VZCZCXRO5527
PP RUEHCHI RUEHDT RUEHFK RUEHHM RUEHKSO RUEHNAG RUEHNH RUEHPB
DE RUEHHI #1251/01 3121033
ZNR UUUUU ZZH
P 071033Z NOV 08
FM AMEMBASSY HANOI
TO RUEHC/SECSTATE WASHDC PRIORITY 8708
INFO RUEHHM/AMCONSUL HO CHI MINH 5277
RUEHGP/AMEMBASSY SINGAPORE 2671
RUCNASE/ASEAN MEMBER COLLECTIVE
RUEHZU/ASIAN PACIFIC ECONOMIC COOPERATION
RUEATRS/DEPT OF TREASURY WASHINGTON DC
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RHMFISS/DEPT OF ENERGY WASHINGTON DC

UNCLAS SECTION 01 OF 03 HANOI 001251 
 
SENSITIVE 
SIPDIS 
 
STATE FOR EAP/MLS MBROWN 
SINGAPORE FOR TREASURY 
TREASURY FOR SCHUN 
COMMERCE FOR JBENDER 
USTR FOR DBISBEE 
 
E.O. 12958: N/A 
TAGS: ECON ENRG EAGR PINR VM
SUBJECT: ADDRESSING THE ECONOMIC AGENDA DURING U.S. VISIT BY 
VIETNAM'S ECON "CZAR" 
 
REF A) Hanoi 1185 and HCMC 739 (Media Crackdown); 
B) Hanoi 950 (Vietnam Assistance Options); 
C) State 117469 ("DOL Hosts US-Vietnam Labor Dialogue); 
D) Hanoi 1108 ("Vietnam Economic Highlights"); 
E) Hanoi 1048 (Civil Nuclear Cooperation); 
F) 07 Hanoi 1550 ("New Czars in The Making? The New DPMs") 
 
HANOI 00001251  001.2 OF 003 
 
 
This cable is Sensitive But Unclassified.  For official use only, 
not for dissemination outside USG channels or posting on the 
internet. 
 
¶1. (SBU) Summary:  The November 8-20 visit to the United States by 
Deputy Prime Minister (DPM) Hoang Trung Hai, offers a significant 
opportunity to engage on some of the most important issues in our 
bilateral agenda with Vietnam's top economic official.  DPM Hai has 
jurisdiction over key portfolios, including energy and mining, trade 
and investment, and nuclear and environmental cooperation.  His 
aides say his main message in Washington will be that Vietnam wants 
more and deeper economic engagement with the United States, and that 
he will be looking for confirmation that we will pursue a similar 
line during an Obama administration.  The Deputy Prime Minister will 
also promote Vietnam's inclusion in the Generalized System of 
Preferences, and discuss nuclear cooperation and Vietnam's joining 
the Trans-Pacific Partnership Agreement.  Hai's visit presents us 
with an opportunity to get Vietnam to focus on the structural 
reforms essential to Vietnam's development, and to raise private 
sector concerns about the increasing uncertainty of Vietnam's 
policies, particularly as they pertain to taxation and contractual 
obligations, and how this affects investors' perspectives of 
Vietnam.  Finally, as Vietnam's top nuclear policy maker, Hai is 
well positioned to promote civil nuclear cooperation with the United 
States and get Vietnam to participate more fully in international 
fora on nuclear energy.  END SUMMARY. 
 
¶2. (U) Deputy Prime Minister Hai, one of Vietnam's five Deputy Prime 
Ministers (DPM), will lead a delegation of Vietnamese officials to 
Boston and Washington, DC from November 8 to 21.  Hai will be coming 
from petroleum sector-related visits to Venezuela and Canada.  The 
DPM will be in Boston to attend a United Nations Development 
Program-sponsored seminar at Harvard University from November 8 to 
¶15.  The program, part of the UNDP's Vietnam Leadership Program, 
will include a three-day session titled "Economic Development and 
the Role of the State, Global Macroeconomic Conditions and 
International Trade" and a two-day program on infrastructure and 
urbanization.  Hai requested a meeting with the Governor of 
Massachusetts. 
 
¶3. (SBU) In Washington from November 15 to 21, DPM Hai requested 
meetings with the secretaries of State, Energy and Commerce, NSC 
Advisor Price, and USTR Schwab.  He plans to attend a private sector 
lunch organized by the U.S. Chamber of Commerce and the U.S.-Asean 
Business Council, and meet with former USTR Charlene Barshefsky and 
Senator Jim Webb.  The Department of Energy is arranging a visit to 
a nearby nuclear power plant. 
 
¶4. (SBU) Hai's delegation will include Foreign Affairs Vice Minister 
Doan Xuan Hung, Industry and Trade Vice Minister Nguyen Cam Tu, and 
Office of the Government Vice Chairman Van Trong Ly.    Also 
attending, but not planning to join in the Washington leg of the 
trip are Agriculture and Rural Development Vice Minister Bui Ba 
Bong, National Assembly Vice Chairman Nguyen Chi Dung, Finance 
Minister Finance and Banking Department Director General Pham Phan 
Dung, and executives from the state-owned gasoline retail monopoly, 
Petrolimex and the power company, Electricity of Vietnam (EVN). 
 
HAI'S AGENDA: KEEPING MOMENTUM BETWEEN ADMINISTRATIONS 
--------------------------------------------- ------ 
 
¶5. (SBU) Ministry of Foreign Affairs officials told Econoff that DPM 
Hai's top priority in Washington will be to convey Vietnam's desire 
to continue deepening our bilateral economic relations at the 
current pace during an Obama administration.  Of particular concern 
to Hai is the fate of items mentioned in the June 2008 U.S. Vietnam 
Joint Statement, including Vietnam's application for the Generalized 
System of Preferences (GSP).  Senior GVN officials continue to 
express hopes that Vietnam will get GSP before the end of the 
current administration.  Vietnam is also considering whether to join 
the Trans-Pacific Partnership Agreement (TPP), and Hai will want to 
 
HANOI 00001251  002.2 OF 003 
 
 
know whether the regional free-trade agreement will be endorsed by 
the new administration.  Although Hai is Vietnam's preeminent 
government official on energy matters, according to his team he does 
not plan to raise conflicts in the South China Sea over oil 
exploration. 
 
THE MESSAGE TO HAI: STRUCTURAL REFORM 
------------------------------------- 
 
¶6. (SBU) Vietnam's desire to keep the strong pace of our economic 
relations presents us with a good opportunity to get Vietnam's 
leaders to focus on tackling long-delayed reforms on labor, 
transparency and corruption, improved IPR protection, and improving 
governance and accountability (REFS A, B, C).  These, we should 
stress, will raise Vietnam's overall competitiveness as an exporter 
and investment destination.  In addition, these reforms will open 
new avenues of cooperation with the U.S. and contribute to deepening 
relations. 
 
¶7. (SBU) Moving forward on a Bilateral Investment Treaty (BIT) will 
also promote progress in this regard.  The BIT was launched during 
the Prime Minister's visit in June, with the first round of talks 
proposed for mid-December.  Underscoring our continuing interest in 
the BIT should help Hai push a bureaucracy that has dragged its feet 
on getting to the negotiating table.  Other areas where prodding Hai 
may lead to progress include the Prime Minister's Project 30 
administrative reforms, Vietnam's consideration of a Customs 
"single-window", and expanding USAID governance cooperation into 
areas like civil society-building and broader rule-of-law. 
 
POLICY UNCERTAINTY 
------------------ 
 
¶8. (SBU) DPM Hai, who oversees Vietnam's energy policy, is regarded 
as the most influential policymaker in Vietnam's power, mining and 
industrial sectors.  The energy sector has been one of the most 
troublesome for U.S. investors including Chevron, ConocoPhillips, 
AES and Gannon.  Hai has taken a personal interest in these issues 
and meets with company executives regularly.  The GVN has sown 
uncertainty with its ever-changing tax regime and demands for 
changes in existing production sharing contracts (REF D).  Many of 
these policy changes, whether royalty taxes on mining, luxury taxes 
on automobiles or import licensing schemes, have been introduced 
this year with little discussion or lead time despite their 
significant impact to the private sector.  U.S. investors such as 
Ford, ExxonMobil, Chevron and ConocoPhillips believe these and 
similar problems are adversely affecting Vietnam's investment 
climate. 
 
CIVIL NUCLEAR ENERGY 
-------------------- 
 
¶9. (SBU) We should use Hai's focus on energy issues to promote 
increased U.S.-Vietnam nuclear cooperation (REF E).  This serves two 
primary purposes: furthering our international nonproliferation aims 
through the creation of a safe and secure Vietnamese civil nuclear 
program, and the eventual development of a market for U.S. nuclear 
technology and equipment.  Building on existing cooperative 
agreements with the Department of Energy and the Nuclear Regulatory 
Commission, Hai's planned visit to a nuclear power facility and 
meetings with the Secretary of Energy and the Director of USTDA 
provide opportunities to advocate for a closer relationship.  For 
the past several months, we have urged Vietnam to sign a broad, 
bilateral nuclear cooperation MOU.  We hope to have GVN approval for 
Hai to sign the agreement during his meeting with the Secretary of 
Energy.  If not, we urge this opportunity to advocate for prompt 
action. 
 
¶10. (SBU) Similarly, the GVN has repeatedly indicated its interest 
in participating in the Global Nuclear Energy Partnership (GNEP), 
but failed to send a delegation to the recent GNEP Ministerial in 
Paris.  Senior U.S. interlocutors should urge Vietnamese 
participation and highlight the many benefits (and no cost) 
associated with joining this growing organization.  Finally, we urge 
USTDA to build on the Nuclear Orientation Visit it recently funded 
to urge Vietnam to consider U.S. technology as it develops its 
nuclear sector.  (Note:  Embassy Hanoi understands that Hai's TDA 
meetings have not been confirmed.  We have urged MoFA to ensure that 
 
HANOI 00001251  003.2 OF 003 
 
 
his schedule includes TDA. End Note.)  The GVN recently announced 
plans to build two nuclear power plants by 2020. 
 
BIOGRAPHICAL NOTES 
------------------- 
 
¶11. (U) Hai, 49, became a Deputy Prime Minister (DPM) in August 
2007, when the number of DPMs expanded from three to five.  Hai is 
the youngest person ever to hold the position.  He was previously 
the last Minister of Industry, before it was merged with the 
Ministry of Trade into the current Ministry of Industry and Trade 
also in August 2007.  As one of two economic DPMs, Hai has oversight 
of industry, trade and investment.  Although he has yet to assert 
full control of these issues, he has taken direct interest in 
certain investment projects, such as energy and power generation. 
 
¶12. (U) Hai started as an engineer at the state-owned power company 
Electricity of Vietnam (EVN), rising to CEO in 1998-2000.  Hai 
joined the Communist Party in the early 1990s and served in the 
powerful Central Committee.  He was also a member of the National 
Assembly.  Hai has an engineering degree from the Hanoi University 
of Technology Technical, and an MBA from Trinity University in 
Ireland.  His B.A. was in political philosophy.  Hai was born on 
September 27, 1959 in Thai Binh Province on the Red River Delta. 
Hai speaks fluent English and has been known to conduct official 
meetings in English (which is highly unusual for GVN officials). 
Third-country mission colleagues advise us that Hai is a heavy 
smoker, and does not like to spend too much time without a puff. 
 
COMMENT: A GOOD OPENING FOR CONTINUUM 
--------------- 
 
¶13. (SBU) Comment: The Vietnamese's interest in ensuring that the 
dynamic nature of our bilateral relationship is maintained under a 
new administration highlights the value the GVN places on the U.S. 
relations - and the notion that we have a window of opportunity to 
influence change and reform in Vietnam. End Comment. 
 
MICHALAK