Countries that lie on geopolitical fault lines often find themselves as pawns in a great game between two rival powers. We saw this during the Cold War where the rival powers of the U.S. and the USSR incited revolutions and counter revolutions in developing nations like Afghanistan to fulfill a long-range objective of cornering the other. One side effect of this rivalry is that some nations in pivotal positions can enjoy marked economic prosperity. During the Cold War era, nations like Japan and West Germany experienced an economic miracle that was largely bolstered by the efforts of the U.S. to maintain friendly trade relations with these nations and curb the flow of other investors’ money to these nations. This was not an accident. Both Japan and West Germany were right alongside the USSR and in such strategic geographic positions as to render them crucial in a coming war. By bolstering their economies, the U.S. not only kept them as allies but showcased the benefits of capitalism to citizens of the USSR. We can see something similar happening today.
The U.S.-China relationship continues to sour over a range of issues from control of the South China Sea to intellectual property disputes. Some are even saying that we have entered a Cold War between China and the U.S., although it is worth mentioning that this one is not nearly as tense as the last one. In any case, if this rivalry continues and both try to counter the other’s influence, which is most likely to occur in the realm of naval forces in the Pacific, then a relationship between the U.S. and Vietnam looks increasingly opportunistic. Vietnam borders China and has a mostly coastal perimeter, which is perfect for harboring naval forces. Plus, its mix of dense jungle terrain with mountainous topography make the country an almost impenetrable fortress. Remember that mountains and jungles serve as natural fortifications, which is partly why the U.S. had such a difficult time in Vietnam. If the U.S. were to pursue a close economic relationship with Vietnam, and secure it as an ally, the U.S. could counter China by denying it to their sphere of influence.
While the U.S. did fight a prolonged and ultimately disastrous war in Vietnam and the country is still Communist, the country has largely moved on from these old tensions. Since the 1980s, Vietnam has moved toward a blend of market capitalism and state-directed socialism, like that of China, which has revitalized the nation. In fact, Vietnam is widely regarded as one of the fastest growing economies today. Some examples of this economic success are that Vietnam is the second-largest producer of coffee and that Samsung garners forty percent of its output from Vietnamese manufacturers.
Moreover, Vietnam is a founding partner of the CPTPP, which is an eleven-member free trade agreement that replaced the problematic Trans-Pacific Partnership. Outside of this, we should recognize that Vietnam could be more open to pursuing a close relationship with the U.S. than with China. Indeed, Vietnam and the U.S. have some bad memories, but Vietnam arguably has even worse memories with China. Remember that this is an ancient country with millennia of history and a long history of conflict with China, most recently in a brief war with them in 1979. While it may seem outlandish that ancient tensions could play a part in the modern world, this has already occurred. In China during the 1950s when the government was seeking to respond to military advances by India, Chairman Mao actually based his response on similar disputes between the two nations that occurred a thousand years prior.
Ancient tensions can echo to modern decisions.
If the U.S. were to pursue a closer economic relationship with Vietnam, this would probably take the form of manufacturing and tourism. The Vietnamese Dong, which is the Vietnamese currency, is incredibly cheap compared to the US Dollar (1 USD = 23125.79 VND), which makes importing relevant goods from Vietnam significantly cheaper than producing them domestically. Furthermore, when combining this cheap currency with the nation’s political stability, this makes tourism, which is considered an export in economics, perfect for American travelers. Additionally, the country has pumped huge resources into modernizing its education, particularly regarding English-language education, and this development of human capital is perfect for sustaining a bourgeoning manufacturing sector. While educational attainment still lags other Southeast Asian countries, they are close to catching up. Apart from these achievements, it is worth mentioning that the country’s infrastructure still has many weaknesses. Big cities like Hanoi have seen huge infrastructural developments, which can support a growing manufacturing sector, but the countryside is mostly underdeveloped. Currently, the government has plans to address these infrastructural disparities. All these factors could indicate future success in manufacturing and tourism.
In the coming years, Vietnam could find itself in the middle of a tense relationship between the U.S. and China, and it is possible that the U.S. could bolster its economy by recognizing the nation’s strategic importance.
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