VZCZCXRO6109
OO RUEHCHI RUEHCN RUEHDT RUEHHM
DE RUEHHI #1357/01 3500909
ZNR UUUUU ZZH
O 150909Z DEC 08
FM AMEMBASSY HANOI
TO RUEHC/SECSTATE WASHDC IMMEDIATE 8852
INFO RUEHHM/AMCONSUL HO CHI MINH 5380
RUEHZS/ASEAN REGIONAL FORUM COLLECTIVE

UNCLAS SECTION 01 OF 05 HANOI 001357 
 
SENSITIVE 
SIPDIS 
 
DEPARTMENT FOR H AND EAP/MLS.  PLS PASS TO SENATOR WEBB 
 
E.O. 12958: N/A 
TAGS: PREL PGOV PHUM ECON ETRD MARR VM
 
SUBJECT: SCENESETTER FOR SENATOR WEBB'S DECEMBER VISIT TO VIETNAM 
 
HANOI 00001357  001.2 OF 005 
 
 
OVERVIEW 
-------- 
 
¶1.  (SBU) Senator Webb: Your December 22-January 2 visit to Vietnam 
comes at an opportune moment.  Our bilateral relationship with 
Vietnam is arguably at its highest point since relations were 
normalized in 1995.  Propelled by a series of senior bilateral 
visits, the United States and Vietnam have deepened cooperation in 
areas ranging from public health and MIA issues to higher education 
and technical assistance designed to support Vietnam meet its WTO 
and Bilateral Trade Agreement obligations.  The United States is 
Vietnam's largest export market and third largest overall trade 
partner, and U.S. investment in Vietnam continues to grow. 
Conservative voices in Vietnam's leadership remain wary of U.S. 
intentions, but their influence is waning as the country's young 
population -- the first generation in memory to live without war -- 
looks to the West.  Strategically, Vietnam increasingly views the 
U.S. presence in the region as a force for stability, a perspective 
evident in the first-ever bilateral political-defense talks October 
6 and policy planning talks October 30.  Vietnam is also taking a 
more active role in multilateral diplomacy, both as a non-permanent 
member of the UN Security Council and as an emerging leader in 
ASEAN. 
 
¶2.  (SBU) Profound differences remain, however, particularly in our 
approach to human rights.  While Vietnam has made strides in 
improving religious freedom -- resulting in the country being 
removed from the list of "Countries of Particular Concern" -- there 
has not been a corresponding improvement in political rights or 
press freedom.  Suspicion over our human rights reporting and 
advocacy almost certainly are a main reason for the cumbersome 
restrictions that the GVN continues to place on our HCMC consulate 
operations.  We have our differences too on how Vietnam approaches 
international issues.  While taking its UNSC obligations seriously, 
Vietnam's non-interventionist line has caused it to align with 
Russia and China on issues such as Georgia and Darfur.  China, 
understandably, remains Vietnam's strategic obsession and provides 
the subtext for Hanoi's "friends to all" foreign policy -- an 
approach that can at first seem naive, but which is firmly rooted in 
real politic. 
 
VIETNAM'S FOREIGN POLICY PRIORITIES 
----------------------------------- 
 
¶3.  (SBU) Vietnam professes a "friends to all" foreign policy, 
guided by a non-interventionist ethic similar to China's famous Five 
Principles of Peaceful Coexistence.  But despite the Bandung-era 
rhetoric, Vietnam's foreign policy is fundamentally pragmatic. 
While the overriding strategic concern remains China, Vietnam is 
under no illusions that it can somehow "balance" China with the 
United States, Russia, or Japan.  Mistrust of China runs deep, fed 
by historical animosities and simmering resentment over what is 
widely viewed as a weak position on South China Sea territorial 
disputes.  Vietnam's leadership appears to realize, however, that 
confrontation with China is not in the country's interest.  Nor is 
it a position that the Party could sustain domestically: once 
unleashed, nationalistic sentiment, though initially directed at 
China, could easily turn toward the Party itself. 
 
¶4.  (SBU) Instead, Vietnam seeks to maintain as cordial and stable a 
relationship with China as possible, while also cautiously 
cultivating a diverse range of bilateral friendships and enmeshing 
these in a framework of multilateral engagement.  In this context, 
Vietnam's bilateral relationship with the United States enjoys pride 
of place; however, our relationship is but one of several, and 
Vietnam is wary of pushing the agenda with the United States too 
far, too fast, lest it antagonize China. 
 
¶5.  (SBU) Multilaterally, Vietnam puts great store in ASEAN.  It has 
voiced support for enhancing both the association's internal 
capabilities and its relationships with ASEAN's dialogue partners. 
Similarly, Vietnam looks at a number of regional issues such as 
Burma and the Thai-Cambodia border disputes largely, though not 
exclusively, through an ASEAN lens.  Thus, while Vietnam's natural 
impulse is not to interfere in Burma's internal affairs, Hanoi 
recognizes the obstacles that Rangoon's continued intransigence 
poses for ASEAN's credibility and relations with the West.  At the 
UNSC, Vietnam has been professional and well-briefed, but cautious. 
Vietnam's UN mission has been eager to join in consensus, when 
possible, voting for example to support sanctions on Iran.  But 
where there has been disagreement, Vietnam has tended to follow a 
non-interventionist line. 
 
HUMAN RIGHTS AND RELIGIOUS FREEDOM 
---------------------------------- 
 
¶6.  (SBU) For Vietnam non-interference is not just an abstract 
principle, but also a reflection of narrow self-interest.  Vietnam 
 
HANOI 00001357  002.2 OF 005 
 
 
continues to have a poor record on human rights and still reacts 
defensively to criticism, though it has learned to be more 
responsive to international calls for dialogue, engaging the United 
States and others in annual formal human rights discussions. 
Vietnam's sensitivities notwithstanding, promoting human rights, 
religious freedom, and the growth of an active civil society remain 
top U.S. priorities.  For its part, the MFA seems to have fixated on 
the possibility of a Vietnam Human Rights Act in Congress, and you 
are likely to hear objections to its passage. 
 
¶7.  (SBU) The human rights picture is not all bleak, to be sure. 
Economic growth has brought with it an enormous expansion of 
personal freedoms, and government is much less intrusive than it was 
twenty, ten, or even five years ago.  While much remains to be done, 
religious freedoms continue to expand, with most religious groups 
reporting improved conditions and growing memberships.  We see this 
progress as continuing.  We have not, however, seen corresponding 
progress in political rights, and the government continues to 
severely restrict freedom of speech and assembly.  Political 
dissident groups such as "Bloc 8406" are banned and their members 
subject to harassment and arrest; another twelve activists were 
arrested over the last three months.  Similarly, the October 
conviction of two correspondents reporting on a major corruption 
scandal (universally referred to here as the "PMU-18" scandal) and 
the firing of several senior newspaper editors -- with more firings 
rumored to be imminent -- has had a chilling effect on the recently 
emerging field of investigative journalism.  Vietnam's internet blog 
scene, particularly in HCMC, has been a source of spirited debate. 
But here too, the government is feeling, clumsily thus far, for a 
way to curb what it considers to be overly sensitive discussions; in 
September, a prominent blogger critical of Vietnam's "soft" stance 
toward China was sentenced to two and a half years in prison.  We 
have been pressing Vietnam to amend its draft media law and to 
provide whistle-blower protection for journalists and their 
sources. 
 
ECONOMIC SUCCESS AND CHALLENGES 
------------------------------- 
 
¶8.  (U) Trade and investment have played a central and expanding 
role in our improved relations.  After a decade of isolation and 
failed economic policies, Vietnam is determined to catch up with the 
Asian Tigers.  Vietnam's market-oriented reform program ("doi moi," 
renovation) has spurred export-led economic growth averaging 7.5 
percent over the past decade.  Trade with the United States has 
expanded rapidly after Vietnam acceded to the WTO in January 2007 -- 
growing 29 percent from 2006 to 2007 -- 
due in some measure to technical assistance provided through the 
U.S.-supported STAR (Support for Trade Acceleration) program.  The 
United States is currently Vietnam's largest export market and 
third-largest overall trade partner.  Despite the global economic 
uncertainty, two-way trade in 2008 looks likely to once again break 
new ground and surpass last year's mark. 
 
¶9.  (U) We are seeking to keep up the momentum with negotiations 
toward a new bilateral investment treaty, the first round of which 
will take place in Washington this month.  We are also urging 
Vietnam to join the Trans-Pacific Partnership free trade 
negotiations, a step we hope you will also encourage.  The two sides 
recently agreed to open up completely their air cargo markets under 
a revised civil aviation agreement.  Inadequate intellectual 
property protection and, especially, deficiencies in protecting 
labor rights remain major problems, which stand in the way of 
Vietnam's request for GSP status.  A Department of Commerce team 
held discussions this week in Hanoi on Market Economy Status, 
something Vietnam has long sought.  Commerce also recently 
determined in its third and last report on textiles and garments 
that Vietnam was not dumping in the United States.  We are pushing 
Vietnam to open its market further to U.S. beef. 
 
¶10.  (U) Despite rapid economic growth, Vietnam's economy continues 
to face substantial challenges, including underdeveloped 
infrastructure; a shortage of skilled workers, managers, and 
engineers; and chronic misallocation of state resources to 
inefficient, but politically powerful state-owned enterprises. 
Corruption is endemic, as evidenced by the Japanese government's 
decision to freeze all low-interest loans to Vietnam until it takes 
"meaningful steps" to eliminate corruption.  And while poverty 
reduction efforts have been extremely successful -- a recent World 
Bank study described Vietnam's poverty reduction rate as one of the 
most significant in history -- disparities of wealth have widened. 
 
¶11.  (U) The global financial crisis has not directly affected 
Vietnam given its limited integration into the world financial 
system.  However, the government is concerned that the slowing 
global economy will affect Vietnam's exports and foreign investment 
inflows.  It has revised its 2009 GDP growth estimate down to 6.5%, 
a figure that many local economists argue is still too high.  Recent 
 
HANOI 00001357  003.2 OF 005 
 
 
developments come on top of significant macroeconomic difficulties 
at the beginning of the year, including high inflation, a ballooning 
current account deficit, and pressure on the currency caused by high 
money supply and credit growth.  In response to these earlier 
difficulties, the government tightened its monetary and fiscal 
stance.  These policies have worked, but now the government is 
beginning to reverse them in response to increased concerns about 
growth.  The government faces a difficult balancing act between 
controlling price increases (year-on-year inflation for November was 
still 24.2 percent) and sustaining an economic expansion sufficient 
to provide jobs and increasing income to its people. 
 
THE MILITARY RELATIONSHIP AND TERRORISM 
--------------------------------------- 
 
¶12.  (SBU) Military ties, for obvious historical reasons, have 
developed less rapidly.  But here too there has been progress. 
Efforts to provide the fullest possible accounting of missing 
personnel predate the establishment of diplomatic relations, and the 
development of trust on the issue has made gains in other fields 
possible.  We would like to see more progress in areas such as 
underwater recovery and archival access, but, overall, both sides 
can be proud of our achievements: accounting for 880 Americans 
previously listed as MIA (1766 remain missing throughout Southeast 
Asia).  Largely on these foundations, the two sides' militaries are 
slowly developing ties and have discussed cooperation in search and 
rescue, naval medicine and meteorological information exchanges. 
These and other initiatives -- such as expanding English-language 
training under IMET, ship visits, and encouraging Vietnam to 
participate in global peacekeeping operations -- were on the agenda 
for political-defense talks, the first of their kind, which were 
held in Hanoi October 6.  Touching on a subject likely to come up in 
your discussions, the two sides also exchanged views on China's 
presence in the South China Sea. 
 
¶13.  (SBU) While the Vietnamese people and the GVN have also made 
great strides toward healing war wounds and getting on with the 
business of building a future for their country, issues relating to 
the status of former ARVN soldiers, as well as others associated 
with the "former regime," remain painful.  One of the next important 
psychological steps that the GVN needs to take in order to move from 
division to unity is to expand their drives aimed at reconciliation 
with foreign soldiers who served in Vietnam to include Vietnamese 
who served in the ARVN.  Your proposed visit to both the former ARVN 
cemetery at Bien Hoa and a local cemetery where Viet Cong/Viet Minh 
fighters are buried would represent a real watershed in US-VN 
relations, as well as in Vietnam's own process of internal 
reconciliation.  (Note: Bien Hoa is one of the few remaining former 
ARVN cemeteries. While some Vietnamese relatives of the fallen now 
have access to the site, access is limited and we have not been able 
to obtain permission to visit and see the current condition of the 
graves and the grounds.  End note) 
 
¶14.  (SBU) Vietnam says the right things about the threat of global 
terrorism and has participated with us in modest cooperative 
activities, including USG-funded counterterrorism-related training 
at the International Law Enforcement Academy (ILEA) in Bangkok and 
military-to-military exchanges with an emphasis on counterterrorism 
themes.  Vietnam has signed eight out of thirteen UN terrorism 
conventions.  Vietnam recently hosted a team of technical experts 
from the Department of Energy to discuss the possibility of 
launching Megaports in the ports of Saigon and Haiphong.  This would 
be a major step forward, and the government is currently considering 
a draft MOU proposed by the DOE. 
 
U.S. ASSISTANCE: HEALTH, TRADE, EDUCATION, ENVIRONMENT 
--------------------------------------------- --------- 
 
¶15.  (U) Health diplomacy has been a hallmark of Mission strategy 
for over 10 years, has opened many doors, and currently about 80 
percent of all funding is in health and disability.  Combating the 
spread of infectious disease has been one of the most vigorous areas 
of bilateral cooperation.  For FY 2008, HIV/AIDS assistance under 
PEPFAR totaled USD 88.6 million; since 2004, USD 234 million has 
been devoted to HIV/AIDS in Vietnam.  The results have been 
encouraging, with Vietnam achieving the targets set by the Office of 
Global AIDS Coordination.  The United States has made substantial 
investment to prevent and control avian influenza.  Myriad other 
capacity building work, for example in tuberculosis, research 
capacity building, and good clinical practice, has been done 
in-kind. 
 
¶16.  (U) U.S. assistance in other areas remains disproportionally 
limited, particularly in relation to spending in smaller neighboring 
nations, but increased somewhat in FY08 to more than USD 10 million, 
due to earmarks for governance programming and de-mining.  U.S. 
programs such as USAID's STAR and the Vietnam Competitiveness 
Initiative have become the government's preferred source of 
 
HANOI 00001357  004.2 OF 005 
 
 
expertise in reshaping trade and economic regulation, with secondary 
positive effects on governance.  Treasury is also starting to engage 
on economic issues, with programs in areas such as anti-money 
laundering, taxation, insurance and bond market development. 
 
¶17.  (U) Education, although a newer priority, is the focus of much 
Mission activity.  Joint efforts to improve Vietnam's system of 
higher education -- including expanding opportunities to study in 
the United States and enhancing educational opportunities in Vietnam 
through partnerships with U.S. universities -- was a main focus of 
PM Dung's June visit to Washington.  As a product of the visit, the 
two sides have committed to regular meetings of an Educational Task 
Force to discuss ways forward in several key areas, including 
establishing an American university in Vietnam.  Ongoing U.S. 
educational activities include the Fulbright Program, which provides 
scholarships for two-year Master's Degree programs at American 
universities for 25 Vietnamese students each year, and the Vietnam 
Education Foundation, which sends more than 40 students to the U.S. 
for Ph.D. study in the hard sciences every year.  The Fulbright 
Economic Teaching Program provides high-quality training in 
economics and public policy for mid-level administrators.  In 
addition, the U.S. Mission actively assists U.S. universities and 
colleges wanting to set up programs at Vietnamese schools, while 
EducationUSA Centers in Hanoi and Ho Chi Minh City provide 
information and counseling to encourage students to study in the 
U.S. 
 
¶18.  (U) Vietnam's rapid economic growth has put strains on the 
environment, and the government's failure to address unchecked 
pollution from booming Export Processing Zones and Industrial Parks 
has drawn the attention of local media.  Climate change is an 
increasingly high-profile issue, and Vietnam's leadership is aware 
of scientific studies outlining the severe effects rising sea levels 
and salinity will have on Vietnam's ecology and coastal economy, 
particularly in the rice-producing deltas.  The June 2008 Joint 
Statement between President Bush and PM Dung prominently mentioned 
climate change.  During Dung's visit, the United States and Vietnam 
agreed to accelerate cooperation on climate change adaptation and 
mitigation, and announced the creation of the Delta Research and 
Global Observation Network (DRAGON) Institute at Can Tho University. 
 Supported by the U.S. Geological Survey, DRAGON Institute is 
specifically designed to enhance cooperation on environmental 
issues, particularly climate change, threatening the Mekong Delta. 
These efforts support initiatives already underway by various U.S. 
agencies -- including USAID, the U.S. Forest Service, and NOAA -- 
that directly or indirectly support Vietnam's climate change 
response.  Expanded cooperation from the U.S. Department of Energy 
and U.S. Nuclear Regulatory Commission to support the creation of 
the necessary safety and security infrastructure for Vietnam's 
planned civilian nuclear power sector may also help mitigate 
Vietnam's future greenhouse gas emissions 
 
ADOPTION 
-------- 
 
¶19.  (SBU) Over the past two years, the US Embassy has uncovered 
serious irregularities in the adoption system in Vietnam. 
Anti-fraud investigations have uncovered more than 10 cases where 
children were taken without the consent of their birth parents; 75% 
of birth parents interviewed reported receiving payment as direct 
inducements for placing their child up for adoption; most did not 
understand that they were permanently relinquishing custody of their 
children.  As a result of these problems, the U.S. did not renew our 
adoption agreement with Vietnam and imposed a moratorium on new 
adoptions from Vietnam.  The United States, along with our 
international partners, believe that it is essential that Vietnam 
become a full member of the Hague Convention as soon as possible and 
have offered technical assistance to help Vietnam reach this goal. 
We are encouraged that the government has begun to acknowledge the 
problem and has formed an inter-agency working group on adoption 
policy reform coordinated by the Office of the Government.  However, 
to date there has not been any serious progress on legal reform and 
Hague accession, in large part due to resistance from working-level 
officials at both the provincial and national levels. 
 
WHAT YOU CAN EXPECT 
------------------- 
 
¶20.  (SBU) While the GVN recognizes the strategic importance of the 
United States in the region and the world, leaders here are not shy 
about raising the specter of U.S.-led efforts to bring about 
political change -- "peaceful evolution" -- or to criticize U.S. 
actions it perceives as outside the multilateral system.  They 
routinely chafe over U.S. criticism of Vietnam's record of human 
rights and religious freedom.  Nonetheless, Vietnam's leaders are 
also pragmatic and value their relationship with the United States, 
both for its intrinsic importance and because Vietnam's security and 
economic growth have become inextricably enmeshed in an 
 
HANOI 00001357  005.2 OF 005 
 
 
international system of which the United States remains the leader. 
As a result, you can expect your interlocutors not only to be 
articulate and well informed, but also to express support for the 
bilateral relationship.  As noted above, lingering suspicions still 
exist among conservatives in leadership; however, the overall tenor 
is one of support for the development of closer ties with the United 
States, albeit at a measured pace.  Your upcoming trip to Hanoi will 
add momentum to our efforts to help translate these good feelings 
into sustainable accomplishments. 
 
¶21.  (U) We look forward to your visit and stand ready to do 
everything we can to make your discussions as productive as 
possible.