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South China Morning Post
July 5, 2008 Saturday

The price of prominence


Stinging inflation prompts questions over Vietnamese prime minister's leadership style, writes Greg Torode

When he took power two years ago as modern Vietnam's youngest-ever prime minister, Nguyen Tan Dung was seen as unusually well qualified - at least in terms of his support base.

He offered links to contrasting elements of Vietnam's Communist Party leadership, boasting credentials as an economic reformer and teenage wartime revolutionary and experience in the internal security apparatus, a body never far from the minds of the party's old guard.

Still just 58, Mr Dung (pronounced Zung) also offered the energy and charisma of relative youth. He may have been anointed beneath huge busts of Karl Marx and Vladimir Lenin in Hanoi's Ba Dinh Hall, but his power suits and penchant for golf offered a modern image.

Two years on, and Mr Dung is having to draw on all of his links, and internal appeal, as he grapples with some of the toughest challenges to face Vietnam's fast-emerging economy in recent years.

Vietnam is suffering the highest inflation in East Asia - it hit 26.8 per cent last month - amid tumbling stock and property markets. Pressure on the currency, the dong, and rising labour unrest are challenging Vietnam's image as a foreign-aid and investment "darling".

The Communist Party has long favoured stability and security above all else, and elders know all too well the social and political dangers of inflation. Hyper-inflation in the mid-1980s brought the country to its knees and forced a dramatic rethink that sparked market and social reforms, known as Doi Moi, or "renovation".

But for more than a decade, that long-cherished stability has been secured by dramatic reductions in poverty as reforms - and wealth - spread. Many of Vietnam's 85 million people have grown used to their lives improving year after year, but suddenly that assumption is far from guaranteed for many ordinary workers as inflation bites at their wages.

As head of the government, Mr Dung is the lightning rod for internal criticism as the pressures mount. His tenure, after all, has helped secure the foreign-investment inflows and free-spending expansion by state-owned enterprises that have helped fuel the overheating. He is now cutting back on government spending and reining in the state-owned enterprises to bring prices down.

Suddenly, the dynamic image that propelled his rise is seen as both blessing and curse. A range of Hanoi sources say the crisis has exposed Mr Dung to criticism over his leadership style. A southerner, Mr Dung is seen as favouring action over talk.

"He's paying for his prominence," said one veteran Asian envoy based in Hanoi. "There are problems that he's got to fix, and all kinds of people are using the situation to snap at his heels."

It must always be remembered that Vietnam's is a staunchly collective leadership, with power delicately spread among the general secretary of the party, the president and the prime minister, veteran party analysts say. Then there is the rest of the 14-member Politburo meeting in secret.

Carl Thayer, a Vietnam watcher at the Australian Defence Force Academy, said that as the economic pressures mounted, Mr Dung faced pressures from conservatives and even some in the reform camp. A rising urban middle class demanding action on worsening traffic, pollution and corruption also added to the challenges.

"There does seem to be a growing view that Mr Dung is simply not a consensus-builder," Professor Thayer said. "Look at the media and it is 'Dung does this, Dung does that, Dung issues another decree', and there is little sense of consultation. You see very little of the other leaders.

"The larger issue does seem to be one of his leadership style, especially in a party wedded to the idea of a collective decision-making. We could see his dynamic style reined in."

The wider question is the impact the situation could have on the pace of reforms. While some reports have suggested a return to the conservative-reformer battles that hamstrung progress in the mid-1990s, other seasoned Hanoi insiders urge caution in painting too bleak a picture.

The party is now committed to reforms and strategic international engagement - including on the economic front. Vietnam is a member of the World Trade Organisation, which demands a basic level of openness and limits the chances of a significant reversal in reforms.

Officials, for example, have repeatedly stressed the importance of an emerging private sector in Vietnam's drive to be considered a mid-ranked developed nation by 2020 - an ambitious target given that it was considered one of the world's poorest countries less than a decade ago.

"Vietnam will muddle through," Professor Thayer said. "One of the key issues will be the speed of implementation of further changes and reforms, rather than the actual need for continued progress."

Mr Dung's much-vaunted fight against endemic corruption could also suffer.

Hanoi-based World Bank economist Noritaka Akamatsu said the government needed to be careful in handling the current difficulties with spending cuts and interest-rate increases. "In the medium to long term, I think everyone believes in Vietnam's future," he told Bloomberg.

Certainly Mr Dung appeared upbeat during his first mission to Washington last week. Meeting President George W. Bush in the White House, he pledged closer co-operation in investment, trade and education.

He also met advisers to presidential candidates John McCain and Barack Obama.

The trip was seen as highly significant in Hanoi and around the region. Vietnam has worked hard in recent years to deepen ties with its former enemy, China, but is determined to balance relations with improved ties elsewhere, particularly with another former combatant, the US.

Officials who met Mr Dung in Washington said he was particularly proud of his visit to the Pentagon during the trip hosted by Defence Secretary Robert Gates - the first such mission by a Vietnamese leader since the end of the Vietnam war in 1975.

"It didn't get the attention of his trip to the White House, but it seemed to be really important to him," one US official said. "He spoke in warm, personal terms about just how important to him that element of the trip was to be the first Vietnamese leader welcomed into the Pentagon showed just how deep our engagement has become."

The official said Mr Dung impressed his hosts as a confident and competent leader. Any sense of his charisma or dynamic reputation was muted by his formal approach.

"He was careful to keep on-message and spoke mostly in Vietnamese but he wasn't as stiff as some of his predecessors, he was naturally warm and appeared comfortable in himself and the state of the relationship."

Mr Dung spoke powerfully of those ties in an online chat with ordinary Vietnamese last year - an unusual move by a habitually secretive and aloof leadership.

He spoke of old hatreds and of losing a father and an uncle to bitter enemies. He joined the Communist Party aged just 18 and was active in wartime struggles in the early 1960s in his home province of Ca Mau, Vietnam's southernmost tip.

"I spent 23 years fighting the US aggressors in Vietnam's southern battlefield," he said, flooded by 20,000 online questions. "We, like all Vietnamese, hated the former aggressive regime and the US invasion troops, but we did not hate the entire US nation.

"We were thankful to those Americans who poured on to the streets to demonstrate against the war in Vietnam. We also felt for the American mothers who lost their sons and husbands."

Now, he said, it was time to "close the past and head towards the future".

Mr Dung stayed in the army until 1981, later earning a law degree before taking on more advanced study at one of Hanoi's top ideological schools. He ran the southern province of Kien Giang before heading to Hanoi, serving in the Interior Ministry and rising, in his 40s, to the Politburo. Spells as deputy prime minister and State Bank governor rounded out his résumé before he took the top job.

During his online chat, he insisted he did not feel lonely as prime minister. "I don't know what other people think, but I feel life is always beautiful," he said.

But, as he is finding, it is not without its challenges.

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