Political trends and risks in Vietnam

Recent commentary on political developments in Vietnam focuses on the rise of To Lam, who secured the Presidency in May of this year, and then, on the death of Nguyen Phu Trong on 19 July, the position of General Secretary of the ruling Vietnamese Communist Party (VCP). Much of this commentary ignores the underlying role played by how allegations of corruption probably themselves require corrupt payments to overcome the Party’s institutionalised protection of its members from the state bodies charged with anti-corruption activities.

In his late 60s, Lam has a background in security and is also head of the military’s central Party organisation and President of the National Council of Defence and Security. Followers of political events in Vietnam know that several very senior officials have recently resigned or been removed on corruption charges.  Lam is a northerner, from Hung Yen province in the Red River delta, and holds the academic rank of Professor of Security Science (and a doctorate). He is the son of a police colonel who was active in ‘cleaning up’ the south after 1975. All this is what the informative Vietnamese Wiki tells us.

The systemic risks associated with his rise are considerable, largely because the somewhat creaky institutions of the VCP appear to have been by-passed by him and various associates from within the security apparatus on the way to the top. Despite their faults, these institutions have over the years managed to get the Party through testing crises and can be reduced to a pithy thesis: ‘at the end of the day, ultimate power should reside with the Central Committee’. This notion is in part driven by a justified fear that an excessive concentration of power is a very dangerous thing.

The aversion to an excessive concentration of power is exemplified by the case of Tran Xuan Bach, who might have been a ‘Vietnamese Yeltsin’, until he was expelled from the 13-member Politburo.  Following a testing period in the late 1980s, when students and workers encouraged by the political changes in the USSR started to openly organise, Bach advocated faster political change along the lines of the liberalisation unfolding in Eastern Europe. Bach was removed at the 8^th Plenum of the Central Committee in March 1990.

The lesson was to elevate the importance of managed reform. Rural uprisings in the mid late 1990s, known as the ‘Thai Binh’ troubles, saw the Party seek to contain the unrest through institutional changes to ease pressure on the population from corrupt local officials.

Another push for power from within the security institutions saw General Le Kha Phieu a veteran of the Vietnam War and war in Cambodia, appointed General Secretary in 1997 and then dismissed by the Central Committee just over three years later, notwithstanding support for him in the Politburo. His demise owed in part to widespread fears that his access to information on other senior officials via security channels made him too dangerous.

Then, after the Global Financial Crisis in 2008, then Prime Minister Nguyen Tan Dung (2006-2016) mounted a sustained attack on General Secretary Trong with the support of big and corrupt forces in state-owned businesses. This contributed to macroeconomic instability and the disclosure of some major scandals (Vinashin, for example). The clash was eventually resolved in favour of Trong, again because of their relative support in formal Party institutions.

Many Vietnamese observed the presence of Trong’s barely known close relatives at his funeral. They were not ‘fat cats’, leading to some to ponder that Trong, widely viewed as a believer in the relevance of Marxism to governing Vietnam, had likely encouraged the anti-corruption campaigns, which conveniently saw To Lam’s group secure the dismissal of political opponents. But Trong sincerely believed the Party could through this be purified and retain a valid role in leading the country. This is fanciful, of course.

To step back from the intra-Party machinations, it is noteworthy that Vietnam faces, at present, no significant security issues, either domestic or international. Relations with China are managed in part by the way the ‘friends in all directions’ strategy allows for warm relations with the US and its allies. Domestically, whilst the population view the regime as corrupt and illegitimate, there is no sign of organised resistance, though the population is likely well-aware of recent events in Bangladesh and Sri Lanka, and the evident capacity for state institutions to be looted, as for example in Lebanon.

This means that the slew of attacks on local scholars, lawyers and others is not a reflection of an objective analysis of political risks. Further, the anti-corruption campaign has apparently had little effect upon systemic corruption: local businesses continue to pay local officials, and so on.

Transition away from this to a more normal situation (where officials’ corrupt earnings are not central to the country’s political economy) would meet in a sense the historical needs of the moment as the accumulated financial portfolios of officials (their loot) are laundered and ‘pirates become businesspeople’. (see Fforde 2022 which is  founded on excellent Vietnamese scholarship both inside and outside Vietnam). This would entail greater judicial independence and an end to Party control over the implementation of the laws that purport to make corruption illegal. This stems from Politburo Directive # 15 of 2007, mentioned in various reliable sources but highly secret (for details see Fforde 2022).

It is important to realise the very large sums of money that are in play. Reliable sources report that Dinh La Thang spent $800 million to secure the position of Secretary of the Party Committee of Hi Chi Minh City in 2016 (funds likely obtained from his earlier positions as Minister of Transport and boss of PetroVietnam), although he only survived in that position for a couple of years and was later sentenced to 30 years for corruption.

Academic estimates suggest that officials’ corrupt earnings are equivalent to more than a quarter of GDP. The Saigon Commercial Bank scandal reportedly saw $24 billion lost. These are small amounts compared to what is available to those with access to the peak levers of power, in a country with a GDP of nearly $500 bn, and whose rise exploited allegations of corruption to remove political rivals. Of course, with these levels of corruption most senior officials are likely vulnerable.

As the transition to a new leadership unfolds, a key question is what the reward will be to those who have supported and facilitated To Lam’s rise to power. Here are three things to watch:

First, whether the Central Committee will be used to mount a fight-back, likely inspired by other senior officials who are To Lam’s opponents (such as, as seems likely, the current Prime Minister Pham Minh Chinh).

Second, whether secretly organised (and so currently invisible) popular opposition starts to react to the trends towards greater authoritarian rule and stirs instability by such acts as worker strikes, popular opposition (recalling the Trees Movement in Hanoi in the mid late 2010s), and student demonstrations. If the security forces respond to this with violence, as would be likely, the willingness of the population to confront the security apparat in sufficient numbers to force them to back off and other developments could unfold very fast.

Third, the money trail. Bearing in mind the $800 million that bought Dinh La Thang the Ho Chi Minh Party secretaryship, it is likely that billions will be needed to secure the ongoing loyalty of those who have supported To Lam’s rise. The money will appear in bank accounts overseas and could destabilise the economy. Looting on this scale, as we know from other countries, requires control over institutions such as the Ministry of Finance and the Central Bank. The current Minister of Finance has a background in the state finance sector but was also Party Secretary of Nghe An between 2013 and 2016 and active in ‘audit’ work (a good area for securing bribes). The current Governor of the Central Bank is from a more technical background, having joined the Bank in 1991 after graduation, when she was 23.

Two final points: first, To Lam and his associates lack much independence from the rest of the Party – they are ‘Party people’ – and this limits their power; second, without major systemic change (which is only likely if the population decides they have had enough and decide to match Bangladeshi and Sri Lankan popular fury), there is not likely to be significant shifts in Vietnam’s foreign policy and positioning.

Adam Fforde started working on Vietnam in 1977; he is currently an Honorary Professorial Fellow at the Asia Institute, University of Melbourne, and an Adjunct Professor at the Victorian Institute for Strategic Economic Studies, Victoria University. He thanks comments from anonymous Vietnamese colleagues and Vladimir Mazyrin.