Richard Javad Heydarian is a Manila-based academic, columnist and author
May 03, 2023
“[We should pursue] long-term stability, future orientation, good-neighbourly friendship and comprehensive co-operation", declared Chinese leader Xi Jinping during his meeting with visiting Vietnamese dignitary Truong Thi Mai in Beijing in late April. China and Vietnam, Mr Xi added, should remain "good neighbours, good friends, good comrades and good partners” in a new brave world.
Truong Thi Mai was no ordinary guest. She is Vietnam’s first woman to become a permanent member of the all-powerful Secretariat of the Communist Party of Vietnam (CPV) in almost half a century. What’s even more poignant, however, was the timing of her visit to Beijing.
It came barely a week after the US Secretary of State Antony Blinken visited Hanoi to mark the 10th anniversary of the comprehensive strategic partnership between the two countries as part of broader efforts to seal a de facto alliance with Vietnam. Back in 2021, Vietnam also made a similar manoeuvre, when Prime Minister Pham Minh Chinh held a high-profile meeting with a special Chinese envoy, Xiong Bo, barely a day before hosting the US Vice President Kamala Harris in Hanoi. The message was unmistakable.
Time and again, the Southeast Asian nation has signalled its unwillingness to side with either of the two superpowers in the Indo-Pacific. To enhance its room for manoeuvre, Vietnam has actively pursued strategic co-operation with “middle powers” from Japan and South Korea to India, Russia and Europe in recent years. The upshot is the emergence of Vietnam as a global economic dynamo and a full-fledged regional power in Southeast Asia. Vietnam’s successful “multi-alignment” strategy holds valuable lessons for nations around the world, including in the Middle East, where regional powers are deftly navigating relations with multiple superpowers.
Chinese communism has deep roots in Vietnam, despite the two countries' complicated relations. AFP
The Southeast Asian nation has signalled its unwillingness to side with either of the two superpowers in the Indo-Pacific
The emergence of contemporary Vietnam, built on the ruins of multiple ancient kingdoms, has few parallels anywhere in the world. From its millennia-old struggle with imperial China, to its defeat of Mongol forces in the Middle Ages, a relentless struggle for autonomy has defined Vietnam’s strategic history. If anything, the 20th century proved even more traumatic, as the Southeast Asian nation had to fend off not one, but multiple empires, beginning with colonial France and, shortly after, the Americans.
Just as important to understanding Vietnam’s national psyche, however, is its rollercoaster relations with neighbouring China. Chinese revolutionary communist leader Mao Zedong not only dispatched his finest generals, but also personally oversaw China’s assistance to Vietnamese communist forces’ successful campaigns against colonial France. By 1951, the Vietnamese communists adopted Maoism as a pillar of “the basic theory” of their party.
It didn’t take long, however, before bilateral relations soured, especially as Beijing began to explore a detente with the West in order to confront the Soviet Union, a key patron of Vietnam at the time. The upshot was the 1979 Sino-Vietnamese war, as both Hanoi and Beijing backed competing forces in the broader Indo-China conflict in the twilight decades of the 20th century.
Just as relevant is also Hanoi’s fear of abandonment, which reached its apogee in the late-1970s and throughout the 1980s, when an increasingly enfeebled Soviet Union, then fully embroiled in the Afghan War, struggled to aid its Vietnamese allies. Embittered by such traumatic history, post-Cold War Vietnam embraced a self-consciously “non-aligned” foreign policy posture.
Under the so-called “Four No’s” doctrine, Hanoi shunned, first, siding with any superpower against the other; second, hosting any foreign troops; third, negotiating a mutual defence pact with any foreign power; and fourth, deploying force to achieve foreign policy goals. Meanwhile, Vietnam adopted post-war reforms to rebuild the country through expanded trade and investment with the world.
Over the past two decades, Vietnam has carefully sought to leverage relations with multiple powers to maintain its autonomy. Two of its modern challenges include growing trade dependence on China and festering maritime disputes in the South China Sea.
In response, Vietnam reached out to its former nemesis, the US. First came Hanoi’s decision to join the Trans-Pacific Partnership Agreement (TPP) in late 2000s to diversify its trading partnerships. Then came the signing of a comprehensive strategic co-operation agreement with the Obama administration, followed by the Trump administration’s designation of Vietnam as a “co-operative maritime partner” in the Indo-Pacific.
Economically, Vietnam’s gambit paid off big time. Bilateral trade ballooned to $139 billion last year, making America the largest export destination for Vietnamese manufacturers. In 2022, Vietnam surpassed even the United Kingdom to become one of the US’s top seven trading partners in merchandise. Bilateral defence ties, however, have been hobbled by ideological differences, most notably disagreements with the Biden administration and the US Congress over human rights and democracy issues. The two sides are yet to secure a single major defence deal a decade after signing a comprehensive partnership pact.
Crucially, Vietnam’s communist leadership has also refused to overtly align with the US. If anything, Vietnam’s party chief, Nguyen Phu Trong, was the first foreign leader to visit Mr Xi following the latter’s successful bid for a third term in office. The high-profile visit culminated in 13 major agreements, which aim to enhance bilateral trade and more effectively manage maritime disputes.
Moreover, Vietnam has also refused to side with the West against Russia. By adopting a consciously neutral position on the conflict in Ukraine, it has sought to maintain robust defence ties with Moscow, though western sanctions have complicated this.
Thanks to its “multi-alignment” strategy, Vietnam also enjoys deep strategic and economic ties with a whole host of middle powers, including India (a potential source anti-ship cruise missiles as well as warships), Japan (a major source of maritime security aid), as well as the EU (which has a defence partnership pact with the Hanoi).
The lesson for mid-sized nations and regional powers in other parts of the world, especially in the Middle East, is unmistakable. Vietnam has proven the wisdom of seeking and preserving fruitful ties with multiple superpowers simultaneously. By all indications, Middle Eastern powers seem to be following a similar path, as they deftly cultivate and balance relations with the US, China, India and Russia in an increasingly uncertain geopolitical environment. In many ways, multi-alignment seems to be the name of the game.
Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
MATCH INFO
Uefa Champions League final:
Who: Real Madrid v Liverpool Where: NSC Olimpiyskiy Stadium, Kiev, Ukraine When: Saturday, May 26, 10.45pm (UAE) TV: Match on BeIN Sports
ESSENTIALS
The flights
Fly Etihad or Emirates from the UAE to Moscow from 2,763 return per person return including taxes. Where to stay
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