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RR RUEHCHI RUEHDT RUEHHM
DE RUEHHI #2420/01 2640634
ZNR UUUUU ZZH
R 210634Z SEP 06
FM AMEMBASSY HANOI
TO RUEHC/SECSTATE WASHDC 3466
INFO RUEHZS/ASEAN REGIONAL FORUM COLLECTIVE
RUEHHM/AMCONSUL HO CHI MINH 1850

UNCLAS SECTION 01 OF 04 HANOI 002420 
 
SIPDIS 
 
SIPDIS 
 
DEPARTMENT FOR EAP/MLS, H 
FROM THE AMBASSADOR FOR SENATOR HAGEL 
 
E.O. 12958: N/A 
TAGS: PGOV PREL OTRA VM
SUBJECT: SCENESETTER FOR SENATOR HAGEL 
 
HANOI 00002420  001.2 OF 004 
 
 
Introduction 
------------ 
 
¶1. (SBU) Senator Hagel:  Vietnam looks forward to welcoming 
you to Hanoi.  Your visit will be an important step in 
strengthening our cooperative relationship with Vietnam while 
bringing into focus key issues, including those our two 
countries will need to address in the run-up to the 
President's visit.  With Vietnam's new senior leadership now 
in place following the 10th Communist Party Congress in 
April, now is the perfect time to stress to your 
interlocutors the United States' desire to highlight our 
mutual interests and deepen our engagement with Vietnam. 
Vietnam' new leadership will play a critical role in 
maintaining a positive trajectory in our bilateral 
relationship in the years to come. 
 
¶2. (SBU) The bilateral relationship has enjoyed positive 
momentum over the past 18 months, thanks in part to a series 
of high-level bilateral visits, including that of then-Prime 
Minister Phan Van Khai, to the United States and of 
Secretaries Rumsfeld, Nicholson and Leavitt, and USTR Schwab 
 
SIPDIS 
to Vietnam.  Two other reasons for the positive trend in 
relations have been Vietnam's wish to join the WTO and its 
desire for a successful APEC 2006 and a visit by President 
Bush.  Both WTO and APEC are seen here as hallmarks of 
Vietnam's emergence on the global stage. 
 
¶3. (SBU) Looking beyond discrete events and visits, our 
relationship is strengthening due to two factors.  First, the 
United States represents an important force in the 
maintenance of a stable Asian geopolitical environment in 
which even "small" countries like Vietnam are assured their 
independence and freedom of action.  Perhaps more important 
as a factor for change, the United States has also emerged as 
a vital source of financial and technical assistance and a 
huge market for Vietnamese goods.  Since the signing of our 
Bilateral Trade Agreement in 2001, our two-way trade volume 
has quintupled.  For these reasons, Vietnam's new leaders are 
committed to continued progress in bilateral relations and 
will likely speak warmly and optimistically about the future 
of the U.S.-Vietnam relationship. 
 
¶4. (SBU) During your visit, we hope that you will: 
 
-- underline that President Bush's November visit can provide 
an opportunity for the United States and Vietnam to advance 
our bilateral agenda in a number of areas, including through 
the conclusion of several government-to-government and 
commercial agreements; 
 
-- express USG support for Vietnam's WTO accession while 
explaining that the U.S. Congress now has the lead on PNTR; 
 
-- encourage further economic reform and pro-business 
regulations to attract and maintain investors' interest in 
Vietnam; 
 
-- suggest that Vietnam's efforts to emerge on the world 
stage, including its aspirations to join the UN Security 
Council (UNSC) in 2008-2009, mean that it will necessarily 
have to start taking public positions on certain issues of 
global concern, such as Iran, Burma and North Korea. 
 
President Bush's Visit 
---------------------- 
 
¶5. (SBU) In the run-up to then Prime Minister Phan Van Khai's 
visit to the United States last summer, the Vietnamese 
bureaucracy was ordered to be proactive in reaching a number 
of agreements with the United States.  We expect that the 
President's visit will be a similar action-forcing event, and 
we hope that you will stress to Vietnam's senior leadership 
the need to accelerate action on a number of positive 
developments we hope to conclude in the months ahead.  For 
example, we are looking for progress in deals involving 
Boeing aircraft, port development and power plants, as well 
as closure on a number of official agreements, including the 
establishment of a Peace Corps program and a maritime 
agreement.  We are separately providing a paper on 
deliverables which list these initiatives and provides a 
&state of play.8 
 
The Economy and WTO 
------------------- 
 
¶6. (SBU) Vietnam today is fueled by a dynamic economy, which 
grew at a rate of 8.4 percent last year.  Per capita annual 
income jumped from about USD 220 in 1994 to USD 638 in 2005. 
 
HANOI 00002420  002.2 OF 004 
 
 
The 20-year-old economic reform program known as "Doi Moi" 
(renovation) has been effective in promoting market-oriented 
changes and improving the quality of life for many 
Vietnamese.  Foreign trade and foreign direct investment have 
increased dramatically and poverty rates have dropped. 
Vietnam's chief exports are crude oil, textiles, footwear and 
aquatic products.  The United States is currently Vietnam's 
third largest overall trade partner (behind China and Japan), 
but its largest export market. 
 
¶7. (SBU) The economy still faces challenges, however, from 
the problems caused by difficulties in transforming old 
command-economy structures, systemic corruption and the slow 
pace of reform in many areas.  The banking system, in 
particular, suffers from a lack of transparency and 
inadequate managerial and auditing standards, deterring 
foreign investors who might otherwise inject new inflows into 
the financial sector and limiting potential growth across all 
sectors of the economy. 
 
¶8. (SBU) The United States and Vietnam reached a bilateral 
market access agreement in May, paving the way for Vietnam's 
WTO accession.  The Vietnamese will no doubt press you on the 
PNTR vote in Congress in advance of the President's arrival 
for APEC.  Accession in the next two months is seen here as 
critical because of Vietnam's role as APEC host.  Vietnam 
does not want to be the first-ever APEC host that is not also 
a WTO member.  Time may be running short, however, as, in 
addition to the PNTR vote, there are a number of hurdles the 
Vietnamese still face in a final round of multilateral 
negotiations in Geneva. 
 
Role for U.S. Firms 
------------------- 
 
¶9. (SBU) Vietnam's need to modernize and improve its 
infrastructure creates opportunities for U.S. firms.  The 
quality and cost of Vietnam's telecommunications, ports, 
transportation and waste management infrastructure, as well 
as its supplies of power and fresh water, are significant 
concerns for any investor.  The foundation of the information 
highway is a competitive telecommunications system, a glaring 
weakness here.  Electricity blackouts occur and are also a 
major disincentive for any new investment.  Furthermore, 
Vietnam must improve its handling of solid and industrial 
waste.  Already some manufacturing firms are putting their 
expansion plans on hold because the Port of Saigon will reach 
capacity by December 2006.  U.S. firms can help Vietnam 
address these concerns.  Several U.S. companies are actively 
pursuing contracts to address these infrastructure needs. 
 
¶10. (SBU) Your meetings with GVN officials will provide an 
opportunity to advocate on behalf of a number of pending 
commercial projects involving U.S. businesses, noting 
competitive advantage that U.S. companies, experience and 
high standards offer. 
 
Vietnam on the Global Stage 
--------------------------- 
 
¶11. (SBU) On issues of regional and global concern, such as 
terrorism, proliferation and the rise of China, the 
Vietnamese are coming to understand that they share interests 
with the United States.  Among these shared interests is 
ensuring that China "rises peacefully" and is not allowed to 
dominate the region or regional organizations.  Vietnam's 
relations with China are complex.  Both countries share 
similar forms of government and ideological beliefs, but they 
also share a long history of conflicts and disagreements. 
China is a major economic partner of Vietnam, but also is a 
competitor in many economic areas as well.  Vietnam-China 
bilateral talks have cooled frictions about disputed border 
claims, but some are still unresolved claims, including in 
the Paracel and Spratly island chains.  Although your 
interlocutors will probably not mention China directly, they 
will likely note that Vietnam welcomes the role of the United 
States in the region and hopes that the United States will 
strengthen its relations with the Association of Southeast 
Asian Nations (ASEAN). 
 
¶12. (SBU) Furthermore, beyond APEC 2006, Vietnam is seeking 
to play a greater role internationally by joining the UNSC as 
a non-permanent member for the 2008-2009 term.  While this is 
an aspiration we should encourage, at the same time we should 
make clear to Vietnam that with a stronger international role 
comes a responsibility to take responsible stands on certain 
issues of international concern.  To date, Vietnam's "friends 
with all" foreign policy has dissuaded it from speaking out 
about Iran, Burma or North Korea, and we have been 
 
HANOI 00002420  003.2 OF 004 
 
 
encouraging the GVN to stake out a more proactive stance on 
these and other matters. 
 
Human Rights/Religious Freedom 
------------------------------ 
 
¶13. (SBU) Your interlocutors may raise the issues of human 
rights and religious freedom, noting how much progress they 
have made in responding to U.S. concerns.  Indeed, there has 
been progress, and we have seen slow, but significant, 
improvements in some previously troublesome regions, such as 
the Central Highlands.  However, Protestants in northern 
Vietnam and the Northwest Highlands continue to have 
problems, and the registration of churches and congregations 
-- a key issue related to Vietnam's designation as a Country 
of Particular Concern (CPC) for religious freedom violations 
-- has been too slow. 
 
¶14. (SBU) I hope you will impress upon your interlocutors the 
importance of keeping up the momentum in the areas of human 
rights and religious freedom, particularly in advance of the 
President's visit.  For example, the timeline for making a 
decision on Vietnam's CPC status is very short now, and the 
GVN should take advantage of the next 3-4 weeks to spur on 
progress.  At the same time, releasing additional prisoners 
of concern would grab headlines and send an important message 
about Vietnam's readiness to address our human rights 
concerns. 
 
Health Cooperation 
------------------ 
 
¶15. (SBU) Our cooperative efforts to prevent and treat 
HIV/AIDS and Avian Influenza have become major pillars of the 
bilateral relationship, and your interlocutors will likely 
offer thanks for our support in these areas.  They may also 
seek further assistance.  You may also be asked to address 
Vietnamese concerns about "war legacy" issues, such as Agent 
Orange/dioxin.  While the need for a better understanding of 
the science remains, we are working to find acceptable and 
appropriate ways to approach this matter, focusing on 
remediation of dioxin's impact on the environment in areas of 
high concentration, which are limited to a small number of 
former storage sites, not broad areas of the countryside. 
 
Assistance, Bilateral Cooperation Continue to Expand 
--------------------------------------------- ------- 
 
¶16. (SBU) U.S. assistance to Vietnam is becoming as varied as 
the many areas in which our two countries cooperate.  In 
addition to working with Vietnam to combat HIV/AIDS and Avian 
Influenza, other highlights of our assistance and cooperative 
programs are: 
 
-- USAID is supporting Vietnam's transition to an open market 
economy by strengthening trade liberalization, particularly 
the legal and trade reforms needed to implement commitments 
in the U.S.-Vietnam Bilateral Trade Agreement and WTO 
accession through a USD three million program.  This program 
has been especially effective at ensuring Vietnam's changes 
to its legal code are creating an investor-friendly 
environment. 
 
-- Our disability assistance of USD 3.5 million focuses on 
key vulnerable groups, including victims of war injuries, 
disabilities and disasters. 
 
-- We support Vietnam's counterterrorism capacity with police 
training provided by the International Law Enforcement 
Academy (ILEA) in Bangkok and through military exchanges.  We 
are seeking to expand bilateral cooperation to combat trade 
in illegal narcotics.  We also support anti-trafficking 
programs run by NGOs operating at the borders of China and 
Cambodia.  Furthermore, we provide assistance in humanitarian 
demining, clearance of unexploded ordnance and measures to 
enhance the security of our trade. 
 
-- Finally, through a combination of Fulbright grants and the 
Vietnam Education Foundation (VEF), the United States 
sponsors over 100 students yearly for graduate study in the 
United States, primarily in science and technology.  The 
Fulbright program is the second largest in Asia.  The VEF was 
established with the unpaid proceeds of loans extended to the 
former South Vietnamese government. 
 
The Media 
--------- 
 
¶17. (SBU) There will be media interest in your visit, and 
 
HANOI 00002420  004.2 OF 004 
 
 
reporters will be eager to seek opportunities to meet with 
you.  All domestic media in Vietnam are under the control of 
the Communist Party and its censors.  Aside from Agent Orange 
and occasional anniversary events surrounding the Vietnam 
War, media coverage about the Mission's activities is 
positive and extensive.  There is a small corps of 
international press situated in Hanoi, including Reuters, 
TIME, Associated Press, Boston Globe, NHK, Agence France 
Press and National Public Radio.  A burgeoning online news 
community and web bloggers are increasing the quality and 
content of information distribution in the country. 
 
Defense and Other Cooperation 
----------------------------- 
 
¶18. (SBU) Our mil-mil cooperation remains modest but 
positive.  Secretary of Defense Rumsfeld recently had a 
productive visit to Vietnam, and two U.S. Navy ships made the 
fourth port call to Vietnam since 2003 in early July.  Under 
the International Military Education and Training (IMET) 
Program, two Vietnamese officers are now studying English in 
the United States.  This program is seen by the GVN as an 
important part of their preparations for participation, at 
some undetermined future date, in peacekeeping activities. 
In other areas, we have a nascent nonproliferation 
cooperation program composed primarily of building capacity 
among Vietnamese officials.  In this regard, we are seeking 
Vietnam's agreement to convert the fuel at its reactor to low 
enriched uranium. 
 
Fullest Possible Accounting 
--------------------------- 
 
¶19. (SBU) We continue to have good cooperation with the 
Vietnamese in the fullest possible accounting of our 
personnel missing from the war, but there are a number of 
issues we would like to see concrete progress, including 
underwater recovery operations and archival access.  It would 
be useful for you to thank your interlocutors for Vietnam's 
continued cooperation to date and express the USG's hope for 
further assistance in the future. 
 
¶20. (SBU) In closing, I want to thank you for coming to 
Vietnam.  We have important U.S. national interests to 
protect and promote here, and your visit will prove important 
in this regard.  It will not only help to lay the foundation 
for a successful visit by the President, but will also spur 
on continued progress in our bilateral ties.  This will 
ensure that the U.S.-Vietnam relationship in 2007 and beyond 
will be the full expression of the friendly partnership that 
is now coming into view.  We look forward to welcoming you, 
and stand ready to assist you in any way necessary in order 
to ensure a successful visit that furthers U.S. goals and 
interests in Vietnam. 
ALOISI