Vietnam attracted an impressive $8 billion in foreign direct investments last year, according to a report that was released on Sept. 17 by the UN’s Conference on Trade and Development. Indeed, the UNCTAD report revealed that overseas investors saw Vietnam as a more attractive investment opportunity than all of its ten Southeast Asian neighbors, save only Malaysia (also $8 billion), Singapore ($22.7 billion, and Thailand ($10 billion). And the beneficial results of FDI flows into Vietnam in the past decade show. When I first visited Vietnam in 2000, it was still very much a backward, impoverished country, and looked like the classic Marxist-Leninist economic basket case that it had become. But on my most recent visit last Sept., Ho Chi Minh City (formerly Saigon) sparkled. And when I spent several days driving around the Mekong Delta, the signs of rising prosperity were visible everywhere, most notably on the faces of ordinary Vietnamese people going about their work peaceably on those ubiquitous motorbikes. Even its strongest critics must acknowledge the economic progress that Vietnam’s (communist) leadership has made in in the last decade, as it has moved away from a Soviet-style command economy.

Overseas investors, notably the American Chamber of Commerce in Vietnam, rightly can claim a large share of the credit for Vietnam’s emerging modernization. AmCham members have always maintained that when they encourage Vietnam to honor the sanctity of commercial contracts, they are encouraging the country along the road to the rule of law, which will encourage political liberalization as well. After all, the International Covenant on Civil and Political Rights Covenant, to which Vietnam is a signatory, is also a contractual obligation between the government and its citizens. The problem is: the authorities in Vietnam pay the covenant little respect. Despite the visible signs of economic growth that that I saw one year ago, September, 2008 also marks the beginning of a new crackdown on Vietnamese citizens whose “crimes” are basically that they believe they ought to enjoy the freedoms of speech, association, and assembly that the International Covenant on Civil and Political Rights is supposed to protect. So far, more than twenty of these brave people have heard the midnight knock on the door in the past year. And this is the point where the story directly touches — and becomes awkward for — the American Chamber of Commerce.

On June 13, a prominent Vietnamese lawyer named Le Cong Dinh — an active AmCham member in Ho Chi Minh City and a respected advocate for the rule of law both on commercial- and human rights fronts — was arrested and tossed into jail, where he remains locked away. Dinh was the managing partner of DC Law, a prominent law firm in Ho Chi Minh City with a client roster that includes major foreign investors in Vietnam. Now, he has been disbarred from the practice of law. (In classic communist fashion, Dinh has been disbarred before the official “investigation” has been completed, and before there has been a “show” trial.) Dinh’s “crime” is basically that he engaged in peaceful exercise of the freedoms that the International Covenant on Civil and Political Rights requires the Vietnamese government to honor. Specifically, Dinh ran afoul of Article 88 of the Vietnamese penal code, which criminalizes “propaganda” against the state — as defined by the Politburo. In the eyes of the Politburo, Article 88 and similar statutes trump the international human rights covenants. As for the eyes of the American business community in Vietnam, well, they are looking away. The American Chamber of Commerce in Vietnam has turned its back on Le Cong Dinh, who has become an inconvenient man.

The story illustrates the difficult situation that foreign investors face as they try to do business in dicey Third World countries where the rule of law is fragile. And for the American Chamber in Vietnam, it’s hopes to maintain a low public profile on important rule of law issues, even when AmCham’s own best-and-brightest members are involved, are fraught with risks. Perhaps encouraged to believe that it can safely violate its citizens’ freedoms of speech without serious objections from the business community, the authorities in Hanoi have recently squared the circle. Now, Hanoi is also threatening the freedoms associated with commercial speech — including academic research on important economic issues, if that research might run counter to the communist party line. So by its silence on the injustices that are being perpetrated upon Le Cong Dinh and other pro-democracy advocates, the U.S. business community has helped encourage forces that are now threatening its own direct interests. Moreover, AmCham has to worry about the signal that it has sent to human rights advocates on Capitol Hill.

Here’s why:

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By deliberately averting their eyes, even when the abuses of fundamental notions of due process hit one of their own, AmCham’s leaders have given the authorities in Hanoi reason to believe that their crackdown enjoys the tacit support of the American business community. At the same time, by refusing to point out the contradiction between Vietnam’s draconian Article 88 and the country’s obligations to adhere to the international legal norms that define civilized societies, AmCham has also sent a signal to trade skeptics on Capitol Hill. Critics like California’s Sen. Barbara Boxer would deny Vietnam its duty-free trade privileges with the U.S. pursuant to the Generalized System of Preferences, on grounds that despite Vietnam’s undeniable progress on the economic front, the country’s human rights record remains dismal. By its silence, AmCham has handed the congressional human rights advocates clear evidence to support their accusations that when it comes to human rights, the business community will put profits before principles.

On Oct. 1, 2008, one month into the current Vietnamese crackdown, Sen. Boxer framed the issue succinctly. “Like many of my Senate colleagues, I had hoped that strengthening our relationship with Vietnam on the trade and economic front and supporting Vietnam’s integration into the international community would dramatically improve Vietnam’s human rights record,” she declared upon introducing legislation that would strip Vietnam of its GSP privileges. “But that has not turned out to be the case.”

Now, with the arrest of AmCham member Le Cong Dinh and other peaceable democracy advocates, the senator has more ammunition to press her legislation.

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The American Bar Association has spoken out about the obvious abuses of due process involving Dinh and other pro-democracy advocates who have been caught up in the current crackdown. So has the American ambassador in Hanoi, Michael Michalak, who has pointed out that Dinh and the others have been arrested for “activities that, in many places in the world, are regarded as normal, usual discussions aimed at strengthening rule of law in Vietnam.” Human Rights Watch and other respected advocacy organizations have also been eloquent in saying that Article 88 and similar laws of Marxist-Leninist origin ought to be piled in history’s communist dustbin. But not the American Chamber of Commerce — the one voice that would be heard loud-and-clear in Hanoi.

“AmCham certainly supports a more transparent legal system and better rule-of-law in Vietnam,” Adam Sitkoff, AmCham’s Hanoi-based executive director, told me in what turned out to be a testy exchange of e-mails. “However, we don’t have any statement or public opinion on the Le Cong Dinh [case].” When I asked if upon further reflection, he thought that it might better help convey AmCham’s seriousness of purpose issues by speaking out when it sees injustices, Sitkoff shot back: “I appreciate that you are trying to put words in my mouth.”

Said Virginia Foote , a prominent member of AmCham’s board of governors who is widely respected both in Hanoi in Washington, D.C. for her efforts to foster closer commercial ties between the two countries, in a Sept. 1 e-mail: “I don’t know enough about this case to comment — I have been in US for several weeks now.”

Dinh’s law firm, DC Law, lists Foote’s investment firm, Vietnam Partners, as a client. Asked if she was concerned that one of her own lawyers had been caught up in Hanoi’s crackdown, Foote replied: “I don’t know if he has ever been a lawyer for Vietnam Partners — we use a different firm normally — and I don’t know what you refer to.” AmCham, Foote said, “has commented many times on instances where the Board or members disagree” with either the U.S. government or Vietnam’s.

Foote played a leading role in the creation of the US-Vietnam Bilateral Trade Agreement and then Vietnam’s WTO accession. She was awarded Vietnam’s Medal of Friendship in July, 2007 by President Nguyen Minh Triet.

While AmCham members aren’t exactly falling all over themselves to acknowledge it, there is little doubt that before he became an inconvenient man to the U.S. business community, Dinh was one of AmCham’s most visible personifications of Vietnam’s progress along the road to law.

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Until June 13, when the security police picked him up and accused him of being an enemy of the state, Le Cong Dinh, 41, was considered one of the Socialist Republic of Vietnam’s shining success stories. Dinh’s resume sparkled: Graduate of Saigon University, then Hanoi Law School. Fulbright scholar at Tulane University, where he received a Master of Laws degree in 2000. International trade lawyer at a powerhouse American law firm, White & Case, where in 2003 he defended the Vietnamese Association of Seafood Exporters in the anti-dumping case brought by the US catfish lobby against Vietnam. Co-founder in 2005 and managing partner of D.C. Law, with headquarters in Ho Chi Minh City. Married to a former Miss Vietnam who is known for her brains as well as her beauty, Nguyen Thi Ngoc Khanh, since 1998.

Dinh was a man with connections, most of which centered on promoting the development of the rule of law in a still-communist country where political power is concentrated in the communist party and a Politburo. As vice-president of the Ho Chi Minh City Bar Association from 2005 – 2008, Dinh spearheaded efforts to develop commercial legal reforms in his native country. DC Law’s impressive client list includes Yahoo, Intel, Toshiba, Hyatt International, and Toyota, as well as Vietnam Partners, Ginny Foote’s investment banking boutique. Dinh was also an active AmCham member. He frequently attended Am Cham networking receptions in Ho Chi Minh City, and also AmCham events aimed at developing a deeper appreciation of the rule of law in Vietnam.

Dinh also was not shy in pointing out that the emerging rule of law in Vietnam extends beyond just the sanctity of commercial contracts. He defended several well-known pro-democracy advocates. He became an outspoken critic of the top authorities in Hanoi, including the president. Dinh also tapped into politically potent nationalist anti-Chinese sentiment (the resentments stem from 1,000 years of Chinese domination of Vietnam), by accusing the government of offering too many concessions to Beijing to mine bauxite in the central highlands.

Dinh, who is skilled at using the Internet to spread his pro-democracy message widely, also became friendly with organizations outside Vietnam like Viet Tan (for Vietnam Reform Party) that are also skilled in modern communications. Viet Tan began in 1982 as an underground movement that broadcast short-wave radio programs into Vietnam, according to news reports. The organization has offices in California, and also Paris and Australia, and also claims members inside Vietnam. The reform party’s basic political message is a peaceable one: that Vietnam should become a liberal democracy. (Despite Viet Tan’s advocacy of democracy and rejection of violence, Hanoi regards it as a “terrorist” organization.) Along with such pro-democracy advocates, Dinh became involved in efforts to draft a more modern model constitution for his country — one that guaranteed the freedoms of expression and assembly. That’s what got Le Cong Dinh into trouble.

On June 1 — just twelve days before he was arrested — Dinh was elected secretary of the Democratic Party of Vietnam, which advocates “national unity based upon the principle of freedom, democracy and equality.” In Vietnam, that’s considered a criminal offense.

A Vietnamese pro-democracy advocate confirms that Dinh attended a seminar on non-violent struggle that the Viet Tan organized in Thailand in March. When he was arrested the next month, the Vietnamese authorities found in Dinh’s home a text in Vietnamese of a booklet entitled “From Dictatorship to Democracy, that had been translated and distributed inside Vietnam by Viet Tan. The Kafkaesque Article 88 was made for such “crimes.”

Presently, Dinh’s connections basically extend to his jailers and whatever “freedoms” they permit him in the confines of his cell in some undisclosed location. He could get 20 years, or he could be exiled. Meanwhile, Dinh — who made an (unconvincing) “confession” that he had violated Article 88 that the Vietnamese authorities broadcast on YouTube — must be wondering how he will ever put his life back together.

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Last month, another Vietnamese dissident was arrested, her crime being that she wore a T-shirt with a politically incorrect slogan that protested the Chinese bauxite mining project, and the Chinese in general.

If such low-tech speech like simple slogans on T-shirts frighten the authorities in Hanoi, imagine how they fear modern communications that bring news and information to the Vietnamese people that the communist party considers politically incorrect. There are the Internet’s news channels, newspapers like the New York Times and the Wall Street Journal, BBC’s Vietnamese Radio Service, the Voice of America, Vietnam’s active blogosphere, Twitter, cell-phones, text messaging, and so forth. Dinh, like most of the other pro-democracy advocates who have been arrested, is said to be very skilled at using the Internet to spread powerful ideas.

During Vietnam’s long struggle for independence, it was the communists who successfully controlled the message and the spread of ideas. During the civil war with the south that ended with the communist victory in 1975, Ho Chi Minh’s forces were freedom fighters. They were nationalists who first fought the French imperialists, then the Japanese during World War II, and after that the French again, and then the Americans, until they prevailed. But these days, dissident organizations like Viet Tan, with their skill at using the tools of using modern communications, control the message — and now it’s the communists who look backward. On Sept. 14, for example, Viet Tan organized a “virtual rally” over the Internet, focusing on their objections to Chinese bauxite mining in the Central Highlands and China’s influence in Vietnam. If one’s aim is to overthrow the communists in Hanoi and open up the country politically as well as economically, the most powerful “weapons” are no longer guns. The communists have the guns, but they no longer have powerful political ideas.

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I asked the Vietnamese minister of justice, Ha Hung Cuong, and Vietnam’s ambassador to the United States, Le Cong Phung, if they would allow me to interview Le Cong Dinh to hear his side of the story. I asked if they would help me get in touch with Dinh’s Vietnamese lawyer. They wouldn’t. I also asked whether they agreed that it is reasonable to make it a crime for a group of Vietnamese citizens to band together to take the political position that the sooner that Vietnamese people are allowed to select their own leaders, the better. They wouldn’t answer that question, either.

An intrepid lawyer in Hanoi named Le Quoc Quan was not so reticent. Former lawyer, as it turns out. Quan, a respected democracy advocate, was arrested on March 3, 2007 after he returned from a stint in Washington, D.C. with the National Endowment for Democracy. He was released several months later after an international outcry that included Americans like former secretary of state Madeleine Albright and Sen. John McCain.

Like his friend Le Cong Dinh, Quan was disbarred while in jail, before an official investigation had been completed. “The police handed the disbarment decision to me while I was in the cell, “ Quan relates. “I did not have opportunities to consult with my lawyers but I found that it did not comply with the law. Then I borrowed the pen of the police to write my complaint. I was not taken to court for trial, my complaints are pending without answer.”

When I told Quan that I was wondering how the Vietnamese authorities would deal with Gandhi, if he were Vietnamese and living in the country these days. His reply was as touching as it was brave: “Kakaka…it is interesting and sound ‘naïve’ thinking,” Quan replied. “I like Gandhi and his struggle style very much and last year I organized an English class in Thai Ha Church. I brought a document in English talking about ‘Gandhi.’ I requested my students to translate into Vietnamese. The police later threatened me and all my class members. They are so afraid to learn something about non-violent struggle for democracy and justice.” There could be no “Gandhi in Vietnam these days,” Quan concluded.

I asked Quan if he had received any support from the American business community when he was arrested and disbarred. His indirect reply turned the question back on Dinh’s case. “Dinh is my friend. I supported him totally and would like anyone to help him. I think the voice from Business community can be a good help as Vietnam is trying to do more and more business with the world.”

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As for the American business community, AmCham and its foreign investors now face another assault on free speech – and this time, that speech threatens to affect financial bottom lines directly, as it explicitly links economic- with political rights.

On July 24, Prime Minister Nguyen Tan Dung signed a directive called “Decision 97” that ought to have sent alarm bells off in AmCham offices. The directive bans scholars and researchers from public discussion of various subjects that might cause discomfort to the communist party. As Associated Press reporter Ben Stocking has reported, the decree “limits scientific and technical research to 317 approved topics and prohibits groups from publishing research on policies of the communist party and the government.”

The restrictions even included macroeconomic research — obviously aimed at banning public discussions and analyses of Hanoi’s (inept) policies that have contributed to worrisome inflation. Last week, a Hanoi-based independent think tank, the Institute of Development Studies, decided it had no other choice except to shut down because of Decision 97, according to Stocking’s AP report. When it was set up two years ago, IDS attracted international attention because its membership roster included some of Vietnam’s most prominent intellectuals, some with close communist party ties. As Le Cong Dinh learned the hard way, the intellectuals have now experienced the limits of free speech and thought. “With this new decision, we can hardly operate,” economist and IDS vice president Pham Chi Lan declared. It would be very difficult for us to raise our voice as an institution. That’s why we decided to close.”

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There is a certain dark irony that the crackdown on free speech that first caught up pro-democracy advocates like AmCham member Dinh has now expanded to threaten free speech on economic issues like Vietnam’s rising inflation — economic issues that greatly concern AmCham and other foreign investors in the country.

“International trade is one of the chief instruments by which you bring along the rule of law,” explains leading Columbia University economic theorist Jagdish Bhagwati. The professor quickly adds that “the rule of law is also essential in extending human rights and economic development, alongside.”

There is a new Vietnam War going on, this one over ideas. The U.S. business community, sooner or later, will have to decide which side it is really on — and where, in the long run, its own enlightened self-interest lies.