Lured by Promising Vietnam Markets, US Tightens Ties With Its Former Foe

TWENTY years after withdrawing in confusion and haste, the United States is quietly returning to Vietnam.

US diplomats will open a tiny ``liaison'' office for regular business today in Hanoi, the Vietnamese capital. The step, decided on by President Clinton a year ago, falls short of full diplomatic ties. But it reflects a cautious US judgment that Vietnam has become more cooperative in the search for information about US soldiers still missing from the Vietnam war.

It also reflects the reality that without rapid normalization, US businesses will be closed out of one of the most promising markets in East Asia.

``Though some progress has been made since the lifting of the trade embargo, American business representatives still have to sit in Hanoi and chew their nails while Vietnam awards contracts to other countries,'' says Adhip Chaudhuri, an economist at Georgetown University here.

An agreement between the US and Vietnam to swap liaison offices was signed in a 10-minute ceremony last Friday in Hanoi. A contingent of Vietnamese officials promptly set up shop in an office building in Washington and will eventually occupy the former South Vietnamese Embassy near the city's ``embassy row.''

The US liaison office, housed in an office building in Hanoi, was officially opened last Friday, but normal operations have been delayed until today because of the week-long celebration of the Vietnamese new year, Tet.

The first step toward fully normalized relations between Washington and Hanoi was taken last year when the Clinton administration lifted an embargo on trade with Vietnam, which was forceably unified under Communist rule after the Vietnam war.


Another sticking point was cleared away Friday as Vietnam agreed to pay $203.5 million to Americans whose property was confiscated when the North Vietnamese Army took control of South Vietnam in 1975.

The final step - establishing full diplomatic ties, opening embassies, and possibly granting most-favored-nation (MFN) trading status to Vietnam - will not be taken until Washington is satisfied that Vietnam has done everything possible to provide information about the 1,600 Americans still missing in Vietnam.

The process could take years, US officials acknowledge.

The Clinton administration has been forced to cope with conflicting pressures. US business leaders seek to speed up the process of normalization, while veterans groups and organizations representing the families of soldiers still officially ``missing in action'' seek to slow it down.

Representatives of the latter are amenable to the idea of a liaison office but have criticized the administration for going ahead with last week's ceremony before the release of a Pentagon report, due Feb. 17, on how fully Vietnam has cooperated in the search for the missing US soldiers.

``The administration should have used the opportunity of last Friday's signing ceremony to urge Vietnam to implement pledges to increase their unilateral accounting efforts,'' says Ann Mills Griffiths, the executive director of the National League of Families of American Prisoners and Missing in Southeast Asia.

``Obtaining the fullest possible accounting for our prisoners of war and missing in action is our highest priority with respect to Vietnam,'' a State Department spokesman reaffirmed last week. ``The administration believes that by opening the liaison offices, we will enhance our ability to make progress toward that goal.''

Besides the 1,600 Americans missing in Vietnam, 600 more US soldiers who fought in the Vietnam war are missing in other Southeast Asian nations, mostly in Laos and Cambodia.

For their part, US businesses are eager to exploit economic opportunities in Vietnam that have been foreclosed by the absence of normal diplomatic ties.

Since the trade embargo was lifted - one year ago today - the two countries have generated more than $100 million in trade, according to the Washington-based Indochina Project.

MFN is crucial

But without a grant of MFN to Vietnam, credits from the Export-Import Bank, and investment guarantees from the Overseas Private Investment Corporation - all of which will have to await full normalization - US companies are unable to compete on an equal basis with foreign firms.

As a result, American businesses have been forced to stand by as foreign companies such as Mitsubishi, British Petroleum, and the Australian telecommunications firm OTCI have cashed in on Vietnam's opening market.

With a population of 70 million, Vietnam is an attractive market for low-priced consumer goods ranging from soft drinks to motorcycles and an increasingly popular site for the offshore production of clothes, shoes, and other nontechnical goods.

``Vietnam is not China but it has the largest population of all the land-based Southeast Asian nations,'' says Hank Poli of the Indochina Project. ``As it develops and the GNP rises, it could be a major market for US products.''

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