To the economists of the World Bank, the new economy was evidence that Vietnam was finally on the respectable path to prosperity - a classic model of free market economic development.

But with its policy of free market socialism, the government turned its back on the peasantry which supported it through 50 years of war and poverty.

It has created a society where wealthy farmers, government officials, Party cadres and a commercial class form a rich elite, while the masses struggle to exist on low wages.

In 1992, the government reduced the statutory minimum wage from $50 dollars to $35 in the cities and $30 in rural areas.

Vietnam has a predominantly rural economy - more than 70% of the population is employed in agriculture.

It was a peasant army which defeated the French and then the Americans and it has been from the continuing support of the peasants that the government derived its legitimacy.

Although Vietnam is now the world's third biggest rice exporter - after Thailand and the US - this is largely because, under the free market system, many rural Vietnamese are simply too poor to consume more of the rice themselves.

Moreover, the concentration on producing rice and other cash crops, like rubber and coffee, for export has been at the expense of food crops for domestic consumption.

A 1993 government survey revealed that, while 20% of farmers had become well-off as a result of the reforms, 25% were desperately poor.

The corruption associated with the privatisation of co-op lands has meant that Party cadres are prominent in the new class of rich peasants, whereas war veterans and ex-soldiers are over-represented among the rural poor.

The government has turned its back on its natural constituency, as its free market policies recreate the misery and social inequality which existed under colonialism.

Per capita income in many rural areas is less than $100 dollars a year - half the national average.

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