Hanoi to repay Saigon's loans Vietnam's concession: One more step in slow march toward a closer relation.

April 05, 1997

THE COMMUNIST government of Vietnam in Hanoi will repay over 25 years some $145 million that the U.S. lent to the government of South Vietnam in Saigon before its collapse in 1975. This is an astounding concession, timed for Secretary of the Treasury Robert Rubin's visit next week. The loans were a small part of the billions the U.S. spent in a lost cause to keep South Vietnam out of the clutches of Hanoi. Victors in war do not normally pay the vanquished's debts.

This is just one measure of Hanoi's mounting desire to improve relations with the United States, which were supposedly "normalized" in 1995. The barriers are high, as witness the delay of the Senate in confirming former Rep. Pete Peterson to be ambassador to Vietnam, nearly a year after his nomination. But Hanoi swallowed and agreed to this repayment.

Vietnam has two motives for wanting good relations with the U.S. One is political, the search for potential protectors against bullying by China. The Soviet Union played that role during the Chinese invasion of Vietnam in the 1970s, but is no longer there. China claims islands and seabed in the South China Sea a long way from China and close to Vietnam, which also claims them, and China is bellicose about pursuing the claim. A friendly U.S. would be a helpful display for Hanoi in this context.

The other motive is economic. Communism wrecked the Vietnamese economy. Only trade and foreign investment can relieve the country's crushing poverty. While retaining its monopoly on political power, the regime is trying to encourage private investment and to participate in the world economy, without quite knowing how. It is in the same quandary as the country it most resembles and fears, China.

Vietnam is a long way from earning most favored nation trading )) status with the U.S. and must lower many barriers first. Getting there is in the U.S. interest, too. The present impasse penalizes the U.S. as much as it does Vietnam. It's no surprise that the modernization of Vietnam's telecommunications, now threatened by decline of the currency, is a big contract for four companies, three of them European and one Japanese, none American.

Agreeing to partial repayment of debt as the successor to the South Vietnamese government is a step toward an open trading relationship with the U.S. That, when it comes, will be in the interest of both countries.

Pub Date: 4/05/97

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