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Background Brief: Vietnam: Anti-Climatic Showdown at the 6th Party Plenum Carlyle A. Thayer October 19, 2012

The outcome of Vietnams recent sixth party plenum produced something of an anticlimax. When the timing of the sixth plenum was brought forward unexpectedly Vietnams political elite were all abuzz with rumours that Prime Minister Nguyen Tan Dung, a member of the Politburo, would be forced to step down for his mismanagement of the economy and his failure to curb the growth of corrupt interest groups. The sixth plenum met from October 1 to 15. This is the longest period the Central Committee has met since the eleventh national party congress in January 2011. Indeed, no party plenum in the five years since the tenth congress in April 2006 has met for more than nine days. And, as party Secretary General Nguyen Phu Trong noted in his opening speech, no recent plenum has had such a heavy work load. 1 Typically, when the party Central Committee meets, the Vietnamese media publish the opening and closing speeches by the party Secretary General, the resolution of the plenum and a summary of proceedings. Once the Central Committee begins its in camera discussions the media falls silent. This opens the field to rumours and speculation. After the plenum concludes the Vietnamese media provide summaries that closely parallel the official party texts. Background2 Three important developments form the backdrop to the sixth plenum. First, the fourth plenum the Vietnam Communist Partys Central Committee, which met from December 26-31, 2011, adopted a major resolution on party-building.3 This led to an

The plenum considered reform of state-owned enterprises, land ownership issues, education and training, science and technology, and selection of future party and state leaders. These are fundamental long-term development issues.

Carlyle A. Thayer, Vietnam: Showdown for Prime Minister Nguyen Tan Dung?, Thayer Consultancy Background Brief, October 2, 2012. Thayer Consultancy Reports are archived and may be located at http://www.scribd.com/carlthayer.

Most so van de cap bach ve xay dung Dang hien nay. Subsequently the Vietnam Communist Party held a national meeting to address party-building, reform and corruption. See: Carlyle A. Thayer, Vietnams Hardy Perennial Entrenched Corruption, Thayer Consultancy Background?, March 1,

2 intense party-led campaign of criticism and self-criticism (see below). The purpose of this campaign was to examine the strong and weak points of party organs and individuals at all levels and to identify ways to overcome shortcomings and deficiencies. In the past, criticism campaigns have led party members being disciplined, demoted or dismissed from office. Second, party in-fighting became increasingly visible.4 It appears that a loose coalition formed around President and Politburo member Truong Tan Sang and party Secretary General Nguyen Phu Trong to oppose if not bring down Prime Minister and Politburo member Nguyen Tan Dung. At the start of the year Dung was replaced as head of the Anti-Corruption Steering Committee which he had set up and headed during his first term in office. In May, deputy Mrs Dang Thi Hoang Yen, a supporter of Truong Tan Sang, was unceremoniously expelled from the National Assembly. 5 In August, Nguyen Duc Kien, a private banker with close ties to the prime ministers daughter was arrested.6 A concerted effort was made to expose widespread corruption in the Vietnam Shipbuilding Industry Corporation (Vinashin), a stateowned enterprise favoured by the prime minister.7 Third, Vietnams economic malaise, particularly high inflation and the devaluation of the dong (which made funding overseas education more expensive), produced widespread and growing public expressions of discontent particularly among the second tier of the party elite.8 Their complaints surfaced on the web. But in May, in an unprecedented development, several new blogs appeared, Dan Lam Bao and Quan Lam Bao in particular, that targeted top leaders. Prime Minister Nguyen Tan Dung received the lions share of criticism for his handling of the economy, nepotism, and tolerance of a network of corrupt officials. Public discontent and the blogs put pressure on the party leadership to respond and take action.

2012 and Carlyle A. Thayer, Vietnam: Is Reform for Real?, Thayer Consultancy Background Brief, March 7, 2012.

Carlyle A. Thayer, Vietnam: Policy and Personality Differences Emerge, Thayer Consultancy Background Brief, May 22, 2012.

Carlyle A. Thayer, Vietnam: Conflict of Interest Private Entrepreneurs in the National Assembly?, Thayer Consultancy Background Brief, April 17, 2012 and Carlyle A. Thayer, Vietnam: The Case of Deputy Dang Thi Hoang Yen, Thayer Consultancy Background Brief, April 20, 2012.

Carlyle A. Thayer, Vietnam: Why Was Nguyen Duc Kien Arrested?, Thayer Consultancy Background Brief, August 23, 2012; Carlyle A. Thayer, Vietnam: Nguyen Duc Kien A Pawn In Power Struggle?, Thayer Consultancy Background Brief, August 23, 2012; Carlyle A. Thayer, Vietnam: Nguyen Duc Kien and Regulatory Reform, Thayer Consultancy Background Brief, August 23, 2012; Carlyle A. Thayer, Vietnam: Chairman of Asia Commercial Bank Ly Xuan Hai Arrested, Thayer Consultancy Background Brief, August 24, 2012 and Carlyle A. Thayer, Vietnam: Fall Out from Arrest of Nguyen Duc Kien, Thayer Consultancy Background Brief, August 29, 2012.

Carlyle A. Thayer, Vietnam: Compensating Vinashins Foreign Investors, Thayer Consultancy Background Brief, March 26, 2012.

Carlyle A. Thayer, Vietnam: Rising Public Discontent, Thayer Consultancy Background Brief, January 13, 2012.

3 Criticism and Self-Criticism Campaign9 The first phase of the criticism and self-criticism campaign was launched in July and took place over three weeks. It involved the Politburo and Secretariat as a collective and each of their individual members. Four days were spent examining the Politburo and Secretariat, twelve days were spent examining the top leadership, and five days were spent clarifying some of the issues that were raised. Vietnams rumour mill reported Nguyen Tan Dungs examination took two days to complete and that his dossier ran to more than three hundred pages. On August 13th the Politburo convened a national conference of key party cadres to disseminate the result of the high-level criticism campaign as preparation for a similar criticism campaign at provincial and municipal levels. The Politburo directed that fifty-six party units and individuals be examined closely. The criticism campaign would then be conducted at the district and local levels. Sixth Plenum A preliminary report on the criticism campaign drawn up by the Politburo was submitted to the sixth plenum for review by the Central Committee. This report noted that the Politburo and Secretariat has committed serious errors in the execution of their duties and unanimously recommended that the Central Committee consider appropriate disciplinary action for the Politburo and Secretariat and a comrade member of the Politburo [Nguyen Tan Dung]. The Central Committee spent one-third of its time discussing this report. On Friday, October 12, it appeared that Nguyen Tan Dungs fate was sealed when rumours surfaced that 140 of the 175 members of the Central Committee were in favour of his removal. By Sunday, October 14, the rumours had reversed course. Reportedly only six members of the Central Committee spoke against Mr Dung, while over seventy per cent of the Central Committee favoured retaining him. It was also rumoured that one of Mr Dungs past critics, Politburo member Nguyen Sinh Hung, the chair of the National Assembly Standing Committee, spoke against Mr Dungs dismissal. According to the closing speech at the end of the sixth plenum delivered by Secretary General Trong, the Central Committee gave very careful consideration to the recommendations of the Politburo and decided not to impose discipline on the Politburo and Secretariat and the comrade member of the Politburo as requested. The Politburo and Secretariat were directed to take urgent measures to overcome shortcomings and deficiencies so that hostile forces could not take advantage of this situation. Prime Minister and Party Comrade Analysts who were surprised that Nguyen Tan Dung was not forced to resign as prime minister may have confused the role of a prime minister in a liberal democratic system with the role of prime minister in a communist one-party state.

Carlyle A. Thayer, Vietnam: Criticism and Self-Criticism Campaign Gets Underway, Thayer Consultancy Background Brief, August 17, 2012.

4 Nguyen Tan Dung is both prime minister and a comrade member of the Politburo. He has individual responsibility over his Cabinet ministers and state organs under his control. But he is also a member of the Politburo, a collective decision-making body. Media reporting that focused exclusively on his role as prime minister neglected his influential position as the fourth ranking member of the Politburo. Nguyen Tan Dung, as prime minster, promoted high economic growth and foreign investment, the creation of massive state conglomerates on the model of South Koreas chaebols, and Vietnams integration into the global economy. His economic strategy produced high inflation which quickly impacted on the hip pocket nerve of mid-level party officials who had benefitted from Vietnams socialist-orientated market economy. Further, Prime Minister Dungs controversial support for Chinese foreign investment in bauxite mining in the Central Highlands produced a massive public back lash during his first term in office. Prime Minister Dung was an enthusiastic advocate of raising Vietnams international profile through large scale projects. He promoted the creation of twelve major conglomerates and advocated the construction of an expensive national high-speed rail system. But he failed to exercise proper supervision over his conglomerates, particularly Vinashin and the Vietnam National Shipping Lines (Vinalines); their directors quickly became mired in large-scale corruption.10 Prime Minister Dung was compelled to acknowledge personal responsibility before the National Assembly. He also suffered a further blow to his prestige when the National Assembly rejected his high-speed rail project. Finally, Prime Minister Dung failed to carry out reform of state-owned enterprises, the debt-ridden banking sector, and the political influence of powerful interest groups that profited by his high-growth policies. Why Wasnt Prime Minister Dung Rolled? So why wasnt Nguyen Tan Dung forced to resign? The answer lies in the realm of party politics rather than state administration. The party Central Committee is structured to reflect four broad sectoral groups: members who work in the party at central level (19%), members who work in the state apparatus at central level (23.5%), members who work at provincial and/or local levels (47%), and the military (10.5%). Each of these sectoral groups has its own interests. While each sectoral group is not a unified political bloc it is clear that Nguyen Tan Dung had sufficient support in the central state and provincial/local blocs to scuttle any attempt to formally censure him. Nguyen Tan Dung is not just the prime minister he is also a comrade member of the Politburo. Vietnams rapid economic growth has resulted in the office of the prime minister becoming increasing powerful, overshadowing the party. This has led to a large patronage network that has benefitted from Dungs high-growth and lax supervision policies. But other members of the system including other comrade members of the Politburo have benefitted as well. It appears they went along for


Carlyle A. Thayer, Vietnam: Arrest Warrant for Former Vinaslines Chairman, Thayer Consultancy Background Brief, May 22, 2012.

5 the ride and in the process they, their families and patronage networks also benefitted from Vietnams socialist-orientated market economy. This has resulted in what the Politburo report on the criticism and self-criticism campaign identified as a five major shortcomings in the Politburo and Secretariat as collective bodies and their individual members: They failed to prevent or take action against not a small number of party officials and party members, including those holding leading and managerial positions who became degraded in political thought, morality and lifestyle, pursued wealth and power for personal ends and became corrupt. Individual members of the Politburo and Secretariat, and their family members, failed to set a good example of morality and lifestyle. They failed to take timely and resolution action to overcome negative phenomena such as paying money for university degrees, jobs and promotion for themselves and their children. They failed to effectively supervise the implementation of Central Committee resolutions on reform of state-owned enterprises (SOE), especially the role of party organisations in state-owned enterprises. They exercised loose management over SOEs, particularly Vinashin and Vinalines, resulting in massive debts.

Net Assessment 1. Despite Nguyen Tan Dungs many faults and shortcomings as prime minister, he was not dismissed or forced to resign because this would have been politically destabilizing to Vietnams one-party system. For example, if Mr Dung had been forced to resign as prime minister, would he also have had to give up his seat on the Politburo and Central Committee? Who would have replaced him as prime minister the most senior deputy prime minister (Politburo member Nguyen Xuan Phuc) or, as rumoured, Nguyen Sinh Hung, a former first deputy prime minister and now head of the National Assembly Standing Committee? If Nguyen Tan Dung had to relinquish his positions as member of the Politburo and prime minster what would have happened to his network of supporters in the central state, central party and provincial/local bureaucracies? 2. Nguyen Tan Dung has had some of his powers as prime minister clipped by the Central Committee. The decision by the Central Committee to restore its Economic Commission is designed to give the party access to economic data and to shape future economic policy. It will not be business as usual for Prime Minister Nguyen Tan Dung, He may have staved off pressures for him to resign but he will not be able to return to his freewheeling days. The Central Committee has in effect imposed a reform agenda on both Prime Minister Dung and the Politburo. The revival of the Central Committees Economic Commission and renewed attention to the grooming of middle level party officials for party posts will be at the expense of prerogatives Mr Dung exercised. 11

Carlyle A. Thayer, Vietnam: Nguyen Tan Dung Life After 6 Background Brief, October 17, 2012.


Plenum?, Thayer Consultancy

6 The Central Committee has empowered the Politburo to address as a matter of urgency socio-economic stability, reform of the SOE and banking sectors, and future leadership selection at the next party congress. In other words, Prime Minister Dung will be directed in his effort to address these issues. His powers have been limited to the extent that he must implement this reform program. 3. The Central Committee can be expected to keep a watching brief over its reform program. In the ordinary course of events the next party plenum should meet before the 2013 Lunar New Year (February 9-12, 2013). Nguyen Tan Dung may not have been mentioned by name but he will be in the sights of those who want to clean up the economic mess that was a by-product of his high economic growth - at virtually any cost- approach.12 Prime Minister Dung will be under pressure from now until the next party plenum to show progress on reform of state-owned enterprises, banking sector reform, and ending the influence of family and other patronage networks that have operated without much restraint so far. 4. Vietnams anti-climactic sixth plenum has produced a Vietnamese version of a Mexican standoff in which no faction can emerge as the clear winner. The political in-fighting that was witnessed this year can be expected to continue as factional groupings attempt to influence the scope and pace of reform. The year 2013 will mark the mid-way point between the eleventh national party congress and the next national party congress. The Politburo will establish various sub-committees to begin drafting long-term socio-economic development plans and begin personnel selection for the partys highest offices. Once again party factions and future leaders will begin to jostle to influence policy and gain a seat on the partys highest-decision bodies.

Suggested citation: Carlyle A. Thayer, Vietnam: Anti-Climatic Showdown at the 6th Party Plenum, Thayer Consultancy Background Brief, October 19, 2012. Thayer Consultancy Background Briefs are archived and may be accessed at: http://www.scribd.com/carlthayer.


Thayer, Vietnam: Nguyen Tan Dung Life After 6 Plenum?.