VZCZCXRO2115
PP RUEHHM
DE RUEHHI #0731/01 1700937
ZNR UUUUU ZZH
P 180937Z JUN 08
FM AMEMBASSY HANOI
TO RUEHC/SECSTATE WASHDC PRIORITY 8045
RHEHNSC/NATIONAL SECURITY COUNCIL WASHINGTON DC
INFO RUEHHM/AMCONSUL HO CHI MINH 4874
RUEKJCS/SECDEF WASHINGTON DC
RUEATRS/DEPT OF TREASURY WASHINGTON DC
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC

UNCLAS SECTION 01 OF 04 HANOI 000731 
 
SENSITIVE 
SIPDIS 
 
FOR PRESIDENT BUSH FROM AMBASSADOR MICHALAK 
 
E.O. 12958: N/A 
TAGS: OTRA ECON ETRD EINV PREL PHUM KIRF EAIR VM
SUBJECT: SCENESETTER FOR U.S. VISIT OF VIETNAM PRIME MINISTER DUNG 
 
¶1. (SBU) Summary: Vietnam's Prime Minister views his June 24 White 
House meeting as an opportunity to confirm to all -- including those 
who hate us -- that the United States will remain a big part of 
Vietnam's future.  In particular, he will celebrate our remarkable 
economic partnership, built on U.S. technical assistance, and "sell" 
the idea of further significant partnerships in education and 
science and technology.  We should embrace the Prime Minister's 
broad vision of engagement, which strongly supports U.S. national 
interests, while underscoring that we want to see changes in Vietnam 
leading to greater freedoms for the nation's young, wired, dynamic 
population.  End Summary. 
 
¶2. (SBU) Prime Minister Nguyen Tan Dung will arrive in Washington as 
the leader of a nation proud of its increasing clout in the region. 
There is much to celebrate.  Vietnam's economic reforms have set the 
country on a successful market economy path defined by average 
annual economic growth of 7.5 percent over the last decade.  In 
2007, the economy grew at a rate of 8.5 percent.  Poverty rates have 
tumbled, from 58 percent in 1993 to under 15 percent in 2007, 
according to the GVN's latest figures.  A recent World Bank study 
described this poverty reduction rate as the most significant in 
such a short period of time of any nation in history.  The middle 
class is growing and retail markets are booming.  The transformation 
of Vietnam's economic, social and technological landscape is 
beginning to create more "space" for Vietnam's people to be heard, 
even on some sensitive issues. 
 
Acknowledging U.S. Help; Seeking More 
------------------------------------- 
 
¶3.  (SBU) Dung and his key supporters understand that the United 
States has -- and is -- playing a direct role in creating the 
conditions for their nation's success.  Dung is thankful, in 
particular, for the key technical assistance we've given over the 
past seven years in reforming the system of economic governance.  He 
wants more.  On this trip, Dung hopes to highlight and deepen very 
positive bilateral trends in cooperation in the key, forward-looking 
areas of education and scientific cooperation on climate change, 
both key concerns of the Vietnamese people.  We are already 
expanding our efforts in those areas, so we will be able to respond 
positively.  Dung should also welcome U.S. help in the broader areas 
of good governance, and rule of law, all previously considered too 
sensitive for U.S. involvement.  This is good news. 
 
Facing Challenges 
----------------- 
 
¶4.  (SBU) Your meeting with Prime Minister Dung, however, also comes 
at a point when Dung is battling to maintain his position in the 
complex political environment here.  Having staked his reputation on 
delivering solid economic growth, this year's spike in inflation 
creates definite political challenges.  Current woes expose 
weaknesses in the economy and economic policy which were papered 
over in the go-go years of huge FDI inflows and increases in 
exports.  In addition, the recent passing of one of Dung's mentors, 
former Prime Minister Vo Van Kiet, robs Dung of a strong advocate of 
reform at a sensitive time.  All this aids Dung's more conservative 
counterparts in questioning the Prime Minister's embrace of the 
United States, while charging that Dung may not "have what it takes" 
even in economic matters. 
 
¶5.  (SBU) To date, the Prime Minister has not been knocked off his 
agenda.  Indeed, all signals indicate that Dung is determined to 
boldly call for a significant expansion of out bilateral 
relationship in the economy, educational exchanges, environment and 
overall assistance in ways that can and will energize the process of 
reform that Dung now leads. 
 
GROWING RELIANCE ON U.S. ADVICE 
------------------------------- 
 
¶6. (SBU) Dung's motivation to seek stronger ties is clear.  We are 
Vietnam's largest market and one of its closest trading partners. 
Dung and his colleagues also appropriately see the United States as 
an important force in maintaining a stable regional environment and 
balancing a rising China.  Domestic considerations play a role as 
well.  As Vietnam continues its rapid economic and social 
transition, many Vietnamese view the strength of its relations with 
the United States as a key indicator of how much progress has been 
made in leaving the dark days of the 1970's and 1980's behind.  For 
these reasons, Dung is committed to continued progress in bilateral 
relations and will speak positively and optimistically about the 
future of U.S.-Vietnam ties.  Differences over human rights remain, 
however, and lingering fears that the United States supports the 
overthrow of the current regime continue to complicate the 
relationship. 
 
HANOI 00000731  002 OF 004 
 
 
 
¶7. (SBU) For our part, Vietnam provides an important opportunity in 
East Asia for advancing U.S. national interests in securing a stable 
and peaceful Asia-Pacific region.  We are also encouraged by the 
steady liberalization of the government's role in the life of its 
citizens.  Problems remain, as noted below, but all agree that basic 
trends are positive with regard to personal freedoms, when viewed 
over time. 
 
TESTS FOR VIETNAM: EDUCATION, CORRUPTION AND STATISM 
--------------------------------------------- ------- 
 
¶8. (SBU) Despite its achievements, Vietnam still faces substantial 
challenges.  Its outdated education system is failing to keep up 
with the demands of a modern economy and an acute shortage of 
skilled and semi-skilled labor is already posing a major roadblock 
to development.  Since my arrival one year ago, I have been leading 
a multi-faceted, multi-year effort which has already helped result 
in a deepening of U.S. engagement with Vietnam on education issues. 
We are helping broker partnerships between Vietnam's academic 
institutions and the private sector, including public-private 
partnerships with U.S. businesses, as well as significantly 
increasing the number of Vietnamese students choosing the United 
States for overseas training.  These efforts will pay great 
dividends now, but even greater dividends ten or twenty years down 
the road. 
 
¶9. (SBU) As mentioned above, high inflation worries the national 
leadership, and one of the main culprits is inefficient, opaque 
spending by State Owned Enterprises, or SOEs, which account for 37 
percent of Vietnam's GDP.  SOE leaders, largely entrenched Party 
insiders, resist the reform agenda and have deep and powerful 
connections to current and past top leaders.  Dung to date has been 
unwilling or unable to privatize or significantly limit the growth 
of the big SOEs.  Governments, multilateral development banks and 
financial institutions have all urged the GVN to improve oversight 
of the state sector. 
 
¶10. (SBU) Corruption also continues to be a major problem in 
Vietnam, and Transparency International's perception index ranks 
Vietnam at 123 of 179 countries, a continuous backsliding since 
¶2002.  More worrisome was the arrest in April of two popular 
reporters who made their name on graft-busting, and their two 
government sources.  The detentions sent chills through a press that 
had thought itself increasingly free -- in fact encouraged by the 
leadership -- to go after corrupt officials.  To help Vietnam keep 
reform on track, we need to support and emphasize the vital role 
that an active press plays in ferreting out corruption. 
 
ADOPTIONS - AN AMERICAN POLITICAL ISSUE 
--------------------------------------- 
 
¶11. (SBU) Corruption and fraud in the field of intercountry adoption 
have created an atmosphere where child selling can and does occur. 
There are documented cases of local officials kidnapping children 
and then offering them for adoption.  When we uncover specific 
cases, Vietnamese authorities flatly refuse to punish offenders.  As 
a result, the U.S. announced we cannot agree not to renew our 
adoption agreement which expires in September 2008.  Some 
prospective American parents and adoptions groups were initially 
critical of USG vigilance with regard to these issues; my Embassy's 
issuance of a report outlining the abuses we are seeing has dampened 
that criticism.  The issue remains a sensitive one, however.  We 
continue to encourage Vietnam to join the Hague Convention on 
Intercountry Adoptions, which would require it to put in place 
robust safeguards to protect the rights of children and birth 
parents.  Dung will say the right thing in this regard, but may also 
call for intermediate measures as well. 
 
OUR MESSAGE ON HUMAN RIGHTS 
--------------------------- 
 
¶12. (SBU) While we share common views with the GVN in many areas, 
differences over human rights remain, and lingering fears that the 
United States supports the overthrow of the current regime continue 
to complicate the relationship.  The existence of groups in the 
United States and elsewhere that explicitly advocate regime change 
helps generate charges by conservatives that the U.S. Government 
supports the overthrow of the current regime.  These stoke a 
lingering paranoia that we are indeed still "the enemy."  Reassuring 
the GVN that the USG does not support violent separatist groups can 
assist in building a better human rights dialogue based on mutual 
trust. 
 
¶13. (SBU) Serious human rights deficiencies in Vietnam include lack 
of freedom of speech, freedom of assembly and freedom of the press. 
 
HANOI 00000731  003 OF 004 
 
 
My Mission tracks approximately 50 individual cases of prisoners of 
conscience and activists under various forms of house arrest, 
surveillance, and/or harassment.  We continue to call for the 
release of all prisoners of conscience and freedom of peaceful 
expression of political views, but where we see individuals 
expressing their political opinions, many of our government 
interlocutors see "lawbreakers" trying to destabilize the regime. 
 
¶14. (SBU) In other areas of governance and civil society, however, 
perceptible progress is being made.  Key Vietnamese leaders, 
including PM Dung, are committed to enhancing governance, 
establishing the rule of law and combating corruption -- all 
critical in building guarantees of individual freedoms.  Vietnam's 
leading newspapers are more aggressive in what they publish and in 
their willingness to push back against censors.  As noted above, 
however, generally good progress on allowing the press more freedom 
to highlight corruption and general government inefficiency has been 
marred by crackdowns that appear to occur when the media focus their 
sights too high up within the leadership hierarchy. 
 
¶15. (SBU) With regard to religious freedom, Vietnam continues to 
make progress.  More needs to be done, but the country no longer 
qualifies as a particularly severe violator of religious freedom 
under our legal definition and we removed the nation from the list 
of countries of particular concern in late 2006. 
 
OUR TRANSFORMATIONAL ASSISTANCE 
------------------------------- 
 
¶16. (SBU) Eighty-five percent of all U.S. Official Development 
Assistance to Vietnam focuses on health issues, and we are expanding 
our cooperative efforts, under your Emergency Program for AIDS 
Relief to prevent and treat HIV/AIDS and combat Avian Influenza. 
Vietnam has been a model partner in the global effort to fight Avian 
Influenza, in particular, which is significant given the 
recalcitrance of others.  In other areas, we have been building 
bridges with Vietnam's small nuclear regulatory sector, in part to 
set the stage to enable our companies to help the nation achieve its 
goal of building a nuclear power plant.  This engagement also serves 
counter-proliferation objectives.  Our technical assistance directed 
at helping Vietnam reform its system of economic governance remains 
a mainstay, as noted above. 
 
¶17. (SBU) Given its topography, Vietnam would be one of the 
countries most severely affected by a rise in sea levels and has 
begun to develop adaptation and mitigation strategies.  In 
preparation for this visit, our Vietnamese counterparts, at the 
direction of the Prime Minister, repeatedly highlighted the need for 
U.S. assistance to respond to the impacts of climate change. 
Several U.S. agencies already work with Vietnamese counterparts in 
this area. 
 
GRADUAL PROGRESS IN DEFENSE COOPERATION 
--------------------------------------- 
 
¶18. (SBU) Defense relations have advanced at a measured pace, but 
have actually come quite far if viewed over time.  We are in year 
three of a new IMET program, and we now have professional military 
exchanges with the People's Army of Vietnam (PAVN) in a limited but 
growing range of areas including military law, military nursing, 
public affairs, search and rescue, weather prediction and disaster 
preparedness.  Since 2003, U.S. Navy ships have made five port 
visits to Vietnam, including most recently a November 14-18 visit by 
two mine countermeasures ships.  Reaching our full potential for 
closer cooperation in defense activities, including multilateral 
peacekeeping, humanitarian assistance efforts and attendance at U.S. 
military schools is attainable, but will require time, persistence 
and patience, and a lot of hard work. 
 
AGENT ORANGE/DIOXIN 
------------------- 
 
¶19. (SBU) Over the past few years, we have begun to see a new 
approach by the GVN in dealing with Agent Orange/dioxin, which in 
the past has been used to demonize the United States.  The GVN has 
responded positively to increased U.S. engagement and the two 
countries have started to move beyond scientific dialogue towards 
cooperation on dioxin remediation projects.  Building on earlier 
technical assistance, Congress appropriated an additional USD 3 
million in Economic Support Funds (ESF) for "dioxin mitigation and 
health activities," which we are in the process of implementing. 
While this represents significant progress, the Vietnamese media and 
GVN officials continue to request additional support and Prime 
Minister Dung likely will raise this issue with President Bush. 
 
A WORD ABOUT CHINA 
 
HANOI 00000731  004 OF 004 
 
 
------------------ 
 
¶20. (SBU) While Vietnam's engagement with the United States will 
continue to broaden, China remains Vietnam's strategic 
preoccupation.  This is not to say that Vietnam is "choosing" China 
over the United States; the situation is much more complex than 
that.  Vietnam's leadership is sophisticated enough to realize that 
relations with China and the United States do not represent a zero 
sum game; it is possible to have good relations with both.  Each 
relationship also creates challenges, however.  While China 
constitutes a vital and necessary commercial partner and former 
ally, it is also perceived as a significant and frustrating 
constraint to Vietnam's freedom of action.  Most Vietnamese also 
dislike China on one level; the Chinese ruled Vietnam for a thousand 
years and sometimes the "older brother" approach wears thin. 
 
CONCLUSION 
---------- 
 
¶21. (SBU) Your interactions with then-PM Phan Van Khai, your 
meetings with President Triet and PM Dung here in 2006, then your 
White House meeting with President Triet in 2007, all served to open 
doors to new modes of cooperation.  Frankly, this year's interaction 
may prove the most significant.  Our current concrete cooperation in 
the economy, education, environment and energy has already added 
significant new momentum to the relationship.  PM Dung, in my view, 
is skillfully pushing for advances into additional new areas of 
cooperation.  This in turn recommits Vietnam to the reform agenda 
that has improved the lives of millions of Vietnamese.  More 
importantly, however, it locks us in for years to come, 
foreshadowing an even greater U.S. influence in the years and 
decades to come. 
 
MICHALAK