Cablegate: Former Pm Vo Van Kiet On U.S. Ties, Wto, Economic Reform

This record is a partial extract of the original cable. The full text of the original cable is not available.

UNCLAS SECTION 01 OF 02 HO CHI MINH CITY 001383

SIPDIS

SENSITIVE

E.O. 12958: N/A
TAGS: PGOV PREL PINR ECON EAID EFIN ETRD VM WTO SOE
SUBJECT: FORMER PM VO VAN KIET ON U.S. TIES, WTO, ECONOMIC REFORM

REF: HANOI 2926

1. (SBU) Summary: Former Prime Minister Vo Van Kiet, one of the
fathers of Vietnam's economic reform policy and an informal
advisor to the GVN and the Party, stressed to the Consul General
October 30 that Vietnam is on the verge of eliminating the last
vestiges of its central planning system, divesting all but a few
"strategic" state owned enterprises and creating a level playing
field that will foster entrepreneurship and spur economic growth.
A firm majority in the Party favors taking more dramatic steps to
spur double-digit economic growth. At the same time, the
contention that the United States seeks to use economic reform to
undermine the Party -- so-called "peaceful evolution" -- no longer
resonates much. Vietnam, Kiet maintained, is ready to take our
bilateral relationship to a new level of cooperation. End
Summary.

2. (SBU) In a two-hour tour d'horizon with the CG and PolOff
October 30, former Prime Minister Vo Van Kiet (1991-97), one of
the Party's elder statesmen from the South and an architect of
Vietnam's economic liberalization policy, underscored the
commitment of the GVN and the Communist Party to deeper economic
reform and to a substantially improved relationship with the
United States. Kiet agreed with the CG that Vietnam has the clear
capacity to move to double-digit rates of economic growth from its
current annual seven percent rate. He said the Party is acutely
aware that, should Vietnam fail to further catalyze economic
growth, it will fail in its top-priority objective to catch up
with its "neighbors" (China, Thailand and Malaysia).

3. (SBU) Sometimes sounding more like an investment banker than a
former Politburo member and current informal advisor to the GVN
and Party, Kiet said that the GVN now recognizes that it needs to
do more to promote the non-state sector of the economy, to
catalyze domestic entrepreneurship and to attract greater foreign
investment. The GVN, he maintained, is prepared to take new
measures to streamline the regulatory process and to minimize
corruption. The GVN also will move more determinedly to divest
all but a few "strategic" state-owned enterprises and create a
level playing field in which SOEs and private companies would
compete fairly for credit, market share and survival. Subsidies
for SOEs would be cut and legal and administrative remnants of
Vietnam's old centrally planned economic system also will be
removed. Kiet maintained that these reforms do not need to wait
until the 10th Party Congress in 2006 for resolution. He said
that the legal framework exists or can be supplemented quickly to
implement reform, particularly as the National Assembly
understands that the negative effects of waiting outweigh the
positive ones of prompt action.

Peaceful Evolution warnings losing steam
----------------------------------------

4. (SBU) Kiet agreed that there are those in the Party -- "older
cadre and government officials" -- who still resist economic
reform because such reform "would create social instability."
(Note: Party leaders equate social instability with a weakening
of the Party's control over society. End note.) Publicly, these
concerns are sometimes manifested as a warning against "peaceful
evolution," an attempt by "external forces" such as certain
elements in the United States to use peaceful means to bring
"unwanted" change to Vietnam.

5. (SBU) Unlike when he was Prime Minister, Kiet believed that the
naysayers are a minority and will not halt the reform process.
Within the Party, fear of lagging behind Vietnam's neighbors and
failing to meet the economic expectations of the Vietnamese people
outweigh concerns over the implications of pushing for a more
open, private-sector oriented economy.

A strengthened bilateral relationship
-------------------------------------

6. (SBU) Kiet also was firm that the "peaceful evolution" group
within the Party and GVN would not be able to impede the
strengthening of the U.S.-Vietnam bilateral relationship. Now
that Vietnam had "resolved" most bilateral issues with China other
than the Spratlys, there is more of an emphasis within the Party
and GVN on the relationship with the United States. Kiet said
that the strategy of making trade and economic issues the bedrock
of the relationship is the correct one; in particular, the
Bilateral Trade Agreement is a "needed precondition" that allows
Vietnam to address other problems in the relationship. He said it
is the "common view of Vietnam's leadership" that there is no
reason why the U.S.-Vietnam relationship could not be modeled on
the U.S. bilateral relationship with Japan or the very friendly
ties that Vietnam has developed with France.

7. (SBU) Kiet also made a pitch for U.S. support for Vietnam's
rapid entry into the WTO. However, unlike his successor PM Phan
Van Khai, Kiet did not call for U.S. concessions during the WTO
accession negotiations (see reftel for the Ambassador's recent
conversation with PM Khai). Kiet did rail against hardliners
within the Party who had held up Vietnamese approval of the BTA in
the late 1990s. He argued that, because Vietnam delayed signing
the BTA, it was put in the position of having to negotiate with
its neighbors (Cambodia, Laos and China) for Vietnam's WTO
accession rather than have them seek Vietnam's approval for their
own entry into the WTO.
8. (SBU) Only on religious freedom issues did Kiet sound less like
a reformer and more like a traditional Party representative. Kiet
acknowledged a number of "incidents" and said that some local
officials still have unfortunate "prejudices." He maintained,
however, that these incidents belie the tremendous growth of
religious freedom and religious practice in Vietnam. The CG
pointed out to Kiet that our dialogue with the GVN on religion
does not focus on the freedom of belief but on how people can
organize themselves to practice their faith.

WINNICK

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