VZCZCXRO3522
RR RUEHHM
DE RUEHHI #0486/01 0721007
ZNR UUUUU ZZH
R 131007Z MAR 07
FM AMEMBASSY HANOI
TO RUEHC/SECSTATE WASHDC 4891
INFO RUEHBK/AMEMBASSY BANGKOK 5528
RUEATRS/DEPT OF TREASURY WASHINGTON DC
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RUEHHM/AMCONSUL HO CHI MINH 2750

UNCLAS SECTION 01 OF 02 HANOI 000486 
 
SIPDIS 
 
STATE FOR EAP/MLS AND F 
STATE PASS USTR DAVID BISBEE 
STATE PASS USAID FOR ANE/DAA CHILES/JENNINGS 
AMEMBASSY BANGKOK FOR RDM/A CARDUNER 
USDOC FOR 4431/MAC/AP/OPB/VLC/HPPHO 
TREASURY FOR OASIA 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958:  N/A 
TAGS: EAID EFIN ETRD ECON PREL VM
SUBJECT: U.S. AID -- INFLUENCING THE FUTURE OF VIETNAM 
 
Ref A) 2005 Hanoi 17, B) 2005 Hanoi 568 
 
¶1. (SBU) Summary: U.S. foreign assistance programs in Vietnam, 
though low in dollar figures, are having a huge, direct impact in 
shaping Vietnam's reform program.  Government of Vietnam (GVN) 
decision-makers seemingly cannot stop praising our flagship STAR 
(Support for Trade AcceleRation) program, which places U.S. experts 
in the boardrooms of over 30 GVN and Party ministries and agencies 
to provide direct assistance in the drafting of new laws and 
regulations.  GVN officials have repeatedly indicated to us that 
they would welcome even greater involvement by the USG, including in 
some sensitive governance areas.  During his upcoming visit, 
President Nguyen Minh Triet will likely reiterate Vietnam's interest 
in expanding USG programming into more emerging reform areas such as 
public administration, macroeconomic policy and legal development. 
Such forthright invitations present us with an opportunity to expand 
our influence in shaping Vietnam's future.  End Summary. 
 
Proven Track Record 
------------------- 
 
¶2. (SBU) Though Vietnam receives far greater amounts of 
developmental assistance from other countries in the international 
community, particularly the EU and Japan, GVN officials repeatedly 
single out and praise the impact and quality of USG assistance in 
both public and private settings.  Because of this high estimation 
of U.S. programming, numerous ministries as well as the Prime 
Minister's Office have approached us both formally and informally 
over the past year to request further involvement by the USG, even 
in some of Vietnam's more sensitive reform areas.  These requests 
are not just a developing country's blanket request for more aid 
dollars.  GVN officials have made it clear that it is the 
effectiveness of U.S. assistance that they value.  Refs A and B 
explain in detail the accomplishments of USAID STAR (Support for 
Trade AcceleRation), the flagship program for U.S. assistance in 
Vietnam.  As detailed below, the success of the STAR program has 
been critical to Vietnam's ability to enter into the World Trade 
Organization, and Vietnamese officials recognize this contribution 
is uniquely different from the assistance of other donors. 
 
¶3. (SBU) In fact, STAR, which advises the GVN on legal reform on an 
"as asked" basis with no direct involvement from Embassy Hanoi, 
receives far more requests than it can handle.  Over 30 ministries, 
five key committees and offices in the National Assembly, the 
Supreme People's Court, the Supreme People's Procuracy, the Internal 
Affairs Committee of the Communist Party, the Vietnam Chamber of 
Commerce and Industry, and numerous provincial People's Committees 
have asked for STAR's help in the last year alone. Almost all of 
these recipients of STAR's technical advice are repeat customers who 
have learned from direct experience the benefits of involving STAR 
in the drafting of the hundreds of new decrees, implementing 
regulations and laws the GVN has had to write in recent years. 
 
¶4. (U) In all, over the last five years of operations, STAR has 
helped Vietnam develop over 80 new laws and regulations, organize 
more than 260 workshops for over 18,000 state officials and business 
leaders, publish more than 60,000 copies of reference materials on 
new laws and decrees, and organize 27 study missions for 166 
Vietnamese officials. 
 
Senior Level Attention 
---------------------- 
 
¶5. (SBU) The effectiveness of USG programming in Vietnam, and the 
credibility this effectiveness garners among senior GVN officials, 
gives the United States more influence on sensitive decisions than 
other donors who give far more money but do not have the same 
impact.  An example of this positive disproportionate influence was 
the decision by the National Assembly to ask the United States as 
the only foreign donor to participate in its two-day closed-door 
debate on the ratification of the WTO protocol.  President Triet 
made sure that U.S. assistance was mentioned as a key part of the 
bilateral relationship in the Joint Statement issued during 
President Bush's visit in November 2006.  In the December 2006 
Consultative Group Donors meeting, the Prime Minister himself 
singled out STAR as the kind of aid other donors should emulate. 
U.S. assistance programs have senior-level attention here, at a time 
when much work is left to be done. 
 
What's Next? 
----------- 
 
 
HANOI 00000486  002 OF 002 
 
 
¶6. (SBU) While there have been substantial policy changes in Vietnam 
over the past five years, a number of critical challenges remain: 
further legal reform, implementation of new decrees and regulations, 
human resource development, public administration reform, 
implementation of WTO commitments, fighting corruption, central bank 
macro economic management, and problems arising from international 
integration, such as stock market regulation.  In each of these 
areas, the GVN would welcome U.S. assistance.  As another example, 
the Ministry of Agriculture and Rural Development (MARD) recently 
told us that when asked to choose a country on which they would like 
to model their organizational structure and methodological approach, 
a majority of MARD departments chose the United States.  MARD asked 
if there was any assistance available to help them to do this. 
Ministry of Education and Training (MOET) officials have told us 
that their minister has made a "strategic decision" to model 
Vietnam's economic reforms on the U.S. model.  An additional example 
is the State Bank of Vietnam's request that we help revise their 
basic banking law.  The GVN has also asked us to be the lead donor 
in reforming their justice system.  The requests continue to pour 
in, but our ability to respond is severely constrained. 
 
¶7. (SBU) Given the limited budget numbers we have for assistance 
programming in Vietnam, we must be very cautious in taking on new 
challenges.  Our total (non-PEPFAR) AID budget is only USD 6.056 
million for FY2007 and USD 7.015 million for FY2008, which is barely 
able to keep our STAR and other economic growth and humanitarian 
programming on life support, much less enable them to respond to 
growing interest from the GVN.  The Vietnamese interest in building 
their legal and economic framework on our advice will not last 
forever; this is an opportunity we should not miss, if in fact we 
want to develop a truly strategic partnership with this rising 
Southeast Asian dragon. 
 
MARINE