The new Vietnam: forty years after the Vietnam War, the Southeast Asian nation is becoming a modern, capitalist country eager to improve relations with the U.S.

• Author: Smith, Patricia

The story of Tue Nghi's life is a classic rags-to-riches tale, and it embodies the new Vietnam. Having grown up in poverty, the 22-yearold resident of Ho Chi Minh City now runs her own company that buys, fixes up, and sells homes. At the moment, she owns four cars and many houses.

"I feel lucky that I was born a long time after 1975," she says.

That was the year that the Vietnam War ended with the Communist forces of Ho Chi Minh defeating the South Vietnamese, who had fought alongside U.S. troops. Forty years later, that war seems like ancient history to most Vietnamese: Two-thirds of the population was born after the war ended.

As Thuy Truong, a 30-year-old tech entrepreneur, put it recently, "Forty years ago? Who cares?"

What young Vietnamese do care about is business and improving ties with the world, especially the United States. Once bitter enemies, the U.S. and Vietnam have not only mended fences, they're also increasingly cooperating on many fronts in a part of the world that's becoming more important.

"Relations between Vietnam and the U.S. are better now than they've been since the end of the war in 1975," says Hung Nguyen, a Vietnam expert at George Mason University in Virginia. And Nguyen predicts those ties will continue to improve in the years ahead.

America's involvement in Vietnam began more than 60 years ago, when Vietnam became a Cold War battleground (see Key Dates, p. 16). After French colonial rulers were ousted in 1954, Vietnam was partitioned into a Communist North and pro-Western South. In the mid-1950s, the U.S. started sending military advisers to support South Vietnam in its struggle against the Communist forces of the North and guerrilla fighters known as the Vietcong.

As the decade wore on, U.S. military involvement in the conflict increased, and by 1969, there were more than 500,000 U.S. combat troops in Vietnam. By the time the war ended six years later, 58,000 American soldiers and at least 3 million Vietnamese had been killed.

After the war, the Communist government sent hundreds of thousands of South Vietnamese to brutal "re-education camps" and imposed a state-run economy. The result was years of crushing poverty.

But in 1986, Vietnam followed China's lead, with a series of free-market reforms called dot moi. Private enterprise was allowed and foreign investment encouraged. The change was dramatic--especially after the U.S. fully restored diplomatic ties in 1995.

Today, annual per capita income is about $1,900 (compared with $53,750 for the U.S.), about 10 times what it was 25 years ago. American companies like Intel and Ford have built major manufacturing plants there, and the U.S. is the largest importer of Vietnamese goods--especially clothing and footwear. (Check your labels: If you have clothes from Nike, Forever 21, or Zara, there's a good chance they were made in Vietnam.)

The China Threat

But like China, Vietnam remains an authoritarian Communist regime that stifles political opposition. The U.S. says Vietnam holds more than 100 political prisoners. Corruption is rampant.

Vietnam has made progress in reducing its poverty rate, but more than 15 million Vietnamese, out of a population of 90 million, still live in dire poverty--mostly in rural areas, working on farms. With the nation's new wealth concentrated in cities like Ho Chi Minh City and Hanoi, Vietnam's leaders still face the challenge of trying to extend the boom to those it hasn't yet reached.

Ironically, if the U.S. fought in Vietnam partly to preserve capitalism, it turns out that even a Communist victory couldn't destroy it. Capitalism is exploding in Vietnam, with more than 300 new companies forming there every day. The emergence of Vietnam's new economy is no surprise to U.S. Ambassador Ted Osius, who calls the Vietnamese "the most entrepreneurial people on earth."

This entrepreneurial spirit isn't the only thing pulling the U.S. and Vietnam closer together. China's rising power makes both the U.S. and Vietnam uneasy; to counter it, both nations are eager to strengthen ties and increase U.S. military presence in the region.

"Among all the choices, Vietnam chooses Pax Americana, *" says Le Van Cuong, a retired general who five decades ago was fighting America.

The two countries also have common economic interests. Vietnam and the U.S. are two of a dozen countries negotiating a wide-ranging free-trade agreement known as the Transpacific Partnership. The Vietnamese see the agreement, which doesn't include China, as a way to increase trade with the U.S. to counter China's regional influence.

With ties strengthening, American investors, tourists, and war veterans (see "Enemies in Battle, Now Friends," facing page) are coming to Vietnam. Many Vietnamese who fled to the U.S. after the war have returned home to start businesses. And Vietnamese students are now going to the U.S. in droves, Two decades ago, there were fewer than 800 Vietnamese students in the U.S.; last year, there were more than 16,000.

Seventy-eight percent of Vietnamese now say they have a favorable opinion of the U.S., according to a Pew Research Center poll. The figure is 88 percent among those under 30.

Brooks Brothers & Burberry

Nowhere is Vietnam's transformation more apparent than in Ho Chi Minh City. After the Communist victory, the capital of South Vietnam that was then called Saigon was renamed for...