Can Vietnam Weather the Coming Era of Great Power Competition?

One hot Sunday afternoon in May 2014, I was working out of the Danish embassy in Hanoi, just around the corner from the Chinese embassy. The two embassies were separated by the small Lenin Park, which is still adorned by a statue of the founder of the Soviet Union. During the afternoon, thousands of angry Hanoians had gathered in and around the park, which was unusual in a country where political demonstrations are rare. The Vietnamese police, however, remained calm.

Preceding the demonstration, China had moved a giant oil rig into Vietnam’s Exclusive Economic Zone, prompting some of the most serious tensions in China-Vietnam relations for decades. The symbolism of the placement of the oil rig was not lost on the Vietnamese public. It sparked fierce anti-Chinese reactions, and led to the looting and burning of hundreds of Chinese-owned factories and businesses, while thousands of Chinese nationals had to leave the country. It is in this light that the police’s inaction should be seen. Exceptionally, the Vietnamese Communist Party (VCP) had chosen to allow the protesters to vent their anger against China.

The episode illustrates the challenges that Vietnam has had to face for decades in dealing with its large neighbor in the north. On the one hand, China is Vietnam’s largest trading partner, and there are close relations between the countries’ ruling communist parties. On the other hand, the leadership of the party, like the population, is nationalistic and deeply concerned about China’s increasing assertiveness in the region. Therefore, Vietnamese policymakers know that bowing too much to Chinese pressure could threaten the VCP’s legitimacy.

From Ideology to Pragmatism in Vietnam’s Foreign Policy

Since reunification in 1975, Vietnam’s foreign policy has evolved through different phases in accordance with the party’s domestic interests. The most significant change came with the introduction of Doi Moi, a policy of economic reform, in 1986. The socioeconomic crisis leading up to the Doi Moi reforms had reached the point where it was challenging the legitimacy of the VCP, and economic reforms were initiated to ensure its survival.

With Doi Moi, Vietnam slowly opened its economy up to the world and international integration and took the first steps away from an ideology-driven foreign policy – that is, from emphasizing socialism and relations with socialist countries to a policy centered on strengthening economic development, international integration, and national interests. However, this was never a linear process, and tough and lengthy discussions took place between reformists and conservatives, particularly during the late 1980s and early 1990s.

Reformists like Prime Minister Vo Van Kiet and Foreign Minister Nguyen Co Thach, a key architect in the reform process, favored economic liberalization and stronger ties with the West. Conversely, conservatives like General Secretary Nguyen Van Linh and the defense minister and later president, Le Duc Anh, were skeptical of international economic integration, and particularly of developing relations with the United States.

Ultimately the reformists were helped by the collapse of the Soviet Union, which sped up the process of Vietnam opening itself up to the West. At the time, other socialist countries accounted for 80 percent and 65 percent of the country’s imports and exports, respectively. Vietnam simply had no choice but to diversify its trade, and it went on to normalize relations with China in 1991 and the U.S. in 1995. Later that same year Vietnam joined the Association of Southeast Asian Nations (ASEAN) and finally managed to emerge from the international isolation the country had suffered since its invasion of Cambodia in 1978.

Partnerships, Trade Deals, and Multilateralism

Vietnam’s foreign policy is today based on the principles of independence, self-reliance, multilateralism, and diversification, and since independence Vietnam has maintained a non-aligned approach which is reflected in the “four noes” of its defense policy: no foreign military bases on Vietnamese soil, no military alliances with other countries, no entering into cooperation with other countries against a third country, and no use of force or threat to use force in international relationships.

To implement these policies, Vietnam has proactively expanded the scope of its foreign relations by establishing partnerships, entering bilateral and multilateral trade deals, and cultivating a more active multilateralism.

Vietnam has built an extensive network of 17 strategic partnerships and 13 comprehensive partnerships, as well as deepening relations with many other countries. It is also a signatory to 18 free trade agreements, including the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP), the Regional Comprehensive Economic Partnership (RCEP), and the European Union-Vietnam Free Trade Agreement. In May of this year, Vietnam also joined the U.S. alternative to the CPTPP, the loosely defined Indo-Pacific Economic Framework (IPEF).

These partnerships and free trade agreements have provided access to new markets, new technology, huge inflows of foreign direct investment, and preferential agreements, making Vietnam one of the fastest growing economies in the world for more than three decades. Vietnam is currently one of the most open economies in Asia, with trade now double its GDP by value.

In respect to multilateral commitments, Vietnam has become a more active and visible actor, particularly over the last decade. Vietnam joined United Nations Peacekeeping Operations in 2014 and was elected as a non-permanent member of the U.N. Security Council in the term 2020-2021. It also plays an increasingly active role within ASEAN: the country has insisted on strengthening ASEAN’s centrality in the regional diplomatic architecture and quite successfully managed to chair the bloc at the height of the COVID-19 pandemic in 2020.

As a consequence of its positive economic developments and increasing international recognition, the top leadership of the party today recognizes diplomacy as a key instrument for ensuring its security interests and socioeconomic development. This has led to a significant modernization of Vietnam’s Foreign Service, particularly in the last decade. Civil servants are better trained and have a better understanding of global issues and improved language capacity. Accordingly, they feel more confident operating in the international arena. In parallel, the analytical capacity of the Foreign Ministry’s internal think tank and training institute, the Diplomatic Academy of Vietnam, has improved considerably in both quality and scope, providing better analysis that enables the VCP to take more informed decisions.

The ‘Tyranny of Geography’ and the Complexity of Great Power Relations

Vietnam’s history of wars and occupations and the burden of its proximity to China, which has been described as “the tyranny of geography,” is critical to the VCP’s understanding, thinking, and actions. The importance of its geopolitical location, with a land border with China and a coastline more than 3,200 kilometers long, primarily on the South China Sea, cannot be overestimated, and conditions both the country’s domestic and foreign policies.

The bitter experience of being a geopolitical victim of the competition between the U.S., the Soviet Union, and China during the Cold War and the costs of leaning toward one side (the Soviet Union) is embedded in the DNA of the VCP.

In relation to China, Vietnam is still living under the shadow of its northern neighbor, although relations between the two communist parties have been quite solid, and China is Vietnam’s most important trading partner. However, relations with China are basically constrained by mutual mistrust over the South China Sea, where competing claims and recurrent clashes are now Vietnam’s main security concern.

To counter China’s assertiveness, Vietnam has been beefing up its military capacity and actively forging strategic ties with the U.S., Japan, the EU, India, and South Korea, while retaining Russia as its major arms supplier. Vietnam will continue to engage closely with China while resisting Chinese challenges to its sovereignty. The policy of “engagement and struggle” will be maintained.

Trade and investment are important in the relationship between Vietnam and the United States. Vietnam is the only Southeast Asian country among the top 10 U.S. trading partners, while the U.S. is Vietnam’s second-largest trading partner and top export market.

Nevertheless, the shared concern about China’s growing assertiveness in the region is the primary focus of Vietnam-U.S. cooperation. The U.S. understands that Vietnam will not become a new defense ally, but the country has strategic importance as a partner that can stand up to China. For Vietnam, a good relationship with the U.S. provides security and diplomatic support and with it the leverage to strengthen its deterrence against China in the South China Sea.

While Vietnam and the U.S. see eye-to-eye on most strategic issues, political and ideological differences remain. However, the geopolitical importance of Vietnam and its security interests seems to outweigh U.S. concerns about democracy and human rights. Portraying great power competition as a clash between autocracies and democracies is also a dead end in Vietnam, as in most of the rest of Southeast Asia.

At the same time, Vietnam is Russia’s most important friend in Southeast Asia. Since independence, Russia has been Vietnam’s only consistent partner among the three great powers. Russia is by far the largest arms vendor to Vietnam, having for two decades provided more than 80 percent of Vietnam´s weapons imports, though economic ties between the two countries are rather modest. The Russian invasion of Ukraine has challenged Vietnam’s key policy of non-interference, and although Vietnam does not support the invasion, its responses to it have been equivocal, as its historical affinity with Russia is still strong.

The Vietnamese rarely do anything hasty, but it is likely that the invasion of Ukraine will lead to an acceleration of the ongoing trend of diversification in the country’s purchases of arms and a reduction in the country’s reliance on Russia. The oil rig incident in 2014, described at the start of this article, has already accelerated Vietnam’s engagement with the U.S., India, Japan, and European countries in the modernization of Vietnam’s naval and maritime capabilities.

Relations with the U.S., China, and Russia have influenced Vietnam’s foreign policies for more than four decades. These countries will continue to play a key role in the future, but new countries are becoming important partners, and relations between the big three will tend to change. The importance of Russia will likely diminish somewhat over time, while actors like India, Japan, South Korea, and the EU are becoming increasingly relevant. The irony is that both Moscow and Washington are important to Vietnam’s defense and security when it comes to deterring Beijing in the South China Sea.

Vietnam is being courted by many countries currently. From being a synonym for war, the country has become the object of intense interest due to its geopolitical position and booming economy. Vietnam is an emerging middle power and it shares Western concerns in several key areas of potential cooperation, like respect for international law, a rules-based international order, freedom of navigation in the Indo-Pacific, the strengthening of maritime enforcement, climate change, and connectivity.

Hedging Strategy Under Pressure

For decades, Vietnam has quite skillfully managed its foreign policy and preserved its sovereignty through a hedging strategy. The strategy basically focuses on avoiding taking sides, while applying different strategies in relations with the great powers and building extensive economic and political partnerships with third parties, particularly middle powers, as a fallback position. This strategy will come under pressure due to two main challenges: the increased competition between China and the U.S., which will be a key driver of change in the Indo-Pacific; and China’s continued harassment and assertiveness in the South China Sea.

Managing the rivalry between the U.S. and China will be a key challenge for Vietnam. Hanoi has reservations about Washington’s and Beijing’s strategic rivalry and will be cautious not to be caught between the two countries, while the pressure will increase. It is unlikely that Vietnam will advance a relationship with one great power at the expense of another, and due to its history and proximity to China, it is unlikely that Vietnam will enter any formal alliance aimed at countering China’s rise.

Managing the conflict in the South China Sea will also remain a key challenge for Hanoi for the foreseeable future, as there is no lasting solution on the horizon. Due to China’s increasing assertiveness in the region, the VCP will have to manage the rising nationalism among the Vietnamese population. Domestically, the party will adopt a hard stance in relation to China, as it knows that bowing to China can damage its legitimacy, though at the same time it will keep diplomatic channels and economic engagement open.

The general secretary of the VCP, Nguyen Phu Trang, has likened Vietnamese diplomacy to bamboo with “strong roots, solid stems, and flexible branches.” The coming years will show whether the roots are strong enough and the branches sufficiently flexible to weather the gales of great power competition.

Until now, Vietnam’s hedging strategy has managed to keep it neither too close to nor too far from the great powers and still provides Vietnam with the possibility to maneuver and play a key role in determining its own development path.