VZCZCXRO2215
RR RUEHCHI RUEHDT RUEHNH
DE RUEHHM #0958/01 2970945
ZNR UUUUU ZZH
R 230945Z OCT 08
FM AMCONSUL HO CHI MINH CITY
TO RUEHC/SECSTATE WASHDC 5062
INFO RUEHHI/AMEMBASSY HANOI 3384
RUCNASE/ASEAN MEMBER COLLECTIVE
RUEHHM/AMCONSUL HO CHI MINH CITY 5291

UNCLAS SECTION 01 OF 02 HO CHI MINH CITY 000958 
 
SENSITIVE 
SIPDIS 
 
STATE FOR EAP/MLS, DRL/AWH AND DRL/IRF 
 
E.O. 12958: N/A 
TAGS: PGOV PREL PHUM SOCI ECON VM
SUBJECT: CENTRAL HIGHLANDS SOCIOECONOMIC CONDITIONS BEHIND UNREST 
 
REF: A) HCMC 682 B) HCMC 693 (C) HCMC 517 (D) HCMC 447 and previous 
 
HO CHI MIN 00000958  001.2 OF 002 
 
 
¶1. (SBU) Summary: The Central Highlands region of Vietnam is in 
the midst of an economic transformation.  While only twenty 
years ago much of the Central Highlands was forested and 
cultivated by ethnic minorities using swidden (roving 
slash-and-burn) agricultural techniques, today the jungle is 
clearly in retreat in the face of an onslaught by both giant 
State-owned enterprises and individual peasant farmers 
cultivating commodity crops for world markets.  While economic 
development is by-and-large improving living standards and 
modernizing the area, indigenous ethnic minorities (often 
collectively termed "Montagnards") are being disproportionately 
left behind as socio-economic, cultural, and educational 
marginalization disadvantages them vis-`-vis their ethnic 
Vietnamese neighbors.  Frustration over their exclusion and 
exploitation is the main trigger of unrest in the area, 
especially when it takes the form of corruption and land 
misappropriation.  End summary. 
 
DEVELOPMENT PROJECTS AND NEW CROPS 
---------------------------------- 
¶2. (SBU) Large-scale agricultural developments are immediately 
evident upon arrival in the Central Highlands.  On all but the 
steepest mountains, the jungle has been replaced by orderly 
rubber groves that stretch as far as the eye can see.  Rice, 
black pepper, coffee, and cashew farming are ubiquitous in more 
populous areas.  Though rubber and coffee have been cultivated 
in the Central Highlands since the French colonial period, much 
of the large-scale transition to cash crops currently taking 
place occurred within the past twenty years.  For example, 
according to official statistics, more than 117,000 hectares of 
rubber trees are being cultivated in the Central Highlands, and 
a Vietnam Rubber Industry Group's survey said 170,000 additional 
hectares could also be converted to rubber production by 2015. 
While a high percentage of small-scale farmers have shifted at 
least a portion of their production to export-oriented commodity 
crops, large-scale agribusiness in the Central Highlands is 
almost entirely controlled by SOEs and political insiders who 
often rely largely on in-migrant labor from the North and 
Northwest Highlands.  While large agribusiness projects helped 
build the markets for cash crops that are increasing Vietnam's 
net income, NGO development studies indicate that the approval 
process concentrated power in the hands of the 
politically-connected, who are almost exclusively non-indigenous 
Kinh-majority Vietnamese. 
 
¶3. (SBU) While rubber production remains almost exclusively the 
domain of large plantations, black pepper and coffee have 
emerged as "engines of change" for small farmers in the region. 
With reasonably modest capital investment, even small land 
holders can take advantage of cash-crop markets to supplement 
lower income traditional products such as rice, yams, and corn. 
GVN programs encourage the cultivation of these cash crops 
through loan programs, training, and subsidies.  Gia Lai 
Provincial and Chu Se District officials highlighted the new 
prosperity that cash crops had brought their people and planned 
to continue to promote their cultivation. 
 
¶4. (SBU) On the conceptual level, both NGOs and the GVN have 
expressed interested in introducing new crops -- notably cacao 
-- to the area to increase the local value-added.  Economic 
planners believe cacao cultivation in the Central Highlands, 
accompanied by cacao-to-chocolate processing capacity, could 
bring not just increased profits but create new fields of 
economic opportunity in processing and industry.  Local 
officials and farmers of other cash crops alike also see the 
advantage of crop diversification via cocoa as a shield against 
sometimes fickle international commodity markets. 
 
ETHNIC MINORITIES LEFT BEHIND 
----------------------------- 
¶5. (SBU) Ethnic minorities have not been nearly as successful as 
native Vietnamese immigrants to the Central Highlands in 
benefiting from the dramatic economic growth so evident 
throughout the Central Highlands.  The historical dependence of 
ethnic minorities on a swidden agriculture way of life makes 
sedentary agriculture, let alone agribusiness farming, 
culturally foreign.  Accustomed to a very difficult but 
independent lifestyle, ethnic minorities frequently find work in 
organized enterprises unattractive.  This has led some mangers 
of SOEs to complain that ethnic minorities have such a poor work 
ethic that they were forced to replace them with ethnic 
Vietnamese migrants.  These cultural difficulties are compounded 
by generally minimal levels of education (ref septel) among 
ethnic minorities, geographic isolation, years of war, mutual 
suspicion, and FULRO separatism. 
 
¶6. (SBU) Basic structural and historical imbalances work to the 
economic disadvantage of ethnic minority groups native to the 
 
HO CHI MIN 00000958  002.2 OF 002 
 
 
Central Highlands.  Starting in 1954 under President Diem's 
South Vietnamese government, Catholic refugees from the north 
were encouraged to resettle in the South, including the Central 
Highlands.  Under Diem, lands traditionally belonging to 
Montagnards was decreed "Sovereign Territory" and reallocated to 
the new Kinh (ethnic Vietnamese) immigrants for cultivation. 
After the Vietnam War, the central government continued the 
policy of encouraging Kinh resettlement to the Central Highlands 
in the hopes it would spur economic development and increase 
national security.  Ethnic minority community leaders relayed 
that the in-migration of Kinh with access to capital and 
experience in banking has led to a steady transfer of land from 
ethnic minorities to Kinh migrants.  This is a tricky problem to 
address, because (as noted ref C) well intentioned policies to 
restrict land transfers from ethnic minorities to ethnic 
Vietnamese bred resentment and charges that the GVN was 
purposefully marginalizing ethnic minorities by not allowing 
them a share in Vietnam's economic boom.  The domination of 
local government by Kinh officials has exacerbated the problem 
as SOEs and other Kinh-led enterprises have used sometimes 
questionable land appropriation schemes to strip ethnic 
minorities of their traditional land.  Anger over land 
appropriation and misappropriation seems to be the leading cause 
of unrest in the region (ref D). 
 
¶7. (SBU) In a replay of the clash of aboriginal and modern 
culture that has been replayed in the USA, Canada, Australia and 
elsewhere, differing conceptions of land ownership and land 
rights have also played a significant role in breeding 
resentment among ethnic minorities.  In Vietnam's case, ethnic 
minority individuals frequently complain that the GVN 
"confiscated" their lands on the pretext of being "unused." 
Within the tradition conceptions of land and territory among 
Central Highlands minorities, the "territory" of one village or 
ethnic group consists not just of the land where they live and 
farm at any given time.  Instead, it includes the entire forest 
region in the area where the group lives, areas where they have 
lived and areas where they might live again in the future, as 
over time they abandon one area to be slowly reclaimed by the 
forest and relocate their dwellings and farms to newly cleared 
forest land.  Ethnic Vietnamese immigrants, in contrast, 
typically viewed tribal lands as consisting only of those lands 
actively used for farms and homes by the ethnic minorities at 
the time the immigrants arrived.  The immigrants -- and GVN 
officials charged with distributing land rights -- viewed all 
other surrounding forest land as "vacant." 
 
¶8. (SBU) While government loan programs (such as Programs 134 
and 135) target ethnic minorities for microfinance loans, their 
Kinh counterparts frequently out-compete them with their greater 
access to capital.  According to some ethnic minority members 
who have returned to Vietnam after fleeing to Cambodia in search 
of a better life, ethnic minorities can generally borrow only 
4-20 million dong (240-1200 USD), while their Kinh neighbors can 
borrow up to 100 million dong (6000 USD).  Such differences are 
not necessarily the result of prejudice.  Banks are reluctant to 
loan more to ethnic minorities because they both generally do 
not have sufficient collateral and have history of fleeing to 
Cambodia, a sad but true factor.  Minorities' relative lack of 
access to capital, however, serves to further compound the 
growing gap between them and ethnic Vietnamese both by allowing 
ethnic Vietnamese to profit more from the most profitable cash 
crops and by perpetuating an environment in which ethnic 
minorities do not learn the skills needed to interact with 
modern banks or manager larger-scale operations. 
 
COMMENT 
------- 
¶9. (SBU) As long as substantial numbers of Montagnards feel 
marginalized and angry, the Central Highlands will remain a 
tense and potentially unstable region.  While some in the GVN 
continue to see FULRO separatism in every dark jungle corner, 
ethnic minority discontent is primarily rooted in economic 
deprivation and fears -- well-founded fears, based upon the 
unfortunate history of aboriginal peoples in other nations -- 
that the clash of aboriginal and modern cultures will lead to a 
loss of ethnic traditions and ultimately even ethnic identity. 
Defusing this volatile situation will be very challenging even 
if the GVN is successful in eradicating corruption and other 
forms of active discrimination against ethnic minorities.  End 
Comment. 
 
¶10. (U) This cable was coordinated with Embassy Hanoi. 
FAIRFAX