The three-day Tet festival is approaching in Vietnam, the climax of a long season of celebrations that began with the enthusiastic embrace of Christmas in mid-December. In the southern city that residents still call Saigon, parks and boulevards have been festooned with colorful lights, and Christmas carols drifted over restaurants, hotel lobbies and department stores with their resident Santas.

On the surface, the “American” war that ended more than three decades ago seems to have left no traces here. But in the hearts and minds of those who suffered the war and survived to remember it, there is pain. Tet is a time for reflection, and there are some conflicted emotions about where Vietnam is headed in the new year.

It is not only that the spectacle of affluence and materialism, even in tough economic times, and the love affair with things Western seem jarring to a revolutionary generation that gave their all to a cause, losing relatives and friends, often to unmarked battlefield graves. There is also, especially in the south, unease and disappointment that a unified Vietnam has not lived up to its considerable potential. Despite nearly two decades of economic liberalization, the Vietnamese see their country stagnating under the heavy hand of excess government regulation and censorship, and watch politicians squandering the country’s economic gains on corruption.

The start of this long holiday season coincided with a suspension of Japanese development assistance after the discovery of a multimillion-dollar bribery scheme that diverted aid funds from Japan, until now Vietnam’s largest donor. A reporter from a leading newspaper said journalists have been told to stop dwelling on this. Two reporters were arrested last year for writing about the skimming of aid from not only from Japan but also the World Bank. One journalist is in jail and the other in re-education. The reporters, Ngyuen Van Hai of Tuoi Tre and Nguyen Viet Chen of Thanh Nien, were convicted of “absuing democratic freedoms.” (Human Rights Watch has a new report, Vietnam: Stop Muzzling the Messengers, on these and other cases. Colleagues say that the reporters had inside government sources, but that did not save them or their editors. The government, which retains the right to appoint news managers, dismissed the editors of the two newspapers involved. The popular, daring and profitable daily Tuoi Tre saw its editor replaced in December for the third time in two years by ever “safer” government appointees; in early January the editor of Thanh Nien was sacked.

In Danang, a publishing house was shut down in December and two top editors fired for printing “mistakes.” Internet users are regularly harassed and occasionally arrested. It is estimated that nearly a quarter of Vietnamese use the Internet to post blogs and share information. Among the bloggers are schoolchildren as young as 11 or 12 who have home computers or frequent Internet cafes, which the government polices clumsily. It may be a sign of a losing battle that new regulations on Internet use have been recently published in an effort to contain the impact of the cyberworld. At the same time, newspapers and other publications are racing to create English-language Web sites to give their reporting wider exposure.

Among students, academics and, above all, journalists, critics are becoming astonishingly outspoken. In a recent seminar of professors and university administrators (some of them retired from careers in the West), speaker after speaker told of chafing under political restrictions imposed from Hanoi. The message heard again and again from participants was that the government should understand that free speech and access to information were prerequisites of human and economic development. A university president, asked how she had managed to gain so much intellectual space for her faculty, declared boldly, “I don’t get given autonomy; I take it.”

In southern Vietnam there are other grievances beyond those of the classroom and newsroom. Residents of Saigon, officially renamed Ho Chi Minh City three decades ago, complain that more than three-quarters of the earnings of this dynamic, outward-looking metropolitan area are siphoned off by the central government and southerners get very little in return. A recent survey by a British consulting company ranked Saigon 150th among 215 large cities worldwide in quality of life, well behind neighbors such as Singapore, Bangkok and Kuala Lumpur, against which this city should be more competitive. On a scale of 1 to 10, the English-language Viet Nam News reported, Saigon got a zero for the quality of its water, and some hospitals were found to have two or three patients sharing one bed.

Every enterprise and voluntary association gets bogged down in layers of licensing requirements. Trade groups, chambers of commerce and construction companies say publicly that new ventures may face as many as thirty-three time-wasting procedures, frustrating would-be investors.

Among intellectuals there is enormous interest in a new book from Vietnam’s most popular dissident writer, Duong Thu Huong, author of Paradise of the Blind and other works of fiction critical of enduring nationalist myths.

The new book, just published this month in Paris and titled in French Au Zenith, is a thinly veiled and not complimentary novel about the national hero, Ho Chi Minh, the founding father of modern Vietnam and an off-limits subject here. Newspapers have been warned not to touch the story, but copies or excerpts of Huong’s book in French and Vietnamese began to circulate on the Internet even before its publication.

Huong, who is from Hanoi and was once an active communist cadre, turned against the regime, as did other intellectuals in the north, on learning after unification that much of the propaganda they had been fed about life in the south was untrue, and that Hanoi’s army was killing not only Americans but also fellow Vietnamese. For more than two decades northerners have been exploring this theme of official wartime deceit in books, poetry and film.

When Huong, whose works are banned in Vietnam, was asked, at a rare appearance in New York in 2007 sponsored by American PEN, why there was not open revolt in Vietnam, she said there were several reasons, among them that the Vietnamese had a history of fighting outsiders and no tradition of internal conflict–thus the shock at learning how many southern Vietnamese were dying in the “American” war. She also said bluntly that the Vietnamese are ruled by backward-looking leaders whose pride in winning a war against the United States–a pride widely shared–has never been augmented and updated with a compelling postwar vision for the country. The leadership has survived for thirty years “on corpses,” she said.

Meanwhile among the young, the majority of Vietnam’s population, there is a deep, if blind and unrealistic, belief in the West, encouraged by the Viet khieu, or overseas Vietnamese, who return with money to spend on homes and goods that local people without connections cannot afford. In recent years, European designer boutiques have supplanted Vietnamese stores in downtown Saigon, where characterless contemporary architecture is in vogue. A huge shopping mall topped with luxury apartments and a hotel is under construction, covering a full city block of prime real estate from Nguyen Hue boulevard to Dong Khoi, the former Rue Catinat.

The complex is called Times Square.