The Indo-Pacific is a dynamic concept that has come into the picture of great power politics. In the last two decades, an Indo-Pacific identity is increasingly becoming synonymous to a single maritime construct. Countries in the region are driven by geo-economic and geo-political interests with a constant presence of external payers. Due to its strategic relevance, China is pushing forwards its expansionist agenda by striking a historical chord and threatening interests of smaller states in the region. Vietnam has been one of the victims as well as the one to stand up against China’s advances.
According to realist theory in international relations scholarship, a country can be categorized as a middle power depending upon a state’s military strength, economic capabilities, and geostrategic position. Due to the power gap, diplomacy as a foreign policy tool is used often to participate in international politics and exert influence among regional players. Vietnam has taken charge of ASEAN Chairmanship three times since its entry and been part of significant regional building mechanisms to strengthen its commitment towards three pillars of ASEAN community. Its strategic location, growing economic and military strength makes Vietnam an important player in the region. This article makes a case for Vietnam as a rising middle power in the region that has the potential to play a prominent role in Indo-Pacific in the backdrop of its growing economy, interpersonal relations, leadership role in ASEAN and regional security order amidst escalating Chinese threat.
Leading the ASEAN Economy
In the aftermath of Doi Moi reforms, Vietnam focused on the development of a multi-sector economy. In 1989, it exported rice for the first time and today is the 4th largest rice exporter in the world. In the aftermath of Asian financial crisis in 1997-98, the country registered a strong 8.5% GDP growth rate. In 2008 it was removed from the world’s least developed countries (LDCs) and since then has been registering a consistent growth rate above 5%.
The period between 2000-2019 has seen consistent 5.5% plus growth with 6.5-7% growth in the last five years. Among ASEAN states, Vietnam had the fourth highest annual average growth rate in the 21st century, above ASEAN’s average 5.3%. In 2019, Vietnam had the second highest GDP growth rate i.e. 7% among the ten states closely following Cambodia’s 7.1%.
The coronavirus pandemic has hit the world economy and shattered growth targets for the year 2020. According to recent estimates by Asian Development Bank for the year 2020, the growth projections remain at a negative 3.8% for Southeast Asia and it is preparing for an L-shaped recovery. Meanwhile, Vietnam is among the only three countries in the region to have a positive growth rate of 1.8% along with Myanmar and Brunei. In fact, Vietnam will be one of the few countries in developing economies of Asia to have a positive GDP growth rate amidst the ongoing crisis. Hanoi is targeting a growth rate of 6.5% this year.
International trade and investment has become a key factor in the region’s economic integration. According to ASEAN Key Figures 2020, intra-ASEAN trade holds the largest share in total ASEAN trade at 22.5%. In 2019, Vietnam was the third largest exporter (17.3%) and importer (17%) in the region. Over the last decade, the country has become one of the manufacturing hubs in the region with its labour and industrial policies. Vietnam is ranked 3rd in shares of manufacturing products to total exports (%) by ASEAN Member States, growing from 46.8% in 2006 to 86.4% in 2019. It also holds the largest manufacturing shares in imports of goods in 2019 at 84%. In context of FDI inflow in 2019, Vietnam is the third largest recipient among ASEAN states amounting approx. US$16.12 billion.
Political Integration and ASEAN Leadership
Post 1995, Vietnam witnessed major landmarks in international integration. First, it signed an FTA with the US in 2001 and later associated with all 12 FTAs that Vietnamese exporters can take advantage of including ASEAN plus FTAs. Second, it joined the WTO in 2007 that enhanced the country’s economic interests making it a significant player in the global economy. The pre and post 2007 share of exports of goods and services to GDP was 67% and 106% respectively. Third, it was elected as a non-permanent member in UNSC for the term 2008-09 and acted as the council’s President during the term.
Vietnam has improved its bilateral ties with countries beyond ASEAN. In February 2020, Vietnam sealed the deal with Europe on the EU-Vietnam Free Trade Agreement (EUVFTA). The agreement is said to bring a significant impact on exporting firms, foreign investors, and consumers in Vietnam. It has strived forward to foster ties with Japan, India and Australia along with close ties with US, all four associated with the QUAD bloc. In 2018, it signed a new strategic partnership with Australia and with India the country shares a comprehensive strategic partnership. Both the countries have had joint naval exercises as well. With Japan they share strategic links in the last five years. It was the destination for Japanese PM Suga’s maiden foreign visit as was the case with his predecessor Shinzo Abe. In the role of ASEAN chair, the country stands ready to be the effective bridge to connect the ASEAN with countries such as the Czech Republic, Bulgaria, and Albania.
One important aspect of Vietnam’s political rise is its balancing act against China and the USA. Both have historical associations with Vietnam that brought ill-will to the country and both are the two most important international partners in present times. The US is Vietnam’s largest export market with a share of 23% followed by China at 15.6%. In terms of imports, Vietnam is heavily dependent on China with a share of 29% whereas the US is far below the list with a mere 5.6%. By numbers, China remains the largest trading partner with an annual trade of US$116 billion between the two countries in 2019 followed by the US at US$75.3 billion. While Vietnam maintains a trade surplus with US, there exists a trade deficit with China.
In the on-going tussle in world politics between existing superpower USA and a rising revisionist power China, ASEAN states have had a varied response. Cambodia and Laos are close allies of China while Singapore and Indonesia maintain proximity to the US. The diametrically opposite stance has invited trouble in the ASEAN bloc as Singapore and Cambodia recently exchanged a round of accusations against each other. Vietnam has adopted a different approach and is upholding the principle of ASEAN neutrality. Many IR scholars argue that Vietnam is exercising hedging against China with USA, a practice of mixing both cooperation and distance. Goh defines Vietnam’s hedging strategy as a form of “triangular politics” between Vietnam, China and the United States.
Vietnam’s political integration is incomplete without mentioning the role it plays in ASEAN.
ASEAN is home to about 650 million people, with a gross domestic product (GDP) of more than US$3.2 trillion and trade value exceeding $2.8 trillion. Vietnam has the third largest population, fourth largest area among ASEAN countries and an important geographic and economic position in Southeast Asia. Prior to joining ASEAN, Vietnam had a rather negative perception of the group in the late 1970’s for its indifference towards individual member states political structures and independent foreign policies. Vietnam’s entry into the ASEAN had two direct implications. First, it became the first country from the Indochina region to be a member of ASEAN and paved the way for Laos, Cambodia and Myanmar taking the organization to its present strength of ten. Second, ASEAN became the de facto player to uphold peace and stability in a region that has had a bloody Cold War history.
In 1998, Vietnam hosted the 6th ASEAN summit for the first time in the backdrop of Asian financial crisis that had devastated Southeast Asian economies. Under Vietnam’s chairmanship, the Hanoi Action Plan was adopted to enforce ASEAN Vision 2020. In 2010, Vietnam became the Chair for the second time of the 16th Summit. The year was difficult in particular due to aftershocks of 2008-09 global financial crises. It played a pivotal role in the roadmap for building the ASEAN Community 2015. Vietnam is credited with drawing consensus on entry of the US and Russia in the East Asia Summit, expanding the ASEAN plus Three (APT) institution into ASEAN + 8. The first ASEAN Defense Ministers Meeting Plus (ADMM+) was inaugurated under Hanoi’s chairmanship strengthening defence and security cooperation between ASEAN and its eight dialogue partners. It was also the year when ASEAN Commission on the Promotion and Protection of the Rights of Women and Children (ACWC). It was an important step towards “development of policies, programmes, and innovative strategies to promote and protect the rights of women and children to complement the building of the ASEAN Community”. It was also involved in building the ASEAN Community Vision 2025.
2020 marked an important milestone when Vietnam assumed the rotating Chair of ASEAN for the third time. July 28th marked Vietnam’s 25 years of ASEAN membership. On the occasion Ambassador Tran Duc Binh, Head of Vietnam’s delegation to ASEAN said, “Vietnam is one of the countries recording highest results in implementing the master plan on building the ASEAN Community. Vietnam has worked to strengthen unity and solidarity in ASEAN and elevate ASEAN’s central role in maintaining regional cooperation, peace, and stability.”
2020 has been an extraordinary year for countries around the world. In the wake of the pandemic, Vietnam has played a significant role in virtual diplomacy and formulated a COVID-19 ASEAN Response Fund, a Regional Reserve for Medical Supplies, a Standard Operating Procedure (SOP) on Public Health Emergencies, and a Post-COVID-19 Recovery Plan. At a domestic level, it is one of the very few countries to successfully curb the spread of the virus. Vietnam recorded its first COVID-19 death as late as 31st July 2020, and till now (April 2021) has registered 2,833 cases and 35 deaths, one of the lowest in the world. The most notable achievement this year has been the signing of Regional Comprehensive Economic Partnership (RCEP), the 15-member free trade agreement making it the largest regional trading bloc in the world. Vietnam also holds the responsibility of non-permanent member of the UN Security Council for the 2020-2021 term elected by 192/193 votes. President and Party Secretary Nguyen Phu Trong said that the election is an “important recognition” of Vietnam’s roles and contributions to global and regional affairs, showing its increased position and credibility.
In the Asia Power Index 2020 conducted by Lowy Institute, Vietnam ranks 12th out of 26 countries of Asia-Pacific and 5th among ASEAN countries. While Singapore, Malaysia, Thailand and Indonesia stand ahead in the power index, all of them have observed a negative trend and lost out points except Thailand that remained unchanged as compared to last edition. Vietnam is the only country among ASEAN states to observe a positive trend and gained 1.3 points since last year. One of the indicators is Diplomatic influence that measures the ‘extent and standing of a state’s or territories foreign relations’ and Vietnam has gained the maximum points (+6) out of all countries. Its performance in other indicators is mentioned below.
Vietnam also holds a positive score in the power gap category that indicates that the country exerts more influence in the region than expected given its available resources.
Table 1: Vietnam’s Performance in Asia Power Index 2020
Source: Asia Power Index 2020
On the Security Front
Vietnam’s policy with respect to security in the region assesses the global situation which has been rapidly evolving into a multipolar order. South China Sea or what is called East Sea in Vietnam has been a long-standing issue in maritime security and the larger Indo-Pacific space. The dispute goes back to China’s claim to the entire South China Sea on the basis of its historic nine-dash line that predates the emergence of post-colonial sovereign states of Asia. The claims evolved into aggressive actions by the Chinese through buildup of artificial islands and growing military infrastructure that threatens the sovereignty of littoral states. Due to the geo-economic importance of the sea, China has begun to endanger commercial operations of smaller states in their respective economic zones mainly Vietnam, Malaysia, Philippines, Taiwan and Brunei, reaching as far as Indonesia’s Natuna Sea. Large hydrocarbon reserves have been found in regions like Vanguard Bank and The Ca Voi Xanh (Blue Whale) gas field that lie just 50 miles off Vietnamese coast. Vietnamese fishing industry is also threatened due to Chinese coast guard presence that has previously unilaterally banned fishing activity in the region. In 2014, a Vietnamese fishing vessel 90152 was sunk by Chinese maritime surveillance vessel that sparked national outrage in the country and led to anti-China riots. In April this year, a Chinese survey ship Haiyang Dishi 8 encroached Vietnam’s resource-rich territorial waters near Paracel Islands, called Hoang Sa in Vietnam.
Vietnam has grown militarily, its defense spending increasing from 2.23 percent of GDP in 2010 to 2.36 percent in 2018and engaged with countries including Russia, USA, India, Australia and Japan strategically. On both the national level as well as the regional level, it has reiterated the commitment towards 1982 United Nations Convention on the Law of the Sea (UNCLOS) for any territorial rights claimed by any country in South China Sea. Vietnam helped build the Declaration on the Conduct of Parties in the East Sea in 2002 and negotiations are on between ASEAN and China over an upgraded Code of Conduct for the South China Sea. Cooperation with external players mainly the US for security reasons is one approach taken by the country. Vietnam’s Foreign Minister Pham Binh Minh said during ASEAN-US virtual summit, “We welcome the U.S.’s constructive and responsive contributions to Asean’s efforts to maintain the peace, stability and developments in the South China Sea.”On November 25, 2019, Vietnam released a new Defense White Paper, reiterating the “Three No’s” defense policy – no alliances, no foreign bases and no aligning with a second country against a third. However, its participation within the ‘QUAD Plus’ framework that is an extension of QUAD along with with New Zealand, Vietnam and South Korea is seen by some as an alliance against rising China. Vietnam’s strategic position for the QUAD and reiteration of free and open, rules-based order in the Indo-Pacific is the current approach to set a status quo in the South China Sea for its resource interests. The 2018 inauguration of Paracel Islands Museum in Da Nangand the indication to take the legal route through legal arbitration, similar to the case won by Philippines in 2016 is how Vietnam is standing up for bullying behaviour against smaller states in the region.
In Vietnamese there is an old saying: ‘A single tree cannot make a forest’. Since the 21st century, Vietnam’s economic and political rise has been complementary to the rise of ASEAN. Foreign direct investment (FDI) and exports played an increasingly important role in Vietnam’s economic success while significant political presence in international politics is the world’s acknowledgment of its leadership role in the ASEAN and demonstration of its importance in the Indo-Pacific region.Lack of a united ASEAN front to the South China Sea issue remains one of the biggest challenges for the country. As a non-permanent member, Vietnam needs to work as a bridge between the ASEAN and UN. For a dynamic regional institution and the emerging maritime-geopolitical construct of Indo-Pacific, Vietnam needs to leverage its position and role to realize ‘peace and stability of the region’ in its truest sense.