VZCZCXRO2115
PP RUEHHM
DE RUEHHI #0731/01 1700937
ZNR UUUUU ZZH
P 180937Z JUN 08
FM AMEMBASSY HANOI
TO RUEHC/SECSTATE WASHDC PRIORITY 8045
RHEHNSC/NATIONAL SECURITY COUNCIL WASHINGTON DC
INFO RUEHHM/AMCONSUL HO CHI MINH 4874
RUEKJCS/SECDEF WASHINGTON DC
RUEATRS/DEPT OF TREASURY WASHINGTON DC
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
UNCLAS SECTION 01 OF 04 HANOI 000731
SENSITIVE
SIPDIS
FOR PRESIDENT BUSH FROM AMBASSADOR MICHALAK
E.O. 12958: N/A
TAGS: OTRA ECON ETRD EINV PREL PHUM KIRF EAIR VM
SUBJECT: SCENESETTER FOR U.S. VISIT OF VIETNAM PRIME MINISTER DUNG
1. (SBU) Summary: Vietnam's Prime Minister views his June 24 White
House meeting as an opportunity to confirm to all -- including those
who hate us -- that the United States will remain a big part of
Vietnam's future. In particular, he will celebrate our remarkable
economic partnership, built on U.S. technical assistance, and "sell"
the idea of further significant partnerships in education and
science and technology. We should embrace the Prime Minister's
broad vision of engagement, which strongly supports U.S. national
interests, while underscoring that we want to see changes in Vietnam
leading to greater freedoms for the nation's young, wired, dynamic
population. End Summary.
2. (SBU) Prime Minister Nguyen Tan Dung will arrive in Washington as
the leader of a nation proud of its increasing clout in the region.
There is much to celebrate. Vietnam's economic reforms have set the
country on a successful market economy path defined by average
annual economic growth of 7.5 percent over the last decade. In
2007, the economy grew at a rate of 8.5 percent. Poverty rates have
tumbled, from 58 percent in 1993 to under 15 percent in 2007,
according to the GVN's latest figures. A recent World Bank study
described this poverty reduction rate as the most significant in
such a short period of time of any nation in history. The middle
class is growing and retail markets are booming. The transformation
of Vietnam's economic, social and technological landscape is
beginning to create more "space" for Vietnam's people to be heard,
even on some sensitive issues.
Acknowledging U.S. Help; Seeking More
-------------------------------------
3. (SBU) Dung and his key supporters understand that the United
States has -- and is -- playing a direct role in creating the
conditions for their nation's success. Dung is thankful, in
particular, for the key technical assistance we've given over the
past seven years in reforming the system of economic governance. He
wants more. On this trip, Dung hopes to highlight and deepen very
positive bilateral trends in cooperation in the key, forward-looking
areas of education and scientific cooperation on climate change,
both key concerns of the Vietnamese people. We are already
expanding our efforts in those areas, so we will be able to respond
positively. Dung should also welcome U.S. help in the broader areas
of good governance, and rule of law, all previously considered too
sensitive for U.S. involvement. This is good news.
Facing Challenges
-----------------
4. (SBU) Your meeting with Prime Minister Dung, however, also comes
at a point when Dung is battling to maintain his position in the
complex political environment here. Having staked his reputation on
delivering solid economic growth, this year's spike in inflation
creates definite political challenges. Current woes expose
weaknesses in the economy and economic policy which were papered
over in the go-go years of huge FDI inflows and increases in
exports. In addition, the recent passing of one of Dung's mentors,
former Prime Minister Vo Van Kiet, robs Dung of a strong advocate of
reform at a sensitive time. All this aids Dung's more conservative
counterparts in questioning the Prime Minister's embrace of the
United States, while charging that Dung may not "have what it takes"
even in economic matters.
5. (SBU) To date, the Prime Minister has not been knocked off his
agenda. Indeed, all signals indicate that Dung is determined to
boldly call for a significant expansion of out bilateral
relationship in the economy, educational exchanges, environment and
overall assistance in ways that can and will energize the process of
reform that Dung now leads.
GROWING RELIANCE ON U.S. ADVICE
-------------------------------
6. (SBU) Dung's motivation to seek stronger ties is clear. We are
Vietnam's largest market and one of its closest trading partners.
Dung and his colleagues also appropriately see the United States as
an important force in maintaining a stable regional environment and
balancing a rising China. Domestic considerations play a role as
well. As Vietnam continues its rapid economic and social
transition, many Vietnamese view the strength of its relations with
the United States as a key indicator of how much progress has been
made in leaving the dark days of the 1970's and 1980's behind. For
these reasons, Dung is committed to continued progress in bilateral
relations and will speak positively and optimistically about the
future of U.S.-Vietnam ties. Differences over human rights remain,
however, and lingering fears that the United States supports the
overthrow of the current regime continue to complicate the
relationship.
HANOI 00000731 002 OF 004
7. (SBU) For our part, Vietnam provides an important opportunity in
East Asia for advancing U.S. national interests in securing a stable
and peaceful Asia-Pacific region. We are also encouraged by the
steady liberalization of the government's role in the life of its
citizens. Problems remain, as noted below, but all agree that basic
trends are positive with regard to personal freedoms, when viewed
over time.
TESTS FOR VIETNAM: EDUCATION, CORRUPTION AND STATISM
--------------------------------------------- -------
8. (SBU) Despite its achievements, Vietnam still faces substantial
challenges. Its outdated education system is failing to keep up
with the demands of a modern economy and an acute shortage of
skilled and semi-skilled labor is already posing a major roadblock
to development. Since my arrival one year ago, I have been leading
a multi-faceted, multi-year effort which has already helped result
in a deepening of U.S. engagement with Vietnam on education issues.
We are helping broker partnerships between Vietnam's academic
institutions and the private sector, including public-private
partnerships with U.S. businesses, as well as significantly
increasing the number of Vietnamese students choosing the United
States for overseas training. These efforts will pay great
dividends now, but even greater dividends ten or twenty years down
the road.
9. (SBU) As mentioned above, high inflation worries the national
leadership, and one of the main culprits is inefficient, opaque
spending by State Owned Enterprises, or SOEs, which account for 37
percent of Vietnam's GDP. SOE leaders, largely entrenched Party
insiders, resist the reform agenda and have deep and powerful
connections to current and past top leaders. Dung to date has been
unwilling or unable to privatize or significantly limit the growth
of the big SOEs. Governments, multilateral development banks and
financial institutions have all urged the GVN to improve oversight
of the state sector.
10. (SBU) Corruption also continues to be a major problem in
Vietnam, and Transparency International's perception index ranks
Vietnam at 123 of 179 countries, a continuous backsliding since
2002. More worrisome was the arrest in April of two popular
reporters who made their name on graft-busting, and their two
government sources. The detentions sent chills through a press that
had thought itself increasingly free -- in fact encouraged by the
leadership -- to go after corrupt officials. To help Vietnam keep
reform on track, we need to support and emphasize the vital role
that an active press plays in ferreting out corruption.
ADOPTIONS - AN AMERICAN POLITICAL ISSUE
---------------------------------------
11. (SBU) Corruption and fraud in the field of intercountry adoption
have created an atmosphere where child selling can and does occur.
There are documented cases of local officials kidnapping children
and then offering them for adoption. When we uncover specific
cases, Vietnamese authorities flatly refuse to punish offenders. As
a result, the U.S. announced we cannot agree not to renew our
adoption agreement which expires in September 2008. Some
prospective American parents and adoptions groups were initially
critical of USG vigilance with regard to these issues; my Embassy's
issuance of a report outlining the abuses we are seeing has dampened
that criticism. The issue remains a sensitive one, however. We
continue to encourage Vietnam to join the Hague Convention on
Intercountry Adoptions, which would require it to put in place
robust safeguards to protect the rights of children and birth
parents. Dung will say the right thing in this regard, but may also
call for intermediate measures as well.
OUR MESSAGE ON HUMAN RIGHTS
---------------------------
12. (SBU) While we share common views with the GVN in many areas,
differences over human rights remain, and lingering fears that the
United States supports the overthrow of the current regime continue
to complicate the relationship. The existence of groups in the
United States and elsewhere that explicitly advocate regime change
helps generate charges by conservatives that the U.S. Government
supports the overthrow of the current regime. These stoke a
lingering paranoia that we are indeed still "the enemy." Reassuring
the GVN that the USG does not support violent separatist groups can
assist in building a better human rights dialogue based on mutual
trust.
13. (SBU) Serious human rights deficiencies in Vietnam include lack
of freedom of speech, freedom of assembly and freedom of the press.
HANOI 00000731 003 OF 004
My Mission tracks approximately 50 individual cases of prisoners of
conscience and activists under various forms of house arrest,
surveillance, and/or harassment. We continue to call for the
release of all prisoners of conscience and freedom of peaceful
expression of political views, but where we see individuals
expressing their political opinions, many of our government
interlocutors see "lawbreakers" trying to destabilize the regime.
14. (SBU) In other areas of governance and civil society, however,
perceptible progress is being made. Key Vietnamese leaders,
including PM Dung, are committed to enhancing governance,
establishing the rule of law and combating corruption -- all
critical in building guarantees of individual freedoms. Vietnam's
leading newspapers are more aggressive in what they publish and in
their willingness to push back against censors. As noted above,
however, generally good progress on allowing the press more freedom
to highlight corruption and general government inefficiency has been
marred by crackdowns that appear to occur when the media focus their
sights too high up within the leadership hierarchy.
15. (SBU) With regard to religious freedom, Vietnam continues to
make progress. More needs to be done, but the country no longer
qualifies as a particularly severe violator of religious freedom
under our legal definition and we removed the nation from the list
of countries of particular concern in late 2006.
OUR TRANSFORMATIONAL ASSISTANCE
-------------------------------
16. (SBU) Eighty-five percent of all U.S. Official Development
Assistance to Vietnam focuses on health issues, and we are expanding
our cooperative efforts, under your Emergency Program for AIDS
Relief to prevent and treat HIV/AIDS and combat Avian Influenza.
Vietnam has been a model partner in the global effort to fight Avian
Influenza, in particular, which is significant given the
recalcitrance of others. In other areas, we have been building
bridges with Vietnam's small nuclear regulatory sector, in part to
set the stage to enable our companies to help the nation achieve its
goal of building a nuclear power plant. This engagement also serves
counter-proliferation objectives. Our technical assistance directed
at helping Vietnam reform its system of economic governance remains
a mainstay, as noted above.
17. (SBU) Given its topography, Vietnam would be one of the
countries most severely affected by a rise in sea levels and has
begun to develop adaptation and mitigation strategies. In
preparation for this visit, our Vietnamese counterparts, at the
direction of the Prime Minister, repeatedly highlighted the need for
U.S. assistance to respond to the impacts of climate change.
Several U.S. agencies already work with Vietnamese counterparts in
this area.
GRADUAL PROGRESS IN DEFENSE COOPERATION
---------------------------------------
18. (SBU) Defense relations have advanced at a measured pace, but
have actually come quite far if viewed over time. We are in year
three of a new IMET program, and we now have professional military
exchanges with the People's Army of Vietnam (PAVN) in a limited but
growing range of areas including military law, military nursing,
public affairs, search and rescue, weather prediction and disaster
preparedness. Since 2003, U.S. Navy ships have made five port
visits to Vietnam, including most recently a November 14-18 visit by
two mine countermeasures ships. Reaching our full potential for
closer cooperation in defense activities, including multilateral
peacekeeping, humanitarian assistance efforts and attendance at U.S.
military schools is attainable, but will require time, persistence
and patience, and a lot of hard work.
AGENT ORANGE/DIOXIN
-------------------
19. (SBU) Over the past few years, we have begun to see a new
approach by the GVN in dealing with Agent Orange/dioxin, which in
the past has been used to demonize the United States. The GVN has
responded positively to increased U.S. engagement and the two
countries have started to move beyond scientific dialogue towards
cooperation on dioxin remediation projects. Building on earlier
technical assistance, Congress appropriated an additional USD 3
million in Economic Support Funds (ESF) for "dioxin mitigation and
health activities," which we are in the process of implementing.
While this represents significant progress, the Vietnamese media and
GVN officials continue to request additional support and Prime
Minister Dung likely will raise this issue with President Bush.
A WORD ABOUT CHINA
HANOI 00000731 004 OF 004
------------------
20. (SBU) While Vietnam's engagement with the United States will
continue to broaden, China remains Vietnam's strategic
preoccupation. This is not to say that Vietnam is "choosing" China
over the United States; the situation is much more complex than
that. Vietnam's leadership is sophisticated enough to realize that
relations with China and the United States do not represent a zero
sum game; it is possible to have good relations with both. Each
relationship also creates challenges, however. While China
constitutes a vital and necessary commercial partner and former
ally, it is also perceived as a significant and frustrating
constraint to Vietnam's freedom of action. Most Vietnamese also
dislike China on one level; the Chinese ruled Vietnam for a thousand
years and sometimes the "older brother" approach wears thin.
CONCLUSION
----------
21. (SBU) Your interactions with then-PM Phan Van Khai, your
meetings with President Triet and PM Dung here in 2006, then your
White House meeting with President Triet in 2007, all served to open
doors to new modes of cooperation. Frankly, this year's interaction
may prove the most significant. Our current concrete cooperation in
the economy, education, environment and energy has already added
significant new momentum to the relationship. PM Dung, in my view,
is skillfully pushing for advances into additional new areas of
cooperation. This in turn recommits Vietnam to the reform agenda
that has improved the lives of millions of Vietnamese. More
importantly, however, it locks us in for years to come,
foreshadowing an even greater U.S. influence in the years and
decades to come.
MICHALAK