnamese people's confidence and unity with the party, won the respect of foreigners, and shocked the world. That is the bravery of facing the truth and daring to criticize and self-criticize. That is the determination to renovate (Doi Moi): new thinking (doi moi tu duy), open democracy, and the determination to overcome every obstacle. That is the political genius, resolve, and unity of our people in determining our country's direction.... The fact that our revolutionary leaders voluntarily withdrew from leadership positions in the party and designated the younger generation as their successors is a shining example and noble gesture that deserves the respect of the entire party, Vietnamese people, and friends alike.

In an attempt to salvage Vietnam's influence in Cambodia and Laos, Foreign Minister Nguyen Co Thach, as Vietnam began to implement the Doi Moi policy in 1986, spoke of "the urgent need to complete the economic link between the three Indochinese countries, Vietnam, Cambodia, and Laos, to prevent the enemy, meaning China, from undermining their unity [Vietnam-led economic regionalism] because it is no longer suitable for the new situation."134 In January 1986, Vietnam's Council of Ministers proposed that the Council of State bestow its highest awards on the six most powerful members of the PRK Politburo for "strengthening the spirit of solidarity, special friendship, and all-around cooperation between Vietnam and Cambodia."135 After 1987 the chairman of the Council of Ministers Hun Sen became the leader of economic reforms in Cambodia. Cambodia's economic reforms were largely influenced by a combination of external pressures and learning from the reforms taking place in Vietnam.

and the Soviet Union. With the death of Party Secretary Le Duan in July 1986 and the rise of southerners Nguyen Van Linh and Vo Van Kiet and a younger reformist, Nguyen Co Thach, in the CPV, Hanoi counseled the PRK Politburo to pursue economic reform. In 1987 Moscow significantly curtailed its aid commitment to the PRK, pushing the regime to think about economic self-sufficiency and a political solution to the Cambodian conflict.134 Hun Sen's close relationship with his counterparts Vietnamese foreign minister Nguyen Co Thach and Soviet foreign minister Eduard Shevardnadze certainly influenced his thinking about economic reforms in Cambodia.

In 1987, in a concerted effort to end the military conflict with China, Hanoi pressured the PRK Politburo to accept what Le Duc Tho called the "Red Solution," to the dislike of its most powerful member, Hun Sen. On March 7, 1987, the Vietnamese Politburo discussed diplomatic strategies and came up with three options to deal with China: (1) continued fighting, (2) peaceful coexistence, and (3) friendly cooperation. On the diplomatic front, Vietnam proposed secret Sino-Vietnamese negotiations to find a solution to the Cambodian conflict, as well as counseling the PRK to declare a policy of national reconciliation.137 On April 9, 1987, the MOFA established an internal research group, with the code name CP 87,138 led by Vice-Minister Tran Quang Co and Dang Nghiem Hoanh (director of General Department of Foreign Relations) to conduct research on the policy of normalization with China and a solution to the Cambodian problem. At the end of April 1987, Le Duc Tho and General Le Duc Anh flew to Phnom Penh, bringing the leaders of CP 87 with them. Le Duc Tho suggested the Red Solution—that is, ending the Cambodian conflict by means of a reconciliation and compromise between the PRK and the Pol Pot clique, and creating a new socialist regime in Cambodia that would be acceptable to both Vietnam and China. According to Tran Quang Co's account, Le Duc Tho's idea met a cold reception from the PRK leadership, especially Hun Sen. Two years later, in 1989, Hun Sen called it "wrong and dangerous" to the Cambodian people.140 On October 12, 1989, Hun Sen told Vietnamese ambassador Ngo Dien, after complaining about Moscow's political concessions to Beijing and pressure on Cambodia to compromise with China and the Khmer Rouge, "Some Vietnamese comrades said we need to make some concessions to save China's face... After meeting Khieu Samphan, I clearly realized in [1987] that I cannot get along with this [Pol Pot] clique."141 To Hun Sen and his colleagues in the PRK Politburo, the Red Solution demonstrated Hanoi's and Moscow's changing politics without considering the desires of the PRK, a small ally, in this asymmetrical relationship. Perhaps for the first time Hun Sen had to confront and accept realpolitik.

The Vietnamese leadership was confident that by 1986 the PRK, with the help of the Vietnamese troops, would decisively thwart China's attempt to topple the Phnom Penh regime.

The Abandoment of Vietnam-Led Indochinese Regionalism

To the developing countries, the soaring cost and burden of Vietnam's aid to its two brotherly neighbors emerged as a contentious issue within the inner circle of the Vietnamese leadership.

Thach concluded his report to the National Assembly by stressing this.

Vietnam's Doi Moi policy formulated at the Sixth National Party Congress in 1986 was the result of two factors that converged on the eve of the Party Congress in 1985: (1) the development and (2) external economic pressures. First, the new thinking about economic reforms emerged to orient Vietnam's economy and foreign economic relations when Deputy Prime Minister Vo Van Kiet (1982-88) replaced Deputy Prime Minister Le Thanh Nghi (1974-80) and Nguyen Lam (1980-82). As chairman of the State Planning Committee, Nguyen Lam had steered Vietnam's economic planning based primarily on large amounts of aid from the Soviet Union and other Eastern European countries. Yet I contend that the external, objective and subjective pressures provided ammunition reformist leaders, including Chairman Vo Van Kiet and Foreign Minister Nguyen Co Thach, used to convince the old guard, especially General Secretary Le Duan, president Pham Van Dong, and senior Politburo member Le Duc Tho, in the final year of their power. Without the crumbling economic power of the Soviet Union and its negative impact on Vietnam's import-export industries, the cornerstone of the Vietnamese economy, the reformists' economic ideas would not have prevailed in 1985. The death of Le Duan in July 1986 provided the pretext if not the catalyst for the rise of the second-generation reformists and many of the changes that ensued.

The decline in the economic power of Vietnam's communist superpower ally, the Soviet Union, had a ripple effect on all other members of the COMECON, including Vietnam. First, foreign aid from the Soviet Union and other, more developed Eastern European countries shifted from nonrefundable aid, accounting for the majority of aid in 1975-80, to long-term loans in 1981-85 and then to short-term loans and the principle of reciprocity in economic relations from 1986 to 1990. This shift forced Vietnam to substantially increase its exports to bridge the export-import gap and reduce its balance of payments deficit. Second, as the main supplier of raw materials, fuel, and technology at a rate well below market prices to other COMECON countries, the Soviet Union could no longer shoulder that burden alone as the costs of extraction and transportation had increased substantially. As the cheap supply of energy and raw materials from the Soviet Union dwindled and the market price of strategic goods was much higher than that offered by the Soviets, the COMECON countries, including Vietnam, sought to purchase energy-efficient technology from the West and improve the efficiency of their economic production systems. Worse than the Eastern European countries, Vietnam had faced economic sanctions by the West and ASEAN countries since its invasion of Cambodia in December 1978.

In 1985 it was forced to reduce waste and significantly increase the efficiency of its economic production, producing more with less energy, and to improve the quality of its export products as demanded by the Soviet Union and other Eastern European countries.

Vietnam learned from the Eastern Europeans that to survive in the new international division of labor, less-developed countries had to reform economically and adapt quickly to take advantage of prevailing trends in the global economy. In this new line of thinking, the grave threat to Vietnam's global security after the mid-1980s was no longer China's military attacks but economic competition. China's success in implementing economic reforms and its access to Eastern Europe threatened Vietnam's most important and reliable markets. China's dumping of cheap goods similar the those Vietnam exported to Eastern Europe seriously threatened Vietnam's economic development and political stability in the long run.

To hasten its economic reforms, Vietnam had to reduce the costs of its occupation of Cambodia and significantly curtail aid to Cambodia and Laos, abandoning the idea of Vietnam-led economic regionalism in Indochina, which it could not longer finance by 1985. Two years after they conceived the idea of Vietnam-led economic integration, after the summit of the three countries in Vientiane in February 1983, Vietnam's top economic planners came to the sobering conclusion that Cambodia's and Laos's economies were too weak and without massive aid from the Soviet Union Vietnam's own weak economy could no longer shoulder the burden of aiding its two poorer neighbors. There was no prospect of long-term economic benefits, including taking advantage of Cambodia's and Laos's national resources (rich forests, fisheries, vast rice paddies, and raw materials) that economic regionalism was promising, but short- and medium-term investment in the two poorer countries would add a significant burden to Vietnam's struggling economy. Well before the Sixth Party Congress in December 1986, Hanoi had already hatched a strategic plan with Phnom Penh to announce the complete withdrawal of the Vietnamese occupying troops from Cambodia by 1990 and shifted its strategy from military confrontation to negotiation with China to find a political solution to the Cambodian problem.

Search This Blog

vietnamsstrategicthinking

The Road to Doi Moi 1986

Comments

Post a Comment

Popular posts from this blog

Vietnam's strategic thinking during the third indochina war

The Coup