Why Vietnam is becoming America’s new BFF

The former enemies are big trading partners. Could military co-operation be next?

America’s new BFF

Brendan Smialowski/AFP/Getty Images

Americans used to burn Vietnamese shirts; now they buy them. They also buy shoes, wooden furniture, nuts and leather goods. Vietnam isn’t only a seller’s market; it also imports merchandise from the United States, everything from machinery to cotton and cars. Who knows? Perhaps some of those cars are built by some of the one million Vietnamese-Americans living in the U.S.

It’s hardly the same relationship that existed when Marc Leepson returned home to New Jersey after a year-long tour in Vietnam in December 1968. “For so long Vietnam was a war,” the U.S. veteran says. Today, in some ways, “it’s like any other country,” he says. “But of course, it isn’t.”

Nearly 40 years after a war that lasted decades and took more than three million lives, the once bitter enemies are now financial buddies. Two-way trade hit US$21.5 billion last year—more than 10 times what it was a decade ago. And trade continues to thrive this year, despite growing concern over Vietnam’s human rights abuses. Indeed, the U.S. has become the largest importer of Vietnamese goods.

Almost every other month it seems the two countries are signing one agreement or another, or partnering in a new venture. Vietnam is currently at the negotiating table of the Trans-Pacific Partnership, meant to foster the freer flow of goods and services across the Pacific Ocean.

More directly, the U.S. helped the Vietnamese government draft a law that kick-started Vietnam’s nuclear sector; the country wants to build 10 nuclear plants in the next two decades to meet growing energy demands. For many, the war’s ugly shadow has receded. “Most of the Vietnamese population is too young to remember the war,” says Joshua Kurlantzick, an expert on Southeast Asia at the Council on Foreign Relations. “The whole society and economy has sort of moved on.”

After the U.S. withdrawal in 1973, North Vietnam swallowed the south. For more than 15 years, there was virtual silence between the U.S. and the Communist country. That changed in 1994, when Bill Clinton took baby steps toward normalizing relations, lifting the trade embargo on Vietnam—a risky move politically. The then-U.S. president pressed forward, despite the political fallout, and in 2000 signed a bilateral trade agreement with Hanoi. “We were punishing Vietnam for what?” says Leepson. “Because we didn’t come out on the winning side of that war?”

By then, rapid economic growth was already under way, transforming a country once barely able to feed itself. In some ways, Vietnam followed China’s path to modernization by liberalizing the domestic market and encouraging foreign investment.

While economic reforms helped bring the nation out of isolation—it is now a full member of the World Trade Organization—recent years have been difficult. Vietnam has struggled with a currency crisis and soaring inflation. With a population exceeding 90 million, the country could become a middle power in Southeast Asia, exercising some degree of influence in the region. But to do so, Vietnam will need access to the U.S. market. Warming relations with Washington also help counterbalance its dependence on China, Vietnam’s largest trading partner.

For now, Vietnam is walking a tightrope between the U.S. and China, its top two trading partners. Though the Vietnamese public has favourable views of Americans, some worry Washington is trying to end the country’s one-party rule. And the market reforms the U.S. is pushing are slowly undermining socialist principles. Closer to home, Beijing and Hanoi have competing claims over the South China Sea and crucial shipping routes between the Pacific and Indian oceans. China currently claims almost all of the sea, believed to be rich in oil and gas deposits. Tensions deepened last week when China took military control of the Paracel and Spratly islands, which Vietnam claims as its own.

To counter Chinese muscle in the water, Vietnam is encouraging an American presence. The U.S. was the first country to open commercial repair facilities in Cam Ranh Bay when Vietnam opened it to foreign navies in 2009. And U.S. Secretary of Defense Leon Panetta recently visited the former U.S. base, where he focused on bringing American Navy ships to the bay. If he succeeds, Leepson suggests, the irony would be rich: one of the main reasons the U.S. got dragged into war with Vietnam in the first place was to keep the Soviets from getting Cam Ranh Bay as a military base. For now, Vietnam is only welcoming logistics ships. The countries are still cautiously tiptoeing toward a military-to-military relationship. Slowly but surely, things are changing.

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