Diplomatic ties to Hanoi expected to have little immediate impact


HANOI, Vietnam -- The re-establishment of diplomatic relations with Vietnam stands as a watershed in American history. Yet the decision will have little immediate effect on the two countries or on people with business or personal links.

"It is more symbolic at this stage than anything else," said Stanley Karnow, author of "Vietnam, A History," one of the definitive books on the Vietnam War. "This is a step toward reconciling ourselves.

"It is not just reconciliation with Vietnam -- that is the simple part. It is reconciliation with ourselves. We are saying, 'We had this experience. It was a disaster. A grievous mistake. A costly mistake. Nations make mistakes. Now, we are going to move on.' "

A slightly more visible sign of change will come with the upgrade of the U.S. liaison office to an embassy.

Already an American flag is raised daily at the modern nine-story building that opened in January in a Hanoi suburb. The consular section already engages in "everything it wants to do here," said Charles Neary, the consular officer.

Next year the United States is expected to open a consulate in Ho Chi Minh City (Saigon), possibly on the site of the former U.S. embassy that was abandoned April 30, 1975, and stands in disrepair.

Most visa requests come from Vietnamese in the south, and a consulate there could take over the bulk of those responsibilities, said Mr. Neary.

Yet even without diplomatic relations, more than 100,000 Vietnamese-Americans have returned annually for several years, according to officials in Ho Chi Minh City.

People with varying interests in Vietnam -- commercial, human rights, personal -- predict minimal direct impact from full diplomatic relations.

Vietnam's record on human rights puzzles some observers, who note greater freedoms for Vietnamese coupled with recent arrests of religious and political dissidents.

"There are strong conflicting signals" from Vietnam, said Dinah PoKempner of Human Rights Watch/Asia in Washington.

Major corporations will benefit most. Later this year Mr. Clinton is expected to approve Vietnam's participation with U.S. government-supported institutions offering low-interest loans and insurance to businesses in developing countries.

"Without these we are getting beat by our U.S. trading partners, Japanese, Europeans, you name it," said Al Wickert, country manager for Caterpillar.

For instance, he said, Caterpillar's foreign competitors are able to offer bids 30 percent less on some projects because their countries already have normal relations and offer government-backed loans.

Since President Clinton lifted the U.S. trade embargo in February 1994, more than 200 U.S. companies operate in Vietnam and about 1,000 Americans live here.

U.S. businesses rank eighth in the total amount of capital invested in Vietnam with 37 projects worth $560 million.

However, some observers said at least half that investment comes from only two sectors: oil exploration and cigarettes.

"The embargo was lifted a year ago and American investment has not poured in," said one businessman.

Mr. Karnow agreed. "Anyone who thinks there is going to be a big surge now is, I think, mistaken," he said.

For the two sides to achieve the lowest available tariffs, they would have to negotiate a trade agreement that would bestow most-favored-nation status on both parties.

Executives involved in small and medium projects said only the extension of most-favored-nation status would significantly lower their costs and increase their competitiveness.

However, debate in the Senate over a trade agreement is unlikely before next year. Without that status, products exported from Vietnam carry tariffs as high as 50 percent.

Nor will diplomatic relations will bring substantial humanitarian support from the U.S. government, said officials working with aid organizations here.

"I don't see any practical effect," said Sylvia Haydash, associate director of Holt International, a child-welfare agency.

Vietnam receives about $3 million to $4 million each year from the U.S. Agency for International Development -- compared with about $30 million annually received by Cambodia.

According to restrictions imposed by Congress, U.S.-backed projects can only assist war victims or children.

Now, with Congress debating drastic cuts in foreign aid, officials here hope only that diplomatic relations could lead to an increase in interest among private donors.

Restoration of ties acts as a counterweight to neighboring China's growing economic and military strength, State Department officials and some members of Congress have suggested. That argument is echoed by regional neighbors.

The irony is not lost on Mr. Karnow.

One of the original arguments for U.S. military involvement in Vietnam was that the intervention was needed to stop possible Communist Chinese aggression, he said.

Now, the United States is citing the same reason for the re-establishment of friendly relations with Communist Vietnam.

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