VZCZCXRO7048
OO RUEHHM
DE RUEHHI #0641/01 0951027
ZNR UUUUU ZZH
O 051027Z APR 07
FM AMEMBASSY HANOI
TO RUEHC/SECSTATE WASHDC IMMEDIATE 5063
INFO RUEHHM/AMCONSUL HO CHI MINH 2845
RHEHNSC/NATIONAL SECURITY COUNCIL WASHINGTON DC
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RUEATRS/DEPT OF TREASURY WASHINGTON DC
RHEFDIA/DIA WASHINGTON DC
RUEAWJA/DEPT OF JUSTICE WASHINGTON DC
RUEABND/DRUG ENFORCEMENT ADMIN HQ WASHINGTON DC
RUEAIIA/CIA WASHINGTON DC

UNCLAS SECTION 01 OF 05 HANOI 000641 
 
SIPDIS 
 
SENSITIVE - DO NOT POST ON INTERNET 
SIPDIS 
 
STATE FOR EAP/MLS AND CA 
STATE ALSO PASS USTR DBISBEE 
COMMERCE FOR 4430/MAC/AP/OPB/VLC/HPPHO 
TREASURY FOR OASIA 
 
E.O. 12958: N/A 
TAGS: PGOV PHUM PREL ECON ETRD EFIN KOCI CVIS CASC AMGT
ABLD, OECX, SCUL, EAID, EIVN, VM 
SUBJECT: AMBASSADOR PROMOTES COMMERCIAL DELIVERABLES, TIFA, NEC, HR, 
AML AND ADOPTIONS WITH OOG PHUC 
 
Ref:  State 26801 
 
¶1. (SBU) Summary:   The Ambassador met with the Office of the 
Government (OOG) Vice Chairman Nguyen Xuan Phuc on April 4 to 
promote positive Vietnamese government action on commercial projects 
by U.S. firms and to address a number of prominent bilateral issues, 
including: Trade and Investment Framework Agreement (TIFA) 
negotiations and the annual Bilateral Trade Agreement (BTA) review; 
human rights; anti-money laundering; the need for a published 
schedule of adoptions fees; the Peace Corps program; and the New 
Embassy Compound (NEC).  Vice Chairman Phuc took note of the U.S. 
concerns and pledged that the GVN would work hard to make progress 
on these issues to ensure a successful visit by President Triet 
later this year.  End Summary. 
 
TIFA and the BTA Review 
----------------------- 
 
¶2. (SBU) The Ambassador began the meeting by noting that in each of 
the stops during his March 25-30 travels in the United States, U.S. 
firms expressed considerable excitement over the prospects for our 
two countries' commercial and economic relations.  Before moving to 
review specific commercial deliverables, the Ambassador underscored 
the importance the United States places on successfully completing 
TIFA negotiations in time for a signing ceremony at the time of 
President upcoming visit.  A TIFA would help to boost bilateral 
trade and investment and serve as a strong indication of our 
expanding economic ties.  Negotiations should not wait until the 
final weeks before the visit, the Ambassador stressed, and he 
requested that OOG work with the other relevant stakeholders to 
begin talks as soon as possible.  Vice Chairman Phuc agreed that the 
two sides should begin talks very soon, reporting that Vietnam is 
undergoing internal procedures to set up its negotiating team. 
(Comment: After the meeting, OOG International Relations Department 
Director Bui Hui Hung asked that USTR send a formal letter to the 
GVN asking to begin negotiations.  Such a letter would help expedite 
internal GVN processes, Hung said.  We have transmitted this request 
to USTR by email.  End comment.) 
 
¶3. (SBU) In addition to the TIFA negotiations, it is time for the 
two sides to schedule the annual BTA review, the Ambassador noted, 
stressing the ongoing importance of this agreement and its review 
process to our economic ties, particularly on investment.  He 
emphasized that this review needs to occur before President Triet's 
visit. 
 
Commercial Deliverables 
----------------------- 
 
¶4. (SBU) The Ambassador then turned to a number of commercial 
projects by U.S. firms under consideration by the Government of 
Vietnam (GVN), and pushed for breakthroughs on these deals before 
the Triet visit.  Currently, the GVN is considering projects worth 
an estimated USD 7.1 billion of business for U.S. companies, with 
approximately USD 4.2 billion of that being exports to Vietnam. 
Approval of these projects would go a long way toward reducing the 
growing gap between Vietnamese exports to the United States and U.S. 
exports to Vietnam, the Ambassador said.  With hard work in the 
coming months, the two sides could hold a very significant signing 
ceremony in Washington, eclipsing even the magnitude of the signing 
ceremony held during then-Prime Minister Phan Van Khai's 2005 visit 
to the United States. 
 
¶5. (SBU) Vice Chairman Phuc agreed that progress on commercial 
projects will help strengthen bilateral ties, enhance President 
Triet's visit and work to balance trade between our two countries. 
He confirmed the GVN has been working to advance these business 
deals, and expressed confidence that the environment for U.S. 
businesses will be "very favorable in the coming period." 
 
¶6. (SBU) The Ambassador first raised the joint investment 
opportunity between Alcoa World Alumina and Chemicals Company and 
Vinacomin to develop a bauxite mine and alumina refinery in Dak Nong 
Province.  Prime Minister Dzung's approval of the companies' joint 
action plan and cooperative agreement would allow them to move 
forward on their development plans.  Vice Chairman Phuc advised that 
Vietnam is undertaking a comprehensive survey of bauxite in central 
 
HANOI 00000641  002 OF 005 
 
 
Vietnam in order to have a better picture of the quantity and 
quality of reserves available.  Vinacomin has been assigned as the 
primary agency, and it will select appropriate partners to mine and 
distribute bauxite.  Vice Chairman Phuc also said he would meet with 
former U.S. Ambassador Pete Peterson later on April 4 to discuss 
this project. 
 
¶7. (SBU) On the SSA Marine projects to develop Vietnam's seaport 
infrastructure, the Ambassador stated that granting an investment 
license for the firm to develop port facilities at Cai Mep late last 
year was an important step to address Vietnam's infrastructure 
needs.  In addition to seeing this project move ahead smoothly, the 
United States hopes the GVN will approve an investment license for 
SSA Marine to undertake a second port project at Cai Lan in Quang 
Ninh Province in time for President Triet's visit.  Phuc concurred 
that the Cai Mep project is going well, and explained that Vietnam 
is working to finalize an agreement on the Cai Lan project before 
the Triet visit.  (Comment:  While SSA has strong capabilities in 
consulting and engineering services, we suspect that Ministry of 
Industry (MOI) will not support a proposal for a 100 percent 
foreign-owned project, as proposed by SSA.) 
 
¶8. (SBU) Following meetings in Chicago between Boeing and DPM/FM 
Pham Gia Khiem last month, Boeing will soon issue a letter to the 
DPM outlining examples of how Boeing can help the Vietnamese 
aviation industry, the Ambassador continued.  Given the support of 
the Ex-Im Bank and the U.S. Trade and Development Agency (TDA), an 
agreement for Vietnam Airlines (VNA) to purchase additional Boeing 
aircraft would greatly benefit VNA and serve as an unparalleled 
symbol of the current strength of our countries' relationship.  The 
Ambassador expressed the hope that the two sides can overcome delays 
caused by vacancies in VNA leadership, as the Boeing 787 Dreamliner 
is the ideal fit for Vietnam's current and future air transportation 
needs.  Vice Chairman Phuc agreed that the two sides should be 
prepared to sign an agreement over Boeing aircraft this summer. 
Although Vietnam has received other offers, VNA would like to 
purchase Boeing aircraft to serve best its long range routes to 
Europe and, in the future, the United States.  Phuc committed to 
"work hard to conclude this agreement" by this summer. 
 
¶9. (SBU) Vietnam should add the Gannon power plant project in Dong 
Nai Province to the country's master energy plan, the Ambassador 
continued.  The key decision on whether to move forward with this 
project rests with the Prime Minister.  Ambassador Marine recently 
wrote the PM a detailed letter outlining the advantages of this 
project and the U.S. desire for a positive response in the near 
future.  The Gannon power plant would entail significant technology 
transfer from several major U.S. firms, including General Electric 
and Shaw, Stone and Webster.  Phuc reported that he met with Gannon 
executives in the United States last month, and is following this 
deal closely.  He committed to organize an inter-ministerial 
meeting, including relevant stakeholders such as PetroVietnam, to 
finalize a decision and report to the Prime Minister. 
 
¶10. (SBU) Regarding plans for the American firm AES to build a 
coal-fired plant in Vietnam, negotiations will begin the week of 
April 9 over a power purchase agreement and a coal supply agreement, 
two keys to starting this project.  The Ambassador and Vice Chairman 
Phuc agreed that the two sides should negotiate quickly to conclude 
these agreements and begin work on the power plant.  Ambassador 
Marine noted that recent power outages in Vietnam highlight the 
critical need to reach agreements and begin work on power projects 
such as those being proposed by Gannon and AES. 
 
¶11. (SBU) Motorola, another key partner for Vietnam, is interested 
in expanding its cooperation with Vietnamese mobile telephone 
companies, the Ambassador said.  Meetings between Motorola and DPM 
Khiem during the March visit were useful in advancing negotiations 
between Motorola and Vinaphone, but a deal for Motorola to deliver 
technology to expand Vinaphone's GSM networks in Hanoi and Ho Chi 
Minh City could be a key deliverable for President Triet's visit. 
Vice Chairman Phuc commented that he participated in the meetings 
with Motorola in the United States, during which Vietnam raised the 
prospect of Motorola manufacturing equipment, including mobile 
phones, in Vietnam.  Phuc asked the Ambassador to urge Motorola to 
agree to this idea, saying that if both sides can agree, "it will 
open good prospects for Motorola on cooperation with Vinaphone." 
 
HANOI 00000641  003 OF 005 
 
 
 
¶12. (SBU) Ambassador Marine then raised a new project:  GTECH 
Corporation's interest in providing technology and services to 
Vietnam as it contemplates developing a national online lottery 
system and a sports betting system.  GTECH Corporation is a 
worldwide leader in providing software infrastructure and payment 
processing systems for the gaming industry, the Ambassador 
explained, and would be an excellent partner for Vietnam.  Although 
this was the first he had heard of GTECH's interest in Vietnam, Vice 
Chairman Phuc explained that Vietnam is currently developing plans 
to develop sports betting systems and casinos, and urged GTECH to 
work with its Vietnamese counterparts to ensure that its proposal is 
included in this planning.  He continued by saying that Vietnam is 
particularly interested in the sports betting industry. 
 
¶13. (SBU) Moving on, the Ambassador said that U.S. companies are 
stepping up their interest as Vietnam develops its downstream oil 
and gas industry.  For example, Shaw, Stone and Webster is seeking 
to obtain the right to complete a feasibility study and eventually 
develop an oil refinery in the Long Son District of Ba Ria-Vung Tau 
Province.  Shaw, Stone and Webster is talking with the Ministry of 
Planning and Investment (MPI) about this project, and TDA has 
indicated it would consider co-funding the project, the Ambassador 
explained.  Vice Minister Phuc replied that he is impressed with 
Shaw, Stone and Webster's experience and capabilities, and has 
already expressed strong support to the relevant GVN agencies, 
asking them to work with the MPI to develop an investment plan for 
this project. 
 
¶14. (SBU) After raising the above commercial projects, Ambassador 
Marine raised a final case, which he noted was not a commercial 
opportunity but rather a problem.  A long-standing member of the 
American business community in Vietnam recently asked the Embassy 
for assistance in resolving a commercial dispute over property 
involving Redsun, a company which the American businessman 
represents in Vietnam.  Redsun holds a legitimate contract for a 
piece of property, and now claims the contract is not being honored. 
 The Ambassador explained that he typically advises interested U.S. 
firms that corruption is still an issue in Vietnam and the rule of 
law is not yet fully established, but the GVN is taking important 
steps and progress is being made.  Cases such as this one, 
demonstrating a failure to honor the sanctity of contracts, undercut 
those positive sentiments, the Ambassador said.  Noting the growing 
interest by U.S. firms in investing and growing business in Vietnam, 
the Ambassador asked for OOG's cooperation in seeking fair 
resolution to the Redsun case and ensuring that local interests not 
get in the way of good business practices.  Vice Chairman Phuc 
responded that this was the first he heard of this case, but agreed 
that the issue should be dealt with according to the law to protect 
the legitimate rights of foreign investors.  Phuc committed to 
forward this issue to relevant authorities upon receiving "necessary 
documents" and more information about this case. 
 
Human Rights 
------------ 
 
¶15. (SBU) There is a growing concern in Washington and throughout 
the United States about human rights, the Ambassador explained, and 
it is important for the two sides to maintain frank and open 
dialogue to prevent this from overshadowing the other positive 
aspects of our relationship.  The two sides will have an opportunity 
to continue discussions at the April 24 Human Rights Dialogue in 
Washington.  The Ambassador expressed confidence that the two sides 
could work together to manage these concerns, but the months ahead 
will be difficult for our relationship unless we work together to 
address the issue immediately. 
 
¶16. (SBU) Phuc responded by confirming that Secretary Rice's 
comments to DPM Khiem on the human rights situation were fully 
reported to Prime Minister Dzung.  He continued by pointing to the 
"many positive developments" Vietnam has made in recent years to 
expand human rights and religious freedom.  Phuc cited the recent 
abolition of Decree 31, which allowed GVN officials to detain 
citizens without due process.  He also explained that Vietnam is 
trying to build transparency into its legal proceedings, including 
allowing the media and foreign diplomats to witness the March 30 
trial of Father Nguyen Van Ly. 
 
HANOI 00000641  004 OF 005 
 
 
 
Anti-Money Laundering and Law Enforcement Cooperation 
--------------------------------------------- -------- 
 
¶17. (SBU) Following up on meetings between members of DPM Khiem's 
delegation and the U.S. Drug Enforcement Agency (DEA) and the U.S. 
Department of Justice (DOJ) in Washington, the Ambassador expressed 
a desire to see the two sides move forward on measures to strengthen 
Vietnam's anti-money laundering (AML) system, particularly through 
work on the AML Decree.  The United States also encourages Vietnam 
to take the necessary steps to join the Asia Pacific Group's 
Financial Action Task Force (FATF), an important institution with 
strong AML criteria.  This would be a clear signal of the growing 
maturity of Vietnam's banking system and the prudence of its 
leadership as it takes a larger role in the international 
marketplace.  Furthermore, the United States would welcome a request 
by the GVN for the DOJ to review Vietnam's AML Decree.  These steps 
are key elements in the process of setting the stage for Vietnamese 
banks to open representative offices in the United States, and they 
would provide a way for the United States and Vietnam to cooperate 
better on tracking "hot" drug money transiting Vietnam.  These steps 
are only part of our desire to see stronger law enforcement 
cooperation between our two countries.  The Ambassador added that he 
would soon send a formal proposal to the GVN to expand the existing 
Letter of Agreement (LOA) which allows us to provide technical 
assistance in this area. 
 
¶18. (SBU) Vietnam is ready to work with the United States on money 
laundering to increase transparency and prevent criminal activities, 
Vice Chairman Phuc explained.  After being briefed on the Washington 
meetings with DEA and DOJ, the Prime Minister instructed the 
relevant GVN agencies to increase cooperation with the United States 
on AML efforts.  Phuc noted that Vietnam stands ready to act on 
specific information on suspected money laundering activities.  He 
also registered his concern that AML activities must not create 
obstacles to legitimate investment or remittances to Vietnam.  The 
Ambassador agreed that the vast majority of remittances are 
completely legal, but emphasized that it is equally important to 
ensure that those conducting illegal activities not be allowed to 
hide behind legal remittances.  Phuc took note that Vietnam should 
further refine its legal documents, including the AML Decree, to 
which the Ambassador replied that we stand ready to help in this 
regard, and a formal request for assistance by the GVN would be a 
significant step forward. 
 
Adoptions 
--------- 
 
¶19. (SBU) Moving next to adoptions, the Ambassador demarched the 
Vice Chairman on the lack of a published schedule of adoptions fees, 
per Reftel.  He expressed appreciation for the growing cooperation 
on adoptions of Vietnamese children by Americans.  He reminded Phuc 
that he had sent a March 15 letter to OOG Chairman Doan Manh Giao 
outlining our concerns over the adoption program in Vietnam. In 
short, the absence of a fee schedule creates the opportunity for 
individuals and organizations at the grassroots level to make 
illicit profits from adoptions.  The two governments must work 
together to prevent this, the Ambassador stressed.  He urged the OOG 
to work with the Ministry of Finance (MOF) to publish a fee schedule 
soon, and thereby avoid any possible disruption of this wonderful 
program which benefits citizens of both countries.  OOG Vice 
Chairman Phuc committed to try to meet with MOF officials at an 
upcoming cabinet meeting to urge them to publish a fee schedule as 
soon as possible. 
 
Peace Corps 
----------- 
 
¶20. (SBU) Citing DPM Khiem's comments in Washington on his desire to 
see this program established, the Ambassador commented that the 
Vietnamese Ministry of Education and Training (MOET) has been 
unwilling to meet or discuss a way forward.  The Embassy would be 
happy to meet with the OOG to discuss this further if necessary.  In 
a sign of the widespread support for the Peace Corps program, 15 
U.S. Senators recently co-signed a letter to Prime Minister Dzung 
pushing for the GVN to agree to bring the Peace Corps to Vietnam. 
Phuc confirmed that the OOG received this letter, and said that the 
 
HANOI 00000641  005 OF 005 
 
 
OOG will continue to request that the Ministry of Foreign Affairs 
(MFA) and MOET work to negotiate a formal Peace Corps agreement, in 
which he claimed the GVN has a strong interest. 
 
New Embassy Compound (NEC) 
-------------------------- 
 
¶21. (SBU) Finally, on the NEC, the Ambassador noted that he remains 
troubled by the lack of visible progress in acquiring land for a new 
U.S. Embassy in Hanoi.  An agreement to open a new Embassy that 
accurately reflects the importance of our growing bilateral 
relationship remains one of the Ambassador's key priorities.  He 
encouraged the OOG to prod the MFA to respond soon to a formal offer 
the United States submitted more than a month ago and help to broker 
a positive resolution to this issue soon.  Vice Chairman Phuc shared 
the Ambassador's concerns and agreed to "work harder" to have 
resolution on this issue in the near future. 
 
MARINE