Inching toward Hanoi

January 10, 1994

The unofficial report that Assistant Secretary of State Winston Lord is about to make that recommends ending trade sanctions on Vietnam looks like a trial balloon. Veterans groups and families of MIAs are gearing to fight it. The largest U.S. search party ever, 84 American specialists in four teams, is spending 23 days in Vietnam searching for evidence of MIAs. This, following Mr. Lord's satisfaction with Hanoi's cooperation last year, looks like the preparation of American opinion for ending the boycott and even resuming diplomatic relations.

If President Clinton does end the 19-year-old boycott, which he loosened last year, it would be to help U.S. business, not Vietnam. The Communist regime introduced free market economics in 1986 and invited foreign investment in 1988. It has granted more than 800 licenses for investment of $7.5 billion, of which $2.2 billion has materialized. Most comes from Hong Kong and Taiwan.

Hanoi has further to go, in legal protections and infrastructure improvements, to create a convincing welcome mat. Under the loosened U.S. embargo, U.S. firms may seek business in Vietnam but not perform it, test-drill for oil but not produce it, and work on infrastructure projects if financed by the World Bank or Asian Development Bank.

At least a dozen U.S. firms have registered to bid Saturday on World Bank-financed contracts to upgrade Vietnam's Highway 1. Some 300 firms have sought U.S. permission to seek business in Vietnam and at least 15 have set up offices in Hanoi or Ho Chi Minh City (Saigon). Mobil Corp., which struck oil off South Vietnam in the 1970s and abandoned it in 1975, will start drilling again in the spring. Boeing believes that it could sell from $3 to $5 billion worth of planes there, and lost an order for five that went to European Airbus because Vietnam Airlines couldn't wait.

So far there is every reason to think that stated U.S. requirements for ending the embargo have been met. Domestic opposition, based on the fate of 2,239 Americans missing in action in Vietnam and unaccounted for, is passionate. This is a smaller number of missing than in previous wars, but the behavior of Vietnam in the mid-1970s, demanding ransom for information, was reprehensible. That has long since ended. Washington's hesitation is really caused by a general touchiness about a war the U.S. did not win and of which many Americans disapproved. It is easier to trade with an enemy one has beaten, like Germany and Japan after 1945.

With the Fortune 500 clamoring for a piece of Vietnam's action, the Clinton administration is feeling the heat from both directions. We think it should end the embargo. Diplomatic relations may follow depending on Vietnamese behavior.

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