Vietnam's political environment began to settle after the ruling Communist Party of Vietnam (CPV) completed its five-yearly national congress in January, which resulted largely in a continuation of the status quo in terms of the country's political leadership. In February the country's top leaders turned their attention towards rectifying Vietnam's worsening economic problems and furthering its foreign policy goals. The prime minister, Nguyen Tan Dung, announced a series of measures designed to constrain rapid credit growth and force state-owned enterprises (SOEs) and commercial banks to be more careful about how they spend or lend money. Mr Dung's actions were largely driven by concerns about inflation outweighing the government's goal of job-creation. Consumer price inflation on a yearly basis reached its highest rate in over two years in February, and the prime minister is well aware that the CPV is keeping a close eye on his efforts to contain rising prices. During the national congress held in January, many prominent delegates criticised the CPV's handling of the economy, highlighting rising inflation and the debt crisis surrounding one of the country's most prominent SOEs, the Vietnam Shipbuilding Industry Group (Vinashin), which nearly collapsed with debts of US$4.4bn in late 2010 (in December Vinashin defaulted on the first scheduled repayment, US$60m, of a US$600m international syndicated loan). Mr Dung needs to deliver results quickly. The National Assembly (NA, the legislature) will meet from March 21st onwards to discuss Vietnam's economic situation and the prime minister is likely to come under criticism if he is not seen to be taking decisive action to improve the country's economic stability, particularly with regards to curbing inflation. The NA is not as pliant as it once was. In 2010 Mr Dung admitted some culpability for the Vinashin debacle during a televised session of the legislature-this was seen as an acknowledgement of his prominent role in encouraging Vinashin and other SOEs to expand aggressively during his tenure.

The legislature is also scheduled to decide, following elections in May, whether to reappoint Mr Dung to the role of prime minister. (He was reappointed to the Politburo-a 14-member council that oversees policy formulation, but his expected retention of the post of prime minister still needs to be endorsed by the NA.) The political risks engendered by Mr Dung's moves to combat inflation and shore up the country's finances are substantial. One of the measures taken by the government in February was to allow oil companies to increase the retail prices of petrol and diesel. The government subsidises fuel prices, but the cost of doing so has been increasing rapidly, owing to a sharp rise in the price of crude oil (dated Brent Blend) as a result of both the ongoing political turmoil in the Middle East and the recent devaluation of the local currency, the dong. Long queues of motorcycles and cars were seen outside petrol stations on the day of the price rise, with their owners hoping to fill their tanks before a 10 am deadline. Still, with the economy growing rapidly-real GDP grew by 6.8% in 2010-the risk of street demonstrations, akin to protests seen recently in the Middle East, occurring in the capital, Hanoi, or Ho Chi Minh City appear slim.