The likely decision comes after two-thirds of the Senate voted in favour of ending the embargo and growing pressure from US business to trade with Vietnam. It is a sensitive matter for Mr Clinton because of his opposition to the Vietnam war in the 1960s. During the presidential election campaign he was taunted by Republicans for avoiding the draft into the armed services.
Washington's relations with Vietnam are also strongly influenced by efforts to determine the fate of 2,200 US servicemen missing in action (MIAs) in the Vietnam war. A CBS/New York Times poll shows that 57 per cent of people believe that some of the soldiers missing are still somewhere in Vietnam.
President Clinton's advisers, including the Secretary of State, Warren Christopher, and the Defense Secretary, Les Aspin, recommended that improved relations with Vietnam would assist in locating the MIAs.
At the same time, the administration is moving cautiously on what it knows is a divisive issue. Veterans and MIA organisations are being informed of the reasons for the decision - there are 27 million US veterans - in order to limit the political backlash. Public opinion is also divided, with 46 per cent favouring and 40 per cent opposing the lifting of the embargo.
The Senate gave Mr Clinton political cover for his action last week by urging him, by the surprisingly large margin of 62 to 38, to end the embargo. John Kerry, the Democratic senator who proposed the resolution, said: 'The Vietnamese cannot be expected to go on and on helping us forever and receiving nothing in return but the cold shoulder of two decades of wholesale embargo.'
Opponents of dropping the embargo admit its end is inevitable. Senator Robert Smith, a Republican, said the Vietnamese were holding back on returning the remains of US soldiers, adding: 'I think it's a mistake and I regret it, but I lost the fight and I know when I'm whipped.' Another Republican, Senator John McCain, a pilot shot down over Vietnam and held for six years, says ending the embargo will help counterbalance growing Chinese influence in Vietnam.
US business, eager to establish itself in South-east Asian markets, is also conscious that the embargo gives an advantage to Japanese and other competitors. Boeing says it could sell 80 passenger jets worth dollars 5bn ( pounds 3.3bn) to Vietnam over the next 10 years, enabling it to employ an extra 50,000 workers. It lost a contract to supply four jets to Vietnam last year when reports of an end to the embargo proved false.
The turning-point for lifting the embargo came last December when the Assistant Secretary of State, Winston Lord, said after a visit to Vietnam that the government was co-operating in looking for MIAs. Some mystery remains, however, over what happened to the American pilots shot down over Laos, which the US secretly bombed in the war.
The White House will be relieved that it is no longer menaced by
a scandal relating to the lifting of the embargo. This was the accusation that the US Commerce Secretary, Ron Brown, had received a dollars 700,000 pay-off from a former Vietnamese government official.
Mr Brown said yesterday that the Justice Department had ended its investigation into the allegations without bringing criminal charges against him.
A Vietnamese businessman living in Florida, Binh Ly, had claimed that, in late 1992, Mr Brown was offered the pay-off and payments of large royalties from Vietnamese oil and gas fields in return for helping end the embargo.
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