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Vietnam Foreign Economic Assistance
In the late 1970s, Vietnam relied heavily on economic
assistance from both Western and Soviet-bloc donors to finance
major development projects, to underwrite its fledgling export
industries, and to meet balance of payments deficits. Following
Vietnam's acceptance of closer ties with the Soviet Union, its
incursion into Cambodia in December 1978, and its border fighting
with China in early 1979, aid from China and from Western
countries and multilateral organizations dropped, slowing
development.
Offshore oil exploration with the assistance of West German,
Italian, and Canadian companies ended in 1981, but resumed
subsequently with Soviet technical assistance. Aid from China,
reportedly close to US$300 million in 1977 and 1978, dropped to
zero in 1979, and Vietnamese recovery in coal production was
profoundly affected by the accompanying loss of ethnic Chinese
workers. In 1979 Japan suspended its Official Development
Assistance funds (a mixture of grants and low-interest loans
amounting to US$135 million) and made renewal contingent upon
Vietnamese withdrawal from Cambodia. Loss of other Western aid in
hard currencies crippled Vietnam's ability to continue importing
needed modern machinery and technology from its West European
trading partners. Following Vietnam's occupation of Cambodia,
only Sweden continued to provide any significant amount of
economic help. Some multilateral assistance, such as that for
development of the Mekong River, was made available by the United
Nations Economic and Social Commission for Asia and the Pacific,
however. Western and multilateral assistance, therefore, did not
stop entirely, although the yearly average of about US$100
million through 1986 provided only a fraction of the country's
hard-currency needs. In 1986 Vietnam's current account deficit
with major industrial countries was some US$221 million. The
conflicts with Cambodia and China in 1978 and 1979 proved
particularly costly in terms of continuing economic ties with
Western and neighboring Asian countries. As a result, Hanoi was
forced to rely even more heavily on Soviet-bloc assistance.
The Soviet Union and other members of Comecon increased their
aid commitments as their own planning became more closely
coordinated with Vietnam's following Hanoi's entry into Comecon
in June 1978. Soviet economic aid in 1978, estimated at between
US$0.7 and 1.0 billion, was already higher than Western
assistance. By 1982 it had increased to more than US$1 billion
annually, close to US$3 million per day, and it remained at this
level through the mid-1980s. The Soviet Union and other Comecon
countries provided aid in all categories--project assistance,
technical training, price subsidies, loans, and trade credits.
Soviet publications emphasized the importance of project
assistance to Vietnam's economic recovery, but about 75 percent
of the value of aid disbursed during the Third Five-Year Plan was
used to finance Vietnam's bilateral trade deficit with the Soviet
Union, which averaged about US$896 million a year. Trade
subsidies in the form of reduced prices for Soviet oil also
declined sharply in the early 1980s as the Soviet Union brought
Vietnam into the Comecon oil-pricing system based on world market
values.
Although the details of Comecon assistance to Vietnam since
the 1970s had not been made public as of late 1987, Soviet
sources gave some indications of the type of project assistance
provided and were quick to claim credit for production increases
attributable to Soviet technical and plant assistance. Soviet-aid
goals from 1978 to 1981 included helping with balance-of-payments
problems, assisting with key projects, introducing industrial
cooperation, accelerating scientific and technical cooperation,
and assisting with the improvement of Vietnamese professional
skills. During this period, the Soviet Union also signed numerous
agreements calling for financial and technical assistance in
matters ranging from traffic-improvement programs for the
railroad from Hanoi to Ho Chi Minh City to completing
construction of the Thang Long Bridge over the Red River
(see Transportation
, this ch.).
Data as of December 1987
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