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Vietnam PM Keeps Post as Economic Struggles Continue

Japanese Foreign Minister Koichiro Gemba (L) shakes hands with Vietnamese Prime Minister Nguyen Tan Dung during their meeting at the Government Office in Hanoi, Vietnam, July 14, 2012. (AP)
Japanese Foreign Minister Koichiro Gemba (L) shakes hands with Vietnamese Prime Minister Nguyen Tan Dung during their meeting at the Government Office in Hanoi, Vietnam, July 14, 2012. (AP)
Vietnam's prime minister appears to have survived a leadership challenge this week over his handling of the poorly-performing economy.

Communist Party officials ended any speculation that Prime Minister Nguyen Tan Dung might lose his job when they concluded a top-level party meeting on Monday.

The 175-member party central committee met for two weeks to discuss a long list of topics, ranging from economic reform and land use to education.

The run-up to what is usually a low-key event attracted international attention following several arrests over a banking scandal and the publication in political blogs of material highly critical of the 62-year-old prime minister, whom many blame for the country’s economic crisis.

Mistakes acknowledged

In a nationally broadcast speech at the conclusion of the meeting, party secretary Nguyen Phu Trong apologized for the mismanagement of the struggling economy.

Trong said the party had made some big mistakes, especially in not preventing corruption and deterioration among some of its members. He added, however, the one member who deserved punishment would be spared.

Many believe that person is the prime minister.

Vietnam analyst Tuong Vu, a professor at the University of Oregon, said Dung’s rivals clearly failed to oust him from power, but Trong’s speech should be interpreted as a warning to the prime minister’s supporters.

“They tried first in the politburo, they failed. They brought it to the central commission, they failed. And now they have to put a spin on it and so they will try to admit defeat and try to mobilize support for their faction, and send a warning message to the prime minister's faction,” said Vu.

Faltering ascent

Dung established his political support base by achieving high economic growth rates. Under his command, Vietnam was focused on becoming the world’s leading shipbuilder. That goal was derailed by the global financial crisis, followed by massive corruption scandals.

In the run-up to the meeting, some analysts predicted Dung would be ousted by his rivals, President Truong Tan Sang and Party Secretary Trong.

Regional security analyst, Professor Carl Thayer, said a dramatic change was not very likely, though, given the makeup of the country's powerful central committee.

“About 40 per cent on the central committee are on there because of him. That’s just a ball park figure. Those people would resist having him removed because it would unravel. The problem with a system like this is nothing is independent. Everything is dependent on the party,” he said.

Economic reforms

Thayer said the prime minister may have retained his position, but his power has been undermined.

Prime Minister Dung was given an agenda to reform state-owned enterprises and sort out the banking system. Further investigations into shipbuilding giants Vinashin and Vinalines also were singled out.

Economists say the results of the meeting are good news for investors, who could have more confidence that economic reforms finally will be carried through.

Dung is now in his second term and will be of retiring age by the time the next party congress convenes. This also will affect his political power, said Thayer, as people are less likely to ally themselves with him.

“If you’re hanging on to Nguyen Tan Dung, he’s going to be lame duck. He’s going to be 65 by the next congress. He had his two terms in office, like an American president he has a second term. In the end power begins to wane,” said Thayer.

Others disagree, saying Dung could well remain in power, but with a different title, perhaps in the position of party secretary.

Analysts say the high-tension rivalry between the country’s top leaders is symptomatic of the shifting relationship between state and party. Associate professor Vu said the state has become so rich and powerful in recent years that party leaders like Trong are losing control.

“There has been a natural process of economic reform that brings more power to the state and causing the ideology that the party represents, system which the party controls, is losing relevance,” said Vu.

It may be years in the future, but observers say change is inevitable for Vietnam as economic reform eclipses communist ideology and the legitimacy of the party.