Vietnam lies on the eastern coast of the Indochinese peninsula. Over half the country is dominated by the heavily forested mountain range, the Chaîne Annamitique. The most populated areas, which are also the most intensively cultivated, are along the Red and Mekong rivers. Partitioned after World War II, Vietnam was not reunited until after 1975, when the communist north finally defeated the southern regime and its US allies in the Vietnam War. Vietnam is now a single-party state ruled by the Communist Party. Since 1986, the regime has pursued a liberal economic policy known as doi moi (renovation).

Family life is strong and is based on kinship groups within village clans. A pronounced north–south cultural split remains evident in the cities. Chinese are the largest minority group. When the victorious communists reunited north and south Vietnam in 1976, they viewed the Saigon Chinese (in what was renamed Ho Chi Minh city), with their Taiwanese links, as a corrupt bourgeoisie. The northern Mountain Chinese were also suspect as a possible fifth column for China's ambitions in Vietnam. Various other mountain minorities (Montagnards), with a history of collaboration with the French and Americans, were also sidelined by the regime in Hanoi. Montagnard resentment over the resettling of lowlanders in mountain regions sparked violent protests in early 2001.

In the older generations women outnumber men, largely because of war deaths. They form a high proportion of the industrial workforce, and are starting to get greater political representation, most notably Vice President Nguyen Thi Binh. Female conscription was reinstated in 2001.

Strengths

Diverse resource base. Young, literate, low-cost labor force. Strong light industrial and handicraft export industries.

Weaknesses

Weak economic institutions. Weight of bureaucracy. Heavy dependence on aid for reconstruction. Enduring suspicion of entrepreneurial southern attitudes and "individualism." Corruption.

Profile

The encouragement of private enterprise began in 1988. Touted by some commentators in the mid-1990s as the next Asian "tiger," Vietnam has aimed at more moderate growth since the Asian crisis of 1997–1998. Annual GDP increases, over 5% again by 2000 and predicted to reach 7% by 2003, are impressive. Inflation, once a huge problem, was held down in the 1990s, and is now under firm control. Increased rice production has boosted incomes, and domestic demand helped the post-1998 upswing. The government promised massive investment in agriculture from 2002.

Attracting foreign investment through reform is essential;government policies regarding state-owned enterprises promise more scope for joint ventures, and new laws on trade-licensing and investment were passed in 2000. Also that year the country's first stock exchange opened. The government has set a target of doubling GDP in the next decade. The potential certainly exists, based on an educated and highly motivated young labor force and mineral resources, located mostly in the north.

Vietnam is effectively a single-party communist state.

Profile

A traditional communist system is still in place, with a powerful politburo elected by the party central committee. Heading the secretariat and politburo, the party general secretary wields much power, alongside the prime minister and president. Changes in senior posts in 1997 left reformers such as new prime minister Phan Van Khai still outnumbered by conservatives. The 2001 party congress balanced the theme of greater democracy with a renewed commitment to socialism.

Main Political Issue

Economic reform

Vietnam is attempting to move to a market economy without political liberalization. The veteran CPV leaders of the 1950s–1970s were slow to transfer power and resisted democratizing the political process. The hand of the economic reformers was strengthened by Nong Duc Manh's elevation to the party leadership at the April 2001 congress, but there remains real concern that opening collective farming and state enterprises to competition will undermine stability, encourage "individualism," and weaken the party's monopoly of power.

Economic liberalization has improved relations with the USA, with lifting of the aid and trade embargo in 1993, full diplomatic relations in 1995, and a landmark bilateral trade agreement in 2000, ahead of a visit by US President Bill Clinton that November.

Vietnam joined ASEAN in 1995, in the wake of the Cambodia settlement. Trade and economic cooperation links with Japan have been strengthened. Agreement in 1999 over the land border reduced tension with China, although competing claims to the Spratly Islands remain a source of friction.

Vietnam has large and well-equipped armed forces, notably the world's seventh-largest army. Military service is compulsory, with conscripts serving a two-year term. The army's role in preserving both stability and socialism was reaffirmed in 2001. Increased defense spending on the navy reflects the rising tensions in the South China Sea, where there are disputed claims to the Spratly and Paracel Islands.

Vietnam is among the world's top ten coffee producers and is the third-largest exporter of rice – to the detriment of domestic stocks.

Oil production, small by world standards, is sufficient to make it Vietnam's biggest export earner. The Oil and Gas Corporation of Vietnam (PetroVietnam) is involved in joint ventures with international oil firms. Vietnam has unexploited gas reserves in the South China Sea; gas from the only producing field has to be flared off.

Timber exports have been banned since 1997 to preserve forests.

Northern Vietnam has a surplus of electricity, mainly from hydroelectric schemes.

In the Vietnam War, seven million tonnes of bombs were dropped, and the defoliant chemical Agent Orange was sprayed over vast areas; a "census" of the continuing health impact was announced in 1999. Half of Vietnam's forests were seriously damaged and some 5% destroyed. Deforestation continued into the 1990s due to logging and expansion of coffee-growing, causing soil erosion and flooding. Floods along the Mekong in 2000 were the worst for 40 years.

Rebuilding infrastructure is still a priority. The flagship project, the four-lane Ho Chi Minh Highway linking Hanoi and the south, is unlikely to meet the target of completion by 2003. A major port development plan is under way. Trains travel slowly, with an average speed of around 15 km/h (9 mph), and take three days from Hanoi to Ho Chi Minh City. The bus network is extensive but journeys are also time-consuming. Taxis and cycles provide cheap local transportation. Hanoi has plans for an elevated metro line.

Vietnam's medical achievements include developing a vaccine for hepatitis B, and extracting artemisinin (an antimalarial drug) from the thanh hao tree. An extensive campaign is under way to combat the spread of AIDS.

Private sponsorship helps fund education.Vietnamese universities have a strong liberal arts tradition. Social pressure to obtain a degree leads to high levels of cheating among university applicants.

The judicial system is based on the Soviet model. The education camps established after liberation have now closed, but religious and political dissidents are still held without trial.

Corruption has risen sharply since economic liberalization, as has the illegal drift of young people to urban areas, where they are blamed for increasing petty crime and "social evils" such as begging, prostitution, and drug-taking. Theft from foreigners is a problem in major cities.

Ostentatious consumerism is rising despite official disapproval, but is beyond most people's reach. Wealth disparities are growing, with rural areas falling deep into poverty.

Until the government opened the way to large-scale tourism in the 1990s, Russians, eastern Europeans, and backpackers from the West made up the bulk of visitors. Other travelers were either on business, or overseas Vietnamese, Viet Kie, who were visiting relatives.

Under a "master plan" adopted in 1995, massive investment was channeled into hotels, but an official target of three million tourists a year by 2000 proved about a million too high. Poor transportation infrastructure remains a problem. Vietnam's appeal rests on its unspoiled Asian way of life and areas of spectacular natural beauty such as Ha Long Bay on the Red River delta.

From 1825, the brutal persecution of the Catholic community, originally converted by French priests in the 17th century, gave France the excuse to colonize Cochin-China, Annam, and Tonkin, and then merge them with Laos and Cambodia.

• 1920 Quoc ngu (Roman script) replaces Chinese script.
• 1930 Ho Chi Minh founds Indo-china Communist Party.
• 1940 Japanese invasion.
• 1941 Viet Minh resistance founded in exile in China.
• 1945 Viet Minh take Saigon and Hanoi. Emperor abdicates. Republic proclaimed with Ho Chi Minh as president.
• 1946 French reenter. First Indo-China War.
• 1954 French defeated at Dien Bien Phu. Vietnam divided at 17ºN. USSR supports North; USA arms South.
• 1960 Groups opposed to Diem's regime in South unite as Viet Cong.
• 1961 USA pours in military advisers.
• 1964 US Congress approves war.
• 1965 Gen. Nguyen Van Thieu takes over military government of South. First US combat troops arrive.
• 1965–1968 Operation Rolling Thunder – intense bombing of North by South and USA.
• 1967 Antiwar protests start in USA and elsewhere.
• 1968 Tet (New Year) Offensive – 105 towns attacked simultaneously in South with infiltrated arms. Viet Cong suffer serious losses. Peace talks begin. USA eases bombing and starts withdrawing troops.
• 1969 Ho Chi Minh dies. Succeeded by Le Duan. War intensifies in spite of talks.
• 1970 USA begins secret attacks in Laos and Cambodia and new mass bombing of North to try to stop arms reaching Viet Cong.
• 1972 11-day Christmas Campaign is heaviest US bombing of war.
• 1973 Paris Peace Agreements signed, but fighting continues.
• 1975 Fall of Saigon to combined forces of North and Provisional Revolutionary (Viet Cong) Government of South. One million flee after end of war.
• 1976 Vietnam united as Socialist Republic of Vietnam. Saigon renamed Ho Chi Minh City.
• 1978 Invasion of Cambodia to oust Pol Pot regime (by January 1979).
• 1979 Nine-Day War with China. Chinese troops pushed back after destroying everything for 40 km (25 miles) inside Vietnam. "Boat people" crisis. At UN conference, Vietnam agrees to allow legal emigration, but exodus continues.
• 1986 Death of Le Duan. Nguyen Van Linh, new Communist Party general secretary, initiates liberal economic policy of doi moi (renovation).
• 1987 Fighting in Thailand as Vietnam pursues Kampuchean resistance fighters across border.
• 1989 Troops leave Cambodia.
• 1991 Open anticommunist dissent made a criminal offense.
• 1992 Revised constitution allows foreign investment, but essential role of Communist Party is unchanged.
• 1995 US-Vietnamese relations normalized. Vietnam joins ASEAN.
• 1996 Eighth Communist Party congress.
• 1997 Legislative elections. Tran Duc Luong president, Phan Van Khai prime minister.
• 1998 Asian financial crisis dampens economic boom.
• 1999 Signing of border treaty with China.
• 2000 Visit by US president Clinton.
• 2001 March, visit by Russian president Putin. April, ninth party congress. Nong Duc Manh becomes general secretary.