Diplomatic links between the United States and Vietnam should give U. S. executives something to cheer about in years to come, but their more immediate effect may be in helping Asia balance an increasingly belligerent China, experts say. 'The Vietnamese hope to get as much U.S. involvement as they can -- not just economically but militarily,' said Bruce Gale, Singapore-based regional manager for Political and Economic Risk Consultancy Ltd. Hanoi is seen as a potential counterweight to Beijing's growing military prowess and blustering claims to disputed areas in the South China Sea. A greater regional role for Vietnam would give other countries, especially economically potent but militarily weak Southeast Asia, a better sense of security, said Paul Wedel, an analyst at Kennan Institute for Private Enterprise in Thailand. Strengthening ties with Washington gives Hanoi more clout and stability. And as U.S. business interest in Vietnam grows, the United States increases its own commitment to Southeast Asia, further enhancing stability in the region, analysts say. Suggestions from some in the U.S. Congress that Vietnam could be used as a strategic counterweight to leverage China on several broad issues are largely dismissed as nonsense by analysts and executives in Asia. Beijing's first comment on new diplomatic ties between Hanoi and Washington said China welcomed the move. 'The Chinese government has always stood for improvement of relations between the United States and Vietnam,' Foreign Ministry spokesman Shen Guyofang said. 'We hope such an improvement in relations between the two countries can benefit mutual peace and stability.'
Still, Beijing is suspicious of the move. 'China feels very annoyed because they know the U.S. is trying to re-establish a blockade against China,' said Thomas Chan, coordinator of the China Business Center at Hong Kong Polytechnic University. Areas of concern for Beijing include the Spratly Islands. The chain of potentially oil-rich reefs in the South China Sea is claimed by Vietnam and China along with four other Asian countries and is a periodic flash point. 'There's a danger the U.S. will try to interfere in the South China Sea,' Chan said. 'If so, there will be a direct confrontation with China and no chance for improved relations.' The first hard indication of how U.S.-Vietnamese ties may affect the region will come later this month at a ministerial meeting of the Association of Southeast Asian Nations in Brunei. ASEAN members are Brunei, Indonesia, Malaysia, the Philippines, Singapore and Thailand. Vietnam is expected to become the seventh member at the July summit. Following the meeting, ASEAN officials will hold talks with counterparts from countries including the United States and China on regional matters such as security in the South China Sea. It will take substantially more time to see what kind of impact the U.S. move is likely to make in Vietnam. While American companies have been active in Vietnam since President Clinton lifted the economic embargo in February last year, they are far behind their rivals. Official figures as of mid-May rank U.S. investment in Vietnam eighth with $530 million. Taiwan leads with $2.5 billion, followed by Hong Kong with $2 billion and Japan at $1.4 billion. Full ties will help U.S. companies, but they're only one step on a very long road. 'Recognition will mean more consular assistance and general help to business, but there's a long way still to go,' said Mark Michaelson, managing director of Warren Williams International, a Hong Kong-based consultancy. Items that still must be negotiated include most favored nation status, which would allow Vietnamese goods into the United States at the lowest possible tariffs, loan guarantee provisions and foreign assistance such as agricultural credits. Moreover, doing business in Vietnam is not easy. It suffers a chronic lack of infrastructure, a labyrinth of government bureaucracy and widespread corruption. Says the Kennan Institute's Wedel, 'The laws are unclear or untested or unimplemented.'
