VZCZCXRO7857
PP RUEHHM
DE RUEHHI #2045/01 2230947
ZNR UUUUU ZZH
P 110947Z AUG 06
FM AMEMBASSY HANOI
TO RUEHC/SECSTATE WASHDC PRIORITY 3030
INFO RUEHHM/AMCONSUL HO CHI MINH CITY PRIORITY 1632

UNCLAS SECTION 01 OF 02 HANOI 002045 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
STATE FOR EAP/MLS, DEPARTMENT PASS TO PEACE CORPS 
 
E.O. 12958: N/A 
TAGS: PREL PHUM ETRD EINV ECON AMGT KNNP EAID VM
SUBJECT: AMBASSADOR MEETS WITH NEW GVN OFFICE OF THE GOVERNMENT VICE 
MINISTER 
 
 
¶1. (SBU) Summary: On August 7, the Ambassador met with Office of the 
Government Vice Chairman Nguyen Xuan Phuc, the new number two 
official in the Prime Minister's office.  During the broad-ranging 
conversation, the Ambassador pressed for: quick resolution of the 
proposed Boeing, Liberty Mutual and SSA Marine commercial deals in 
time for the President's November visit; GVN willingness to sign a 
country agreement establishing a Peace Corps program with at least 
30 volunteers (vice ten); and Vietnamese agreement to a nuclear fuel 
exchange at the Dalat experimental reactor.  The Ambassador also 
pressed for GVN agreement to quickly finalize details for 
acquisition of property in Hanoi for a new embassy compound (NEC). 
Finally, the Ambassador briefed Phuc on plans for the continuation 
of the very successful USAID "STAR" project to assist Vietnam's 
legal reforms in line with its WTO accession agreements.  In 
response, the Vice Chairman: assured the Ambassador that the Prime 
Minister's office will look positively and quickly at the proposed 
commercial deals; will look at the request for a country agreement 
on the Peace Corps and for a larger program; will examine our 
interest in a quick resolution to the Dalat reactor fuel issue; will 
support our request to finalize the NEC deal; and, will instruct the 
Government to present a STAR II proposal in the near future.  End 
Summary. 
 
¶2. (SBU) On August 7, the Ambassador met with Office of the 
Government (OOG) Standing Vice Chairman Nguyen Xuan Phuc.  Although 
the Ambassador had met Vice Chairman Phuc before in his previous 
incarnation as Quang Nam People's Committee Chairman, this was the 
Ambassador's first meeting with Phuc in his new position. 
 
Commercial Deals 
---------------- 
 
¶3. (SBU) The Ambassador noted that the President's upcoming visit in 
November will be a good chance to showcase the strength of our 
bilateral commercial relationship through the GVN's conclusion of 
several important trade deals with U.S. firms.  These include the 
proposed acquisition of additional Boeing aircraft by Vietnam 
Airlines, the issuance of an insurance license to Liberty Mutual, 
the granting of final clearances to allow SSA Marine to undertake 
its proposed developments at the Cai Mep and Cai Lan ports and a 
proposed power project with AES, as well as a proposed Gannon power 
project in Dong Nai Province.  The Ambassador also noted that U.S. 
firms are increasingly concerned about the sanctity of contracts 
under Vietnamese Law, as many U.S. investors report that it is 
difficult to get their Vietnamese partners to stick to their agreed 
contracts. 
 
¶4. (SBU) Phuc noted that the GVN is "trying hard on investment and 
business" and the GVN will work on the proposed purchase of ten new 
Boeing aircraft, the issuance of the insurance license and the power 
projects "in the most positive manner" before the President's visit. 
 Many localities in Vietnam are calling for foreign investment, but 
such investment "must develop according to the law."  In the case of 
Cai Mep port and the power projects, "we will push on our side, but 
you need to push on yours," Phuc said. 
 
Peace Corps 
----------- 
 
¶5. (SBU) The Ambassador also noted that another possible success 
story that could potentially be highlighted during the President's 
visit is the signing of a country agreement to establish a Peace 
Corps program in Vietnam.  The Peace Corps has been welcomed in 
principle in discussions with GVN ministries, but the Ministry of 
Education and Training (MOET) has proposed that it be the sole 
counterpart of the proposed country agreement.  This is not 
practical, as the Peace Corps works in a variety of areas including 
health, environment or education.  Instead, the agreement should be 
with the Ministry of Foreign Affairs (MFA) or the Office of the 
Government -- bodies which are more general in scope.  In addition, 
we have disagreed to date on the initial number of volunteers. 
Because of the administrative and logistic investment required -- 
normally USD one million dollars -- the smallest Peace Corps 
programs begin with 30 volunteers.  In the case of Vietnam, we would 
hope that these volunteers would serve in a number of Vietnam's 
provinces.  However, the GVN will only agree to an initial ten 
volunteers limited to serve in Hanoi and Ho Chi Minh City.  It is 
hard to justify opening a program with just ten volunteers, the 
Ambassador noted. 
 
¶6. (SBU) Phuc promised to ask the PM to reply to our concerns about 
the Peace Corps program as soon as possible and to address these 
concerns in time for an announcement in conjunction with the 
President's visit.  The OOG will ask the MFA to report their 
opinions to the PM on the issues of the program's scope, number of 
volunteers and appropriate level of country agreement. 
 
Dalat Reactor 
------------- 
 
HANOI 00002045  002 OF 002 
 
 
 
¶7. (SBU) The Ambassador noted that the Department of Energy (DOE) 
and the Ministry of Science and Technology (MOST) have held 
technical discussions related to nuclear nonproliferation and, among 
several proposed activities, the swapping of high-enriched uranium 
fuel for low-enriched uranium fuel at the Dalat Nuclear Research 
Reactor, at no cost to Vietnam, under the Russian Research Reactor 
Fuel Return (RRRFR) program.  The proposal has the blessing of the 
MOST, the Vietnam Atomic Energy Commission and the Dalat Nuclear 
Research Reactor, but is waiting for the OOG's approval.  On May 5, 
the Embassy delivered to the MFA draft copies of a bilateral 
government-to-government agreement on nuclear nonproliferation and a 
department-to-ministry level agreement. The GVN's remaining concerns 
over signing this agreement seem to be purely technical, the 
Ambassador added.  The GVN should push "the technical people" to 
accept the deal in time for the President's visit. 
 
¶8. (SBU) Phuc noted that the GVN shares our views on 
nonproliferation and promised to repeat our concerns about the Dalat 
reactor to the relevant technical ministries.  The GVN will never 
allow nuclear materials to fall in the hands of terrorists, he 
added. 
 
STAR II 
------- 
 
¶9. (SBU) The Ambassador underscored that we look forward to working 
with the OOG and with OOG Vice Chairman Nguyen Quoc Huy on the 
follow-on STAR II project.  The original STAR project, coordinated 
by the OOG, was instrumental in helping Vietnam implement the 
Bilateral Trade Agreement and in assisting Vietnam in completing a 
number of steps necessary to join the World Trade Organization. 
STAR II should be equally helpful to assist in many of the 
implementing steps after WTO accession and in developing the human 
resource capacity of the government to manage Vietnam's growing 
economy, the Ambassador added. 
 
¶10. (SBU) Phuc stated that the OOG will task the relevant ministries 
to prepare a proposal for STAR II soon.  The GVN considers technical 
assistance on post-WTO accession very important for Vietnam's future 
success. 
 
New Embassy 
----------- 
 
¶11. (SBU) The Ambassador noted that we have been working with the 
GVN to address our need for a new U.S. Embassy for over ten years. 
The GVN also needs a new facility in Washington.  We have now found 
the right piece of land for our new facility, and the Ambassador's 
recent meeting with the Hanoi People's Committee (HPC) Chairman set 
the stage for a deal.  The main issues remaining are the length of 
lease and an agreement on price and terms of payment.  If these 
issues can be resolved, the resulting deal will pave the way for the 
United States to build an embassy that adequately reflects the 
improved state of the bilateral relationship, he stressed. 
 
¶12. (SBU) Phuc said that the GVN sees no legal impediment to 
resolving the two remaining issues and fully supports our desire to 
conclude this deal soon.  He promised that the OOG will push the HPC 
to report to the PM on the quick resolution of these remaining 
issues. 
 
Comment 
------- 
 
¶13. (SBU) Just as the OOG was a key player in the run-up to the 
Prime Minister's visit last year, the OOG and Vice Chairman Phuc 
will be well placed to advance issues of interest to us that have 
gotten stuck in bureaucratic tangles or are held up because of turf 
battles -- especially in the run-up to the President's visit.  While 
it remains to be seen if Phuc can translate his "can-do" attitude 
into results, we hope that his influence can help resolve a number 
of important and thorny issues over the next several months.  End 
Comment. 
 
MARINE