President Joe Biden meets with General Secretary of the Communist Party of Vietnam Nguyen Phu Trong, Sunday, September 10, 2023 at the Central Office of the Communist Party of Vietnam in Hanoi. (Official White House Photo by Adam Schultz)
Many manufacturers are turning to Vietnam as an alternative to China, but the recent resignation of the country’s president, the second in a little over a year to do so, has led to some concern over the country’s stability. Perhaps the better question might be, is any communist country a good destination for American manufacturers? Dien Luong explains the situation in Vietnam in Foreign Policy, writing:
Last month, a delegation of around 50 U.S. businesses—among them major players such as Boeing and Meta—traveled to Vietnam to explore investment opportunities. Their visit was overshadowed by the abrupt resignation of Vietnamese President Vo Van Thuong on March 20, two days after meetings began.
But Ted Osius, who led the delegation and served as the U.S. ambassador to Vietnam from 2014 to 2017, is no stranger to Hanoi’s political landscape, known for its relative consistency but sometimes colored by unpredictability.
In recent years, Vietnam has emerged as a preferred alternative to China and successfully wooed foreign investment. It has also walked a fine line between Beijing and Washington on the global stage, securing upgrades in bilateral ties with other global powers. But the sudden resignation of a second president in little over a year suggests some political uncertainty. An intensifying anti-corruption campaign has ensnared a slew of high-ranking officials, contributing to bureaucratic stagnation and unnerving foreign investors.
In his inaugural speech last March, Thuong highlighted the importance of revitalizing ideology for the party-state, citing the collapse of the Soviet Union as a cautionary tale. The emphasis on ideology was not unusual, but its prominence in the speech marked a departure from Thuong’s predecessors. The message appeared directed at a notable figure in the audience: Vietnamese Communist Party (VCP) chief Nguyen Phu Trong, a conservative ideologue.
Thuong soon came to be seen as a potential heir apparent to Trong, but almost exactly a year later, Thuong was gone—seemingly ousted in a move that caught many observers off guard. In a typically cryptic statement, the VCP cited Thuong’s violations of party regulations and failure to set an exemplary standard as a top leader. His actions “caused negative public opinion, besmirching the reputation of the party, the state, and him personally,” the statement said, stopping short of naming specific transgressions.
State media uniformly reported that the party accepted Thuong’s resignation, but questions abounded in Vietnam, where high-ranking leaders seldom step down voluntarily. Did Thuong resign of his own accord? Or was he, like his predecessor Nguyen Xuan Phuc, ousted after falling out of political favor amid fierce infighting?
Trong spearheaded a comprehensive reform of Vietnam’s anti-corruption initiatives in 2011 and accelerated the efforts after his reelection as party chief in 2016. This has led to significant changes in how the VCP combats graft. The campaign hit a crescendo in January 2023, when Phuc, two deputy prime ministers, and three ministers were purged for their involvement in scandals over the allocation of COVID-19 testing kits and the coordination of repatriations during the pandemic.
Some analysts say the anti-corruption campaign is also a tool for settling political scores, a characterization that the state has bristled at. Political infighting is common in Vietnam and often intensifies in the leadup to the VCP’s National Congress, which is held every five years to select the country’s new leadership. Although the next Congress is not scheduled until 2026, the power struggles began as early as two years ago, fueled in part by health concerns about Trong and uncertainty over the next leadership transition.
The recent actions against high-ranking figures underscore the nuances of the campaign. It is not baseless to assume that their adversaries capitalized on the anti-corruption drive to orchestrate their ousters. On the other hand, it is naive to see them only as casualties of political rivalry: Just before his resignation, Thuong was implicated in a bribery scandal stemming from his days as a local leader more than a decade ago. Regardless, his departure has clearly telegraphed the message that no one is safe, amplifying a sense of uncertainty among the political class.
Deepening uncertainty could risk policy paralysis. Both diplomats and investors have lamented that the anti-corruption campaign has contributed to the inertia plaguing Vietnam’s bureaucracy. The removal of Thuong is likely to exacerbate this stagnation: Officials, increasingly fearful of making missteps, may become more hesitant to act. Such caution has already led to delays in approving procurement contracts and disbursing public funds, with many analysts attributing these holdups to the overzealousness of the anti-corruption drive.
Foreign investors, often lured by Vietnam’s reputation as having a more stable political environment than its neighbors, could see the defenestration of two presidents in a short period of time as a red flag. After all, the predictability and operational dynamics of Vietnam’s governance are critical pillars for sound investment decisions.
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