Vietnam's Economy Reaches Crisis
Loss of Soviet aid, return of workers from abroad are latest blows
GERMAN reunification cost Nguyen Viet Hao his job. Two years ago, the Vietnamese laborer went to East Germany as a contract worker. That allowed East Germany, through the earnings Mr. Hao sent home, to fulfill communism's commitment to the developing world.Skip to next paragraph
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Then suddenly the cold war was over, the Berlin Wall came down, and the two Germanys raced to reunify. With his East German factory defunct and his contract canceled, Hao is back in Vietnam, waiting for work.
``This was sudden, just like the unification of Germany,'' he says. ``These economic problems are happening to East German people as well as Vietnamese people.''
Vietnam's economy, buttressed for years by East-bloc aid, is in crisis. The Soviet Union and Eastern European countries are abandoning fraternal aid for bare-knuckled commerce.
The new order is upending Vietnam, for years a loyal Soviet satellite. In the past five years, the Soviet Union plowed $16 billion into Vietnam, including an estimated $1.3 billion annually in military assistance. But now aid is disappearing. And starting next year, trade with the Soviet Union and Eastern Europe, about 60 percent of Vietnam's 1989 total, will be on a hard-cash basis. Vietnam is seeking to postpone payments on its $18 billion debt to the Soviet Union.
The economic changes already affect two crucial commodities. Vietnam, which used to get its entire fuel supply subsidized by the Soviets, now gets assistance with 70 percent of its supply. Fertilizer shipments are also down due to Soviet shortages. The lack of fertilizer will trim rice production and hard-currency exports, economists say.
Most difficult is the phaseout of labor cooperation programs, under which about 180,000 Vietnamese worked in the Soviet Union and Eastern Europe.
In East Germany, the Vietnamese migrant group was particularly large, accounting for 58,000 of the country's 85,000 foreign laborers. German officials predict two-thirds will return home. Vietnamese arrive daily on flights from Eastern Europe, happily reuniting with their families and proudly displaying new stereos, motorcycles, and radios.
But ``the economic situation in Vietnam is very hard now. The government is not interested in workers returning from Eastern Europe, because they have nothing for them,'' says Dirk Hebecker, a former East German diplomat.
Vietnam's government faces a monumental unemployment problem, economic analysts say. Not only are workers flooding home from Europe, but boat people are also trickling back from Hong Kong and Southeast Asia. Thousands more are waiting to return from Iraq and Kuwait.
A controversial economic liberalization has endangered thousands of jobs in dinosaur state enterprises. Hundreds of thousands of former soldiers, some demobilized when Vietnam withdrew most of its Army from Cambodia last year, crowd the labor force. The 1.3 million strong military has been cut by more than half, political observers say.
``The government just doesn't have the money to create jobs for so many people,'' says Nghiem Xuan Tue of the Ministry of Labor, Invalids, and Social Affairs. He estimates unemployment at 20 percent and rising.
Runaway population growth also helps to swamp the job market with 1 million new workers every year, government officials say. Vietnam's population of 65 million is projected to climb to 78 million by the year 2000. The government has launched an effort to slow population growth: The National Committee for Population and Family Planning has chosen a campaign of persuasion over more severe measures like those used in China. But the numbers continue to grow.
``Unlike the Chinese, they just can't get a handle on their population explosion,'' says an official with a Western aid organization in Hanoi.
Although United States opposition shuts off Vietnam from World Bank and International Monetary Fund, government officials hope reform measures will invigorate the economy. In 1986, the ruling communists began dismantling inefficient state enterprises. Many have gone bankrupt, displacing thousands of employees. A new private sector is growing. Government economists estimate that almost two-thirds of the economy is now in private hands, a dramatic shift from total state control a decade ago.
Dinh Le Bang returned from Germany last month to find Vietnam's economy in transition. Anxious to be with his family but unable to find work, he plans to use savings and $3,000 severance pay to open a business. ``My country has changed since I went to East Germany two years ago,'' says the machinist. ``Now if you have the money and the potential, you can start your own business.''