VZCZCXRO4756
OO RUEHCHI RUEHCN RUEHDT RUEHHM
DE RUEHHI #0297/01 0900758
ZNR UUUUU ZZH
O 310758Z MAR 09
FM AMEMBASSY HANOI
TO RUEHC/SECSTATE WASHDC IMMEDIATE 9426
INFO RUEHHM/AMCONSUL HO CHI MINH 5747
RUEHZS/ASEAN REGIONAL FORUM COLLECTIVE

UNCLAS SECTION 01 OF 05 HANOI 000297 
 
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TAGS: PREL PGOV PHUM ECON ETRD MARR VM
 
SUBJECT: SCENESETTER FOR CODEL MCCAIN'S VISIT TO VIETNAM 
 
HANOI 00000297  001.2 OF 005 
 
 
OVERVIEW 
-------- 
 
¶1.  (SBU) Your April 6-8 visit to Vietnam comes at an opportune 
moment.  Our bilateral relationship with Vietnam has progressed much 
since your last visit to Hanoi in April 2000 and 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 and policy planning talks in 
October 2008.  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 are part of the 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 realpolitik. 
 
VIETNAM'S FOREIGN POLICY PRIORITIES 
----------------------------------- 
 
¶3.  (SBU) Vietnam professes a "friends to all" foreign policy, 
guided by a non-interventionist ethic that 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 
continues to have a poor record on human rights and still reacts 
defensively to criticism, though it has learned to be more 
 
HANOI 00000297  002.2 OF 005 
 
 
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.  Similarly, the October 2008 
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 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 2008, 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) spurred export-led economic growth that averaged 7.5% 
over the past decade.  The global economic crisis is testing 
Vietnam's ability to maintain this momentum.  GDP growth of 6.2% in 
2008 was the lowest since 2000, and is expected to be even lower in 
2009, with most projections below 5%.  Foreign investment and export 
numbers are unlikely to reach the milestone levels of 2008. 
 
¶9. (U) Trade with the United States remains important to Vietnam. 
Bilateral trade in goods was up 25% from the previous year, and 
stood at an all-time high of $15.7 billion by the end of 2008.  U.S. 
exports are a success story and, despite the crisis, they were still 
higher in January 2009 than the same month in 2008.  U.S. exports to 
Vietnam grew by 47% from 2007 to 2008 to $2.79 billion and the 
growth in agricultural exports (up 83%) was extraordinary.  Exports 
of meats and poultry went up by 166% to $263 million, becoming the 
U.S.'s second highest value export to Vietnam after vehicles (which 
also went up by 18% to $258 million).  Thirty two other agricultural 
commodities experienced growth of three digits or higher. 
 
¶10.  (U) We are seeking to keep up the momentum with negotiations 
toward a new Bilateral Investment Treaty (BIT).  Vietnam also joined 
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.  In 2008, we also held the first meetings of the Market 
Economy Status Working Group, an initiative that Vietnam wants to 
continue (the BIT and the Working Group were jointly announced 
during the Prime Minister's visit to Washington in June 2008).  We 
are pushing Vietnam to open its market further to U.S. beef. 
 
¶11.  (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. 
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.  That said, corruption is 
endemic and disparities of wealth have widened.  Further, GVN lacks 
the technical capacity and systems to ensure consumer safety of 
products and exports, as evidenced by recent struggles dealing with 
melamine, seafood, and cholera. 
 
¶12.  (U) The global financial crisis has not directly affected 
Vietnam given its limited integration into the world financial 
system.  However, the slowing global economy has affected Vietnam's 
 
HANOI 00000297  003.2 OF 005 
 
 
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 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.  After tightening monetary and fiscal policy in response to 
these earlier difficulties, the government has been forced to 
quickly change tacks to cutting interest rates and implementing 
stimulus plans.  Its primary concerns are now maintaining economic 
growth and stability and supplying jobs for its young and growing 
workforce. 
 
THE MILITARY RELATIONSHIP AND TERRORISM 
--------------------------------------- 
 
¶13.  (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, military 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 October 2008. 
 
¶14. (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. 
 
¶15. (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. 
 
AGENT ORANGE 
------------ 
 
¶16. (SBU) The recent Supreme Court decision not to hear the appeal 
by Vietnamese Agent Orange "victims" of the dismissal of their 
lawsuit against U.S. chemical companies resulted in broad public 
criticism, fanned by the local media.  Your interlocutors most 
likely will raise this issue with you.  At the same time, over the 
past few years we have made noticeable progress in our attempts to 
remove this war legacy issue as an irritant to our bilateral 
relationship.  Our engagement has accomplished much, in both 
transforming the tone of the dialogue and building capacity to 
address environmental issues and provide assistance for the 
disabled. 
 
¶17. (SBU) Despite continuing disagreement over the scope of possible 
health effects of dioxin, a contaminant in Agent Orange and other 
herbicides, from 2001 to 2007, the USG spent over USD 2 million to 
initiate technical dialogues and scientific conferences on the 
effects of Agent Orange/dioxin, and fund a 4-year project to build 
the capacity of Vietnamese scientists to analyze soil samples 
collected from the Danang airport.  The Joint Advisory Committee 
(JAC) for Agent Orange/dioxin, which brings together scientists and 
researchers from both governments to provide science-based advice to 
policy makers for potential environmental and health cooperation, 
held its third annual meeting last September, during which 
Vietnamese and U.S. members set up task forces to implement health 
and remediation recommendations. 
 
¶18. (SBU) USAID has started to implement a 2007 USD 3 million 
Congressional appropriation for "dioxin mitigation and health 
activities," with the November 2008 announcement of USD 1 million in 
 
HANOI 00000297  004.2 OF 005 
 
 
grants to three partner organizations to strengthen services for the 
disabled in Danang city.  As part of a growing multilateral 
coalition, we are finalizing plans to spend up to USD 1.4 million on 
remediation preparation efforts in Danang and will soon meet with 
our GVN counterparts to discuss the additional USD 3 million 
recently appropriated for Agent Orange in the FY09 Omnibus Budget 
Bill. 
 
HEALTH, TRADE, EDUCATION, CLIMATE CHANGE 
---------------------------------------- 
 
¶19.  (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.  Including funds approved so far for 
FY2009, which provide an additional USD 88.6 million, HIV/AIDS 
assistance under PEPFAR totals USD 322 million since 2004devoted to 
HIV/AIDS in Vietnam.  The results have been encouraging, with 
Vietnam achieving the targets set by the Office of Global AIDS 
Coordination.  Vietnam is one of a few global epicenters for highly 
pathogenic avian influenza, which experts believe could lead to a 
pandemic.  Accordingly, the United States has made substantial 
investment to prevent and control avian influenza, with total 
funding since 2004 of about USD 45 million projected through FY 
¶2009.  Myriad other capacity building work, for example in 
tuberculosis, research capacity building, and good clinical 
practice, has been done.  While we have strong disease-specific 
investments, we are now working with the Vietnamese and our partners 
to contribute a greater focus on general health system strengthening 
to keep pace with rapid health sector reform. 
 
¶20.  (U) U.S. assistance in other areas remains disproportionally 
low, particularly in relation to assistance levels in neighboring 
developing nations.  Even so, U.S. programs such as USAID's STAR and 
the Vietnam Competitiveness Initiative have become the government's 
preferred source of 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. 
 
¶21.  (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 established 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. 
 
¶22. (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. 
 
 
HANOI 00000297  005.2 OF 005 
 
 
ADOPTION 
-------- 
 
¶23.  (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. 
While meaningful legal reforms and Hague accession will likely take 
several years, 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. 
 
WHAT YOU CAN EXPECT 
------------------- 
 
¶24.  (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 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 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. 
Media interest in your visit will be keen, and we expect extensive 
and positive coverage in all major Vietnamese outlets for your 
activities.  This, too, will help to amplify the message you bring 
of ongoing cooperation.  Your upcoming trip to Hanoi and coverage of 
it will add momentum to our efforts to help translate these good 
feelings into sustainable accomplishments. 
 
¶25.  (U) We look forward to your visit and stand ready to do 
everything we can to make your discussions as productive as 
possible.