How has Communist-run Vietnam's graft campaign shaken up its politics?

HANOI (Reuters) - Vietnam's parliament appointed three new deputy prime ministers, as well as new ministers of environment and justice in a government reshuffle that follows months of political turbulence amid a sweeping anti-graft campaign.

Monday's appointments follow the sudden exits of leading figures, many after accusations of wrongdoing as the Communist-run country stepped up its anti-graft drive over the last two years, but which dented its reputation for political stability.

WHICH LEADERS HAVE STEPPED DOWN?

Vietnam has four top leaders who usually begin five-year terms at the same time as it ushers in a new legislature. The next date for this will come in 2026.

These are the party chief, which has become the most powerful position in recent years, along with the president, the prime minister and the chairman of the parliament.

In January 2023, president Nguyen Xuan Phuc quit, kicking off an unprecedented spate of high-profile resignations, after the party blamed him for "violations and wrongdoing" by officials under his control.

His successor, Vo Van Thuong, resigned just about a year into the job in March 2024, accused of having violated party rules.

A month later, in April, parliament chairman Vuong Dinh Hue left his job for unspecified violations and shortcomings.

During that turbulent period, hundreds of senior state officials from deputy prime ministers to ministers and members of the party's elite Politburo quit, with some being detained in a sweeping anti-graft campaign called Blazing Furnace.

WHAT IS THE "BLAZING FURNACE"?

Launched by late party leader Trong about a decade ago, it aimed to curb widespread corruption by making use of corrupt officials as "firewood" for the burning furnace, he said.

Though welcomed by many, the campaign fanned critics' fears that party factions would expoit it to eliminate rivals.

It ensnared high-flying corporate executives, such as real estate tycoon Truong My Lan, whose arrest sparked a run on one of the country's largest private banks by deposits, Saigon Joint Stock Commercial Bank (SCB), whose rescue has cost the state more than $24 billion by June.

After the campaign launched, Vietam's ranking improved to 83 in 2023 from 113 in Transparency International's corruption perceptions index.

WHAT IS THE IMPACT ON THE ECONOMY?

Graft remains a problem, however, with people in some provinces saying they pay bribes to secure services in public hospitals, a 2023 survey by the U.N. Development Programme and other bodies showed.

The uncertainty caused by the continuous changes at the top has blunted foreign investors' sentiment in the export-oriented industrial hub that hosts the factories of several big multinationals and is highly reliant on overseas funding.

Foreigners mostly sold Vietnamese securities during weeks of political upheaval, data shows, and Western direct investment has lagged that from China in recent months.

The graft fight has also slowed reforms and projects, as fear of repercussions led many officials to delay decisions.

The administrative paralysis forced Vietnam to forfeit foreign aid of at least $2.5 billion between 2022 and 2024.

Western, East Asian and Russian investors often voice concern over delays in approving projects, cumbersome administrative procedures and inadequate regulation, usually blaming the anti-graft drive.

WHAT'S NEXT?

The turbulence brought into the top position To Lam, the long-serving head of the powerful public security ministry, which is a key player in the anti-graft campaign.

Now president of the country and head of the party, Lam is expected to relinquish the presidency. He wields a relatively firm grip on power that many investors, diplomats and analysts hope will reduce political turmoil.

While he is not expected to make significant changes to foreign and economy policy, "the downside is that Vietnam's political climate may become more authoritarian," Le Hong Hiep of Singapore-based think tank ISEAS–Yusof Ishak Institute said in a recent article.

(Reporting by Francesco Guarascio and Khanh Vu; Editing by Clarence Fernandez)