May 20, 2010

Vietnam Environmental Forum NEWS

“The matter of environmental protection is more and more important”

-Deputy Chief of Mission Nguyen Tien Minh

Arriving Hanoi at Two

The Flower Market is open all night. Scooters, bundled with roses, chrysanthemums, jasmine and orchids zip down the highway to carry and trade for the next morning’s daily decorating. Even at 2 a.m. and into tomorrow the growers, brokers and customers sell and buy big bouquets and trundle blossoms to distribute blooms around the city. It’s late and I’m too tired to stop; it doesn’t really matter, because I can catch the market later--it’s open all the time. Some of the flowers are arranged to celebrate Hanoi’s 1000 year anniversary around Hoan Kiem Lake (Lake of the Recovered Sword).

Getting there is half the fun. The grandmothers that serve on the United flights are seasoned pros and make sure that there is water and wine: “Cote de Rhone, or the Cab?” The trip to Asia is a coveted route that flight attendants with ‘seniority’ get the choice assignment. That said, there is a marked difference between steerage (where your correspondent usually sits) and biz class. I have to tell you that flying with a single carrier occasionally lands one an upgrade and being a lucky S.O.B., the stars were in alignment--this time. So the seats were a little wider and the service a step above and the seating companions just like anywhere. The saddle sores were just as distracting, though.

The struggle for an improved lifestyle, stretching scarce resources and planning for the future fire the fervor and competition of the taxi drivers, hotel and hospitality workers that cater to the casual tourist and the frequent flyers. For many, a few dollars, a pittance really, is the distinction between a decent day at work and a verbal flaying at home. The recent run-up in inflation and slightly stronger dollar has pushed the US currency to a level of 19,000 VND (Vietnamese Dong). Bucks are still the predominant measure of tradable currency, despite the battering the dollar has suffered in the recent history in other markets (whither go, Euro, with news from Spain and Greece?). What is good for the tourist is good for the multinationals who can leverage a weaker exchange rate, and--more importantly--the entrepreneurs because getting greenbacks means getting some better margins for their family, or just some lunch.

Another Anniversary Ho Chi Minh was born May 19, 1890 and died in 1969, before the end of the “American War in Vietnam,” as it is known here. After a brief and difficult spasm of “national reconciliation” following the US’ departure, relations were normalized under President Clinton and the road to development was laid. It’s a long road and my may need some good shoes. Here are a few thousand.

At the beginning of our new rapport with Vietnam, trade between the US and Vietnam was at about the same level as trade between the US and Haiti, as my colleague Alex Koff points out. While it is a stretch to compare the countries in any other ways, the legacy of French-American colonialism in these two situations is interesting to contemplate, in brief, anyway. Thing is, Vietnam, being a vibrant, ancient and self-defined autonomous culture, recovered. Haiti, part of the island that Christopher Columbus first strode ashore, is the poster child of malignant governance and neglect and, ultimately the failure of US focus and France’s lack of moral obligation (Desolee, je vous adore, vous savez). But that’s a simplification and quite a different story.

I was always a little murky about the details of our engagement in SE Asia, they being so mixed with Cold War rhetoric of the day (“domino theory” etc.). But the origins of our entanglement came down to the complicated and global reorganization after WWII, the dissolution of the colonial system and France’s restatement of domination over “French Indochina” after the Japanese were expelled. And communism. Ever the liberal and pragmatist, Roosevelt saw the end of WWII as an opportunity to dismantle the colonial system, which he saw as antiquated and profoundly unfair. But he died. Ho, in the meantime, continued to petition Truman for support for independence. But the French ‘lobby’ was strong.

The post-WWII era of global reorganization also meant that, as the US emerged from the war as the strongest nation on the planet, we could enforce a world order that was in line with our emerging strategic objectives. In “The Next 100 Years” George Friedman lays out an interesting argument for America’s prospects in the 2100s--which are strong-- and point out a variety of reasons why the US will continue to dominate the world order (“The report of my death is an exaggeration,” quoth Twain).

Any warring society (and we are one) wants to see the victors victorious and the enemy completely vanquished. The problem is that a clear-cut ‘winner’ in the post WWII world is not defined by a defeated and suppressed foe. For the US it is sufficient enough for our enemies to not gain sufficient momentum and critical mass to seriously threaten our domination, according to Friedman.

Our entanglement in SE Asia, beginning with the French defeat at Dienbienphu was, in hindsight, the beginning of a costly adventure (and, I think a pattern of behavior and participation in wars) that we were never politically engaged to win--we just wanted to disrupt the other guys. Our rapprochement with China in 1972 was another bet on the board as I imagine Nixon, Kissinger et al saw the writing on the wall in Vietnam and needed another Soviet hedge.

For Vietnam, like in Afghanistan presently, the intent was to prevent the other guys (the Soviets during the Vietnam War, Al-Qaeda/The Taliban in Afghanistan) from forming sufficiently to challenge our own form of hegemony. I guess, in the end, it worked and there is no real basis for contemplating a different path to the present (What if we befriended Ho? We couldn’t. What if we didn’t escalate from advisory to combat? We didn’t. What if we dropped The Bomb? Whaaa?!!).

It’s debatable, but maybe the best thing for Vietnam at the time was our departure; and maybe the second best thing might be our return. We’re back. Let’s see.

Trade and The Environment

Vietnam expects GDP growth of seven percent in 2010 as Uncle Ho turns 120. Since normalizing relations in 1995, US-Vietnam trade has reach $15B, with 70 percent of that in exports to the US. Trade between Vietnam and her largest trading partner, China, is roughly $20B, but the export picture is “flipped” meaning that 70% of that figure is imports from China in the form of coal and finished goods. Total trade with China has been recently enhanced by a Free Trade Agreement (FTA) between China and the ASEAN nations.

That’s all good and a great number of Vietnam’s people have been lifted out of poverty, unemployment is low and all kinds of sectors are expanding. Tourism and agriculture are two critical sectors that have benefited from opening trade and the government.

However, there are costs to the environment. Developing industries that have a less severe impact on the environment represents critical decisions for Vietnam’s leaders.

Water-polluting industries include sectors such as: iron and steel, non-ferrous metals, industrial chemicals, rubber and leather products. These sectors all produce domestic and export-ready products, but strain the environment. The price of entry, however, is relatively low in terms of workforce training and technology investment. Hence, they represent attractive expansion sectors for Vietnam. “The matter of environmental protection is more and more important” according to Deputy Chief of Mission Nguyen Tien Minh, who briefed our mission at our launch event in Washington. The question becomes defining a policy and the mechanisms to promote “greener” sustainable expansion sectors. And this impacts trade.

According to the World Bank Policy Research Working Paper 3879, April 2006: “Reducing barriers to trade will reinforce the tendency for countries to export commodities that make use of resource-intensive production factors. As a result of weak environmental policies, trade liberalization in developing countries may result in shifts in the composition of production, exports, and FDI to more pollution or resource intensive sectors.”

The up-front costs need to be factored into, and amortized, over the life of infrastructure and related development; this is most critical in developing countries where quick implementations are preferred or seem to be expedient.

The effect of increased development has certainly complicated Vietnam’s environmental situation, as it is impossible to decouple the increased use of resources and energy to the negative effects of that consumption. The question is: how to adopt the cleaner technologies and still foster the need for economic development.

The answer may not necessarily lie solely in regulations. The need for stricter regulations is undoubtedly the cause of much debate too, as the adoption of environmental policies, and their ultimate enforcement, may be used as a mechanism to protect domestic industries. In addition, competing business interests tend to slow the implementation of broad policies into action. This is not the sole purview of developing countries; the United States’ environmental record is certainly not a paragon of virtuous action. The problem becomes a question of credibility. Shoot the messenger--he wrote the message, too.

Economics and Islands

The May 14, 2010 edition of Viet Nam News contained four articles on environmental and climate change issues facing Viet Nam, with a notable headline “Viet Nam Can Lead on Climate Change.” The theses of the article is how Vietnam’s experience in coping with affects on agriculture and the social implications of climate change can stir change other nations. The reality is that the implementation of real projects is slow and there is a need for more public-private partnerships to make the projects successful.

Another item points out that the numerous islands along her long coastline are ripe for development as Viet Nam is “eager to increase the economic contribution from island economies...” This includes the creation of a Master Plan to boost the economic contribution from islands from 0.2% of GDP to 0.5% with an investment of $8.5B. A large part of the economic planning will involve the impact of climate change as the Master Plan’s objective are to “turn(ing) islands into fortresses to protect the country’s sovereignty and territorial integrity.”

Our Conference Co-Chair Dr. Nguyen Chu Hoi, Director of the Vietnam Administration of Seas and Island is quoted in the article as stating that “The ocean is a treasure, but to open that treasure requires will, capacity and know-how.” The question, as always, is striking a balance between the economics and the environment. No where is this more amplified than in the long fragile coastline of any nation, be it the Gulf of Tonkin or the Gulf of Mexico.

Partnership is what we hope to develop during our exchanges. Before we can do that, understanding is key. The long-term prospects for Vietnam are fantastic, given her abundant natural resources, long coastline and inspiring culture and history. It’s a question of first developing an understanding of a complex set of mechanisms, selecting the right role and working to achievable goals within the context of economics and the environment. - Mike Violette

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Mike Violette
AmericanTCB & Washington Labs