Vietnamese PM faces showdown as party meets amid financial turmoil

Gathering expected to see showdown between Dung and his critics as Vietnam is buffeted by financial scandals and sluggish economy

PUBLISHED : Thursday, 04 October, 2012, 12:00am
UPDATED : Thursday, 04 October, 2012, 4:32am


The political future of Vietnam's prime minister is hanging in the balance as Communist Party chiefs gather for talks overshadowed by financial scandals and economic malaise.

Nguyen Tan Dung has had little reason to celebrate since the communist-controlled parliament formally approved his appointment for a second five-year term in July last year.

Rising public dissatisfaction over slowing economic growth, resurgent inflation, rampant corruption and banking turmoil have put Dung under growing pressure as the Communist Party's 175-member Central Committee meets this week.

The gathering is likely to see "a showdown between the prime minister and his critics", according to Vietnam expert Carl Thayer, emeritus professor at Australia's University of New South Wales. "At the very least it is likely that the Vietnam Communist Party will attempt to cut back on the enormous powers accumulated by the prime minister and his office," he wrote in a report. "The big question is whether the prime minister's critics will push for his dismissal."

The secretive Communist Party's Central Committee meeting began on Monday and is expected to last two weeks - twice as long as usual - highlighting the growing to-do list facing Vietnam's political mandarins.

"Most topics we have to discuss and make decisions on are very important, difficult and sensitive," party Secretary General Nguyen Phu Trong has said.

Experts noted that the central committee, which includes Dung, has the power to oust any member from its ranks or from the powerful 14-member Politburo, comprising top leaders.

"It's a fight between one force which has the money and another which has the power, at the heart of the party, to tackle corruption and clean out its ranks," said a party official, referring to Dung and his economic allies on one side and his political rivals on the other.

Dung, a former central bank governor who took office in 2006, is said to have become the most powerful prime minister ever.

But economic growth has slowed sharply, inflation has picked up, foreign direct investment has plunged and fears about toxic debt in the fragile banking system have mounted.

The near collapse of scandal-tainted shipping behemoth Vinashin in 2010 put the spotlight on the financial troubles of state-owned giants, while the arrest of a disgraced multi-millionaire banker seen as an ally of Dung, in August, shook investor confidence in the country and triggered a run on deposits.

Observers say Dung's rivals, notably party secretary general Nguyen Phu Trong and President Truong Tan Sang, appear to want Dung to pay for his failures.

"With Vietnam's economy facing such deep-seated problems, the risk of an escalating power struggle between the PM and President Truong Tan Sang that could result in the ousting of the PM and his political allies is increasing," said Rajiv Biswas, Asia-Pacific chief economist at IHS Global Insight consultancy.

But Dung has weathered past political storms and could do so again. "Dismissing him is not an easy thing," the party official said.