Hanoi Regime Embittered by U.S. Pressure on Cambodia Peace Pact : Southeast Asia: Vietnam official says normalization of relations has suffered a setback from Washington’s ‘road map’ for settlement.

Efforts by the Bush Administration to link the normalization of relations with Vietnam to progress on a peace settlement in Cambodia have deeply embittered the leadership in Hanoi, with one senior official proclaiming that the relationship has returned to the chilly era of a decade ago.

The Vietnamese are so disillusioned with U.S. policy that one Western diplomat, who has followed the twists and turns in the country’s foreign policy since the early 1970s, suggested that Hanoi has virtually abandoned any real hope of improvement in relations and is turning instead to regional affairs.

The disappointment is also evident in rumors circulating in Hanoi that Foreign Minister Nguyen Co Thach, the principal architect of Vietnam’s overtures to the United States, could be removed from power at the forthcoming seventh congress of the Vietnamese Communist Party, to be held late in June.

Diplomats said that, although they doubt Thach will be ousted, the latest U.S. policy initiative has provided plenty of ammunition to Thach’s hard-line enemies.

“At this time, the situation is quite similar to 1977 and 1978,” said Dang Nghien Bai, head of the Vietnamese Foreign Ministry’s North American department. “Then, we put some conditions and the U.S. didn’t accept it. Now, the U.S. has put preconditions and we don’t accept those. The only difference is that we continue to talk.”

Bai was referring to Vietnamese demands in the late 1970s for war reparations from the United States, which were rejected by Washington. After the breakdown of normalization talks under the Jimmy Carter Administration, the Vietnamese were so angered that they signed a peace and friendship treaty with the Soviet Union.

Bai himself may be an early casualty of the chill. Long considered as the likely candidate to be Vietnam’s first ambassador to Washington after relations are normalized, he is now being sent to Canada instead, according to Foreign Ministry officials.

The United States has not only had no formal relations with Hanoi since the end of the Vietnam War in 1975, but it has imposed a complete embargo on trade and assistance to Vietnam. That move has blocked Vietnam from getting badly needed loans from the World Bank and the International Monetary Fund.

Last year, the Administration agreed to begin “a dialogue” with Vietnam in talks at the United Nations, discussions which had been widely expected to speed normalization of relations.

The Bush Administration has come under increasing pressure in Congress to end the embargo, with major U.S. firms, especially oil companies, worried that they will lose out on major business ventures to European firms and the Japanese.

In April, Assistant Secretary of State Richard H. Solomon presented Vietnam with a “road map” for normalizing relations over two years, following a four-step procedure tied to progress in peace talks over Cambodia.

For example, phase one would start with signing of an international agreement on Cambodia and phase four, would conclude with U.N.-sponsored elections in Cambodia, at which time the United States would restore full diplomatic relations with Hanoi.

“You would like us to interfere in the internal affairs of Cambodia, but we don’t accept it,” Bai said in an interview with The Times. “You will ask Vietnam to persuade China to accept a moratorium (on arms shipments to Cambodian factions). Rubbish! The answer is a compromise between the United States and China.”

The five permanent members of the U.N. Security Council--the United States, Soviet Union, Britain, France and China--have reached agreement on a detailed plan to bring peace to Cambodia with substantial involvement by the United Nations in supervising a cease-fire and running the government in an interim period leading up to free elections.

Vietnam and Cambodia have expressed serious reservations about the plan’s provisions calling for disarmament of the four warring factions in the civil war because the Khmer Rouge guerrillas have reputedly hidden tons of arms in the jungle, placing the Phnom Penh regime at a military disadvantage.

Talks aimed at overcoming differences between the Phnom Penh government and the three resistance factions are scheduled to be held next month in Jakarta, Indonesia.

Vietnamese officials were particularly critical of the United States for taking positions on Cambodia perceived in Hanoi as being close to those adopted by China, which supports the Khmer Rouge, the hard-line Communist group that was overthrown by a Vietnamese invasion of Cambodia in 1978.

The Vietnamese believe that they have gone far to meet U.S. terms for a normalization of relations, such as permitting U.S. military teams to search for the remains of missing U.S. servicemen, opening the gates to emigration of former officials of the South Vietnamese regime under the Orderly Departure Program and by withdrawing the bulk of their forces from Cambodia in September, 1989.

In return, the Vietnamese believe they have received nothing, apart from a $1-million U.S. grant to pay for prosthetic devices.

Earlier this month, the U.S. government again blocked a European effort to open up IMF loans to Vietnam. Late last year, the U.S. government also blocked Vietnam’s efforts to charter a Boeing jetliner from a Hong Kong company to use on Air Vietnam’s international routes.

“From the Vietnamese perspective, they have made a lot of concessions and they have nothing at all to show for it, not even one lousy chartered plane,” said a Western diplomat.

Meanwhile, China is being offered a continuation of most-favored-nation trade status despite disputes over human rights in the wake of the 1989 Tian An Men Square massacre.

“The ‘road map’ strengthened the feeling on the Vietnamese side that there is nothing they can do to satisfy the United States,” said a Western diplomat. “They have apparently decided to reorder their foreign policy along the lines of what’s do-able. It’s a reprioritization that is making them focus more on relations with their neighbors in southeast Asia.”

In part, the shift in priorities is an economic question, because the Vietnamese have recently lost an estimated $1.5 billion a year in aid from the Soviet Union. Hanoi is seeking to make up the losses by setting up barter deals with countries such as Thailand, Malaysia and Indonesia.

One diplomat said it is now possible that Vietnam could soon apply to join ASEAN, the six-member association of southeast Asian nations that was set up largely in response to what was perceived as Vietnamese aggression.