I HAD NO IDEA WHEN I ARRIVED I WAS SEEING THE END, not the beginning, of the boom. Vietnam had made stunning economic advances, and that progress would continue, albeit at a slower pace, during the rest of my four years in the country. But about the time I got to Hanoi, in the summer of 1997, the baht collapsed in Thailand and all of Southeast Asia slid into recession.
It became clear everyone had held unrealistically high expectations for Vietnam and that Vietnam had become a victim of its own hype. The buzz faded. The conservatives in the politburo had outlasted the liberals, and they favored caution over risk, a controlling hand over an empower¬ing one. They took a step forward on reforms, then two backward. They appeared perplexed, uncertain. While the world rushed toward a new knowledge-based economy, they paused to catch their breath. Life, in a strange way, had been easier, even safer, during the war. “Those were the days,” Bao Ninh wrote, “when all of us were young, very pure, and very sincere.”
North Vietnam was of single focus then. To suffer and persevere was to eventually succeed. The future didn’t belong to people demanding economic opportunity, more material possessions, all sorts of things that had nothing to do with independence. It didn’t revolve around complicated fiscal issues that needed quick decisions and firm commitments. The leadership had tried to develop an economic system unique to the world—a “socialistic free-market economy that leapfrogged capitalism”— and when investors tired of a business environment fraught with a lack of transparency, bureaucratic red tape, corruption, and indecisiveness, the Party bosses promised accelerated reforms that they may never have in¬tended to deliver. They didn’t understand that investor confidence was shaped by attitude as much as by policy.
“This is Vietnam,” Anil Malhotra, a World Bank official, used to say to government officials, holding up a small carving of a turtle, a creature sacred to the country’s old dynasties. “It represents perseverance. It never gives up. It has thick skin that deflects all criticism. In those ways, the turtle is just like Vietnam. But the only time it moves forward is when it sticks out its neck.” And that’s what the leadership couldn’t bring itself to do—take risk. If Hanoi had been as timid and indecisive on the battle¬field as it was in the peacetime boardrooms charting economic strategy, it might never have earned its liberation.
Still, I was willing to cut the government more slack than many frus¬trated business friends did, for the obstacles that Vietnam faced and overcame were mammoth. It had been ravaged in 1980 by typhoons that destroyed 40 percent of the North’s rice harvest, debilitated by wars against Cambodia and China, devastated by the collapse of its benefac¬tors in the Soviet Union, crippled by its leadership’s ineptitude, and pun¬ished by vindictive governments in Washington that froze Vietnam’s assets in the United States and declared a trade embargo within twenty- four hours of Saigon’s fall, then set out to collect from Hanoi $143 million the defunct Saigon government owed the United States. But for all its shortcomings, when its back had been to the wall, the government had instituted reforms, and the reforms were significant. They resulted in changes that reduced the share of the population living in poverty from 35 to 15 percent and improved the standard of living more dramatically than even the most upbeat citizen would have dared hope. Vietnam had fought a lifetime of wars for the right to be Vietnam—to decide what road it wanted to travel and at what pace. The leadership was in no rush.
Perhaps it was easy for me to be tolerant because I had no financial stake in Vietnam’s success or failure. The international business commu¬nity was less forgiving. Venture capitalists were the first to pack up with investor burnout. Then went some of the medium-sized companies that couldn’t afford to wait years to turn a profit. “Hanoi is a great place to live. It’s just not a good place to do business,” said an American insurance- company rep the day he got on a plane to Bangkok with his Vietnamese wife and son. Chrysler gave up and went home, too. The megadollar re¬sort project on China Beach was cancelled. “The government said all the right things,” Kent Damon recalled, “but we didn’t see a commitment in action to match the words.” Construction on Hyatt, Marriott, and Westin hotels stopped in midair, about ten stories up. Owners of the $70 million, fourteen-story Sheraton that I could see from my apartment bal¬cony turned off the electricity two weeks before its scheduled opening and boarded up the hotel. Four international carriers cut their air links to Vietnam. Seven of my colleagues, including those representing Time, Far Eastern Economic Review, and Financial Times, packed up to relocate their bureaus in other Southeast Asian capitals. Rents fell by half. Foreign investment tumbled by 80 percent between 1996 and 1999. Five-star ho¬tels limped along with occupancy rates of 10 or 15 percent. At Jay Ellis’s R&R Tavern, where expats had once stood three-deep, it was easy to find an empty stool at the bar any night of the week.
During the war I was reluctant to make close friends because next week they might be dead. Now I was hesitant to make them—at least in the expat community—because next month they might be living in Sin¬gapore, Seoul, or New York.
Vietnam’s economic downturn was a troubling portent of the future, but it had more effect on foreign investors and the moneyed citizenry than it did on the ordinary Vietnamese, most of whom operated outside the structured economy. Vietnam was a cash economy, and in an ironic twist to the legacy of the war, Yankee dollars were the favored currency. They were interchangeable, more or less legally, with the Vietnamese dong and could be used for everything from paying a cab fare to buying a house. Many restaurants and shops listed their bills in dollars, not dong.

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