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Reference ID	Created	Released	Classification	Origin
02HANOI2709	2002-11-08 04:47	2011-08-30 01:44	UNCLASSIFIED//FOR OFFICIAL USE ONLY	Embassy Hanoi

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


2002HANOI02709 - UNCLASSIFIED
 
 
 
                           UNCLASSIFIED     PTQ8796

PAGE 01        HANOI  02709  01 OF 05  080503Z 
ACTION EAP-00   

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      DOEE-00  ITCE-00  DOTE-00  SRPP-00  DS-00    MEDE-00  EB-00    
      EXME-00  EUR-00   E-00     FAAE-00  FBIE-00  UTED-00  VC-00    
      FRB-00   H-01     TEDE-00  INR-00   INSE-00  IO-00    ITC-01   
      LAB-01   L-00     VCE-00   MOFM-05  MOF-01   M-00     AC-01    
      NRCE-00  NSAE-00  NSCE-00  OCS-03   OES-00   OMB-01   OPIC-01  
      PA-00    PM-00    PRS-00   ACE-00   P-00     SCT-00   SP-00    
      SSO-00   SS-00    STR-00   TEST-00  TRSE-00  T-00     USIE-00  
      USSS-00  SA-00    ASDS-00  EPAE-00  PMB-00   DSCC-00  PRM-00   
      DRL-02   G-00     NFAT-00  SAS-00     /019W
                  ------------------0546A8  080504Z /38    
FM AMEMBASSY HANOI
TO SECSTATE WASHDC 8054
INFO AMCONSUL HO CHI MINH CITY 
AMEMBASSY MOSCOW 
ASEAN COLLECTIVE
USCINCPAC HONOLULU HI
SECDEF WASHDC//ISA/ACHAO//

UNCLAS SECTION 01 OF 05 HANOI 002709 
 
SIPDIS 
 
SENSITIVE 
 
STATE FOR EAP/BCLTV, EUR/RUS 
 
                       UNCLASSIFIED 
 
PAGE 02        HANOI  02709  01 OF 05  080503Z 
E.O. 12958: N/A 
TAGS: PREL PTER ETRD ECON EPET ENRG RS VM
SUBJECT:  VIETNAM-RUSSIA:  STRONG BUT "PRAGMATIC" 
--          RELATIONSHIP 
 
REF:  A.  HANOI 2622  B.  HANOI 857 
      ¶C.  HANOI 2621  D.  HANOI 2209 
 
¶1.  (U)  SUMMARY.  SINCE THE BREAKUP OF THE SOVIET UNION, 
VIETNAM'S TIES WITH RUSSIA HAVE EVOLVED FROM CLIENT STATE TO 
A RELATIONSHIP BASED ON " MUTUAL PRACTICALITY AND 
PRAGMATISM."  POLITICAL AND DEFENSE TIES STILL COUNT, BUT 
THE ECONOMIC RELATIONSHIP APPEARS INCREASINGLY IN THE 
FOREFRONT.  THE RETURN OF THE RUSSIAN BASE AT CAM RANH BAY 
PROCEEDED SMOOTHLY WITHOUT ANY APPARENT NEGATIVE IMPACT ON 
THE BILATERAL RELATIONSHIP.  VIETNAMESE STILL CONSIDER 
RUSSIA A GOOD PLACE FOR ADVANCED STUDIES.  ONE RELATIVELY 
MINOR BUMP IN THE ROAD AHEAD IS THE STATUS OF THE VIETNAMESE 
COMMUNITY RESIDENT IN RUSSIA.  END SUMMARY. 
 
--------------------------------------------- 
BILATERAL AGREEMENTS, STEADY STREAM OF VISITS 
--------------------------------------------- 
 
¶2.  (U)  WHILE NO LONGER A CLIENT STATE AS IN THE DAYS OF 
THE SOVIET UNION, VIETNAM STILL CONSIDERS RUSSIA A 
"TRADITIONAL" (I.E., LONG-TIME) FRIEND.  A NOVEMBER 7 "NHAN 
DAN" (PEOPLE'S DAILY) PRESS REPORT COMMEMORATING THE 85TH 
ANNIVERSARY OF THE OCTOBER REVOLUTION STRESSED THAT, AS AN 
OFFICIAL FROM THE RUSSIA-VIETNAM FRIENDSHIP ASSOCIATION HAD 
TOLD GENERAL SECRETARY OF THE COMMUNIST PARTY OF VIETNAM 
                       UNCLASSIFIED 
 
PAGE 03        HANOI  02709  01 OF 05  080503Z 
(CPV) NONG DUC MANH DURING HIS OCTOBER VISIT (REF A), "WHILE 
VIETNAM IS CHANGING, THE WARM SENTIMENT BETWEEN THE RUSSIAN 
AND VIETNAMESE PEOPLE WILL NOT CHANGE."  (NOTE:  "NHAN DAN" 
IS THE CPV'S MOUTHPIECE.  END NOTE.) 
 
¶3.  (U)  NGUYEN QUANG MINH, SENIOR EXPERT IN THE MINISTRY OF 
FOREIGN AFFAIR'S (MFA) EUROPE I DEPARTMENT, POINTED TO THE 
"LONG AND STEADY" COOPERATION BETWEEN THE TWO COUNTRIES AS 
EVIDENCE OF THIS CONTINUITY.  WHILE ACKNOWLEDGING A "BRIEF 
DOWNTURN" FOLLOWING THE COLLAPSE OF THE SOVIET UNION, MINH 
SAID THE "TRADITIONAL RELATIONSHIP" GOT BACK ON TRACK WITH 
THE SIGNING OF A TREATY GOVERNING BILATERAL TIES IN JUNE 
1994, AS WELL AS JOINT STATEMENTS ON THE DEVELOPMENT OF 
ECONOMIC, COMMERCIAL, SCIENTIFIC, AND TECHNICAL COOPERATION 
AND ON A BILATERAL "STRATEGIC PARTNERSHIP" IN 1997.  VIETNAM 
AND RUSSIA SIGNED AN AGREEMENT ON MILITARY AND TECHNICAL 
COOPERATION IN 1998, HE ADDED.  THE NOVEMBER 7 "NHAN DAN" 
REPORT OBSERVED THAT THE BILATERAL AGREEMENTS HAVE SERVED TO 
"STABILIZE THE RELATIONSHIP AND ASSIST VIETNAM IN 
INDUSTRIALIZATION AND MODERNIZATION." 
 
¶4.  (U)  IN ADDITION TO THESE MAJOR AGREEMENTS, THERE HAS 
BEEN A STEADY STREAM OF HIGH LEVEL VISITS SINCE THE MID- 
1990S.  ON THE GVN SIDE, THEN-FOREIGN MINISTER NGUYEN MANH 
CAM VISITED IN 1993; THEN-PRIME MINISTER VO VAN KIET IN 
1994; CAM AGAIN IN 1998 BUT AS THEN-DEPUTY PRIME MINISTER; 
PRESIDENT TRAN DUC LUONG  IN 1998; PRIME MINISTER PHAN VAN 
KHAI IN 2000; FOREIGN MINISTER NGUYEN DY NIEN IN 2001; AND 
MANH IN OCTOBER 2002. 
 
¶5.  (U)  ON THE RUSSIAN SIDE, THEN-FOREIGN MINISTER A.V. 
                       UNCLASSIFIED 
 
PAGE 04        HANOI  02709  01 OF 05  080503Z 
KOZYREV VISITED IN 1995; DUMA (LOWER HOUSE) SPEAKER DENNADY 
SELEZNYOV IN 1997, THEN-PRIME MINISTER VIKTOR CHERNOMYRDIN 
IN 1997; FOREIGN MINISTER IGOR IVANOV IN 2000; PRESIDENT 
PUTIN IN 2001; AND PRIME MINISTER MIKHAIL KASYANOV IN 2002 
(REF B).  A KEY DELIVERABLE FROM PRESIDENT PUTIN'S VISIT WAS 
THE CANCELLATION OF 85 PERCENT OF VIETNAM'S ESTIMATED DEBTS 
OF USD 11 BILLION OWED TO RUSSIA FROM THE VIETNAM WAR ERA, 
WITH THE REMAINING 15 PERCENT TO BE REPAID IN THE FORM OF 
BARTER TRADE SPREAD OVER 2000-2023.  PRIME MINISTER 
KASYANOV'S MARCH 2002 VISIT WAS NOTEWORTHY FOR THE SIGNING 
OF SIX AGREEMENTS, WHICH WERE MORE CONCRETE VERSIONS OF 
AGREEMENTS IN PRINCIPLE DISCUSSED DURING PRESIDENT PUTIN'S 
MARCH 2001 VISIT.  THESE INCLUDED AGREEMENTS ON (1) HEALTH 
CARE AND MEDICINE; (2) BORDER DEFENSE; (3) LAW ENFORCEMENT 
INFORMATION EXCHANGE; (4) HYDRO-METEOROLOGY; (5) A LOAN FOR 
HYDROELECTRIC PLANT CONSTRUCTION IN VIETNAM'S CENTRAL 
HIGHLANDS; AND (6) A FRAMEWORK FOR NUCLEAR ENERGY RESEARCH. 
 
-------------------- 
WE MUST BE PRACTICAL 
-------------------- 
 
¶6.  (SBU)  VLADIMIR TOKMAKOV, RUSSIAN EMBASSY FIRST 
SECRETARY, DESCRIBED HOW BOTH SIDES VIEW THE RELATIONSHIP IN 
 
SIPDIS 
TERMS OF "MUTUAL PRACTICALITY."  BOTH HE AND THE NGUYEN MANH 
HUNG, DEPUTY DIRECTOR OF THE CPV CENTRAL COMMITTEE'S 
COMMISSION FOR EXTERNAL RELATIONS, SAID SEPARATELY THAT THE 
BILATERAL RELATIONSHIP IS NOW "MATURE" AND HAD EVOLVED INTO 
ONE WHERE BOTH SIDES PRIMARILY CONSIDER "THEIR OWN 
 
                       UNCLASSIFIED 
 
PAGE 05        HANOI  02709  01 OF 05  080503Z 
 
                       UNCLASSIFIED 
 
                           UNCLASSIFIED     PTQ8797 
 
PAGE 01        HANOI  02709  02 OF 05  080504Z 
ACTION EAP-00 
 
INFO  LOG-00   NP-00    AGRE-00  AID-00   A-00     CA-01    CCO-00 
      CEA-01   CG-00    CIAE-00  COME-00  CTME-00  INL-00   DINT-00 
      DOEE-00  ITCE-00  DOTE-00  SRPP-00  DS-00    EB-00    EXME-00 
      EUR-00   OIGO-00  E-00     FAAE-00  FBIE-00  UTED-00  VC-00 
      FRB-00   H-01     TEDE-00  INR-00   INSE-00  ITC-01   LAB-01 
      L-00     VCE-00   MOFM-05  MOF-01   M-00     AC-01    NRCE-00 
      NSAE-00  NSCE-00  OCS-03   OES-00   OMB-01   OPIC-01  PA-00 
      PM-00    PRS-00   ACE-00   P-00     SCT-00   SP-00    SSO-00 
      SS-00    STR-00   TEST-00  TRSE-00  T-00     USIE-00  USSS-00 
      SA-00    ASDS-00  EPAE-00  PMB-00   DSCC-00  PRM-00   DRL-02 
      G-00     NFAT-00  SAS-00     /019W 
                  ------------------0546AF  080504Z /38 
R 080447Z NOV 02 
FM AMEMBASSY HANOI 
TO SECSTATE WASHDC 8055 
INFO AMCONSUL HO CHI MINH CITY 
AMEMBASSY MOSCOW 
ASEAN COLLECTIVE 
USCINCPAC HONOLULU HI 
SECDEF WASHDC//ISA/ACHAO// 
 
UNCLAS SECTION 02 OF 05 HANOI 002709 
 
SIPDIS 
 
SENSITIVE 
 
STATE FOR EAP/BCLTV, EUR/RUS 
 
                       UNCLASSIFIED 
 
PAGE 02        HANOI  02709  02 OF 05  080504Z 
 
 
INTERESTS."  TOKMAKOV ADDED THAT RELATIONS HAVE BECOME "MORE 
PRAGMATIC" THAN IN THE SOVIET DAYS.  FROM THE RUSSIAN 
PERSPECTIVE, FOREIGN POLICY PRAGMATISM EMANATES FROM 
RUSSIA'S CHANGED POSITION IN A MULTI-POLAR WORLD, TOKMAKOV 
CONTINUED.  "WE NO LONGER NEED MILITARY BASES AND WE'RE NO 
LONGER A MAJOR WORLD POWER," HE CONCLUDED.  HE ASSESSED 
RUSSIA'S OVERALL RELATIONSHIP WITH VIETNAM AS "WARM AND 
BASED ON MUTUAL BENEFIT."  TOKMAKOV ALSO CITED THE THREE 
MOST RECENT MAJOR VISITS - THE 2001 PUTIN VISIT, THE 2002 
KASYMANOV VISIT, AND THE RECENTLY CONCLUDED MANH VISIT -  AS 
"PARTICULARLY IMPORTANT," NOT NECESSARILY BECAUSE OF 
SPECIFIC RESULTS OR AGREEMENTS, BUT RATHER BECAUSE OF THE 
"ENDURING PERSONAL RELATIONSHIPS" THEY HAVE INSPIRED AMONG 
THE LEADERSHIP OF BOTH SIDES.  TOKMAKOV OPINED THAT IT IS 
IMPORTANT FOR THE LEADERSHIP "JUST TO MEET REGULARLY - 
FRIENDLY TALKS CAN SOLVE MANY PROBLEMS." 
 
¶7.  (SBU)  THE ASSESSMENT OF DR. BUI HUY KHOAT, DIRECTOR OF 
THE INSTITUTE OF EUROPEAN STUDIES OF THE NATIONAL CENTRE FOR 
SOCIAL SCIENCES AND HUMANITIES, PARALLED THAT OF EMBOFF 
TOKMAKOV.  DR. KHOAT SAID THAT PERHAPS THE BIGGEST CHANGE IS 
THAT THE "OLD SOVIET" RELATIONSHIP WAS BASED ON A "STRATEGIC 
ALLIANCE," WHEREAS THE "NEW" RELATIONSHIP IS BASED MORE ON 
"ECONOMIC BENEFITS AND NEW REALITIES."  VIETNAM AND RUSSIAN 
BOTH VIEW EACH OTHER IN TERMS OF THEIR POTENTIAL MARKETS, HE 
CLAIMED.  DR. KHOAT PREDICTED THAT THIS TREND WILL BE 
                       UNCLASSIFIED 
 
PAGE 03        HANOI  02709  02 OF 05  080504Z 
EVIDENT OVER THE NEXT FIVE YEARS, ASSUMING THE ECONOMIES OF 
BOTH COUNTRIES CONTINUE TO DEVELOP.  HE EXPRESSED A HOPE 
THAT RUSSIA, WHICH RANKS NINTH IN FOREIGN INVESTMENT IN 
VIETNAM (MOSTLY IN PETROLEUM SECTOR) WOULD "WORK HARD TO 
IMPROVE ITS STANDING IN THAT AREA" STILL FURTHER.  (NOTE: 
ON PAPER, RUSSIAN INVESTMENT IS AHEAD OF THAT FROM THE U.S. 
-- WHICH IS TECHNICALLY IN 15TH PLACE AMONG FOREIGN SOURCES 
OF INVESTMENT -- BUT MUCH US INVESTMENT, INCLUDING IN THE 
PETROLEUM SECTOR, COMES FROM US SUBSIDIARIES IN THE REGION 
AND SHOWS UP AS THIRD COUNTRY INVESTMENT, IN PARTICULAR FROM 
SINGAPORE.  END NOTE) 
 
¶8.  (SBU)  SERGEY ISAIEV, POL/C AT THE UKRAINE EMBASSY, 
SEPARATELY ASSESSED THAT THE RUSSIANS AND VIETNAMESE ARE 
VIEWING EACH OTHER THROUGH A "PRISM OF PRAGMATISM."  ISAIEV 
SAID THAT UKRAINE IS INTERESTED IN FOLLOWING THE RUSSIA - 
VIETNAM RELATIONSHIP BECAUSE "TO AN EXTENT, WE ARE 
COMPETITORS AND NO ONE IS GIVING GIFTS THESE DAYS."  ISAIEV 
NOTED, HOWEVER, THAT, SINCE PUTIN CAME TO POWER, THERE 
APPEARED TO BE RENEWED RUSSIAN INTEREST IN SOUTHEAST ASIA IN 
GENERAL AND VIETNAM IN PARTICULAR.  HE POINTED TO A 
REORGANIZATION IN THE RUSSIAN MINISTRY OF FOREIGN AFFAIRS 
THAT RESULTED IN THE ESTABLISHMENT OF TWO NEW DEPARTMENTS 
FOCUSED ON SOUTHEAST ASIA.  SEPARATELY, S.K. KALRA, FIRST 
SECRETARY OF THE INDIAN EMBASSY, DESCRIBED THE RUSSIA - 
 
SIPDIS 
VIETNAM RELATIONSHIP AS ANOTHER MANIFESTATION OF VIETNAM'S 
GENERAL WORLD OUTLOOK "TO BE FRIENDS WITH ALL COUNTRIES" AND 
SEEK IMPROVED ECONOMIC RELATIONSHIPS AROUND THE WORLD (REF 
C). 
 
----------------------------------- 
                       UNCLASSIFIED 
 
PAGE 04        HANOI  02709  02 OF 05  080504Z 
MILITARY COOPERATION STILL A FACTOR 
----------------------------------- 
 
¶9.  (SBU)  DR. KHOAT NOTED THAT, WHILE MILITARY-TO-MILITARY 
COOPERATION IS STILL A FACTOR IN THE RELATIONSHIP, THIS 
ASPECT IS LIKELY TO "REMAIN MODEST FOR THE FORESEEABLE 
FUTURE."  DR. KHOAT SUGGESTED THAT RUSSIA WOULD NONETHELESS 
REMAIN AN IMPORTANT SOURCE FOR MILITARY SUPPLIES AND WEAPONS 
(ALBEIT NOT THE MOST MODERN OR HIGH-QUALITY) "AT A 
REASONABLE PRICE."  DR. KHOAT POINTED TO THE OCTOBER VISIT 
TO RUSSIA OF A VIETNAMESE MILITARY SEARCH AND RESCUE 
DELEGATION (REF A) AS AN EXAMPLE OF THIS TYPE OF ENDURING 
COOPERATION.  DR. KHOAT ADDED THAT WHILE VIETNAM "MIGHT 
PREFER" TO OBTAIN HIGHER QUALITY MATERIEL FROM EUROPE, ITS 
EXISTING INVENTORY AND INFRASTRUCTURE WILL REMAIN TIED TO 
THE RUSSIAN STANDARD FOR "MANY YEARS."  INDIAN EMBOFF KALRA 
SEPARATELY NOTED THAT VIETNAM (LIKE INDIA) "WILL BE 
MILITARILY TIED TO THE RUSSIANS" FOR MANY YEARS.  IN 
ADDITION, THE HIGH COST OF EUROPEAN MATERIAL IS ANOTHER 
FACTOR KEEPING VIETNAM IN THE RUSSIAN MILITARY MARKET. 
WITHOUT GOING INTO DETAILS, THE CPV'S HUNG ADMITTED THAT 
THERE ARE "REGULAR" EXCHANGES BETWEEN THE TWO MILITARIES AND 
THAT EACH YEAR "SOME" VIETNAMESE MILITARY OFFICERS RECEIVE 
ADVANCED TRAINING IN RUSSIA. 
 
¶10.  (SBU)  ON A STRATEGIC LEVEL, INDIAN EMBOFF KALRA OPINED 
THAT RUSSIA AND VIETNAM WILL CONTINUE TO SHARE A MUTUAL 
INTEREST.  RUSSIA VIEWS VIETNAM, EVEN AFTER HANDING OVER THE 
BASE AT CAM RANH BAY, AS A FOOTHOLD IN SOUTHEAST ASIA; 
 
                       UNCLASSIFIED 
 
PAGE 05        HANOI  02709  02 OF 05  080504Z 
 
                       UNCLASSIFIED 
 
                           UNCLASSIFIED     PTQ8798 
 
PAGE 01        HANOI  02709  03 OF 05  080504Z 
ACTION EAP-00 
 
INFO  LOG-00   NP-00    AGRE-00  AID-00   A-00     CA-01    CCO-00 
      CEA-01   CG-00    CIAE-00  COME-00  CTME-00  INL-00   DINT-00 
      DOEE-00  ITCE-00  DOTE-00  SRPP-00  DS-00    EB-00    EXME-00 
      EUR-00   E-00     FAAE-00  FBIE-00  UTED-00  VC-00    FRB-00 
      H-01     TEDE-00  INR-00   INSE-00  ITC-01   LAB-01   L-00 
      VCE-00   MOFM-05  MOF-01   M-00     AC-01    NRCE-00  NSAE-00 
      NSCE-00  OCS-03   OES-00   OMB-01   OPIC-01  PA-00    PM-00 
      PRS-00   ACE-00   P-00     SCT-00   SP-00    SSO-00   SS-00 
      STR-00   TEST-00  TRSE-00  T-00     USIE-00  USSS-00  SA-00 
      ASDS-00  EPAE-00  PMB-00   DSCC-00  PRM-00   DRL-02   G-00 
      NFAT-00  SAS-00     /019W 
                  ------------------0546BA  080504Z /38 
R 080447Z NOV 02 
FM AMEMBASSY HANOI 
TO SECSTATE WASHDC 8056 
INFO AMCONSUL HO CHI MINH CITY 
AMEMBASSY MOSCOW 
ASEAN COLLECTIVE 
USCINCPAC HONOLULU HI 
SECDEF WASHDC//ISA/ACHAO// 
 
UNCLAS SECTION 03 OF 05 HANOI 002709 
 
SIPDIS 
 
SENSITIVE 
 
STATE FOR EAP/BCLTV, EUR/RUS 
 
                       UNCLASSIFIED 
 
PAGE 02        HANOI  02709  03 OF 05  080504Z 
 
VIETNAM VIEWS ITS STRONG RELATIONSHIP WITH RUSSIA AS A 
COUNTERBALANCE TO THE PRC'S LONG SHADOW.  KALRA EMPHASIZED 
THAT THIS STRATEGIC ELEMENT HAD NONETHELESS DECLINED OVER 
THE YEARS AND IS LIKELY TO CONTINUE TO DO SO AS THE ECONOMIC 
RELATIONSHIP TAKES ON GREATER IMPORTANCE. 
 
------------------------------------- 
ECONOMIC RELATIONSHIP A DRIVING FORCE 
------------------------------------- 
 
¶11.  (SBU)  THE RUSSIAN EMBASSY'S TOKMAKOV AND THE MFA'S 
MINH SAID SEPARATELY THAT THE PUSH FOR MUTUAL ECONOMIC 
BENEFIT IS THE CURRENT FOCUS OF BOTH COUNTRIES.  FOR 
EXAMPLE, MOST PRESS REPORTS FROM THE KASYMANOV AND MANH 
VISITS FOCUSED ON ECONOMIC ISSUES, INCLUDING HOW TO IMPROVE 
TWO-WAY TRADE, ANNOUNCEMENTS OF JOINT VENTURE PROJECTS, AND 
A CALL FOR VIETNAMESE ENTREPRENEURS TO "WORK HARDER TO FIND 
A MARKET NICHE IN RUSSIA." 
 
¶12.  (SBU)  ARGUABLY, COOPERATION IN THE ENERGY FIELD IS THE 
BIGGEST SINGLE TICKET ITEM IN THE ECONOMIC SECTOR.  THE 
VIETNAM-SOVIET OIL AND GAS JOINT VENTURE, (VIETSOVPETRO, 
WHICH IS A HOLDOVER FROM THE DAYS WHEN ONLY THE SOVIETS WERE 
ALLOWED TO "INVEST" IN THE ENERGY SECTOR) EARNS USD 300-500 
MILLION PER YEAR, ACCORDING TO PRESS REPORTS.  DURING THE 
VISIT OF PM KASYANOV LAST MARCH, THE TWO SIDES ANNOUNCED 
                       UNCLASSIFIED 
 
PAGE 03        HANOI  02709  03 OF 05  080504Z 
PLANS TO EXPAND VIETSOVPETRO TO DEVELOP NEW OIL AND GAS 
DEPOSITS FOUND ON VIETNAM'S CONTINENTAL SHELF.  THIS 
ANNOUNCEMENT CAUSED DISCOMFORT WITH FOREIGN INVESTORS, GIVEN 
THAT VIETSOVPETRO IS A STATE-STATE COMPANY AND THAT, AS OF 
YET, THERE HAS BEEN NO INVITATION TO PRIVATE FIRMS TO BID ON 
THE DEVELOPMENT OF THOSE DEPOSITS.  LOCAL OIL COMPANY REPS 
ALSO QUESTION THE TECHNICAL EXPERTISE OF THE VIETSOVPETRO. 
 
¶13.  (SBU)  IN ADDITION, RUSSIA IS PARTICIPATING IN THE 
CONSTRUCTION OF VIETNAM'S FIRST JOINT OIL REFINERY (AT DONG 
QUAT IN CENTRAL VIETNAM).  HOWEVER, THIS PROJECT IS A 
POTENTIAL WHITE ELEPHANT THAT HAD BEEN REJECTED BY OTHER 
FOREIGN INVESTORS, DONORS, AND THE IFIS, SINCE THE LOCATION 
OF THE REFINERY IS DISTANT FROM THE SOURCE OF THE PETROLEUM, 
WITH LITTLE EXISTING INFRASTRUCTURE (ROADS, PORTS) TO 
SUPPORT THE TRANSPORT.  THIS PROJECT IS AN ADMITTED ATTEMPT 
BY THE GVN TO "DISTRIBUTE DEVELOPMENT" TO THE CENTRAL REGION 
AND, ACCORDING TO EXPERTS, HAS LITTLE REAL ECONOMIC 
RATIONALE.  ACCORDING TO A MARCH 2001 RUSSIAN MFA 
ANNOUNCEMENT, THE REFINERY, WHEN COMPLETED, WILL PRODUCE AN 
ESTIMATED 6.5 MILLION TONS OF OIL A YEAR.  THE PROJECT IS 
EXPECTED TO COST A TOTAL OF USD 1.3 BILLION. ACCORDING TO 
RUSSIAN EMBOFF TOKMAKOV, THE PROJECT SHOULD BE COMPLETED BY 
THE END OF 2004. 
 
¶14.  (U)  RUSSIA HAS ALSO INVESTED ABOUT USD 7.5 MILLION IN 
ANOTHER JOINT VENTURE WITH PETROVIETNAM FOR OIL AND GAS 
PRODUCTION.  IN ADDITION, RUSSIA HAS ALLOCATED USD 100 
MILLION FOR THE CONSTRUCTION OF TWO POWER PLANTS IN THE 
CENTRAL HIGHLANDS.  THESE PROJECTS ARE FOR NOW JUST ON THE 
"WISH LIST," AND IT IS NOT CLEAR HOW MUCH/HOW SOON WILL 
                       UNCLASSIFIED 
 
PAGE 04        HANOI  02709  03 OF 05  080504Z 
ACTUALLY BE INVESTED IN SUCH PLANTS. 
 
¶15.  (SBU)  ASIDE FROM THE ENERGY FIELD, TOKMAKOV POINTED TO 
OTHER JOINT VENTURES IN AREAS SUCH AS RUBBER PROCESSING, 
AQUACULTURE, CARGO TRANSPORTATION, TEA CULTIVATION, AND 
FRUIT AND VEGETABLE PROCESSING.  TOKMAKOV ALSO NOTED THAT 
THERE HAS BEEN "MUTUALLY BENEFICIAL" COOPERATION IN 
SCIENTIFIC RESEARCH PROJECTS, CULTURE, AND EDUCATION. 
HOWEVER, HE LAMENTED THAT THESE AREAS "LAG WELL BEHIND THE 
ENERGY SECTOR." 
 
--------------------- 
PUSHING TWO-WAY TRADE 
--------------------- 
 
¶16.  (SBU)  PRESS ARTICLES AND OFFICIAL STATEMENTS FROM THE 
PUTIN AND KASYANOV VISITS DESCRIBED THE NEED TO INCREASE TWO- 
WAY TRADE "UP TO ITS POTENTIAL."  PUTIN ADMITTED PUBLICLY 
THAT IT WAS "ABSURD" THAT TWO-WAY TRADE WAS ONLY (AT THE 
TIME OF HIS VISIT) ABOUT USD 500 MILLION A YEAR.  SIMILARLY, 
KASYANOV COMMENTED DURING HIS VISIT THAT BILATERAL TRADE 
"NEEDS TO GROW."  THE EUROPEAN STUDIES CENTRE'S DR. KHOAT 
OBSERVED THAT THE BILATERAL TURNOVER DURING THE SOVIET ERA 
REPRESENTED OVER 60 PERCENT OF VIETNAM'S TOTAL TRADE, BUT BY 
2001 RUSSIA ACCOUNTED FOR JUST ABOUT THREE PERCENT OF 
VIETNAM'S EXPORTS AND TWO PERCENT OF ITS IMPORTS.  IN 
ADDITION, VIETNAM IS RUNNING A SIGNIFICANT TRADE DEFICIT 
WITH RUSSIA - RUSSIA'S EXPORTS TO VIETNAM ARE ABOUT DOUBLE 
ITS IMPORTS, ACCORDING TO PRESS REPORTS AND THE VIETNAM 
 
                       UNCLASSIFIED 
 
PAGE 05        HANOI  02709  03 OF 05  080504Z 
 
                       UNCLASSIFIED 
 
                           UNCLASSIFIED     PTQ8799 
 
PAGE 01        HANOI  02709  04 OF 05  080504Z 
ACTION EAP-00 
 
INFO  LOG-00   NP-00    AGRE-00  AID-00   A-00     CA-01    CCO-00 
      CEA-01   CG-00    CIAE-00  COME-00  CTME-00  INL-00   DINT-00 
      DOEE-00  ITCE-00  DOTE-00  SRPP-00  DS-00    EB-00    EXME-00 
      EUR-00   E-00     FAAE-00  FBIE-00  UTED-00  VC-00    FRB-00 
      H-01     TEDE-00  INR-00   INSE-00  ITC-01   JUSE-00  LAB-01 
      L-00     VCE-00   MOFM-05  MOF-01   M-00     AC-01    NRCE-00 
      NSAE-00  NSCE-00  OCS-03   OES-00   OMB-01   OPIC-01  PA-00 
      PM-00    PRS-00   ACE-00   P-00     SCT-00   SP-00    SSO-00 
      SS-00    STR-00   TEST-00  TRSE-00  T-00     USIE-00  USSS-00 
      SA-00    EPAE-00  PMB-00   DSCC-00  PRM-00   DRL-02   G-00 
      NFAT-00  SAS-00     /019W 
                  ------------------0546C0  080505Z /38 
R 080447Z NOV 02 
FM AMEMBASSY HANOI 
TO SECSTATE WASHDC 8057 
INFO AMCONSUL HO CHI MINH CITY 
AMEMBASSY MOSCOW 
ASEAN COLLECTIVE 
USCINCPAC HONOLULU HI 
SECDEF WASHDC//ISA/ACHAO// 
 
UNCLAS SECTION 04 OF 05 HANOI 002709 
 
SIPDIS 
 
SENSITIVE 
 
STATE FOR EAP/BCLTV, EUR/RUS 
 
                       UNCLASSIFIED 
 
PAGE 02        HANOI  02709  04 OF 05  080504Z 
 
 
TRADE PROMOTION AGENCY. 
 
¶17.  (SBU)  TWO-WAY TRADE, WHILE STILL MODEST COMPARED TO 
THE U.S. AND ESPECIALLY TO THE PRC, IS GROWING.  (NOTE:  TWO 
WAY TRADE WITH THE U.S. IS EXPECTED TO REACH ABOUT USD 2.2- 
2.5 BILLION THIS YEAR, WHILE TWO WAY TRADE WITH THE PRC WILL 
PROBABLY EXCEED USD 3 BILLION.  END NOTE.)  VIETNAM - RUSSIA 
TWO-WAY TRADE IS REPORTEDLY EXPECTED TO INCREASE ALMOST 40 
PERCENT FROM 2001 TO 2002 - TO ALMOST USD 700 MILLION.  THE 
MFA'S MINH AND TOKMAKOV OBSERVED SEPARATELY THAT THE VISIT 
OF PUTIN, AND HIS "SINCERE" INTEREST IN DEVELOPING THE 
BILATERAL ECONOMIC RELATIONSHIP, SERVED AS A CATALYST AND 
HELPED SPUR INCREASED LINKS BETWEEN RUSSIAN AND VIETNAMESE 
BUSINESSES.  TOKMAKOV PREDICTED, WITHOUT EXPLAINING HOW, 
THAT THERE IS A "GOOD CHANCE" TWO-WAY TRADE COULD REACH USD 
ONE BILLION OVER THE NEXT FEW YEARS. (COMMENT:  THIS IS 
HIGHLY UNLIKELY UNLESS RUSSIA REDUCES ITS TARIFF RATES FOR 
VIETNAMESE GOODS, HOWEVER.  END COMMENT) 
 
------------------------------------- 
CAM RANH BAY HANDOVER - LITTLE IMPACT 
------------------------------------- 
 
¶18.  (U)  IN A 1978 TREATY AND A SUBSEQUENT BILATERAL 
PROTOCOL, VIETNAM GRANTED THE THEN-SOVIET UNION A RENT-FREE 
LEASE OVER THE FORMER US BASE AT CAM RANH BAY UNTIL 2004. 
                       UNCLASSIFIED 
 
PAGE 03        HANOI  02709  04 OF 05  080504Z 
DURING A TIME OF COLD WAR TENSIONS IN THE FIRST HALF OF THE 
1980S, THE SOVIETS STATIONED MIG-23 FIGHTERS, MEDIUM RANGE 
BOMBERS, MARITIME RECONNAISSANCE AIRCRAFT, ANTISUBMARINE 
WARFARE AIRCRAFT AND NUMEROUS NAVAL VESSELS AT THE BASE. 
ACCORDING TO A 2001 PAPER PREPARED FOR THE AUSTRALIAN 
DEFENSE FORCE ACADEMY, BY 1984, "CAM RANH BAY WAS THE USSR'S 
LARGEST OVERSEAS MILITARY BASE OUTSIDE OF THE WARSAW PACT." 
FOLLOWING THE COLLAPSE OF THE SOVIET UNION IN 1991, ALL 
REMAINING AIRCRAFT AND NAVAL VESSELS WERE WITHDRAWN, AND 
RUSSIA BEGAN RETURNING BUILDINGS TO VIETNAMESE CONTROL. 
"SEVERAL HUNDRED" RUSSIAN MILITARY PERSONNEL STAYED BEHIND, 
MAINLY TECHNICIANS TO OPERATE A SIGNALS INTELLIGENCE 
STATION, ACCORDING TO THIS PAPER. 
 
¶19.  (SBU)  THE UKRAINE EMBASSY'S ISAIEV OPINED THAT WHILE 
RUSSIA "MIGHT HAVE WANTED" TO RETAIN CAM RANH BAY, THEY 
COULD NOT PAY FOR IT.  TOKMAKOV WAS UNABLE TO SUPPLY DETAILS 
ON HOW MUCH "RENT" THE GVN WAS ASKING, BUT ADMITTED 
SEPARATELY THAT RUSSIA COULD NOT AFFORD TO MAINTAIN THE BASE 
ANY LONGER.  HE COMMENTED THAT RUSSIA, NO LONGER A 
SUPERPOWER, HAD "NO NEED" FOR SUCH A BASE.  ISAIEV SAID THAT 
PUTIN "SHOWED GREAT COURAGE" IN FACING DOWN OPPOSITION FROM 
HARDLINERS REGARDING RUSSIA'S PULLOUT. 
 
¶20.  (SBU)  DR. KHOAT AND THE CPV'S HUNG NOTED SEPARATELY 
THAT THE RETURN OF CAM RANH BAY HAD NOT HAD A NEGATIVE 
IMPACT ON THE BILATERAL RELATIONSHIP.  DR. KHOAT OBSERVED 
THAT NOWADAYS "CAM RANH BAY IS NOT A VERY IMPORTANT PART OF 
THE BILATERAL RELATIONSHIP."  HUNG CONFIRMED THAT CAM RANH 
BAY AND ITS FUTURE HAD NOT BEEN ON THE AGENDA FOR THE MANH 
VISIT (ALTHOUGH OTHER REPORTS INDICATED THAT IT CAME UP 
                       UNCLASSIFIED 
 
PAGE 04        HANOI  02709  04 OF 05  080504Z 
DURING GENERAL DISCUSSION), NOR WAS IT RAISED DURING THE 
KASYANOV VISIT, ACCORDING TO THE MFA'S MINH. 
 
¶21.  (SBU)  IN TERMS OF FUTURE USE, TOKMAKOV AFFIRMED THAT 
RUSSIA "HOPES" IT WILL HAVE ACCESS TO CAM RANH BAY TO THE 
EXTENT VIETNAM GRANTS ACCESS FOR INTERNATIONAL SHIP VISITS. 
FOR THEIR PART, THE GVN HAS CONSISTENTLY STATED THAT CAM 
RANH BAY WILL BE USED FOR "APPROPRIATE NATIONAL DEVELOPMENT 
AND DEFENSE."  FOLLOWING A CEREMONY FOR THE HANDOVER OF CAM 
RANH BAY IN MAY 2002, THE MFA ANNOUNCED THAT VIETNAM "WILL 
NOT COOPERATE WITH ANY COUNTRY WISHING TO USE CAM RANH PORT 
FOR MILITARY PURPOSES."  TOKMAKOV NOTED THAT, SHOULD THE GVN 
WANT TO TURN THE AREA INTO A "FREE TRADE ZONE," THE 
TRANSPORTATION INFRASTRUCTURE IN THE AREA WILL NEED 
"CONSIDERABLE IMPROVEMENT." 
 
--------------------- 
A GOOD PLACE TO STUDY 
--------------------- 
 
¶22.  (SBU)  THE MFA'S MINH OBSERVED THAT CLOSE TIES WITH 
RUSSIA ARE REINFORCED BY A STEADY STREAM OF VIETNAMESE 
STUDYING IN RUSSIA.  IN ADDITION, "MANY AMONG VIETNAM'S 
PRESENT LEADERSHIP" (INCLUDING THE THREE CURRENT TOP 
LEADERS) SPENT FORMULATIVE YEARS IN THE SOVIET UNION.  WHILE 
THE TREND TO STUDY IN THE WEST IS GROWING, THE LOW COST OF A 
RUSSIAN EDUCATION REMAINS ATTRACTIVE TO SOME VIETNAMESE 
STUDENTS.  HOWEVER, MINH ESTIMATED THAT THERE ARE CURRENTLY 
ONLY ABOUT 750 STUDENTS IN RUSSIAN HIGHER EDUCATION, 
 
                       UNCLASSIFIED 
 
PAGE 05        HANOI  02709  04 OF 05  080504Z 
 
                       UNCLASSIFIED 
 
                           UNCLASSIFIED     PTQ8800 
 
PAGE 01        HANOI  02709  05 OF 05  080505Z 
ACTION EAP-00 
 
INFO  LOG-00   NP-00    AGRE-00  AID-00   A-00     CA-01    CCO-00 
      CEA-01   CG-00    CIAE-00  COME-00  CTME-00  INL-00   DINT-00 
      DOEE-00  ITCE-00  DOTE-00  SRPP-00  DS-00    EB-00    EXME-00 
      EUR-00   E-00     FAAE-00  FBIE-00  UTED-00  VC-00    FRB-00 
      H-01     TEDE-00  INR-00   INSE-00  ITC-01   LAB-01   L-00 
      VCE-00   MOFM-05  MOF-01   M-00     AC-01    NRCE-00  NSAE-00 
      NSCE-00  OCS-03   OES-00   OMB-01   OPIC-01  PA-00    PM-00 
      PRS-00   ACE-00   P-00     SCT-00   SP-00    IRM-00   SSO-00 
      SS-00    STR-00   TEST-00  TRSE-00  T-00     USIE-00  USSS-00 
      SA-00    ASDS-00  EPAE-00  PMB-00   DSCC-00  PRM-00   DRL-02 
      G-00     NFAT-00  SAS-00     /019W 
                  ------------------0546C3  080505Z /38 
R 080447Z NOV 02 
FM AMEMBASSY HANOI 
TO SECSTATE WASHDC 8058 
INFO AMCONSUL HO CHI MINH CITY 
AMEMBASSY MOSCOW 
ASEAN COLLECTIVE 
USCINCPAC HONOLULU HI 
SECDEF WASHDC//ISA/ACHAO// 
 
UNCLAS SECTION 05 OF 05 HANOI 002709 
 
SIPDIS 
 
SENSITIVE 
 
STATE FOR EAP/BCLTV, EUR/RUS 
 
                       UNCLASSIFIED 
 
PAGE 02        HANOI  02709  05 OF 05  080505Z 
 
ALTHOUGH THIS NUMBER SHOULD GROW, HE CLAIMED. SEPARATELY, 
TOKMAKOV SAID THE NUMBER MIGHT IN FACT BE "SIGNIFICANTLY 
HIGHER," AS THERE ARE MANY PRIVATE VIETNAMESE STUDENTS WHO 
GO TO RUSSIA FOR HIGHER EDUCATION.  WITHOUT PROVIDING 
DETAILED NUMBERS, MINH ESTIMATED THAT DURING THE SOVIET DAYS 
"THOUSANDS" OF VIETNAMESE STUDIED IN THE USSR ANNUALLY.  ON 
THE OCCASION OF RUSSIA'S NATIONAL DAY IN 2002, THE RUSSIAN 
GOVERNMENT ANNOUNCED IT WOULD PROVIDE AN ADDITIONAL 150 
SCHOLARSHIPS FOR VIETNAMESE STUDENTS. 
 
----------------- 
BUMP IN THE ROAD? 
----------------- 
 
¶23.   (SBU)  THERE REMAIN SOME CONCERNS OVER THE STATUS OF 
THE 120,000-STRONG VIETNAMESE COMMUNITY IN RUSSIA.  FROM THE 
RUSSIAN POINT OF VIEW, "SOME VIETNAMESE" ARE "ILLEGAL 
IMMIGRANTS" AND HAVE ENGAGED IN "ILLEGAL ACTIVITIES," SUCH 
AS SELLING COUNTERFEIT GOODS.  IN AUGUST, RUSSIAN 
AUTHORITIES CLOSED A VIETNAMESE-RUN TRADE CENTER AND SEIZED 
"COUNTERFEIT" GOODS AT ANOTHER.  THERE HAVE ALSO BEEN 
SEVERAL REPORTS OF RUSSIAN YOUTHS ATTACKING VIETNAMESE IN 
MOSCOW AND OTHER CITIES.  THE GVN FLATLY REJECTS THE RUSSIAN 
CLAIMS ABOUT "ILLEGAL IMMIGRANTS."  THE CPV'S HUNG STATED 
THAT THERE ARE "NO ILLEGAL VIETNAMESE" IN RUSSIA.  HE 
EXPLAINED THAT MANY VIETNAMESE HAD GONE TO RUSSIA DURING THE 
                       UNCLASSIFIED 
 
PAGE 03        HANOI  02709  05 OF 05  080505Z 
SOVIET ERA ON CONTRACTS; SOME WERE THE VICTIMS OF THE 
"RESULTING CHAOS" THAT ENSUED WHEN THE SOVIET UNION 
COLLAPSED AND MANY FACTORIES CHANGED OWNERSHIP.  HE ADMITTED 
THAT THERE MAY BE "MISUNDERSTANDINGS" REGARDING THEIR 
STATUS, HOWEVER.  HUNG CONFIRMED THAT MANH HAD PRESSED PUTIN 
DURING THE OCTOBER VISIT TO ENSURE THE SAFETY OF ALL 
VIETNAMESE LIVING IN RUSSIA.  WITHOUT GOING INTO SPECIFICS, 
TOKMAKOV SAID THAT THE RUSSIAN GOVERNMENT IS CONTINUING TO 
WORK WITH VIETNAM'S EMBASSY IN MOSCOW TO RESOLVE THESE 
PROBLEMS. 
 
------- 
COMMENT 
------- 
 
¶24.  (SBU)  GOOD RELATIONS WITH RUSSIA REMAIN A KEY 
COMPONENT OF VIETNAM'S STRATEGY OF DIPLOMATIC 
DIVERSIFICATION SINCE 1991, A PROCESS THAT HAS ALSO ENTAILED 
ESTABLISHMENT OF DIPLOMATIC TIES WITH THE U.S. AND SOUTH 
KOREA, RESTORATION OF GOOD RELATIONS WITH THE PRC, EXPANDED 
CONTACTS WITH THE EU AND ITS MEMBER STATES (REF D) AND 
TAIWAN, AND INTEGRATION INTO THE REGION VIA ASEAN.  PERSONAL 
LINKS -- FROM EDUCATIONAL EXPERIENCES AND OTHER SOVIET-ERA 
EXCHANGES -- OF MANY OF VIETNAM'S TOP AND MID-LEVEL 
OFFICIALS ALSO PLAY A ROLE IN THE KEEPING A FOCUS ON THE 
RELATIONSHIP, ALTHOUGH THE RELATIVELY SMALLER NUMBER OF 
STUDENTS THESE DAYS MAKES THIS A DECLINING INFLUENCE.  OTHER 
VESTIGES OF THE OLD PARADIGM -- ESPECIALLY MILITARY 
PROCUREMENT -- WILL REMAIN AS FACTORS IN THE CLOSENESS OF 
BILATERAL TIES AS WELL, ALTHOUGH STRATEGIC LINKS BETWEEN THE 
TWO COUNTRIES NOW ARE MORE IN THE CONTEXT OF THE ASEAN 
                       UNCLASSIFIED 
 
PAGE 04        HANOI  02709  05 OF 05  080505Z 
REGIONAL FORUM RATHER THAN ON THE PREVIOUS BILATERAL BASIS. 
NO MATTER HOW HARD LEADERS IN BOTH COUNTRIES TRY TO PUSH THE 
ECONOMIC RELATIONSHIP, VIETNAM'S ECONOMIC FUTURE IS LIKELY 
TO BE MUCH MORE TIED TO CONTINUED IMPROVEMENTS IN RELATIONS 
WITH THE U.S., EU, AND ASIAN PARTNERS, HOWEVER. 
BURGHARDT 
 
                       UNCLASSIFIED

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Viewing cable 02HANOI2709, VIETNAM-RUSSIA: STRONG BUT "PRAGMATIC"