Outside the museum, the frenzy of an incipient consumer economy is in sharp contrast with the squalor of beggars, street children, and cyclo-drivers, many veterans of the Liberation of Saigon in 1975. What relationship between "war crimes" and macro-economic policy? None, at least at first sight.
International Viewpoint #263 February 1995 economic reform striking simultaneously at all sectors of economic activity has led to the impoverishment of the Vietnamese people.
The first step in 1984-85 (before the formal launching of Doi Moi by the Sixth Party Congress) consisted in crushing the Vietnamese currency, the dong. Repeated devaluations boosted inflation and the "dollarisation" of domestic prices. As in 1973, US dollar bills have largely replaced the Vietnamese dong as a "store of value". The IMF closely monitors monetary emissions by Vietnam's Central Bank, but it is the US Federal Reserve Bank which has taken over the responsibility of issuing
The illusion of "economic progress" and prosperity portrayed in the Western press, is based on the rapid growth of small yet highly visible pockets of Western-style consumerism, mainly in Saigon and Hanoi. Elsewhere, the economic and social reality is different: soaring food prices, local famines, massive lay-offs of urban workers and civil servants, and the destruction of social Paying the "bad debts" of the Saigon regime
At the donor conference held in Paris in November 1993, a total of US$1.86 billion in loans and "aid" was pledged, to support of Vietnam's market reforms. Immediately after the conference, a separate meeting was held behind closed doors, with the Paris Club of official creditors. On the agenda: the rescheduling of unpaid debts incurred by the Saigon regime prior to 1975. Vietnam, which never received war reparations payments, was obliged to foot the bill before the US would "normalise" economic relations and lift its embargo of Vietnam in February
The decision-making process is illuminating: the IMF gave its stamp of approval to Vietnam's economic reforms prior to the Paris conference of donor formed a "friends of Vietnam" committee to lend Hanoi the money needed to reimburse the IMF.
By recognising the legitimacy of these debts, Hanoi in effect agreed to repay loans which had been used by the Saigon regime to support the US War effort. Ironically, one of the Vietnamese of General Duong Van Minh (1), Not a complete surprise, given that Prime Minister Vo Van Kiet retains a former IMF staff member, Dr Nguyen Xian Oanh as economic adviser. 2 Destruction of state-owned industry
Free market reforms have contributed to a massive demobilisation of productive capacity: more than 5,000 of the country's 12,300 state-owned enterprises have been closed down or steered into bankrupcy.
process has been further exacerbatedby the collapse of trade with the countries of the former Soviet bloc.
Rules on the liquidation of State industries were adopted in 1990. These lead to a further "down-sizing" of the industrial base through the restructuring of the remaining companies. More than one million workers and some 136,000 public employees (mainly health workers and teachers) had been laid off by the end of 1992. The government's target under "decision no. 111" was to lay off another 100,000 employees by the end of 1994, thus reducing the size of the civil service by 20%. Moreover, the withdrawal of Vietnamese troops from Cambodia meant the demobilisation of 500,000 soldiers, at the same time as 250,000 "guest workers" returned from Eastern Europe and the Middle East with few prospects for employment. According to World Bank reports, the growth in private sector
¡HOA!
VIET -NAM employment has been grossly insufficient to accommodate this entrants onto the labour market.
As prices soar, the real earnings of those in work have dropped to abysmally low levels. State employees unable to survive on government salaries of US$15 a month have developed a variety of "survival activities," moonlighting and leading to high rates of absenteeism and the de facto paralysis of the entire administrative apparatus.
Vietnam now has no minimum wage legislation whatsoever. With the exception of joint venture enterprises, where the recommended minimum wage is US$3035 a month, there are no guide-lines on the adjustment or indexation of wages. As one
"the Party's free market policy is that the labour market should also
Whereas many state enterprises were "inefficient" and "uncompetitive" by Western standards, their demise was engineered by the deliberate manipulation of market forces: the restructuring of State banking and financial institutions (including the elimination of credit cooperatives at the commune level), was conducive to the freeze of all medium and long term credit to domestic producers. Only short-term credit is available, at an
History repeats itself countries and institutions. But it was the results of the subsequent meetings with the
The Communist Party leadership has recently underscored the "historic role" of the US
Paris Club of states owed money by the in "liberating" Vietnam from Japanese occupation forces in 1945. In turn, the symbols deposed US puppet regime in the south of the US period have gradually returned to the streets of Saigon. At the "Museum of which were decisive in convincing
American War Crimes", now renamed "Exhibition House of Aggression War Crimes",
Washington to lift the US embargo on a model light fighter-jet used by the US Air Force in bombing raids can be purchased
Vietnam. And it was only after the formal at the souvenir kiosk with an encoated Coca-Cola logo on its fuselage, alongside a lifting of this embargo by one country, the vast selection of manuals on foreign investment and macro-economic reform. Not a
US, that multi-lateral and bi-lateral single text on the history of the War is in sight.
disbursements were allowed to proceed.
The IMF demanded reimbursement of arrears of US$ 140 million as a condition for the resumption of credit. Vietnam's former colonial masters, Japan and France
23
International Viewpoint #263 February 1995 annual interest rate of 35 % in 1994.
Moreover, the agreement with the IMF forbids state support of credits to the State-owned economy and the incipient private sector.
The demise of the state sector of the economy was also engendered by a highly discriminatory tax system: in a situation where all subsidies and State credits have been removed, state enterprises continue to pay 40-50% withholding taxes inherited from the system of central planning. Foreign investors and joint ventures, however, enjoy generous exemptions and tax holidays. Moreover, the profit withholding tax is no longer collected on a regular basis from private sector businesses.
The "hidden agenda" of the reforms is the destabilisation of Vietnam's industrial base: heavy industry, oil and gas, natural resources and mining, cement and steel production are to be re-organised and taken over by foreign capital with the Japanese conglomerates (kigyo shuddan) playing a decisive and dominant role. The most valuable state assets will be transferred to joint venture companies. The leadership is not concerned to reinforce and preserve Vietnam's industrial base, or to develop, for that matter, a capitalist economy owned and controlled by "nationals". The stunted private sector
The prevailing view among foreign donors is that a "down-sizing" of the State economy is required to make room for the spontaneous development of a Vietnamese private sector. State investment is said to "crowd out" private capital formation...
Yet the evidence suggests that the reforms not only demobilise the State economy, they also prevent a transition towards market capitalism...
There is no developed entrepreneurial class in Vietnam outside the State economy. The relative weakness of Vietnam's business groups, combined with the freeze on credit and the virtual absence of State support, tends to thwart the development of a domestic private sector economy. While various token incentives are offered to returning Viet Kieu (overseas Vietnamese), much of the Vietnamese diaspora, including the refugees of the Vietnam War and the Boat People, have little in terms of financial resources or savings. Their activities are largely confined to family-owned and medium-scale enterprises in the commercial and services economy. 24
The crisis of the steel industry
The fate of Vietnam's steel industry is a blatant example of the "economic engineering" set in motion by the market reforms. Nearly eight million tons of bombs, and a bounty of abandoned military hardware has traditionally provided Vietnam's heavy industry with an ample supply of scrap metal. America's only tangible "contribution" to post-war reconstruction is now being revoked: large quantities of scrap metal are being "re-exported," at prices substantially below world market values. As a result of this "open door policy," production at Vietnam's five major steel mills is stalling because of a shortage of raw materials. A Japanese conglomerate including Kyoei, Mitsui and Itochu has recently established a modern joint venture steel plant in Ba-Ria Vung Tau province which will re-import scrap metal (at world market prices). Like all other state-owned companies, Vietnam's other steel mills are not allowed to import scrap metal. Domestic producers excluded from their own market
Through the deliberate manipulation of market forces, domestic producers are being excluded from their own market, even in areas where they may have a comparative advantage. With tariff barriers removed, much of Vietnam's light manufacturing industry is being displaced by a massive influx of imported consumer goods. Since 1986, the country's meagre foreign exchange earnings are allocated almost exclusively to the import of consumer goods and currency reforms allow state-companies involved in export to use their hard currency earnings to import consumer goods. This creates a vacuum in the availability of capital equipment for domestic industry. With the lifting of State budget support and the freeze on credit, productive activities are
The result of this lucrative business is the mushrooming of networks between the managers of state-owned import-export companies, local level bureaucrats and private merchants. Hard currency earnings are squandered and large amounts of money are appropriated
Market reforms have also allowed many of state-owned enterprises to escape state control and become involved in a variety of illicit activities.
In the new sectors of light
TAOH!
### VIET-NAM manufacturing and industrial processing, promoted as a result of the "open door" policy, the internal market is "off limits" to Vietnamese companies. Cheap labour garment producers, involved in joint ventures or subcontracting agreements with foreign capital, will usually export their entire output. In contrast, the domestic Vietnamese market is supplied with imported second-hand garments and factory rejects from Hong Kong (3). This leads to the demise of tailors and small producers in the informal economy. Collapse of internal trade
The reforms also promote the "economic balkanisation" of the country. Each region is separately integrated into the world market. The deregulation of the transport industry has led to rocketing freight prices. However, the tendency is for the State transport companies to be driven into bankruptcy with a large share of the transport industry being taken over by the joint venture capital.
The channels of internal trade are also undermined by periodic increases in fuel prices and taxes, dictated by the World Bank. Such measures act as an internal transit duty on the movement of goods in the domestic market. Exceedingly high petrol and diesel prices (particularly in relation to Vietnam's very low wages), numerous user fees and tolls for bridges, roads, and inland waterways affect the entire cost and price structure of domestically produced goods, largely to the advantage of imported commodities...
At the same time, the World Bankrecommended freeze on budget transfers from the central to the provincial and municipal governments has made provincial and local authorities have increasingly "free" to establish their own investment and trading relations with foreign companies, to the detriment of internal trade. The provinces negotiate
International Viewpoint #263 February 1995 numerous investment and trade agreements including the granting of land to foreign investors as well as concessions which allow foreign capital (in a completely unregulated environment) to plunder Vietnam's forest resources. In the context of the budget crisis, these various agreements often constitute the only means of covering central and provincial government expenditures including the salaries of State officials.
Moreover, in a situation where the salaries of public employees are exceedingly low (US$15 to US$30 a month, foreign cooperation and joint venture linkages inevitably constitute a means for obtaining "salary supplements" in the form of consulting fees, expense accounts, travel allowances, and so forth. Such payments — invariably disbursed in hard currency, enable foreign donors and contractors to secure the allegiance of both professional cadres and local level bureaucrats and officials. The state is bankrupt and unable (under the clauses of its agreements with the creditors) to remunerate its own civil servants. Foreign contractors and "aid" agencies not only appropriate human capital in research institutes and government departments, they become the main source of income for senior and middle level bureaucrats involved in the management of foreign not at present allowed to directly approach foreign banks, the latter have access to this lucrative short-term credit market by providing collateral loans to the Vietnamese State banks.
The reforms have triggered a significant collapse in public investment. Since 1985, the share of government capital expenditure in Gross Domestic Product (GDP) declined by 63% from 8.2 to 3.1% of GDP while in agriculture and forestry the decline (90%) was even more dramatic - 1.0 to 0.1%. In industry and construction, capital expenditure fell from 2.7 to 0.1% of GDP (a decline of 96%).
New rules pertaining to the levels of recurrent and investment expenditure have been established under the policy-based loan agreements negotiated with the Bretton Woods institutions. Precise ceilings are now placed on all categories of expenditure, public employees are laid off, allocations to health and education are frozen, and so on. The underlying objective is to reduce the budget deficit. In other words, the State is no longer permitted to mobilise its own resources for the building of public infrastructure, roads or hospitals, and so forth. For example, the creditors not only become the "brokers" of management fees... In turn, Vietnamese companies (whether public or private) are excluded from the tendering process although much of the actual construction work will be undertaken by local companies (using Vietnamese labour at very low wages) in separate sub contracting deals reached with the transnationals... Japanese imperialism
At present, the movement is towards the reintegration of Vietnam into the
Nearly eight million tons of bombs, and a trade and investment.
bounty of abandoned military hardware has traditionally provided Vietnam's heavy industry
Disintegration of public with an ample supply of scrap metal investment
The reforms push the State's public finances into a straightjacket. The central bank cannot expand the money supply or issue currency without IMF approval.
Neither is it allowed to grant credit or finance state-owned enterprises, which are precipitated into bankruptcy as a result.
The bankruptcy of these state-owned companies leads to the further collapse of state tax revenues, and of the financing of remaining public services.
A similar situation exists with regard to the State banks, affected by the decline of dong deposits by the population (who prefer to hold their savings in the form of dollar notes), not to mention the lifting of of State subsidies, strict reserve requirements and high withholding taxes.
In turn, the contraction of credit as well as increased loan defaults by State owned industries tend to push the State banks into receivership, to the advantage of the numerous foreign and joint venture banks now operating in Vietnam. It is estimated that more than 10,000 out of the 12,300 businesses are heavily indebted to the
State banks. Whereas State industries are all major public investment projects, they also decide in the context of the "Public Investment Programme" (PIP) (established under the technical auspices of the World Bank) what type of public infrastructure is best suited to Vietnam, and what should or should not be funded by the "donor community". Needless to say, the process of funding creates debts which in turn reinforces the grip of the creditors on economic policy reform.
This supervision applies not only to the amount of public investment, it affects divestiture and privatisation of most State-owned industries involved in infrastructure and strategic sectors of the economy. In turn, the loans pledged at the Paris donor conference in November 1993, requires a system of international construction and engineering firms. The latter in turn skim off large amounts of money (which Vietnam will ultimately have to repay) into a variety of consulting and
Japanese sphere of influence, a situation reminiscent of World War Il when Vietnam was part of Japan's "Great East Asia Co-Prosperity Sphere". This dominant position of Japanese capital is brought about through control over more than 80 percent of the loans for investment projects and infrastructure. These loans channelled through Japan's OECF as well as through the Asian Development Bank (ADB) support the expansion of the large Japanese trading companies and transnationals. With the lifting of the US Embargo in February 1994, American capital is scrambling to restore its position in a highly profitable investment and trading arena dominated by Japan (and to a lesser extent by the European Union). The Japanese not only have a head lead in key investments, they also control much of the long-term credit to Vietnam. Confrontations between Washington and Tokyo are likely to unfold as American transnationals attempt to restore the position they held in South Vietnam (for example, in off-shore oil) prior to 1975.
25
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International Viewpoint #263 February 1995
Other important players are the Koreans and the Chinese from Taiwan and Hong Kong. A clear demarcation however prevails: the latter tend to concentrate in manufacturing and export processing whereas the infrastructural, oil and gas and natural resources projects are in the hands of Japanese and European conglomerates.
It is worth noting that Japan also controls a large share of the loans used to finance consumer imports. This consumer frenzy of Japanese brand products is now largely sustained on borrowed money fuelled by the recent infusion of hundreds of millions of dollars of so-called "quick disbursing loans" pledged by Japan and the multi-lateral banks (including the Asian Development Bank, the World Bank, and the IMF). These loans (which in the official jargon are said to constitute -"balance of payments aid") are explicitly earmarked for commodity imports. Administered by Vietnam's Central Bank, the disbursements under these loans are allocated in the form of foreign exchange quotas to thousands of State industries involved in the import trade. This process accelerates the deluge of consumer goods while contributing to swelling the external debt.
With the exception of a small number of larger State corporations (and those involved in the import trade), the reforms contribute to demobilising entire sectors of the national economy: the only means to "survive" is for a national industry to enter the lucrative import business or to establish a "joint venture" in which the "foreign partner" has access to credit (in hard currency) and control over technology, pricing and the remittance of profits. Moreover, the entire international trading system is prone (from the lower echelons to top State officials) to Lêông Trôt-ski corruption and bribery by foreign contractors. Distorted growth
The economic crisis has not signified, however, a concurrent decline in the "recorded" rate of GDP growth. The latter has increased largely as a result of the rapid redirection of the economy towards foreign trade (development of oil and gas. natural resources, export of staple manufacturing). Despite the wave in bankruptcies and the compression of the internal market, there has been significant growth in the new export-orientated joint ventures. In turn, the "artificial" inflow of imported goods has led to the enlargement of the commercial sector and its participation in GDP.
Economic growth is in this regard fuelled by debt. The burden of debt servicing has increased more than tenfold since 1986, it has been further boosted as a result of the government's agreement with the Paris Club in late 1993 recognising the debts of the defunct Saigon regime. Agriculture
The adoption of a more flexible "farm contract system" in the earlier reforms adopted in 1981 in support of household production was broadly welcomed by the rural people. In contrast, however, the second wave of agricultural reforms adopted since 1986 has contributed to the impoverishment of large sectors of the rural population. Under the guidance of the World Bank and the FAO, the authorities abrogated the policy of "local level self-sufficiency in food" which was devised to prevent the development of regional food shortages. In the highland areas of central Vietnam, farmers were encouraged to specialise "according to their regional comparative advantage" namely to give up food farming and switch into "high value" cash crops for export. Over-cropping of coffee, cassava (a root vegetable), cashew nuts and cotton combined with the plummeting of world commodity prices and the high cost of imported farm inputs, has been conducive to the outbreak of local level famines.
Ironically, the process of "switching" into export crops also resulted in a net decline in foreign exchange earnings because large shipments of agricultural commodities were sold by the State trading companies to international contractors at substantial financial losses:
"We mobilise farmers to produce cassava and cotton, but they cannot export at a profit because the international price has gone down... What happens is that the State trading companies are obliged to export the coffee or the cassava at a loss. They manage, however, to compensate for these losses because they use the foreign exchange proceeds to import consumer goods. They also make large profits through price mark-ups on imported
In other words, the State export corporations, while showing a book-value profit, are in fact generating debt (in foreign exchange) by routinely selling staple commodities below their world market price. In many of the food deficit areas, industrial crops by farmers who had abandoned food farming remain unsold due to the situation of oversupply which characterises the world market. The result is famine because the farmers can neither sell the industrial crops nor produce food for their own consumption... The rice trade
A similar situation prevails with regard
CUỐC CÁCH MANG BI PHÁN BÔI
(The Revolution Betrayed)
to the State-owned industries involved in the rice trade. The latter prefer to export at a financial loss rather than sell in the domestic market. With the complete deregulation of the grain market and sales in the hands of private merchants, domestic prices have soared particularly in
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26 the food deficit areas. Whereas rice is being exported below world market prices, severe food shortages have unfolded in regions where paddy production had been abandoned as a result of the policy of "regional specialisation". In 1994, for instance, the authorities acknowledged the existence of a famine in Lai Cai over a five-month period (without any emergency relief being provided), two million tons of
International Viewpoint #263 Febnuary 1995 rice remained unsold as a result of the collapse of the State-owned rice trading
Famine is not limited to the food deficit areas, it has struck all major regions including the urban areas and the "food surplus economy" of the Mekong delta (with 25.3 percent of the adult population with a daily energy intake below 1800 calories). In the cities, the devaluation of the dong together with elimination of subsidies and price controls has led to soaring prices of rice and other food staples. Deindexation of salaried earnings and massive urban unemployment (resulting from the retrenchment of civil servants and workers in State-owned industries) has had a major impact on levels of food intake (as well as on the the observed nutritional status of children in International agribusiness
The general direction of the government's grain policy largely coincides with the interests of international agribusiness: a switch out of paddy into a variety of crops (citrus trees, hybrid maize, cashew-nuts, and so forth) is encouraged even in regions (for example, the Mekong delta) which are highly favourable to paddy cultivation. In Dong Nai province in the south, for instance, farmers are encouraged to move out of paddy, hybrid maize seedlings are purchased from a subsidiary of Cargill (an international grain conglomerate with short-term loans (at 2.5 percent a month) financed by the State Agricultural Bank. The harvested maize is then "purchased back" by Proconco, a French agro-industrial joint ventures exporting as well as selling animal feed in the domestic market to produce meat products for Taiwan and Hong Kong... Short-term credit is only available for designated commercial crops with loan periods (less than 180 days) shorter than those required to complete the entire cycle of agricultural production and marketing of the commodity.
An impressive increase in paddy production took place between 1987-89 and 1992 which enabled Vietnam to move from a position of net importer to that of an exporter of rice. This tendency was sustained without an increase in the land areas allocated to paddy. It was largely the result of a shift into new varieties as well as increased use of chemical fertiliser and pesticides entailing substantially higher costs to the small farmer. The government has moved out of supplying farm inputs, the State-owned industries producing pesticides have collapsed. Increasingly a large share of farm inputs are imported:
"Our productivity has not gone up. We must pay for the new seed varieties and insecticide, fertiliser and transport costs have increased. If the costs continue farm activities. Off-farm employment including handicrafts and labour in the city, is essential. Farming does not provide enough earnings."
Largely centred in the Mekong delta, this expanded paddy output and the corresponding surge in exports has also been conducive to increased land concentration. In the Red River delta, small farmers are paying royalties to the International Rice Research Institute (IRRI) (supported by the World Bank and the Rockefeller Foundation) for a new variety of paddy which is produced in local nurseries. Agricultural research institutes whose funds have been cut off by the State, have entered the lucrative business of seed development and
The expansion in paddy production has, however, reached a peak: the withdrawal of State support in the provision of irrigation infrastructure, water conservancy, and maintenance since 1987 will affect future output patterns. Large-scale irrigation and drainage have been neglected: the World Bank recommends cost recovery and the commercialisation of water resources while nonetheless acknowledging that "farmers outside the Mekong delta are too poor to bear increased rates [irrigation charges] at this time". The risk of recurrent flooding and drought has also increased as a result of the collapse of State industries responsible for routine operation and maintenance. A similar situation exists in support and agricultural extension services:
"Provision of agricultural support services — the supply of fertiliser, seed, credit, pest control, veterinary services, machinery services, research extension advice, was until the late 1980s a predominantly governmental function. This system, while still functioning on paper, has in reality, largely collapsed as a result of the restoration of family-based farming system, increasing real budgetary shortfalls and the fall in the real incomes of civil servants as a result of inflation. Those support services involving a marketable product or service have been semi-privatised with some success, and the remainder are hardly functioning. A large number of employees survive by moonlighting activities, while some 8 thousand graduates of the agro-technical schools are reportedly 'unemployed'."
Concentration of land ownership
The tendency is towards a major crisis in production, increased social polarisation in the countryside and a greater concentration of land ownership: large sectors of the rural population in the Red River and Mekong delta areas are being driven off the land, famines have also occurred in the rice surplus regions. The new Land Law passed in the National Assembly in October 1993 was drafted with the support of the World Bank's legal department. World Bank seminars were
Child malnutrition
The deregulation of the grain market has triggered a high incidence of child malnutrition. Despite the increased
"availability" of staple foods as suggested by FAO data, a Nutrition
Survey conducted in 1987-89 suggests an abrupt overall deterioration in the nutritional status of both children and adults. The mean adult energy intake (per capita/per day) for the country was 1,861 calories with 25 percent of the adult population below 1,800 calories indicating a situation of extreme undernourishment. In 9 percent of the sample households, energy intake by adults was less than 1,500 calories.
Recorded energy intakes for young children under six were on average
827 calories per capita.
As a recent World Bank report acquknowledged: "Vietnam has a higher proportion of underweight and stunted children [of the order of 50 percent] than in any other country in
South and South-East Asia with the exception of Bangladesh... The magnitude of stunting and wasting among children certainly appears to have increased significantly.... It is also possible that the worsening macro-economic crisis in the 1984-86 period may have contributed to the deterioration in nutritional status..."
According to the Survey, Vitamin A deficiency which causes blindness
(resulting from a diet composed almost exclusively of cereals) is widespread among children in all regions of the country except Hanoi and the south-east. *
27
only 25% of total salaries of research and other operating expenditure of major research graduates from primary education who entered According to official data, the proportion of institutes. Research establishments are, nonetheless, granted a preferential rate of interest the four-year lower secondary education programme declined from 92% in 1986/87 on short-term credit 1.8% per month instead of
(prior to the inauguration of the tuition fees) to
72% in 1989/90, a drop of more than half a In vocational and technical education including
Similarly some 231,000 teacher training colleges, a freeze on enrolment students out of a total of 922,000 dropped out (with precise ceilings) is established under of the upper secondary education programme. guidelines agreed with external donor agencies.
In other words, a total of nearly 3/4 million The result: a major curtailment in the supply of children have been pushed out of the human capital and qualified professionals.
secondary school system in three years In the above context, financial control and
(despite an increase of more than 7% in the supervision of most research and training population of school age). While recent institutes is in the hands of external donor enrollment data is unavailable, there is no evidence to suggest agencies which selectively fund salary supplements in foreign that this trend has been reversed. The available data of the exchange, research contracts, and so forth. They also dictate the
1980s suggests an average yearly drop-out rate of 0.8% in orientation for research and the development of academic primary education with total enrolment increasing but substantially behind the growth in the population of school age.
International Viewpoint #263 February 1995 organised to focus on the implications of the Land Law:
"The foreign experts brought in the by World Bank think that the Land Law is suitable to our particular conditions: if farmers lack capital or resources they can *transfer' the land or they can move to the cities or work for "an advanced household'. The lack of land is not the cause of poverty, the poor lack knowledge, experience and limited education, the poor also have too many children."
Under the law, farmland (under a formal system of long-term leases) can be freely "transferred" (that is, sold) and mortgaged as "enforceable collateral"
(officially only with a State banking institution but in practice also with private money-lenders). The land can be "transferred" or sold if there is loan default.
The consequence has been the reemergence (particularly in the south) of usury and land tenancy forcing the peasant economy back to the struggles for land and credit waged at the end of the French colonial period. In the south, land concentration is already fairly marked by the development of medium to large size farms (including numerous joint ventures with foreign capital). State farms are invariably transformed into joint venture plantations.
The landless farmers (who constitute an increasingly large share of the rural population) are obliged to seek employment in the cities or as seasonal wage labourers for the rich farmers or joint ventures. Rural wages in the red River delta are in the order of US¢50 a day. While land forfeiture of small farmers in north Vietnam is still at an incipient level, the new Land Law opens the way for the appropriation of large tracts of agricultural land by urban merchants and moneylenders:
The agricultural policies of the defunct Saigon regime of General Thieu are resurfacing. In the south, land titles granted
Crisis in education
Universal education and literacy was key objective of the The structure of underfunding will trigger a speedy erosion of struggle against French colonial rule. From the French defeat at primary education in the years ahead. In 1994 the state allocated Dien Bien Phu in 1954 to 1972, primary and secondary school an average of US$3 to $4 per child at the primary school level. In enrolment in North Vietnam increased seven-fold (from 700 the Red River delta region, the cost to parents of school thousand to nearly 5 million). After re-unification in 1975, a materials and book (previously financed by the government) was about 100kg of rice per child, which is a significant fraction of literacy campaign was implemented in the south. According to UNESCO figures, the rates of of literacy (90 percent) and school total household consumption. enrolment were among the highest in South-East Asia. The government and "donors" have nevertheless expressed The reforms have deliberately and consciously sought to destroy "concern" that with a rapidly declining enrolment rate, "unit costs have increased" and there is now "an oversupply of teachers". the educational system by massively slashing the educational budget, depressing teachers' salaries and "commercialising" With a "down-sized" school system, the authorities believe, secondary, vocational and higher education through the exaction consideration should be given "to quality rather than quantity" of user fees. The movement is towards the transformation of requiring (according to the "donors") the lay off of surplus teachers... All echelons of the educational system are effected education into a commodity. In the official jargon of the UN agencies, this requires "...consumers of [educational services to by this process: state-supported pre-primary creches are being phased out. They will henceforth be run as commercial pay increased amounts, encouraging institutions to become selffinancing, and by using incentives to privatise delivery of education and training where appropriate." Virtually repealing all "Cost recovery" has been enforced in universities and all centres previous achievements including the struggle against illiteracy of higher learning. Institutes of applied research have been told carried out since 1945, the reforms have to recover their costs by commercialising the engendered an unprecedented collapse in products of their research: "Universities and school enrolment, with a high drop-out rate in research institutes are so poorly funded that their the final years of primary school. The obligation survival depends on generating independent to pay tuition fees was entrenched in the new sources of income." At present, the State covers 1992 Constitution.
million students. 28
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VIỆT NAM U.S.A curricula. *
International Viewpoint #263 February 1995 by the US "aid" programmes in 1973 as a means of "pacifying" rural areas are fully recognised by the authorities. In contrast, thousands of peasants who left their villages to fight alongside the Liberation forces are today without formal claims to agricultural land. It may be recalled that the US land distribution programme was implemented in the aftermath of the 1973
Paris agreement during the last years of the Thieu regime. This period of so-called
"Vietnamisation" of the War coincided with the formal withdrawal of American combat troops and the propping up of the
Saigon regime with massive amounts of
. According to the Ministry of
Agriculture, the United States Wartime programme is a useful "model": "Our present policy is to emulate the US land distribution programme of that period, although we lack sufficient financial
The deregulation of the grain market
(under World Bank guidance) allows easy access to the world market (although at very low commodity prices while disrupting the channels of internal trade and triggering local level famines. This pattern is candidly acknowledged by the
World Bank:
"Of course since private sector flows typically respond to price incentives, the problem of food availability in the food deficit areas will not disappear overnight, since consumers in these areas do not have the purchasing power to bid up the price paid for foodgrains from the surplus regions within the country. Indeed as private sector grain trade expands, the availability of food in the deficit regions may initially decline before it improves." A sick health system
In health, the most immediate impact of the reforms has been the collapse of the district hospitals and commune-level health centres. Until 1989, health units provided medical consultations and essential drugs free of charge. The disintegration of health clinics is on the whole more advanced in the south, where the health infrastructure was only developed after re-unification in 1975. With the reforms, a system of user fees has been introduced. The principles of cost recovery and the "free market" sale of drugs were applied. The consumption of essential drugs (through the system of public distribution) declined by 89%. By 1989, the domestic production of pharmaceuticals had declined by 98.5% in relation to its 1980 level with a large number of drug companies closing down. With the complete deregulation of the pharmaceutical industry including the liberalisation of drug prices, imported drugs (now sold exclusively in the "free"
market at exceedingly high prices) have now largely displaced domestic brands.
The impact on the levels of health of the population has been dramatic.
The government (under the guidance of the "donor community") has also discontinued budget support to the provision of medical equipment and maintenance, leading to the virtual paralysis of the entire public health system. Real salaries of medical personnel and working conditions have declined dramatically: the monthly wage of medical doctors in a district hospital is as low as
US$15. With the tumble in State salaries and the emergence of a small sector of private practice, tens of thousands of doctors and health workers have, de facto, abandoned the public health sector. A survey conducted in 1991 confirms that most of the commune-level health centres have become inoperative: their average staff is five health workers, and the average number of patients has dropped to less than six a day! Since the reforms, there has also been a marked downturn in student admissions to the country's main medical schools which are currently suffering from a massive curtailment of their operating budgets. Malaria increases 300%
While the available data is at this stage incomplete, the resurgence of a number of infectious diseases including malaria, tuberculosis, acknowledged by the Ministry of Health and the donors. A WHO study confirms that the number of malaria deaths increased three fold in the first four years of the reforms alongside the collapse of health system and soaring prices of antimalarial drugs. What is striking about this data is that the number of malaria deaths has increased at a faster rate than the growth in reported cases of malaria suggesting that the collapse of curative health services played a decisive role in triggering an increase in malaria-induced mortality. These tendencies are amply confirmed by commune level data:
"The state of health used to be much better. Previously there was an annual check-up for tuberculosis, now there are no drugs to treat malaria, the farmers have no money to go to the district hospital, they cannot afford the user fees..." acknowledges the collapse of the health system (the underlying macro-economic "causes", however, are not mentioned):
"Despite its impressive performance in the past, the Vietnamese health sector is currently languishing... there is a severe shortage of drugs, medical supplies and medical equipment and the government health clinics are vastly underutilised. The shortage of funds to the health sector is so acute that it is unclear where the grassroots facilities are going to find the inputs to continue functioning in the future."
Whereas the World Bank concedes that the communicable disease control programmes for diarrhoea, malaria and acute respiratory infections "have [in the past] been among the most successful of health interventions in Vietnam", the proposed "solutions" consist in the
"commercialisation" (and commodification)
of public health as well as the massive layoff of surplus doctors and health workers.
Wages of health workers should be increased within the same budgetary budget:
"an increase in the wages of of government health workers will almost necessarily have to be offset by a major reduction in the number of health workers..."
The reforms brutally dismantle the social sectors, undoing the efforts and struggles of the Vietnamese people for nearly forty years, reversing "with the stroke of a pen" the fulfilment of past progress.
There is a consistent and coherent pattern:
the deterioration in health and nutrition (in the years immediately following the reforms) is similar (and so is the the chronology) with that observed in school
In the aftermath of a brutal and criminal War, the world community must take cognizance of the "deadly" impact of macro-economic policy, applied to a former Wartime enemy. * Michel Chossudovsky is a professor at Ottawa University. This article was first printed in Third World Ressurgence Number 47, 1994.
Notes:
1. The General was installed by the US military mission in 1963 in the aftermath of the assassination of President Ngo Dinh Diem and his younger brother.
2. Oanh has worked closely with Kiet since the early 1980s when the latter was Communist Party Secretary in Ho Chi Minh City. 3. The price of used garments purchased in the developed countries is US$80 a ton. 4. The value of goods and services produced in a country. 5. In the context of the "Public Investment Programme" established under the auspices of the World Bank (PIP). *
29
China: Deng's death is the end of an era ECONOMIC growth in China is probably the fastest in the world. GDP has grown by an average of over 9% a year since 1980. National income is now four times higher than in 1980. The standard of living of the majority of the population, particularly city dwellers, continues to grow quickly. "Red" China has become an El Dorado for foreign capitalists, who have invested US$200 billion since 1979 (mostly since 1989). China has also become a commercial power on the world state. Foreign trade exceeded US $200 billion in 1994, and China ran a US $23 billion surplus in its trade with the USA in 1993. China sees itself as a potential great power, and is increasingly perceived as such in the international press and among foreign diplomats. But this same China is overrun and submerged by corruption, which is now probably as widespread as before the Communists took over. Chinese society in the 1990s is chaotic and largely uncontrollable. Now that peasants are no longer forcibly confined in their villages, tens of millions of them have come to seek work in the booming regions and (mainly costal) towns. When they arrive, they add to the social and infrastructural crisis of already highly populated areas, and they join an increasingly undisciplined urban workforce The regime tries to repress all this, but increasingly manifests its weakness. It is unable to master China's considerable economic problems, including inflation which has now reached an annual average of 30 to
40%, (and even higher in the boom towns of the south and the coast).
This is the end of an era. How can the revolutionary left respond ?
ROLAND LEW
30 International Viewpoint #263 February 1995
UNTIL THE CULTURAL Revolution, Mao's regime enjoyed considerable popular support. First of all, the Maoists were regarded as the liberators and reunifiers of the country.who had defeated foreign imperialists who had come close to destroying eternal China, particularly the Nippon Empire.
Secondly, the regime was an active social reformer, modernising a country which had been sinking deeper and deeper into backwardness. The regime's will to industrialise China, to "catch up" amplified Mao's legimacy among the population. Of course, appart from some intellectuals, until 1947 few Chinese were in favour of a Soviet-style system. For the peasants, even those who had come into contact with the Communist Party, the Soviet system was unknown, even incomprehensible. But since the alternatives - western liberalism or a return to the old order -were out of the question, all this gave the Party a wide margin of tolerance. The frequent, heavy repression of opponents on the left and the right does not negate the essential fact that the majority of the Chinese population were ready to accept the inovations proposed by the new rulers, including those which meant a break with old habits and expectations. The population, then, was not disturbed by the addoption of a charicature of the soviet economic system, notably the first Five Year Plan of 1953-57, even though this had quite significant implications for an economy and society for which this model was poorly adapted.
Prices rocket as economy overheats increased over 37% in 1993, and by at least as much in 1994. At
The price index for consumer goods rose 27.7% between October the same time, the liberalisation of foreign currency markets led to a
1993 and October 1994. In nine major cities, the increase was over net inflow of US$23 billion in the first 10 months of 1994. This helped increase foreign currency reserves by 110%, to almost
The main victims of soaring inflation and devalued currency are the US$50 billion. The Chinese currency (RMB) released to cover these general population. Official claim that average incomes are rising new funds was equivalent to 700-800 billion yuan - about 20% of faster than inflation are based on manipulated statistics. And the the total already in circulation.
behaviour of the 'average' wage is irrelevant for the mass of citizens This flood of new notes pushes prices up. With most prices not given the sharpening differentiation in salaries. What we do know is controlled, this means an increase in costs to the public, rather than that in Sichuan province, 45% of households experienced a decline an increase in state subsidies.
in real income. The same is tru of cities like Taiyuan, Nanjing and A top level meeting on inflation closed December 1st with the brief
The cause of inflation is not high salaries or bloated social security, these texts was published. This suggests that they contain made an "important speach." Contrary to usual practice, none of press statement that Jiang Zemin, Li Peng and Zhu Ronji had each health care or education. Instead, the cause can be found in the model of economic growth being persued by Beijing important differences. It seems that the Party center is finding it
Since 1980, the economy has grown by an average of 9.3% per more and more difficult to justify its "socialist" market reforms. * year, but the China Peoples' Bank has increased the money supply by over 20% per year'. This reflects the rapid increase in which should have caused a dramatic decline, fixed assets investments in fixed assets. Despitethe introduction of regulations 1. MO 24.7%, M120.6%, M3 325.3%, according to Deputy Director Dai Xianglung
Reprinted from October Review, vol.21 issure 5/6 1994
International Viewpoint #263 February 1995