Chinese Oil Rig and Vietnamese Politics: Business as Usual?

By Nguyen Manh Hung

Vietnamese flag in Hoi An, Vietnam. Source: Jaako's flickr photostream, used under a creative commons license.

Vietnamese flag in Hoi An, Vietnam. Source: Jaako’s flickr photostream, used under a creative commons license.

China’s placement of an oil rig inside Vietnam’s exclusive economic zone in May 2014 was a wake up call for the Vietnamese leadership. It took place at a time when Hanoi was filled with speculation about an intense struggle for power and secret dealings in preparation for the 2016 Communist Party Congress.

While Vietnamese dissidents hope transformational changes in leadership and policy will take place as a result of the oil rig crisis, party leaders continue to conduct “business as usual.” Nonetheless, the crisis has impacted Vietnamese politics in a variety of ways. First, it has made foreign policy, especially the issue of how to deal with Chinese encroachment, the focus of public debate, eclipsing domestic issues such as the dangers of rampant corruption and economic slowdown. Second, it has temporarily stiffened the will of Vietnamese leaders to stand up to Chinese provocations. Third, it has weakened the resistance of those who oppose closer relations with the United States.

For years Vietnamese leaders have been split into two groups: those who want to speed up reform and open up to the West versus those who are wary of the political implications of reform and want to rely on China to save socialism.

The oil rig crisis has narrowed the focus of disagreement between these reformers and conservatives. Rising nationalism and resentment against Chinese aggressive behavior have pushed the pressing issue of how to deal with Beijing to the fore. Vietnam’s leaders are now split between “liberationists” who are fed up with China’s constant pressure and want to find ways to escape its orbit, and “accommodationists” who hope to appeal to socialist solidarity and traditional friendship to cajole China into finding a compromise solution for the conflict.

China’s blatant aggression fans intense nationalistic feeling both within and outside the Communist Party of Vietnam. Public perception of the leadership’s weakness in dealing with China undermines the legitimacy and influence of accommodationists. A chorus of voices demands public disclosure of a 1990 commitment made at Chengdu, China in which Vietnamese leaders were alleged to have made secret concessions to Beijing.

In June an unprecedented public forum on the topic of “Thoat Trung” (escaping from China’s orbit) was held in Hanoi. In July 61 party members signed an open letter addressed to the party and its Central Committee in particular warning of the danger of Vietnam becoming a “new-type of China’s vassal,” and calling for drastic reforms to reduce the country’s dependence on China. Between June and July, three government-sponsored international conferences on maritime disputes in the South China Sea were held in which the majority of speakers were critical of China.

Many party theoreticians whose mission is to shape the narrative of party policy have begun to question the wisdom of relying on socialist brotherhood and ideological affinity to protect Vietnam’s sovereignty and maintain continued communist rule. It is now difficult for any leader to oppose the rising tide of anti-China sentiment. The Politburo has met several times and reached agreement to stand up to China. In July Prime Minister Nguyen Tan Dung indicated that the Politburo was pondering the possibility of bringing China before an international court.

Strong U.S. support for Vietnam’s position during the oil rig crisis amid China’s bullying strategy and Russia’s ambivalent attitude has made clear to Vietnamese leaders who they can realistically count on in their efforts to escape from China’s orbit. This has led to talks about increased defense cooperation between Vietnam and the United States, prompting Senator John McCain (R-AZ) to speak of a possible “giant strategic leap” in bilateral relations.

Nevertheless, foreign policy is no panacea, and no amount of outside assistance alone can bail Vietnam out of its predicament. Vietnam’s economy is facing serious problems. The country’s public debt, according to independent economists, has reached an untenable ratio of 100 percent of the country’s gross domestic product. Banks are burdened with bad debts. Serious businessmen are playing it safe and not borrowing from the banks. If the economy collapses, only China is willing to bail Vietnam out without insisting on human rights improvement and radical economic reform.

Escaping from China’s orbit therefore requires more than balancing foreign powers. It also requires that Vietnam undertake critical and painful reforms to be able to receive effective help from the West, a requirement unlikely to be met by a divided leadership. For Vietnam today, “business as usual” is not a serious option.

Dr. Nguyen Manh Hung is professor emeritus of government and international relations at George Mason University, and a non-resident senior associate with the Sumitro Chair for Southeast Asia Studies at CSIS.