VZCZCXRO2722
RR RUEHCHI RUEHDT RUEHHM RUEHNH
DE RUEHHI #0667/01 1580548
ZNR UUUUU ZZH
R 060548Z JUN 08
FM AMEMBASSY HANOI
TO RUEHC/SECSTATE WASHDC 7953
INFO RUEHHM/AMCONSUL HO CHI MINH 4812
RUCNASE/ASEAN MEMBER COLLECTIVE
RUEHC/DEPT OF INTERIOR WASHINGTON DC
RHMFIUU/DEPT OF ENERGY WASHINGTON DC
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC

UNCLAS SECTION 01 OF 02 HANOI 000667 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: EAID ECON SENV ENRG TRGY SOCI IBRD AID VM
SUBJECT: VIETNAM: SFRC STAFFDEL STUDIES TRANSPARENCY IN EXTRACTIVE 
INDUSTRIES 
 
REF: Hanoi 649 ("Vietnam's Oil And Mining Companies") 
 
HANOI 00000667  001.2 OF 002 
 
 
¶1. (SBU) Summary: Senate Foreign Relations Committee professional 
staff members Jay Branegan and Marik String visited Hanoi May 25-29, 
2008 to meet with GVN officials, private sector energy companies and 
NGOs to discuss transparency in extractive industries.  The 
Extractive Industries Transparency Initiative  aims to strengthen 
governance by improving transparency in revenue flows between oil, 
gas and mining companies and their 
host governments.  GVN officials were generally receptive and said 
they could get behind the initiative.  With the GVN focused on 
inflation and other pressing economic issues, however, it could be 
difficult to identify an EITI "champion" in the near future.  End 
Summary. 
 
¶2. (SBU) Jay Branegan and Marik String, professional staff members 
on the Senate Foreign Relations Committee, visited Hanoi May 24-29, 
2008 to study transparency in extractive industries.  Branegan and 
String met with officials from the Ministry of Industry and Trade 
(MOIT), Ministry of Public Investment (MPI), Ministry of Finance 
(MOF), state-run PetroVietnam, the National Assembly's Committee on 
Science, Technology and the Environment, and NGO and private sector 
energy representatives. 
 
¶3. (SBU) Branegan and String promoted the Extractive Industries 
Transparency Initiative (EITI) as an entry point to increase 
transparency and to help Vietnam avoid the "resource curse" that 
often afflicts resource-rich developing countries.  EITI is an 
international initiative that aims to strengthen governance by 
improving transparency and accountability in developing states where 
revenues from extractive industries provide a significant portion of 
the national budget.  Twenty-two countries in Africa, Central Asia 
and Latin America are currently involved, including Peru, Nigeria, 
Azerbaijan and Kazakhstan.  Membership is voluntary and can create 
enhanced access to capital markets, help countries improve their 
budget accountabilit, and increase a country's desirability as a 
location for foreign direct investment. 
 
MINISTRY OF INDUSTRY AND TRADE 
------------------------------ 
 
¶4. (SBU) Like many of his GVN counterparts, Dr. Nguyen Khac Tho, 
Deputy Director of MOIT's Department of Heavy Industry, assured the 
Staffdel that Vietnam was committed to transparency and 
anti-corruption.  He said the Norwegian Embassy in Hanoi was 
currently helping Vietnam to revise its oil and gas law and had 
already provided MOIT with a copy of EITI as part of that effort 
(Tho was one of the few GVN officials who was actually familiar with 
the initiative).  Minister of Industry and Trade Hoang met with 
Norwegian Embassy officials on May 20, he said, and President Nguyen 
Minh Triet, accompanied by Minister Hoang, would soon depart for 
Norway and would meet Norway's Energy Secretary during the trip. 
Although PetroVietnam reports directly to MOIT, the company's 
revenues do not fall under ministry purview.  MOIT Vice Minister Bui 
Xuan Khu is also a member of PetroVietnam's board, he added. 
 
NATIONAL ASSEMBLY 
----------------- 
 
¶5. (SBU) Nghiem Vu Khai, Vice-Chair of the National Assembly's 
Committee on the Environment, Science and Technology, confirmed that 
the National Assembly has "specific concerns" concerning loopholes 
in Vietnamese law related to the tendering process for oil and gas 
contracts.  He said the GVN was currently revising its national oil 
and gas law and that he, Khai, was a member of the revision 
committee.  The oil and gas law, last revised in 2000, would contain 
no new transparency provisions, he added.  The GVN solicited foreign 
energy firms to provide comments on the new law (a comment period he 
admitted was "short"), but no companies provided comments related to 
transparency. 
 
¶6. (SBU) Khai was unfamiliar with EITI and he emphasized that 
Vietnam strived for transparency since the country's extractive 
industries were under "people's ownership."  Vietnam has not 
considered establishing an oil and gas stabilization fund to ensure 
long-term budget stability and to avoid "Dutch disease," he said, 
and PetroVietnam reinvests the majority of its after-withholding 
capital into production. 
 
¶7. (SBU) Officials at two local Hanoi NGOs, Mekong Economics and 
CODE, noted that Prime Minister Nguyen Tan Dung has made tackling 
corruption a top priority.  Low government salaries, the lack of an 
independent regulatory agency to root out corruption, and a free 
press to publicize it, however, will make eradicating the problem 
easier said than done. 
 
COMMENT 
 
HANOI 00000667  002.2 OF 002 
 
 
------- 
 
¶9. (SBU) Comment: GVN officials were generally forthcoming with 
information and receptive about EITI, and said they could get behind 
the initiative if mandated by the GVN's leadership.  With the 
government focused on inflation and other pressing economic issues, 
however, it could be difficult to identify an EITI "champion" in the 
near term. End comment. 
 
¶10. (U) Staffdel did not have a chance to clear on this cable before 
they departed Vietnam. 
 
ALOISI 
 
 
 
3