Cablegate: Scenesetter for Senator Webb's December Visit to Vietnam

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O 150909Z DEC 08
FM AMEMBASSY HANOI
TO RUEHC/SECSTATE WASHDC IMMEDIATE 8852
INFO RUEHHM/AMCONSUL HO CHI MINH 5380
RUEHZS/ASEAN REGIONAL FORUM COLLECTIVE

UNCLAS SECTION 01 OF 05 HANOI 001357

SENSITIVE
SIPDIS

DEPARTMENT FOR H AND EAP/MLS. PLS PASS TO SENATOR WEBB

E.O. 12958: N/A
TAGS: PREL PGOV PHUM ECON ETRD MARR VM

SUBJECT: SCENESETTER FOR SENATOR WEBB'S DECEMBER VISIT TO VIETNAM

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OVERVIEW
--------

1. (SBU) Senator Webb: Your December 22-January 2 visit to Vietnam
comes at an opportune moment. Our bilateral relationship with
Vietnam is arguably at its highest point since relations were
normalized in 1995. Propelled by a series of senior bilateral
visits, the United States and Vietnam have deepened cooperation in
areas ranging from public health and MIA issues to higher education
and technical assistance designed to support Vietnam meet its WTO
and Bilateral Trade Agreement obligations. The United States is
Vietnam's largest export market and third largest overall trade
partner, and U.S. investment in Vietnam continues to grow.
Conservative voices in Vietnam's leadership remain wary of U.S.
intentions, but their influence is waning as the country's young
population -- the first generation in memory to live without war --
looks to the West. Strategically, Vietnam increasingly views the
U.S. presence in the region as a force for stability, a perspective
evident in the first-ever bilateral political-defense talks October
6 and policy planning talks October 30. Vietnam is also taking a
more active role in multilateral diplomacy, both as a non-permanent
member of the UN Security Council and as an emerging leader in
ASEAN.

2. (SBU) Profound differences remain, however, particularly in our
approach to human rights. While Vietnam has made strides in
improving religious freedom -- resulting in the country being
removed from the list of "Countries of Particular Concern" -- there
has not been a corresponding improvement in political rights or
press freedom. Suspicion over our human rights reporting and
advocacy almost certainly are a main reason for the cumbersome
restrictions that the GVN continues to place on our HCMC consulate
operations. We have our differences too on how Vietnam approaches
international issues. While taking its UNSC obligations seriously,
Vietnam's non-interventionist line has caused it to align with
Russia and China on issues such as Georgia and Darfur. China,
understandably, remains Vietnam's strategic obsession and provides
the subtext for Hanoi's "friends to all" foreign policy -- an
approach that can at first seem naive, but which is firmly rooted in
real politic.

VIETNAM'S FOREIGN POLICY PRIORITIES
-----------------------------------

3. (SBU) Vietnam professes a "friends to all" foreign policy,
guided by a non-interventionist ethic similar to China's famous Five
Principles of Peaceful Coexistence. But despite the Bandung-era
rhetoric, Vietnam's foreign policy is fundamentally pragmatic.
While the overriding strategic concern remains China, Vietnam is
under no illusions that it can somehow "balance" China with the
United States, Russia, or Japan. Mistrust of China runs deep, fed
by historical animosities and simmering resentment over what is
widely viewed as a weak position on South China Sea territorial
disputes. Vietnam's leadership appears to realize, however, that
confrontation with China is not in the country's interest. Nor is
it a position that the Party could sustain domestically: once
unleashed, nationalistic sentiment, though initially directed at
China, could easily turn toward the Party itself.

4. (SBU) Instead, Vietnam seeks to maintain as cordial and stable a
relationship with China as possible, while also cautiously
cultivating a diverse range of bilateral friendships and enmeshing
these in a framework of multilateral engagement. In this context,
Vietnam's bilateral relationship with the United States enjoys pride
of place; however, our relationship is but one of several, and
Vietnam is wary of pushing the agenda with the United States too
far, too fast, lest it antagonize China.

5. (SBU) Multilaterally, Vietnam puts great store in ASEAN. It has
voiced support for enhancing both the association's internal
capabilities and its relationships with ASEAN's dialogue partners.
Similarly, Vietnam looks at a number of regional issues such as
Burma and the Thai-Cambodia border disputes largely, though not
exclusively, through an ASEAN lens. Thus, while Vietnam's natural
impulse is not to interfere in Burma's internal affairs, Hanoi
recognizes the obstacles that Rangoon's continued intransigence
poses for ASEAN's credibility and relations with the West. At the
UNSC, Vietnam has been professional and well-briefed, but cautious.
Vietnam's UN mission has been eager to join in consensus, when
possible, voting for example to support sanctions on Iran. But
where there has been disagreement, Vietnam has tended to follow a
non-interventionist line.

HUMAN RIGHTS AND RELIGIOUS FREEDOM
----------------------------------

6. (SBU) For Vietnam non-interference is not just an abstract
principle, but also a reflection of narrow self-interest. Vietnam

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continues to have a poor record on human rights and still reacts
defensively to criticism, though it has learned to be more
responsive to international calls for dialogue, engaging the United
States and others in annual formal human rights discussions.
Vietnam's sensitivities notwithstanding, promoting human rights,
religious freedom, and the growth of an active civil society remain
top U.S. priorities. For its part, the MFA seems to have fixated on
the possibility of a Vietnam Human Rights Act in Congress, and you
are likely to hear objections to its passage.

7. (SBU) The human rights picture is not all bleak, to be sure.
Economic growth has brought with it an enormous expansion of
personal freedoms, and government is much less intrusive than it was
twenty, ten, or even five years ago. While much remains to be done,
religious freedoms continue to expand, with most religious groups
reporting improved conditions and growing memberships. We see this
progress as continuing. We have not, however, seen corresponding
progress in political rights, and the government continues to
severely restrict freedom of speech and assembly. Political
dissident groups such as "Bloc 8406" are banned and their members
subject to harassment and arrest; another twelve activists were
arrested over the last three months. Similarly, the October
conviction of two correspondents reporting on a major corruption
scandal (universally referred to here as the "PMU-18" scandal) and
the firing of several senior newspaper editors -- with more firings
rumored to be imminent -- has had a chilling effect on the recently
emerging field of investigative journalism. Vietnam's internet blog
scene, particularly in HCMC, has been a source of spirited debate.
But here too, the government is feeling, clumsily thus far, for a
way to curb what it considers to be overly sensitive discussions; in
September, a prominent blogger critical of Vietnam's "soft" stance
toward China was sentenced to two and a half years in prison. We
have been pressing Vietnam to amend its draft media law and to
provide whistle-blower protection for journalists and their
sources.

ECONOMIC SUCCESS AND CHALLENGES
-------------------------------

8. (U) Trade and investment have played a central and expanding
role in our improved relations. After a decade of isolation and
failed economic policies, Vietnam is determined to catch up with the
Asian Tigers. Vietnam's market-oriented reform program ("doi moi,"
renovation) has spurred export-led economic growth averaging 7.5
percent over the past decade. Trade with the United States has
expanded rapidly after Vietnam acceded to the WTO in January 2007 --
growing 29 percent from 2006 to 2007 --
due in some measure to technical assistance provided through the
U.S.-supported STAR (Support for Trade Acceleration) program. The
United States is currently Vietnam's largest export market and
third-largest overall trade partner. Despite the global economic
uncertainty, two-way trade in 2008 looks likely to once again break
new ground and surpass last year's mark.

9. (U) We are seeking to keep up the momentum with negotiations
toward a new bilateral investment treaty, the first round of which
will take place in Washington this month. We are also urging
Vietnam to join the Trans-Pacific Partnership free trade
negotiations, a step we hope you will also encourage. The two sides
recently agreed to open up completely their air cargo markets under
a revised civil aviation agreement. Inadequate intellectual
property protection and, especially, deficiencies in protecting
labor rights remain major problems, which stand in the way of
Vietnam's request for GSP status. A Department of Commerce team
held discussions this week in Hanoi on Market Economy Status,
something Vietnam has long sought. Commerce also recently
determined in its third and last report on textiles and garments
that Vietnam was not dumping in the United States. We are pushing
Vietnam to open its market further to U.S. beef.

10. (U) Despite rapid economic growth, Vietnam's economy continues
to face substantial challenges, including underdeveloped
infrastructure; a shortage of skilled workers, managers, and
engineers; and chronic misallocation of state resources to
inefficient, but politically powerful state-owned enterprises.
Corruption is endemic, as evidenced by the Japanese government's
decision to freeze all low-interest loans to Vietnam until it takes
"meaningful steps" to eliminate corruption. And while poverty
reduction efforts have been extremely successful -- a recent World
Bank study described Vietnam's poverty reduction rate as one of the
most significant in history -- disparities of wealth have widened.

11. (U) The global financial crisis has not directly affected
Vietnam given its limited integration into the world financial
system. However, the government is concerned that the slowing
global economy will affect Vietnam's exports and foreign investment
inflows. It has revised its 2009 GDP growth estimate down to 6.5%,
a figure that many local economists argue is still too high. Recent

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developments come on top of significant macroeconomic difficulties
at the beginning of the year, including high inflation, a ballooning
current account deficit, and pressure on the currency caused by high
money supply and credit growth. In response to these earlier
difficulties, the government tightened its monetary and fiscal
stance. These policies have worked, but now the government is
beginning to reverse them in response to increased concerns about
growth. The government faces a difficult balancing act between
controlling price increases (year-on-year inflation for November was
still 24.2 percent) and sustaining an economic expansion sufficient
to provide jobs and increasing income to its people.

THE MILITARY RELATIONSHIP AND TERRORISM
---------------------------------------

12. (SBU) Military ties, for obvious historical reasons, have
developed less rapidly. But here too there has been progress.
Efforts to provide the fullest possible accounting of missing
personnel predate the establishment of diplomatic relations, and the
development of trust on the issue has made gains in other fields
possible. We would like to see more progress in areas such as
underwater recovery and archival access, but, overall, both sides
can be proud of our achievements: accounting for 880 Americans
previously listed as MIA (1766 remain missing throughout Southeast
Asia). Largely on these foundations, the two sides' militaries are
slowly developing ties and have discussed cooperation in search and
rescue, naval medicine and meteorological information exchanges.
These and other initiatives -- such as expanding English-language
training under IMET, ship visits, and encouraging Vietnam to
participate in global peacekeeping operations -- were on the agenda
for political-defense talks, the first of their kind, which were
held in Hanoi October 6. Touching on a subject likely to come up in
your discussions, the two sides also exchanged views on China's
presence in the South China Sea.

13. (SBU) While the Vietnamese people and the GVN have also made
great strides toward healing war wounds and getting on with the
business of building a future for their country, issues relating to
the status of former ARVN soldiers, as well as others associated
with the "former regime," remain painful. One of the next important
psychological steps that the GVN needs to take in order to move from
division to unity is to expand their drives aimed at reconciliation
with foreign soldiers who served in Vietnam to include Vietnamese
who served in the ARVN. Your proposed visit to both the former ARVN
cemetery at Bien Hoa and a local cemetery where Viet Cong/Viet Minh
fighters are buried would represent a real watershed in US-VN
relations, as well as in Vietnam's own process of internal
reconciliation. (Note: Bien Hoa is one of the few remaining former
ARVN cemeteries. While some Vietnamese relatives of the fallen now
have access to the site, access is limited and we have not been able
to obtain permission to visit and see the current condition of the
graves and the grounds. End note)

14. (SBU) Vietnam says the right things about the threat of global
terrorism and has participated with us in modest cooperative
activities, including USG-funded counterterrorism-related training
at the International Law Enforcement Academy (ILEA) in Bangkok and
military-to-military exchanges with an emphasis on counterterrorism
themes. Vietnam has signed eight out of thirteen UN terrorism
conventions. Vietnam recently hosted a team of technical experts
from the Department of Energy to discuss the possibility of
launching Megaports in the ports of Saigon and Haiphong. This would
be a major step forward, and the government is currently considering
a draft MOU proposed by the DOE.

U.S. ASSISTANCE: HEALTH, TRADE, EDUCATION, ENVIRONMENT
--------------------------------------------- ---------

15. (U) Health diplomacy has been a hallmark of Mission strategy
for over 10 years, has opened many doors, and currently about 80
percent of all funding is in health and disability. Combating the
spread of infectious disease has been one of the most vigorous areas
of bilateral cooperation. For FY 2008, HIV/AIDS assistance under
PEPFAR totaled USD 88.6 million; since 2004, USD 234 million has
been devoted to HIV/AIDS in Vietnam. The results have been
encouraging, with Vietnam achieving the targets set by the Office of
Global AIDS Coordination. The United States has made substantial
investment to prevent and control avian influenza. Myriad other
capacity building work, for example in tuberculosis, research
capacity building, and good clinical practice, has been done
in-kind.

16. (U) U.S. assistance in other areas remains disproportionally
limited, particularly in relation to spending in smaller neighboring
nations, but increased somewhat in FY08 to more than USD 10 million,
due to earmarks for governance programming and de-mining. U.S.
programs such as USAID's STAR and the Vietnam Competitiveness
Initiative have become the government's preferred source of

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expertise in reshaping trade and economic regulation, with secondary
positive effects on governance. Treasury is also starting to engage
on economic issues, with programs in areas such as anti-money
laundering, taxation, insurance and bond market development.

17. (U) Education, although a newer priority, is the focus of much
Mission activity. Joint efforts to improve Vietnam's system of
higher education -- including expanding opportunities to study in
the United States and enhancing educational opportunities in Vietnam
through partnerships with U.S. universities -- was a main focus of
PM Dung's June visit to Washington. As a product of the visit, the
two sides have committed to regular meetings of an Educational Task
Force to discuss ways forward in several key areas, including
establishing an American university in Vietnam. Ongoing U.S.
educational activities include the Fulbright Program, which provides
scholarships for two-year Master's Degree programs at American
universities for 25 Vietnamese students each year, and the Vietnam
Education Foundation, which sends more than 40 students to the U.S.
for Ph.D. study in the hard sciences every year. The Fulbright
Economic Teaching Program provides high-quality training in
economics and public policy for mid-level administrators. In
addition, the U.S. Mission actively assists U.S. universities and
colleges wanting to set up programs at Vietnamese schools, while
EducationUSA Centers in Hanoi and Ho Chi Minh City provide
information and counseling to encourage students to study in the
U.S.

18. (U) Vietnam's rapid economic growth has put strains on the
environment, and the government's failure to address unchecked
pollution from booming Export Processing Zones and Industrial Parks
has drawn the attention of local media. Climate change is an
increasingly high-profile issue, and Vietnam's leadership is aware
of scientific studies outlining the severe effects rising sea levels
and salinity will have on Vietnam's ecology and coastal economy,
particularly in the rice-producing deltas. The June 2008 Joint
Statement between President Bush and PM Dung prominently mentioned
climate change. During Dung's visit, the United States and Vietnam
agreed to accelerate cooperation on climate change adaptation and
mitigation, and announced the creation of the Delta Research and
Global Observation Network (DRAGON) Institute at Can Tho University.
Supported by the U.S. Geological Survey, DRAGON Institute is
specifically designed to enhance cooperation on environmental
issues, particularly climate change, threatening the Mekong Delta.
These efforts support initiatives already underway by various U.S.
agencies -- including USAID, the U.S. Forest Service, and NOAA --
that directly or indirectly support Vietnam's climate change
response. Expanded cooperation from the U.S. Department of Energy
and U.S. Nuclear Regulatory Commission to support the creation of
the necessary safety and security infrastructure for Vietnam's
planned civilian nuclear power sector may also help mitigate
Vietnam's future greenhouse gas emissions

ADOPTION
--------

19. (SBU) Over the past two years, the US Embassy has uncovered
serious irregularities in the adoption system in Vietnam.
Anti-fraud investigations have uncovered more than 10 cases where
children were taken without the consent of their birth parents; 75%
of birth parents interviewed reported receiving payment as direct
inducements for placing their child up for adoption; most did not
understand that they were permanently relinquishing custody of their
children. As a result of these problems, the U.S. did not renew our
adoption agreement with Vietnam and imposed a moratorium on new
adoptions from Vietnam. The United States, along with our
international partners, believe that it is essential that Vietnam
become a full member of the Hague Convention as soon as possible and
have offered technical assistance to help Vietnam reach this goal.
We are encouraged that the government has begun to acknowledge the
problem and has formed an inter-agency working group on adoption
policy reform coordinated by the Office of the Government. However,
to date there has not been any serious progress on legal reform and
Hague accession, in large part due to resistance from working-level
officials at both the provincial and national levels.

WHAT YOU CAN EXPECT
-------------------

20. (SBU) While the GVN recognizes the strategic importance of the
United States in the region and the world, leaders here are not shy
about raising the specter of U.S.-led efforts to bring about
political change -- "peaceful evolution" -- or to criticize U.S.
actions it perceives as outside the multilateral system. They
routinely chafe over U.S. criticism of Vietnam's record of human
rights and religious freedom. Nonetheless, Vietnam's leaders are
also pragmatic and value their relationship with the United States,
both for its intrinsic importance and because Vietnam's security and
economic growth have become inextricably enmeshed in an

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international system of which the United States remains the leader.
As a result, you can expect your interlocutors not only to be
articulate and well informed, but also to express support for the
bilateral relationship. As noted above, lingering suspicions still
exist among conservatives in leadership; however, the overall tenor
is one of support for the development of closer ties with the United
States, albeit at a measured pace. Your upcoming trip to Hanoi will
add momentum to our efforts to help translate these good feelings
into sustainable accomplishments.

21. (U) We look forward to your visit and stand ready to do
everything we can to make your discussions as productive as
possible.

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