How Vietnam beat the US – and then lost out to capitalism

The Guardian, April 22 2015

Early one morning in February 1968, when the fighting in central Vietnam had reached levels of insanity, a group of South Korean soldiers swept into a village called Ha My, a straggled-out collection of bamboo huts and paddy fields about an hour outside the city of Danang. They were from a unit called Blue Dragon which was fighting alongside the Americans, attempting to suppress the communist uprising.

For weeks, they had been herding farmers and their families into a crowded compound which the Americans called a ‘strategic hamlet.’ They hoped that by making them live there, they could starve the communist guerrillas of food and shelter. And for weeks, the farmers and their families had been escaping, trailing back to Ha My, loathing the captivity of the strategic hamlet, needing their land to farm. Now, the Blue Dragon soldiers had had enough.

In the hour that followed their arrival that morning, the Koreans herded the waking villagers into small groups and then methodically they opened fire. By the time the hour was over, they had killed 135 of them. Then they burned their homes and bodies and bulldozed the whole mess into mass graves. For years the truth lay buried.

Now, however, there is a monument to that massacre, built 30 years later, in 1998, at the expense of Blue Dragon soldiers who came back offering genuine remorse. Yet there is something wrong here. The monument stands proud – as big as a house with ornate roofing which shelters two collective tombs and a large gravestone carrying the names of the adults and children who died (and the pet names of the infants who were too young to have their own). But there is no explanation for their deaths, no blame, no anger.

The villagers know what went wrong. They say that when the monument was first built, the back of the gravestone displayed a vivid account of what happened that day. One of them even has a copy of the words, which turn out to be a powerful poem recalling the fire and blood, the burning meat, the bodies in the sand: “How painful to see fathers and mothers collapse into pieces beneath the flames… How terrifying to see children and babies screaming and crying, reaching out, still suckling on the breasts of dead mothers…” But, the villagers say, some South Korean diplomats paid a visit and complained bitterly about the poem and, instead of standing up to them, Vietnamese officials ordered that it be covered up, with a tableau of lotus blossom. By chance, a Korean anthropologist, Heonik Kwon, was studying Ha My at the time and he recorded one villager saying that this denial of the truth was like a second massacre – “killing the memory of the killing”.

Why would the Vietnamese compromise like that? Why would the people who won the war allow the story of that war to be defined by the losers? The villagers say the answer is simple, that South Korea had become one of the biggest foreign investors in their economy and specifically had offered to pay for a local hospital if the massacre poem was concealed. So they agreed: they could not afford to resist. And there is the heart of what has happened to Vietnam since the war ended 40 years ago, on April 30 1975.

A month spent travelling there – talking to poor farmers, intellectuals, academic specialists and veteran fighters from both sides of the lines – reveals numerous falsehoods and compromises that have been forced on the Vietnamese people by the powerful in pursuit of profit. The US has succeeded in promoting a false account of the cause and conduct of its war. In spite of losing the military conflict, the US and its allies have returned with the even more powerful weapons of capital and trade, forcing the Vietnamese down a road they did not choose. Now, it is their leaders who are telling the biggest lie of all.


Begin in Hanoi, in the bright and beautiful flat of Ms Thu, now aged 90, a tiny, sparkling woman who chatters like a bird in fluent French and broken English and who as a young woman saw her country crushed between two powerful enemies like wheat between a miller’s stones. First, it was the French who refused to let go of their colony at the end of the second world war. In 1946, aged 21, Ms Thu took to the jungle and joined the guerrilla struggle, specialising in mixing acid, saltpeter and alcohol to make gunpowder: “I was very happy in the forest. With the powder in the bomb, you can – POP! – realise our dream.”

And that dream was not simply nationalist, to expel the foreign invader. It was specifically communist and revolutionary. Ms Thu recalls a childhood in which the French took away her father, a kindergarten teacher, to whom she brought food in jail when she was only seven. “I hated all the people who wanted to fight and occupy Vietnam. In my mind, I became communist.” Her family were comfortably middle class, but during the 1930s, she says, their home was used as a meeting place for the underground Communist Party. She remembers reading Marx and Lenin and how, when she was 16, the French executed one of her friends: “Sincerely, I am communist.”

And she is not alone. Le Nam Phong is nearly as old as Ms Thu. He was 17 when he signed up as a common soldier to fight the French in 1945. He spent the next 30 years at war, rising to become a Lt General in the army of North Vietnam and a key figure in the eventual destruction of the US military machine. Sitting outside his comfortable home, slicing mango on a warm evening, he remembers his own revolutionary motive: “Socialism? Yes, of course. The purpose of all the fighting was to build a socialist society, to gain freedom and independence and happiness. During the first days against France and against the US we already had in mind the society we wanted to create, a society where men would not exploit other men – fair, independent, equal.”

This is where America’s own account of its behaviour begins to fall apart. That version of events has it that when the French were defeated in 1954, the US army acted to protect the nation of South Vietnam from the threat of a takeover by communists from North Vietnam. The reality is that the French had alienated people all over Vietnam, driving them in the same direction as Ms Thu and the General – into the arms of Ho Chi Minh’s Communist Party. And, more important, there were no two separate nations. In 1954, in spite of the victory of the Vietnamese army, France and its Western allies hung on to power in their southern stronghold. At an international convention in Geneva, all sides then agreed that the country should be divided – temporarily – into two zones, South and North, until July 1956 when a national election would deliver a new government for all of Vietnam.

The Vietnamese we spoke to agreed with what the then US President, Dwight Eisenhower, later admitted – that if that election had been allowed to take place, some 80% of the Vietnamese people would have voted for Ho Chi Minh and the new socialist society. But the US would not allow it. Instead, they turned to a notorious CIA officer, Edward Lansdale, who used a dexterous combination of bribes and violence to install a new government in Saigon, headed by a Catholic politician, Ngo Dinh Diem. He was autocratic and nepotistic but anti-communist and pro-American. The national elections were cancelled for ever. The ‘temporary’ division of Vietnam now became a prolonged pretence that it was really two different countries, the South as the passive victim of invasion from the North.

This is the version which was promoted by the US government and then adopted as truth by US culture – what could be called ‘Deerhunter syndrome’ after the Hollywood film which admitted none of the real origins of the war and which presented US soldiers as real people with hopes and fears while every single Vietnamese man and woman in the film is portrayed as being simply vicious.

At first, the US, who had been funding the French war, were content to pour money into South Vietnam’s army and to send its own troops only in the guise of ‘advisers’ – 16,300 of them. By March 1965, it was sending its own men into combat. At the peak of the fighting, in 1969, the US was using 550,000 of its own military personnel plus 897,000 from South Vietnam’s army and thousands more from South Korea and other allies. By the time they had finished, the number of dead was beyond counting, possibly as high as 3.8 million, according to a study by the Harvard Medical School with the University of Washington.

The British foreign correspondent James Cameron, who was no kind of left-winger, described US actions as “an offence to international decency, both disgusting and absurd.” Writing in 1965, in words that now echo with horrible familiarity, he looked back at the path to war: “Step by step, the West blundered and floundered into a dilemma they never completely comprehended and never in fact sought: from the very beginning, they argued in cliches.”

The violence of those years still lives with those who suffered its grand assault. In a small house in Saigon (as many Vietnamese still call Ho Chi Minh City), a former member of the communist guerrillas remembers the US bombers roaring down on their jungle camp and how they hid in shallow foxholes: “We had very strong rice wine. If you drink it, it would bring tears to your eyes. We used to call it Tears of the Motherland. It stopped us being frightened.”

The US dropped more high explosive on Vietnam than the allies used on Germany and Japan together in the second world war. They also dropped napalm jelly, which stuck to its victims while it roasted their skin; white phosphorous which burned down to the bone; fragmentation bombs which hurled ball bearings and steel shards in all directions; and 73 million litres of toxic chemicals including 43 million litres of Agent Orange which killed vegetation and inflicted illness and genetic mutation on those who were exposed to it. Notoriously, they bombed Hanoi – a city full of civilians with no air force to defend it. A woman who was eight at the time remembers wearing a leafy branch on her back as flimsy camouflage against F111 bombers flying at twice the speed of sound. A man who worked on an anti-aircraft battery says he went home after a night of fruitless defence to find his neighbourhood obliterated: the only sign of his young son was a dismembered leg which he recognised by a scar on its skin.

On the ground, the US assault was just as powerful. In a village in the Mekong delta, a peasant farmer in her late 60s sits peacefully in her home with its floor of baked mud, and she remembers the day when her mother-in-law, who was working in the fields near-by, made the mistake of running when a US helicopter thundered down towards her: a missile caught up with her and smashed her to pieces against a coconut tree. “We had to go to collect her. We had to pick up her teeth.” The helicopter gunships killed three of her brothers as well, she says. All these years later, she adds, she still has trouble sleeping and floods with fear at the sound of a ceiling fan or anything else that could possibly be a helicopter.

Many Americans may now believe that the notorious massacre of villagers at My Lai was a unique or rare event. An American journalist, Nick Turse, found a different picture in June 2001 in the US National Archives in files which recorded the findings of a secret US task force, the Vietnam War Crimes Working Group. They showed that the army had substantiated more than 300 claims of massacre, murder, rape and torture by US soldiers.

Turse then visited Vietnam. In his book, Kill Anything That Moves, he describes trying to find the site of an incident from the files in which 20 women and children were said to have been killed in a hamlet in the central highlands. Following local people, he says, he stumbled across memorials to five other massacres in the same small area: “I’d thought that I was looking for a needle in a haystack; what I found was a veritable haystack of needles.” He concluded that a combination of racial indifference to the life of ‘mere gooks’; official pressure to raise the number of ‘kills’; and the designation of rural areas as ‘free fire zones’ meant that “killings of civilians were widespread, routine and directly attributable to US command policies.”

Those who survived were sometimes taken prisoner and subjected to harsh abuse. A woman from Ha My – which itself suffered a second massacre after the Korean soldiers had done their worst – told us how her sister had been jailed for smuggling small arms to the guerrillas. She had been taken to the notorious old colonial jail on the island of Con Dao. “They put soap powder in water into her mouth, then stamped on her belly. They used electric shocks. If she passed out, they poured water on her face. Vietnamese people did this to her.” In 1970, a group of US Congressmen visited the prison and found men and women shackled in ‘tiger cages’, starved, beaten, tortured and reduced to eating insects. In spite of the uproar when this was reported, the prison stayed open.

It is worth recalling here that in the final scene of Deerhunter, the surviving US soldiers and their loved ones sit around a kitchen table and sing quietly together ‘God Bless America.’


Until a couple of years ago, journalists from one of the big newspaper groups in Saigon used to stop and buy their coffee from an amiable woman who spent each day on the pavement in front of their office. Few of them knew her name. They used to call her the Coffee Lady. She has her own small story about the war. Mostly she has a story about what has happened since the peace came. This is the context in which the Vietnamese Communist Party now tells its lies.

She remembers Liberation Day – the wild rejoicing because the war was over; the sheer pride that they had beaten the biggest army in the history of the world; the hopes for a better life. There was fear too. Some of the communist soldiers were drunk and looting. Everybody had heard how they had murdered hundreds, even thousands of officials and civilians when they occupied Hue in 1968. Now the old generals and officials of the Saigon regime fled with whatever they could carry while their soldiers were left behind, tearing off their uniforms for fear of retribution. In reality, there was no bloodbath. But the Coffee Lady stayed inside. She says she was worried about crazy people picking up the guns she could see lying in the street. And also she was sad, for a very personal reason.

In the early 1970s, she had worked as a waitress on a US base, at Vung Tau, on the coast near Saigon, and there she had met a soldier. He was called Ronald, he came from New York and he was flying surveillance missions over Vietnam and Cambodia. They fell in love. At short notice, he had been sent back to the US, but for a while he had carried on writing and he said he would sponsor her to join him. Recently, he had gone quiet and now, she could see, there was no chance of his coming back for her. Scared that the new regime might be angry, she burned his letters and never heard from him again. Years later, now aged 64, grey-haired and calm, sitting quietly outside a Buddhist pagoda, she can still feel the sadness.

The Coffee Lady is important because she belonged to neither side in the conflict: a Vietnamese woman in love with an American man in search of nothing more complicated than a decent life. She is an unusual witness. Although she had nothing to do with power, the simple fact that she was to spend a quarter of a century sitting outside a newspaper office meant that she ended up reading every word they published. She saw it all.

Liberation Day did not bring an easy life. At first, she found work in one of the new co-operative factories that was set up by the communists. There, she sat bowed over a sewing machine, working eleven hours a day, earning nothing more than a ration card which gave her small amounts of low-quality rice and even smaller amounts of meat. For years, she barely survived, sharing a tiny house with her brother, who spent his days in another, equally demanding textile workshop. Poor – and staying poor. Their experience was mirrored in towns and villages across Vietnam: the economy ran into a decade of depression; almost everybody suffered; some starved. “Life was tough for ordinary people,” she says.

The official Western explanation for these dark years is that Vietnam’s communism was always bound to fail, that what they really needed all along was capitalism. The symbol of this was the ‘boat people’ – thousands of ordinary Vietnamese who were said to have risked everything on the high seas in order to escape from communist oppression and poverty. There is some truth in this. The regime was doctrinaire, often authoritarian and occasionally vicious. But that is not the whole truth. The first boat people were the southern bourgeoisie, mostly Chinese, who owned the private businesses which the communists seized. That Chinese exodus soon gathered pace for a different reason: Vietnam was fighting new wars with China’s ally, Cambodia, and then with China itself. This had nothing to do with socialism, but the satisfying Western narrative remained. The whole truth about the source of the poverty was even more different from the Western story.

The Coffee Lady and others remember how the Americans left their country in a state of physical ruin. Roads, rail lines, bridges and canals were busted by bombing. Unexploded shells and landmines littered the countryside, often under the water in the paddy fields where peasants waded. Five million hectares of forest had been stripped of life by high explosive and Agent Orange. The new government reckoned two thirds of the villages in the south had been destroyed. In Saigon, the American legacy included packs of orphans roaming the streets; a heroin epidemic; and some 300,000 prostitutes, with 10% of the city reckoned to be carrying venereal disease. Nationally, the new government estimated they were dealing with ten million refugees who had fled the fighting; a million war widows; 880,000 orphans; 362,000 war invalids; and three million unemployed.

The economy was simply drowning in the legacy of war, plunging even faster downwards with the sudden loss of American spending. By the time Liberation Day arrived, inflation was running at up to 900% a year, and this agrarian society full of paddy fields was having to import rice. It was clear that the Vietnamese desperately needed the world to provide the trade and aid which could turn their economy around. The Americans did their best to make sure they got neither. As soon as they had lost the war, they imposed a trade embargo on Vietnam, cutting off the war-wrecked country not only from US exports and imports but also from those of multiple other nations who bowed to American pressure. In the same way, the US leaned on multilateral bodies including the IMF, the World Bank and Unesco to deny them aid.

Agent Orange did not simply rip the heart out of Vietnam’s rural economy, it also inflicted serious illness and birth defects on its victims. The US acknowledged this and paid compensation – but only to their own veterans, nothing to more than two million Vietnamese men, women and children who suffered its effects. Similarly, the US buried the numerous allegations of war crimes by its soldiers. A tape-recording which surfaced in the Watergate scandal disclosed President Nixon’s foreign policy guru, Henry Kissinger, in July 1971, advising the president that they should keep quiet about such allegations until, as he hoped, they had won the war: “Then no-one will give a damn about war crimes,” he said. The mass of American war criminals escaped prosecution; the mass of Vietnamese victims and their families received no compensation.

In peace talks in Paris, the US had agreed to pay $3.5 billion in war reparations to mend Vietnam’s shattered infrastructure. They never paid a cent. Adding insult to penury, the US went on to demand that the communists repay to them millions of dollars which the old Saigon regime had borrowed from Washington to fund the effort to kill them.

It is not clear how any economic model – capitalist or socialist – could have survived this hostile encirclement. The effect was simple: the Coffee Lady and her brother toiled in textile factories where the revolution gave them a voice but could not pay them a living wage. She did it for 12 years. During that time, Vietnam’s socialist project began to collapse. Truly it had failed economically, not simply because of US pressure but also because they adopted a crude Soviet policy which forced peasant farmers to hand over their crops in exchange for ration cards. With no incentive to produce, their output crashed, inflation climbed back towards war-time levels, and Vietnam once more started importing rice. From the early 1980s, the leadership was forced to allow the peasants to start selling surplus produce and so capitalism began its return to Vietnam. By the late 1980s, the party was officially adopting the idea of ‘a market economy with socialist orientation.’

It was this shift which allowed the Coffee Lady in 1988 to leave the textile factory to become a trader. Each morning, she says, she would get up at 4am to prepare coffee in time to travel across the city. By 5am, she was sitting on a small chair on the pavement outside the newspaper office. All around her during the 1990s, there was change: foreign investors were allowed to come in; private businesses were encouraged; free trade, free markets, profits for some, wages for others. Behind the scenes, the government was sending signals of compromise to Washington. They stopped asking for their war reparations or compensation for Agent Orange and war crimes. They even agreed to repay the Saigon regime’s old war debt of $146 million. By 1994, the US was appeased and lifted the trade embargo which had been throttling Vietnam for nearly 20 years. The World Bank, IMF and other donors started to help. The economy started growing by up to 8.4% a year and Vietnam was soon one of the world’s biggest exporters of rice.

Crucially, through the 1990s, there were still strong factions within the Communist Party who were defending socialism against the new tide of capitalism. In spite of the economic chaos, they had succeeded in engineering a dramatic reduction of poverty. When the war ended, 70% of Vietnam’s people lived below the official poverty line. By 1992, it was 58%. By 2000, it was 32%. At the same time, they had constructed a network of primary schools in every community, with secondary schools in most; and built a basic structure of free healthcare. For a while, the socialist factions still had political muscle to direct the new capitalist vehicle. Three times during the late 1990s, the World Bank offered extra loans worth hundreds of millions of dollars if Vietnam would agree to sell its state-owned companies and cut its trade tariffs. Each deal was rejected.

But from 2000, the rate of change accelerated and the political balance shifted. Reflecting persistent pressure from international donors and foreign investors, Vietnam now approved the sale of its state-owned companies, passed new laws which generated tens of thousands of new private businesses, struck a trade deal with the US and finally hit a peak in 2006 when it was given membership of the World Trade Organisation, reaping yet more foreign investment and aid. Three decades after the Communists won the war, it was now a fully integrated member of the globalised capitalist economy. Thirty years after the fighting stopped, the West had won its war.

On the pavement in Saigon, the Coffee Lady watched all this unfold and yet, she says, she saw no change at all in her life. “I earned the same, lived in the same room,” she says. “There were more things in the shops, but the prices kept going up. The country changed, but not for people like me. The people who had connections got richer.” All through these years, for example, she stuck with the same brand of Vietnamese-made coffee, Trung Nguyen. While she was still poor and staying poor, the man who owns that company rode the new tide of free enterprise and is now reckoned to be worth $100 million.


In an office across the city, sits Nguyen Cong Khe. For years, he edited one of Vietnam’s main newspapers, Thanh Nien. He upset some powerful people, disclosing links between a Saigon gangster and senior officials, and then exposing a huge scandal which implicated some very well-connected families in the theft of public funds. That was risky. Vietnam runs a clumsy system of official censorship, calling in editors every week – on Tuesdays in Hanoi, Thursdays in Saigon – to tell them what to cover and what to conceal. For his efforts, several years ago, Mr Khe was sacked. Others – journalists, bloggers, labour activists – have been jailed.
In November last year, Mr Khe took another risk by using the New York Times to call on his government to allow a free press.

Now, sitting in his new office where he runs a news website, he goes further. Insisting that his name be attached to this, he says what others will say only behind one hand – that the leadership of the Vietnamese Communist Party have become traitors to their cause. “At the very outset, those who made the revolution installed a government to run the country which had a very good intent to develop the country, to be prosperous in the fairest way, but things went wrong somewhere. Those who joined the revolution, who swore to be transparent: eventually they betrayed their commitment, they betrayed their ideology.”

Mr Khe was himself part of the revolution. As a student in the early 1970s, he agitated against the Americans and spent three years behind bars. He was a party member for years. He understands why the leadership turned to the tools of capitalism to kick start the economy, but he has seen the dark side of the neoliberal coin – the corruption and the inequality.

You can see it in the streets of Saigon. This is a city which has boomed forwards from its dark past, a seething mass of commercial activity but nonetheless a third-world city with signs of poverty on every side. But then there is Dong Khoi Street – an island of self-indulgent wealth where the new elite can buy a T-shirt from Hermes for $500 or a watch from Versace for $15,000 or a dining-room table with four chairs covered in gold-leaf calf skin, stuffed with goose feathers, for $65,000. And on the corner, the Continental Hotel sells meals which would cost a week’s pay for a worker, in a restaurant which – with one final slap in Ho Chi Minh’s face – it calls Le Bourgeois.

Some of the money which is spent here is dirty, Mr Khe suggests. Speaking through a translator, he reckons that for every $10 assigned to any public project, $7 is going into somebody’s pocket. Really? 70% of Vietnam’s state budget is being stolen? That would be a theft of staggering proportions. He nods, twists one hand in the air: “Between 50 and 70%.”

It is impossible to be sure, but there are signs that he could be right. An American businessman who has spent years in Vietnam says a 50% estimate ‘may be’ accurate. Transparency International last year reported that Vietnam is perceived to be one of the most corrupt countries in the world, doing worse than 118 others and scoring only 31 out of a possible 100 good points on its index.

Nobody claims that the corruption is new. All witnesses agree that there is a long history of public officials in Vietnam selling their influence and favouring their families. Some even say that this was acceptable. The allegation is that under the current leadership, corruption has hit new and entirely unacceptable levels. They say that it was boosted specifically by the privatisation of Vietnam’s huge state-owned companies – and the opportunities which it has given some politicians and officials to appoint themselves and their families as executives. The British academic Martin Gainsborough who spent years in Vietnam watched this process being greeted by the West as a welcome reform. He wrote: “Rather than being inspired by reformist ideals, officials have been motivated by much more venal desires… What we often refer to as ‘reform’ is as much about attempts by rival political-business interests to gain control over financial and other resources.”

Beyond that, they say, there has been a collapse of the old socialist ethic which has simply made greed less shameful. An expert adviser recalls how she was on a foreign trip with a minister who went shopping and “bought everything he touched” at the expense of his hosts who needed his help and were willing to pay for it: “They gave me a huge envelope and told me to give it to the minister. They thought I was his secretary. So I gave it to him. He said ‘Oh this is nothing’. It was full of cash.”

For three months recently, an extraordinary website published detailed allegations about the behaviour of named members of the Vietnamese power elite. The site called itself Chandungquyenluc – ‘Portrait of Power’ – and it backed its claims with documents and audio and video tapes. It has never been verified, but observers speculated that it was the work of a very powerful politician using inside information to try to damage rivals. It claimed to provide glimpses of a secret world of theft.

The site attacked one very senior figure, claiming that a local official had delivered a suitcase containing $1 million in cash to his home, as a result of which he had agreed not to collect $150 million of tax due from a property company which was involved in a ‘giant development’. The company had then given him and the local official free villas. The site went on to finger two leading politicians, claiming that one had blocked the prosecution of a corrupt banker and was now receiving healthy back-handers; and that the second had diverted $1 billion from a state company into the bank account of his sister, who was now running 20 different businesses. It also accused a senior military figure of using his son’s company to sell army land for personal profit. In his case, the website displayed a letter from bank employees who claimed he was part of an “extremely large-scale corruption network” with bank accounts worth millions of dollars.

From time to time, the state acknowledges the corruption and cracks down. In high-profile trials at the end of last year, four executives from former state-owned companies were sentenced to death for bribery and fraud; two others were given life in prison. Nobody believes that these trials are exposing the scale of the problem.

Mr Khe shrugs: “We traded millions of lives for independence and equality. When I was in prison I imagined the country would be clear of corruption after the war, but it didn’t happen. The development of the country should proceed, so we don’t go against those who make money legitimately. But we can’t allow those who make illegitimate money to continue to make poor people poorer.”

There he hits the most painful nerve. In spite of its earlier track record of spreading economic success quite evenly, Vietnam no longer stands up for the poor as it once did. A report for the World Bank, published in 2012, noted that fewer people were being lifted out of poverty and that “inequality is back on the agenda.” Between 2004 and 2010, the poorest 10% saw their share of income fall by a fifth, it found, whereas, after years of attempted equity, the richest 5% in Vietnam were now taking nearly a quarter of the income.

The worst of the inequality is in the rural areas. Millions of farmers have been driven off their land to make way for factories or roads. In the early 90s, nearly all rural households (91.8%) owned land. By 2010, nearly a quarter of them (22.5%) were landless. A relentless tide of poor peasants has poured into the cities, where they have been joined by hundreds of thousands of workers who have been made redundant as the private owners of the old state-owned companies set about cutting costs. This wave of men and women has swirled into ‘the informal sector’ – hidden away in sweatshops in private houses, sitting trading on the pavements – and into the sprawling new network of new industrial parks and Export Processing Zones.

In the informal sector, there is simply no protection at all. In the industrial areas, there are protections which have become noticeably weaker. Prof Angie Ngoc Tran, who specialises in studying labour in Vietnam, discloses in her book, Ties That Bind, how the Labour Code, which was once famously progressive, has been watered down, partly as a result of lobbying by groups like the American Chamber of Commerce. The state-sponsored unions have been weakened and have never called a strike. Prof Tran concludes: “With the surge of capital entering Vietnam by way of foreign investment and the privatisation of state-owned enterprises, the state is becoming less and less of a government acting on behalf of the people. At times, some state organs/institutions are in alliance with the capitalists.”

Every worker is guaranteed a minimum wage. Originally, in 1990, it was set at a level which matched the ‘living wage’, ie it covered the essentials of life. But over the years, for fear of losing foreign capital, the government has allowed it to be cut, frozen and overtaken by inflation with the result that by April 2013, the government’s own Labour Federation was protesting that it now covered only 50% of essential costs. Most city workers, they said, were “destitute and physically wasted away… They rent cheap, shabby rooms and cut daily expenses to a minimum… suffer serious malnutrition and other health risks.”

In the background, free healthcare and schooling are no longer free, with charges and bribes now commonplace. The World Bank report noted that the government was spending considerably more on hospitals for the better off than it was on communal health centres for the poor.

Vietnam is no basket case. Its recovery from war is close to miraculous, particularly in cutting back poverty while developed nations like the UK and US were increasing it. Even as it struggles with inequality, on the accepted measure – the Gini coefficient – it remains more equal than the United States. But the reality now is that it has ended up with the worst of two systems – the authoritarian socialist state combined with the ideology of neoliberalism, the two combining to strip Vietnam’s people of their money and their rights while a tiny elite fills its pockets and hides behind the rhetoric of the revolution. And that finally is the biggest lie. Victorious in war but defeated in peace, the claim by Vietnam’s leaders to be socialist looks like empty propaganda. In the words of one former guerrilla who risked his life for this: “They are red capitalists.”

Additional research by Calvin Godfrey.