As prime minister of a country ostensibly ruled by the Vietnamese Communist Party (VCP), he is theoretically subordinate to the Politburo, yet his personal political power has allowed him to continue in office.

Due to the resulting political paralysis, however, policy across the board is in limbo. Foreign governments and businesses used to be able to expect that decisions backed by the Politburo of the VCP were enforceable. This is no longer the case. Whether it has to do with the South China Sea, relations with the U.S. or international institutions such as the World Bank and the International Monetary Fund, nobody really knows what an official piece of paper means in Vietnam and what the authority behind it is, if any. Economic growth has slowed, and a wide range of economic policies remain dead letters, especially measures to control corruption and regain macroeconomic stability.

Vietnam’s political crisis runs very deep and cannot be resolved without fundamental political change. Behind the facade of political institutions, Vietnam has no clear domestic sovereignty. In essence, Vietnam has become a “land without a king.”

Vietnam’s political institutions are those of a single-party state. The constitution states clearly that the ruling VCP holds a monopoly on executive power, and in practice the VCP is meant to exercise this power through a range of Leninist institutions. These include a security apparatus, parts of which are increasingly active in limiting dissent, whether expressed by bloggers, workers, discontented farmers or anybody else. This Leninist structure remains despite public opinion polls that have generally reported wide popular enthusiasm for the market economy.

This is in large part because in the past two decades Vietnam’s economy has grown well, as has its tax base. Until around 2007, the country enjoyed macroeconomic stability. Looked at strategically, Vietnam’s rulers are well-placed to secure legitimacy for the regime by pursuing policies that would ensure that the population has access to public health facilities, adequate public education, relatively honest public servants, and well-planned public transport and urban infrastructure. The country also has the potential for continued rapid growth as it moves into and through “middle-income status.” There are many valid ways of doing all this, with a range of policy options.

None, however, are viable in Vietnam. On one hand, policy as written is of poor quality, often reflecting inadequate investment in research, consensus-building and trials. On the other, policy implementation is usually awful, mainly due to corruption and the lack of discipline within the state apparatus. It is above all the inability of Vietnam’s leaders to lead the state administration—apart from in the occasional strange “island” constituency, such as Da Nang—that shows the country’s lack of domestic sovereignty. And under such conditions, rather than using policy to preserve their regime, Vietnam’s leaders increasingly have to use the security forces.

Historically a broad-based party even when trying to use Soviet methods to construct socialism, the VCP’s discipline allowed it to manage a series of tactical retreats from central planning and emerge with some political coherence and order in the early 1990s. From then on Vietnam saw rapid economic growth.

But beginning in the early part of the past decade, powerful political personalities who commanded authority within the VCP, such as General Secretary Do Muoi and Prime Minister Vo Van Kiet, retired and were replaced by others who either avoided politicking or sought support in an increasingly corrupt environment—which meant “money politics.”

By the late-2000s, the VCP was no longer functioning as a coherent political institution. Various important politicians had to secure support from powerful commercial forces, importantly some big players within state-owned enterprises. Recent events have shown that these special interests now call the shots. The Politburo has been unable to discipline leading politicians, who have been able to generate support within other party structures to protect themselves.

In the absence of clear political authority, the situation calls for leaders that can command legitimacy, yet so far there is no obvious candidate. A group that can offer authoritative leadership, impose discipline on the state administration and move away from the growing trend of using the security apparatus instead of policy to secure legitimacy would have much to gain. Elements of the security apparatus would probably support such a group, as would much of the Vietnamese population. However, reconstruction of political authority, once lost, is very hard. In the absence of coherent political leadership, Vietnam is likely to see a series of ongoing fights between various groups, divided along regional and commercial lines.

The political crisis means that needed reforms are impossible. Domestically, long-festering problem areas such as public health and education, urban infrastructure and development strategy are not being addressed. Corruption remains endemic. Domestic political paralysis means that nobody knows where power and authority lie, and whether deals done are real or simply pieces of paper. Meanwhile, regime legitimacy continues to erode, adding to fears of instability and fragility.

Political opening in terms of formal democratization, however, does not seem essential to a resolution of the crisis, and Vietnam is not yet experiencing mass popular pressure for democratization. As long as Dung retains the support of key commercial interests and there is no resolution of the political crisis of authority, his position, for what it is worth, is secure. But there is no guarantee that his commercial backers will not, when and if they sense the wind changing, abandon him. The basic logic of politics suggests that things could change in Vietnam very quickly.

By Adam Fforde - World Politics Review - July 2, 2013