Who won the Vietnam War?

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Who won the Vietnam War?

by Michel Chossudovsky

April 26, 2005

Peace Magazine - 1995-07-15

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This article was written ten years ago, initially published on April 30th 1995

in the context of the 20th anniversary of the Liberation of Saigon.

A more in-depth analysis based on fieldwork conducted in Vietnam focusing on

Hanoi's neoliberal reforms was subsequently published in Michel Chossudovsky's

book, The Globalization of Poverty, first edition 1997, second edition, 2003.

 

On April 30, 1975, the Vietnam War ended with the capture of Saigon by Communist

forces and the surrender of General Duong Vanh Minh and his cabinet in the

Presidential palace. As troops of the People's Army of Vietnam marched into

Saigon, U.S. personnel and the last American marines were hastily evacuated

from the roof of the U.S. embassy. Twenty years later a fundamental question

still remains unanswered: Who won the Vietnam War?

Vietnam never received war reparations payments from the U.S. for the massive

loss of life and destruction, yet an agreement reached in Paris in 1993

required Hanoi to recognize the debts of the defunct Saigon regime of General

Thieu. This agreement is in many regards tantamount to obliging Vietnam to

compensate Washington for the costs of war.

Moreover, the adoption of sweeping macro-economic reforms under the supervision

of the Bretton Woods institutions was also a condition for the lifting of the

U.S. embargo. These free market reforms now constitute the Communist Party's

official doctrine. With the normalization of diplomatic relations with

Washington in 1994, reference to America's brutal role in the war is

increasingly considered untimely and improper. Not surprisingly, Hanoi had

decided to tone down the commemoration of the Saigon surrender so as not to

offend its former wartime enemy. The Communist Party leadership has recently

underscored the "historic role" of the United States in "liberating" Vietnam

from Vichy regime and Japanese occupation during World War II.

On September 2, 1945 at the Declaration of Independence of Ba Dinh Square in

Hanoi proclaiming the founding of the Democratic Republic of Vietnam, American

agents of the Office of Strategic Services (OSS, the predecessor of today's

CIA) were present at the side of Ho Chi Minh. While Washington had provided the

Viet Minh resistance with weapons and token financial support, this strategy had

largely been designed to weaken Japan in the final stages of World War II

without committing large numbers of U.S. ground troops.

In contrast to the subdued and restrained atmosphere of the commemoration

marking the end of the Vietnam War, the 50th anniversary of independence is to

be amply celebrated in a series of official ceremonies and activities

commencing in September and extending to the Chinese NewYear.

Vietnam Pays War Reparations Prior to the "normalization" of relations with

Washington, Hanoi was compelled to foot the bill of the bad debts incurred by

the U.S.-backed Saigon regime. At the donor conference held in Paris in

November 1993, a total of nearly $2 billion of loans and aid money was

generously pledged in support of Vietnam's free market reforms.

Yet immediately after the conference, a secret meeting was held under the

auspices of the Paris Club. Present at this meeting were representatives of

Western governments. On the Vietnamese side, Dr. Nguyen Xian Oanh, economic

advisor to the prime minister, played a key role in the negotiations. Dr. Oanh,

a former IMF official, had been Minister of Finance and later Acting Prime

Minister in the military government of General Duong Van Minh, which the U.S.

installed 1963 after the assassination of President Ngo Dinh Diem and his

brother(f.2). Dr. Oanh, while formally mediating on behalf of the Communist

government, was nonetheless responsive to the demands of Western creditors.

The deal signed with the IMF (which was made public) was largely symbolic. The

amount was not substantial: Hanoi was obliged to pay the IMF $140 million

(owned by the defunct Saigon regime) as a condition for the resumption of new

loans. Japan and France, Vietnam's former colonial masters of the Vichy period,

formed a so-called "Friends of Vietnam" committee to lend to Hanoi" the money

needed to reimburse the IMF.

The substantive arrangement on the rescheduling of bilateral debts (with the

Saigon regime), however, was never revealed. Yet it was ultimately this secret

agreement (reached under the auspices of the Paris Club) which was instrumental

in Washington's decision to lift the embargo and normalize diplomatic relations.

This arrangement was also decisive in the release of the loans pledged at the

1993 donor conference, thereby bringing Vietnam under the trusteeship of

Japanese and Western creditors. Thus twenty years after the war, Vietnam had

surrendered its economic sovereignty.

By fully recognizing the legitimacy of these debts, Hanoi had agreed to repay

loans that had supported the U.S. war effort. Moreover, the government of Mr.

Vo Van Kiet had also accepted to comply fully with the usual conditions

(devaluation, trade liberalization, privatization, etc.) of an IMF-sponsored

structural adjustment program.

These economic reforms, launched in the mid-1980s with the Bretton Woods

institutions, had initiated, in the war's brutal aftermath, a new phase of

economic and social devastation: Inflation had resulted from the repeated

devaluations that began in 1973 under the Saigon regime the year after the

withdrawal of American combat troops(f.3). Today Vietnam is once again

inundated with U.S. dollar notes, which have largely replaced the Vietnamese

dong. With soaring prices, real earnings have dropped to abysmally low levels.

In turn, the reforms have massively reduced productive capacity. More than 5,000

out of 12,300 state-owned enterprises were closed or steered into bankruptcy.

The credit cooperatives were eliminated, all medium and long term credit to

industry and agriculture was frozen. Only short-term credit was available at an

interest rate of 35 percent per annum (1994). Moreover, the IMF agreement

prohibited the state from providing budget support either to the state-owned

economy or to an incipient private sector.

The reforms' hidden agenda consisted in destabilizing Vietnam's industrial base.

Heavy industry, oil and gas, natural resources and mining, cement and steel

production are to be reorganized and taken over by foreign capital. The most

valuable state assets will be transferred to reinforce and preserve its

industrial base, or to develop a capitalist economy owned and controlled by

Nationals.

In the process of economic restructuring, more than a million workers and over

20,000 public employees (of whom the majority were health workers and teachers)

have been laid off(f.5). In turn, local famines have erupted, affecting at least

a quarter of the country's population(f.6). These famines are not limited to the

food deficit areas. In the Mekong delta, Vietnam's rice basket, 25% of the adult

population consumes less than 1800 calories per day(f.7). In the cities, the

devaluation of the dong together with the elimination of subsidies and price

controls has led to soaring prices of rice and other food staples.

The reforms have led to drastic cuts in social programs. With the imposition of

school fees, three quarters of a million children dropped out from the school

system in a matter of a few years (1987-90)(f.8). Health clinics and hospitals

collapsed, the resurgence of a number of infectious diseases including malaria,

tuberculosis and diarrhea is acknowledged by the Ministry of Health and the

donors. A World Health Organization study confirmed that the number of malaria

deaths increased three-fold in the first four years of the reforms alongside

the collapse of health care and soaring prices of antimalarial drugs(f.9). The

government (under the guidance of the international donor community) has also

discontinued budget support to the provision of medical equipment and

maintenance leading to the virtual paralysis of the entire public health

system. Real salaries of medical personnel and working conditions have declined

dramatically: the monthly wage of medical doctors in a district hospital is as

low as $15 a month(f.10).

Although the U.S. was defeated on the battlefield, two decades later Vietnam

appears to have surrendered its economic sovereignty to its former Wartime

enemy.

No orange or steel pellet bombs, no napalm, no toxic chemicals: a new phase of

economic and social destruction has unfolded. The achievements of past

struggles and the aspirations of an entire nation are undone and erased almost

with a stroke of the pen.

Debt conditionality and structural adjustment under the trusteeship of

international creditors constitute in the aftermath of the Vietnam War, an

equally effective and formally nonviolent instrument of recolonization and

impoverishment affecting the livelihood of millions of people.

 

Michel Chossudovsky is professor of economics at the University of Ottawa and

director of the Center for Research on Globalization