‘Political Earthquake’ Shakes Up Succession Fight in Vietnam

Philip J. Heijmans
·6 min read
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(Bloomberg) -- Vietnam may not have the polarizing elections that divide many democratic nations, but the ouster of a second president in just over a year shows that closed-door power struggles inside the one-party state can be just as brutal.

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President Vo Van Thuong, 53, had been a rising star in the Communist Party, an ally and potential successor to ailing 79-year-old party chief Nguyen Phu Trong. Thuong’s resignation on Wednesday — a party statement vaguely said he “violated regulations on what party members cannot do” — instead leaves a leadership vacuum in what has been one of Asia’s fastest-growing economies.

“It’s another political earthquake in Vietnam,” said Nguyen Khac Giang, a visiting fellow at Singapore’s ISEAS-Yusof Ishak Institute. “It’s not really a good sign for a country often boasted for having very strong political stability.”

On Thursday, the National Assembly officially approved Thuong’s resignation, according to local media reports. And while the position of president in Vietnam is largely ceremonial and the turmoil shouldn’t dent the country’s economic prospects, observers say it marks a new phase of political uncertainty in the Communist Party’s five-decade rule — particularly as various factions vie to succeed Trong, the nation’s longest-serving leader since the war era.

A communist nation with a capitalist bent, Vietnam has benefited from an investment boom as multinational corporations — including key suppliers to Apple Inc. — look to diversify their supply chains away from China. The economy is forecast to expand 6.9% in the first quarter from a year earlier, according to a Bloomberg survey.

Political turbulence in a frontier economy might spook investors elsewhere, but given Vietnam’s consensus-driven system, some analysts voiced confidence after the latest developments. So far, months of behind-the-scenes jostling for power has had a limited impact on investor perceptions of Vietnam.

“This does not change my positive outlook for Vietnam’s long term economic potential,” said Ruchir Desai, a Hong Kong-based fund manager at Asia Frontier Capital Ltd. “The country is the key beneficiary in Asia from the global supply chain shift and the government realizes that exports, the manufacturing sector and overall economic development is its long term priority so I do not see such political changes rocking the boat.”

The benchmark VN Index of Vietnamese stocks advanced as much as 1% in early trading Thursday before paring gains. The currency was little changed, hovering near a record low.

“The president’s position is not related to the economy that much, so investors assume there will be no change in terms of the market outlook,” according to Nguyen Anh Duc, head of institutional sales at SSI Securities Corp.

Yet there’s no doubt that the ongoing corruption probes — championed by Trong as a much-needed “burning furnace” — have cut a broad swath across the Vietnam’s leadership. And more top leaders could yet fall as the gloves come off in a battle for power between factions in the Communist Party, none of which has been able to consolidate control in a way similar to Chinese President Xi Jinping across the border.

Since 2021, Vietnam’s anti-graft drive has ensnared four Politburo members, two deputy prime ministers, two ministers and more than a dozen provincial leaders. In January, authorities detained the chief of a coffee-producing province for allegedly abusing his power and position. Earlier this month, the police arrested three senior provincial officials for allegedly receiving bribes involving property companies Phuc Son Group and Thang Long Property Co.

Potential Candidate

While the specific details behind Thuong’s departure remain unclear, authorities announced his resignation along with the expulsion of a member of the party’s Central Committee for violating regulations. That member was arrested early this month for allegedly taking bribes related to Phuc Son Group.

That case was led by the Minister of Public Security To Lam, 66, who has been leading Trong’s anti-corruption campaign and is seen by some analysts as an early favorite to possibly replace Thuong. Lam was mentioned as a possible favorite to become president the last time the job was vacant a year ago.

“I doubt that when the general secretary started it around 2016 he could have foreseen it would lead to so many senior politicians being punished like this,” said Linh Nguyen, lead analyst for Vietnam at Control Risks. “I have a feeling he’s losing authority by delegating power to the anti-corruption committee and the Ministry of Public Security.”

Golden Steak

Still, Lam has also been the subject of controversy: He made headlines in 2021 after footage emerged of Turkish celebrity chef Nusret Gokce, known as Salt Bae, presenting a gold-leaf encrusted steak to him at a London restaurant. The footage triggered an uproar in Vietnam, with many questioning how a top official could indulge in extravagant meals during an anti-corruption campaign at the height of the pandemic.

Lam may be happy staying in his current role, said Giang, of Singapore’s ISEAS-Yusof Ishak Institute. “Even though the president ranks higher than the minister of public security in Vietnamese politics, the actual power lies with the position of the minister,” he said.

Even so, the presidency is also seen as a possible stepping stone to the role of party chief held by Trong. One of the other top candidates for the top job, Prime Minister Pham Minh Chinh, has been fighting to stay in his role after two of his deputies were ousted last year.

Vietnam PM Fighting for Future as Economy Lags Growth Target

Once the National Assembly officially backs Thuong’s resignation on Thursday, the party’s Central Committee — currently made up of about 160 members — will meet again for an extraordinary session to choose a new candidate, with Vice President Vo Thi Anh Xuan serving in the meantime. The National Assembly would then need to rubber-stamp the choice. The whole process may take months, as it did in 2023.

Whomever emerges as the next president could offer some clarity as to who might eventually take over the country’s top job. Either way, the party infighting looks like it’s just getting started.

“The original 18-member Politburo has been much reduced,” said Carl Thayer, emeritus professor at the University of New South Wales in Australia. “It will be last man standing at next party National Congress.”

--With assistance from Ishika Mookerjee, Abhishek Vishnoi, Nguyen Dieu Tu Uyen, Nguyen Kieu Giang, Eduard Gismatullin and David Finnerty.

(Adds national assembly’s vote in fourth paragraph.)

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