VZCZCXRO8379
RR RUEHCHI RUEHCN RUEHDT RUEHHM
DE RUEHHI #0541/01 1291018
ZNR UUUUU ZZH
R 081018Z MAY 08
FM AMEMBASSY HANOI
TO RUEHC/SECSTATE WASHDC 7780
INFO RUEHHM/AMCONSUL HO CHI MINH 4688
RUEHBJ/AMEMBASSY BEIJING 7112
RUEHZS/ASEAN REGIONAL FORUM COLLECTIVE

UNCLAS SECTION 01 OF 02 HANOI 000541 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: ECON PHUM PGOV KCOR KPAO SOCI PREL CM VM
 
SUBJECT: POLITBURO MEMBER COMMENTS ON AMBASSADOR'S PRIORITIES AND 
ECONOMIC CHALLENGES FACING VIETNAM 
 
HANOI 00000541  001.2 OF 002 
 
 
Summary 
------- 
 
¶1. (SBU) On May 5, influential Politburo member and Standing Member 
of the Secretariat Truong Tan Sang met the Ambassador to discuss 
U.S.-Vietnam relations, the Ambassador's priorities for his tenure 
in Vietnam and economic issues.  The "consensus" within Vietnam's 
governing circles is that Hanoi should deepen its ties to 
Washington; stronger relations are not only in Vietnam's interest 
but the region's interests as well.  Party leaders realize they have 
much work to do before they achieve Ho Chi Minh's vision of a 
Vietnam that is free and prosperous.  The Ambassador said the GVN 
needs to increase efforts to educate local officials about 
central-level directives, especially those on WTO commitments and 
religion.  Sang asked that the Ambassador relay to the American 
people that "the Vietnamese people just want to do business" and do 
not have the stomach for "anti-dumping games."  He acknowledged that 
some state-owned enterprises had borrowed extensively to engage in 
non-core expansion but was confident that the GVN will successfully 
deal with current inflationary pressures.  End Summary. 
 
¶2. (SBU) On May 5, the Ambassador discussed U.S.-Vietnam relations 
and his priorities for his tenure in Vietnam with Communist Party of 
Vietnam (CPV) Politburo member and Standing Member of the 
Secretariat Truong Tan Sang.  After noting Vietnam's recent 
socioeconomic achievements and the steady growth in U.S.-Vietnam 
ties, the Ambassador stated his three main priorities: promotion of 
human rights, strengthening the economic relationship, and 
increasing educational bonds.  Sang responded that he is "very 
happy" about recent trends in U.S.-Vietnam relations.  We have 
different viewpoints on some issues, he said, but differences are 
natural in any relationship.  The "consensus" within Vietnam's 
policy-making circles is that Hanoi should deepen its ties to 
Washington, he stated.  Stronger bilateral relations are in our 
mutual interests and the greater region's interest, he added. 
 
Appeal for Greater Understanding on Human Rights 
--------------------------------------------- --- 
 
¶4. (SBU) The Government of Vietnam (GVN) and CPV are "very 
concerned" with human rights, Sang declared.  Vietnam values its 
independence, but Party leaders understand they have much work to do 
to achieve Ho Chi Minh's vision of a land that is free and 
prosperous, he added.  America is a "civilized and developed 
country" and Vietnam has "a long way to go" to catch up to America's 
level of overall development, he said.  Vietnam made primary 
education universal only recently, but Japan did so 100 years ago, 
he added, an example of how far Vietnam is behind other developed 
countries. 
 
¶5. (SBU) Vietnam has 54 ethnic minority groups but the level of 
economic and cultural development among these groups varies, Sang 
continued.  Luckily for Hanoi, however, no conflicts have taken 
place between these groups, he said.  Americans do not seem to 
appreciate the wide disparities in education levels that exist 
across Vietnam, he continued.  Local officials often come up with 
excuses for not following central Party directives, such as those on 
religion, Sang continued.  The Party has ways to make these 
officials understand the importance of following Central-level 
directives, such as transferring poor performing officials to lower 
level positions.  The Ambassador agreed that the GVN needs to step 
up efforts to educate local officials about central-level 
directives, especially those on religion. 
 
Working Toward a "State Governed by Laws" 
----------------------------------------- 
 
¶6. (SBU) The one thing developed western countries have in common is 
that they are governed by the rule of law, Sang continued.  About 
ten years ago, Party leaders began efforts to make Vietnam a state 
governed by laws.  In this connection, Vietnamese leaders have 
studied many different models, not just China's, Sang declared. 
Suitable models are those countries that have about the same level 
of development as Vietnam, he explained. 
 
¶7. (SBU) The National Assembly (NA) has passed numerous laws and the 
Party has sought to improve the professionalism of its members and 
overall administrative efficiency, Sang continued.  The GVN is 
determined to accelerate reforms; building a law-governed state must 
proceed in parallel with moves toward free market mechanisms, Sang 
said.  The Ambassador pointed out that political and economic 
development usually go together, noting that GVN administrative 
reform efforts under "Project 30" have been impressive. 
 
Education Ties That Bind 
------------------------ 
 
¶8. (SBU) Education also is a major concern for the Party, Sang said, 
 
HANOI 00000541  002.2 OF 002 
 
 
and the number of Vietnamese who study in the United States is bound 
to grow under the Ambassador's tenure.  He said the Party aims for 
these returning students to help develop the country and serve as a 
"strong bridge" between our two countries, viewpoints the Ambassador 
told Sang he shares.  Many high-ranking GVN officials have studied 
in the United States, Sang added. 
 
Economic Relations and Domestic Economic Issues 
--------------------------------------------- -- 
 
¶9. (SBU) Sang then stressed the importance of the bilateral trade 
and economic relationship.  He asked the Ambassador to convey a 
message to the U.S. that "the Vietnamese people just want to do 
business" and do not want to "play anti-dumping games."  Sang said 
Vietnam's labor productivity is low and GDP "the same as a 
medium-sized corporation's revenues."  He added that the Vietnamese 
people are hard-working and would soon raise the overall level of 
development.  Finally, he said Vietnam "must achieve happiness on 
its own" but nonetheless was thankful for all the assistance it has 
received.  In terms of economics and trade, he said "there are no 
obstacles." 
 
¶10. (SBU) In response to the Ambassador's query on the CPV's role in 
economic decision-making, Sang said the Party is working towards a 
multi-sector economy with no limitations.  Sang noted that the 
private sector has grown to 70 percent of GDP in the last 15 years, 
and said that private sector complaints about GVN favoritism towards 
state-owned enterprises (SOEs) were "just low level" chatter.  At a 
high level, SOEs and the private sector are equal according to the 
law, he explained.  When pressed on the actual role of the CPV, Sang 
stated that "what I have just told you is a product of our policy; 
the Party's policies are legalized through the laws of Vietnam."  He 
went on to say that Vietnam will follow its WTO commitments, but may 
implement some commitments earlier than required if it is beneficial 
to domestic interests. 
 
¶11. (SBU) The Ambassador replied that early implementation of WTO 
commitments was always welcome, but questioned the effectiveness of 
the bureaucracy in carrying out some reforms.  Sang assured the 
Ambassador that the PM would reprimand those not implementing the 
laws as directed, and noted that the CPV could also discipline Party 
members, including requiring the PM to fire people.  Sang said that, 
in the long term, the GVN would have to build administrative courts 
to deal with these sorts of issues. 
 
¶12. (SBU) Sang said it was the CPV itself that first reported that 
some SOEs were borrowing extensively to engage in non-core 
expansion.  He said that the policy of the Party is to maintain a 
public sector, but that SOEs will not dominate as before.  Sang 
cited the example of Vietcombank, noting that foreign investors now 
own part of the company.  He admitted that although the new policies 
on reducing the number of SOEs had been in place for seven years, 
implementation had been "lower than our expectations" because 
implementation guidelines had to be made into law before being 
carried out by government officials. 
 
¶13. (SBU) Sang stated confidently that the GVN would cope with 
current inflationary pressures.  He said that the "PM has a good 
plan - just be patient," adding that the CPV not only supports the 
PM, but also requires him to take action.  Sang explained that the 
lack of a skilled civil service remains problematic for Vietnam, 
often resulting in weak institutions and varying degrees of 
performance among the provinces.  The Ambassador said this was 
affecting many projects awaiting approval, including GE, Sabre, 
Alcoa, AES, and SSA Marine.  Sang smiled and said that he would give 
the projects his attention. 
 
Comment: The Smiling Knife 
-------------------------- 
 
¶14. (SBU) Truong Tan Sang is a Party stalwart who has been on the 
Politburo since 1996 and on the Central Committee since 1991.  He 
also currently serves as a deputy in the National Assembly.  Before 
the 2006 10th Party Congress, Sang headed the CPV's Economic 
Commission (which in early 2007 was rolled into the Office of the 
Central Committee).  In his meeting with the Ambassador, he came 
across as confident and decisive and often smiled after the 
Ambassador's words were translated as he pondered his replies. 
 
MICHALAK