Excerpts from a speech on "The Meaning of Vietnam" by Secretary of State George P. Shultz at the State Department yesterday:

The 10th anniversary of the fall of Indochina is an occasion for all of us, as a nation, to reflect on the meaning of that experience. As the fierce emotions of that time subside, perhaps our country has a better chance now of assessing the war and its impact. This is not merely an historical exercise. Our understanding of the past affects our conduct in the present, and thus, in part, determines our future . . . .

The first point -- and it stands out for all to see -- is that the communist subjection of Indochina has fulfilled the worst predictions of the time. The bloodshed and misery that communist rule wrought in South Vietnam, and in Cambodia and Laos, add yet another grim chapter to the catalogue of agony of the 20th century.

Since 1975, over 1 million refugees have fled South Vietnam to escape the new tyranny . . . . When the North Vietnamese Army conquered the South, it rounded up officials and supporters of the South Vietnamese government as well as other suspected opponents . . . . To this day, upwards of 10,000 remain imprisoned . . . .

In the years after the fall of Saigon, hundreds of thousands were uprooted and forced into . . . isolated and barren rural areas to expand agricultural production and reduce "unproductive" urban populations . . . .

The 24 million people of south Vietnam are now victims of a totalitarian state, before which they stand naked without the protection of a single human right . . . .

Compare conditions in Vietnam under 10 years of communist rule with conditions in South Vietnam we fought to defend. The South Vietnamese government accepted the principles of free elections, freedom of speech, of the press and of association. From 1967 to 1971 the South Vietnamese people voted in nine elections; opposition parties played a major role in the Assembly.

Before 1975 there were 27 daily newspapers, some 200 journals of opinion and scholarship, three television and two dozen radio stations -- all operating in relative freedom. No, South Vietnam was not a Jeffersonian democracy with full civil liberties by American standards. But there was a vigorous, pluralist political process . . . .

The transgressions of the Thieu government pale into insignificance next to the systematic, ideologically impelled despotism of the regime that replace it . . . .

Hanoi's leaders are now extending their rule to the full boundaries of the former colonial domain, seeking dominion over all of Indochina. Not only do the Vietnamese threaten Thailand. The Soviets, with naval and air bases at Cam Ranh Bay, are now better able to project their power in the Pacific, Southeast Asian and Indian Ocean regions, and to threaten vital western lines of communication in all those regions. Cam Ranh is now the center of the largest concentration of Soviet naval units outside the U.S.S.R.

What does all this mean? Events since 1975 shed light on the past: This horror was precisely what we were trying to prevent. The president has called our effort a noble cause, and he was right. Whatever mistakes in how the war was fought, whatever one's view of the strategic rationale for our intervention, the morality of our effort must now be clear. Those Americans who served, or who grieve for their loved ones lost or missing, can hold their heads high: Our sacrifice was in the service of noble ideals -- to save innocent peoples from brutal tyranny . . . .

We left Indochina in 1975, but the cost of failure was high. The price was paid, in the first instance, by the more than 30 million people we left behind to fall under communist rule. But America, and the world, also paid a price.

Our domestic divisions weakened us. The war consumed precious defense resources, and the assault on defense spending at home compounded the cost; years of crucial defense investment were lost, while the Soviets continued the steady military buildup they launched after the Cuban missile crisis. These wasted years are what necessitated our recent defense buildup to restore the global balance.

For a time, the United States retreated into introspection, self-doubt and hesitancy. Some Americans tended to think that American power was the source of the world's problems, and that the key to peace was to limit our actions in the world. So we imposed all sorts of restrictions on ourselves.

Vietnam -- and Watergate -- left a legacy of congressional restrictions on presidential flexibility, now embedded in our legislation. Not only the War Powers Resolution, but a host of constraints on foreign aid, arms exports, intelligence activities and other aspects of policy -- these weakened the ability of the president to act and to conduct foreign policy, and they weakened our country. Thus we pulled back from global leadership.

Our retreat created a vacuum that was exploited by our adversaries. The Soviets concluded that the global "correlation of forces" was shifting in their favor. They took advantage of our inhibitions and projected their power to unprecedented lengths: intervening in Angola, in Ethiopia, in South Yemen and in Afghanistan. The Iranian hostage crisis deepened our humiliation.

American weakness turned out to be the most destabilizing factor on the global scene. The folly of isolationism was again revealed. Once again it was demonstrated -- the hard way -- that American engagement, American strength and American leadership are indispensable to peace. A strong America makes the world a safer place . . . .

A lot of rethinking is going on about the Vietnam war -- a lot of healthy rethinking. Many who bitterly opposed it have a more sober assessment now of the price that was paid for failure. Many who supported it have a more sober understanding now of the responsibilities that rest on our nation's leaders when they call on Americans to make such a sacrifice. We know that we must be prudent in our commitments. We know that we must be honest with ourselves about the costs that our exertions will exact. And we should have learned that we must maintain the ability to engage with, and support, those striving for freedom, so that options other than American military involvement remain open . . . .

During the Vietnam war, we heard an endless and shifting sequence of apologies for the communists: that they were "nationalists"; that they were an indigenous anticolonial movement, that they were engaged in a civil war that the outside world should not meddle in. As these arguments were proved hollow, the apologies changed. We heard that a communist victory would not have harmful consequences, either in their countries or the surrounding region. We were told that the communists' ambitions would be satisfied, that their behavior would become moderate.

As these assertions became less convincing, the apologies turned to attack those who fought to be free of communism: our friends were denounced as corrupt and dictatorial, unworthy of our support. Their smallest misdeeds were magnified and condemned.

Then we heard the theme that we should not seek "military solutions," that such conflicts were the product of deep-seated economic and social factors. The answer, they said, was not security assistance, but aid to develop the economy and raise living standards.

But how do you address economic and social needs when communist guerrillas -- as in Vietnam then and in Central America now -- are waging war against the economy in order to maximize hardship? Our economic aid then, as now, is massive; but development must be built on the base of security. And what are the chances for diplomatic solutions if -- as we saw after the 1973 Paris Agreement -- we fail to maintain the balance of strength on which successful negotiation depends? Escapism about the realities of power and security -- that is a pretty good definition of isolationism.

And finally, of course, the critics turned their attack on America. America can do no right, they said. Now, criticism of policy is natural and commonplace in a democracy. But we should bear this past experience in mind in our contemporary debates. The litany of apology for communists, and condemnation for America and our friends, is beginning again. Can we afford to be naive again about the consequences when we pull back, about the special ruthlessness of communist rule? Do the American people really accept the notion that we, and our friends, are the representatives of evil?

The American people believe in their country and in its role as a force for good. They want to see an effective foreign policy that blocks aggression and advances the cause of freedom and democracy. They are tired of setbacks, especially those that result from restraints we impose on ourselves.

Vietnam and Central America -- I want to tackle this analogy head-on.

Our goals in Central America are like those we had in Vietnam: democracy, economic progress and security against aggression. In Central America, our policy of nurturing the forces of democracy with economic and military aid and social reform has been working -- without American combat troops. And by virture of simple geography, there can be no conceivable doubt that Central America is vital to our own security . . . .

Brave Nicaraguans -- perhaps up to 15,000 -- are . . . struggling to prevent the consolidation and expansion of communist power on our doorstep, and to save the people of Nicaragua from the fate of the people of Cuba, of South Vietnam, Cambodia and Laos. Those who assure us that these dire consequences are not in prospect are some of those who assured us of the same in Indochina before 1975 . . . .

The ordeal of Indochina in the past decade -- as well as the oppressions endured by the people of Cuba, and every other country where communists have seized power -- should teach us something. Do we want another Cuba in this hemisphere? How many times must we learn the same lesson?