Cablegate: Embassy Hanoi

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FM AMEMBASSY HANOI
TO RUEHC/SECSTATE WASHDC IMMEDIATE 8386
INFO RUEHHM/AMCONSUL HO CHI MINH 5073
RUEHPF/AMEMBASSY PHNOM PENH 3748
RUEHHK/AMCONSUL HONG KONG 1509

UNCLAS SECTION 01 OF 05 HANOI 001010

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TAGS: PREL PTER ECON ETRD VM

SUBJECT:QSCENESETTER FOR DEPUTY SECRETARY NEGROPONTE VISIT TO
VIETNAM

Introduction
------------

1. (SBU) Deputy Secretary Negroponte: Ambassador Michalak and
Mission Vietnam look forward to welcoming you to Hanoi. Your
visit will be an important signal to the Vietnamese of the
importance of our growing bilateral relationship, especially as
we seek to build on the progress made during Prime Minister
Prime Minister Nguyen Tan Dung?s June visit to the White House.
Your discussions with the Vietnamese leadership will help push
the bilateral relationship to a higher plane. Together with its
increasingly constructive relationship with the United States,
Vietnam is 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. You should encourage Vietnam to
continue to pursue a more outward-looking and engaged role in
the world community.

2. (SBU) Our strengthening relations are in large part due to
Vietnam?s realization that the United States is an important
force in maintaining a stable geopolitical environment in which
even small countries like Vietnam are assured independence and
freedom of action. Vietnam also sees in the United States an
increasingly important source of investment and financial and
technical assistance, as well as a huge market for Vietnamese
goods. Vietnam?s leaders are committed to continued progress in
bilateral relations and will likely speak positively and
optimistically about the future of U.S.-Vietnam ties.

3. (SBU) 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.
Similarly, while Vietnamese are overall quite positive about the
United States, you will likely hear references to ?legacies of
the war,? in particular Agent Orange. On a more operational
level, cumbersome restrictions on U.S. consulate officials in Ho
Chi Minh City (HCMC) have impeded the development of bilateral
ties.

The China Factor
----------------

4. (SBU) While Vietnam's engagement with the United States will
continue to broaden, China is necessarily Vietnam's most
important strategic preoccupation. This is not to say that
Vietnam is "choosing" China over the United States; Vietnam's
leaders are 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. While tensions
persist, the Vietnamese Communist Party is certainly aware of
the Chinese model of spurring economic growth, while preserving
single-party rule. China constitutes a vital commercial partner
and former ally, but it is also perceived as a significant and
frustrating constraint to Vietnam's freedom of action.

5. (SBU) Chinese bullying of foreign companies in an attempt to
compel them to cease oil and gas exploration efforts in the
South China Sea reminds Vietnamese officials that just as the
Vietnamese may not approve of all U.S. policies, neither do
Chinese actions always serve Hanoi?s interest. While progress
has been made in settling the land border, there is no
commonality of views on sovereignty issues regarding the South
China Sea, known as the "East Sea" to the Vietnamese. Hanoi is
also "riding the tiger" with regard to managing the deeply
negative views toward China of many Vietnamese, as was seen when
the Olympic torch made its appearance in HCMC this summer.
China is widely disliked and distrusted as a former colonial
master, and Beijing's actions in the Spratlys and Paracels
threaten to inflame those passions. Should Hanoi allow
unconstrained protests against the Chinese, however, it would
appear weak in the face of calls to action that it could not
satisfy, as well as risk Beijing's anger.

6. (SBU) The GVN is understandably cautious with regard to
China's potential reaction to improved U.S.-Vietnam relations.
U.S.-Vietnam cooperation in the security field is constrained by
an ingrained caution on the part of Vietnam's military in the
face of relative power calculations vis-a-vis China. Likewise,
political cooperation is dampened by an institutional
conservatism born of concern that U.S.-supported "peaceful
evolution" -- not coincidentally, the same term the Chinese use
-- poses a real threat to the regime.

Trade and the Economy
---------------------

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7. (SBU) Trade and investment have played a central role in our
improved relations and we are seeking to keep up the momentum
with agreement soon on a new bilateral investment treaty and a
more liberal civil aviation agreement. We are seriously
considering GSP for Vietnam but it is important that Vietnam
take steps on IPR protection and labor rights. We are also
pushing Vietnam to approve several large U.S. investments.

8. (SBU) After a decade of isolation and failed economic
policies, Vietnam is determined to catch up with the Asian
tigers. Vietnam?s "doi moi" (renovation) program of economic
reform, begun in 1986, has set the country on a successful
market economy path, with an average growth rate of 7.5 percent
over the past decade. Te GVN understands that continued
economic growth is essential to political survival. The GVN
focuses on exports and foreign direct investment in its drive to
achieve middle-income status by 2010. The United States is
Vietnam's largest export market and third largest overall trade
partner. U.S. investors tell us the key challenges they face in
Vietnam are underdeveloped infrastructure, a shortage of skilled
workers and managers, and the considerable level of state
participation in the economy. For its part, the GVN is
grappling with issues of corruption, improving the legal
environment, and implementing its WTO commitments.

9. (SBU) Vietnam is dealing with serious macroeconomic
challenges which prompted some analysts in the spring to warn
that it faced a 1997-like meltdown. Inflation has risen sharply
(28 percent year-on-year for August) and the current trade
deficit is uncomfortably high. High money and credit growth and
global inflation are the main causes. Vietnam has tightened
monetary and fiscal policy in response. These measures have
proved effective so far and the government needs to stay the
course. Over the longer term, Vietnam needs to undertake
serious reforms of its powerful State Owned Enterprises (SOEs)
to ensure long-term economic growth.

Human Rights Challenges
-----------------------

10. (SBU) Serious human rights problems in Vietnam include lack
of freedom of speech, freedom of assembly and freedom of the
press. One of our key objectives is to end the use of catch-all
"national security" provisions for the prosecution of peaceful
dissent. The recent arrests and sackings of Vietnamese
reporters and editors in the wake of a corruption scandal reveal
the on-going battle within the GVN over the role of the press as
well as an internal debate of the importance of fighting
corruption versus protecting the interests of top communist
party insiders.

11. (SBU) The continued existence of groups in the United States
that advocate regime change complicates our overall relations
and human rights engagement in particular by providing
ammunition to hard-liners who want to stoke the fading paranoia
that we are indeed still the enemy. Reassuring the GVN that the
USG does not support separatist groups will help build a human
rights dialogue based on mutual trust. Lingering suspicions
about what the U.S. government is really up to explains some of
our difficulties in gaining formal recognition for the Consular
District of Consulate General Ho Chi Minh City.

Restrictions on Ho Chi Minh City Consulate
------------------------------------------

12. (SBU) Vietnam's interest in opening a Consulate General in
Houston is a welcome development and reflects the continued,
rapid development of our bilateral relations. Before we move
forward, however, we need to address the government of Vietnam's
refusal to recognize the Consular District of the U.S. Consulate
General in Ho Chi Minh City beyond the HCMC city limits. After
years of discussion, we are also in the final stages of
negotiating an agreement on a site for a New Embassy Compound in
Hanoi (remaining sticking points are land reciprocity and
infrastructure).

Counterterrorism
----------------

13. (SBU) Vietnam says the right things about the threat of
global terrorism and has participated with us in modest
cooperative activities. During President Bush's visit in 2006,
the President and his Vietnamese counterpart pledged to increase
cooperation to halt the proliferation of weapons of mass
destruction and related technology and materials in accordance
with international and national laws and each country's

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capacities. The United States provides counterterrorism
assistance to Vietnam by funding Vietnamese participation in
counterterrorism-related training at the International Law
Enforcement Academy (ILEA) in Bangkok, and through military-to-
military exchanges with an emphasis on counterterrorism themes.
We are encouraging Vietnam to include the ports of HCMC and
Haiphong in the Department of Energy?s Megaports Initiative to
detect nuclear materials. Vietnam has signed eight out of
thirteen UN terrorism conventions. Approval of the remaining
five is winding its way through the cumbersome GVN bureaucracy,
the delay explained in part by GVN concern with its capacity to
carry out obligations under the conventions. Vietnam says it is
increasingly concerned with Wahhabist influences in its (very
small) Cham community.

Global Peace Operations Initiative
----------------------------------

14. (SBU) Over past years, the GVN has expressed increasing
interest in the potential for involvement in peacekeeping
missions, especially those organized under UN auspices.
Vietnam's recent UN Security Council membership has given
significant impetus to such thinking. Nonetheless, the GVN will
have to do much more to meet the remaining challenges of the
lack of interoperability, the paucity of English language
speakers in the military and complications due to funding issues
in order to fully engage in future peacekeeping operations.
Their participation in Global Peace Operations Initiative (GPOI)
is an important step in this direction. The Joint Statement from
PM Dung?s June visit to Washington highlights Vietnam?s
agreement to participate in the GPOI through participation in
training courses and other peacekeeping operations activities.
The next step is crafting a ?country plan? for Vietnam.

Impacts of Remaining UXO
------------------------

15. (SBU) In your meetings, you are likely to hear references to
"legacies of war" issues, the catch-all term that the GVN
applies to myriad problems, including Agent Orange(AO) and its
contaminant, dioxin, unexploded ordnance (UXO) and land mines
from the war era, and Vietnam?s own MIA problem. Since 1989,
USAID, with support from the Patrick J. Leahy War Victims Fund
(LWVF) and other sources, has provided over USD 46 million to
support NGOs and private voluntary organizations to develop
comprehensive programs for people with disabilities. Vietnam
was formally accepted as the 37th participant in the U.S.
Humanitarian Demining Program in June 2000, and the USG is now
the largest donor of humanitarian assistance for mine action
programs in Vietnam. The USG has invested over USD 37 million
in a broad spectrum of programs not only to locate, remove and
destroy unexploded ordnance and landmines, but also to address
the UXO effects on health and livelihood of Vietnamese living in
affected areas.

16. (SBU) Today, various NGOs conduct UXO and land mine
clearance, risk education and victim rehabilitation. The USG has
also donated a significant quantity of equipment to the People?s
Army of Vietnam (PAVN) to assist efforts in UXO and landmine
clearance and return land to productive use. In 2006, the State
Department provided USD 3.5 million to support UXO action and
demining activities in Vietnam, almost a third of which went
directly to PAVN in the form of donated demining equipment.
FY08, an additional USD 2.5 million will be provided to
underwrite mine action related activities in Vietnam. For FY08,
Congress directed that approximately $2.5 million be spent on
demining programs, a substantial increase from the $800,000
requested by the Administration.

Agent Orange/Dioxin
-------------------

17. (SBU) While debate continues over the possible human effects
of exposure to dioxin, a contaminant in the wartime defoliant
Agent Orange, recent environmental studies show that dioxin
contamination is concentrated in approximately 20 "hotspots,"
mostly areas within former U.S. airbases where Agent Orange was
stored, loaded and transferred. Areas subjected to heavy
aerial spraying do not currently have soil concentrations
considered hazardous. The United States and Vietnam have not
reached agreement on the scope of possible health effects, with
Vietnam continuing to argue that over three million handicapped
can trace their disabilities to dioxin exposure. We do not
believe that this figure can be supported by scientifically-
sound data and analysis. However, our engagement on this issue
has accomplished much, in both transforming the tone of the

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dialogue and capacity building to address environmental issues
and provide assistance for the disabled.

18. (SBU) The Joint Advisory Committee (JAC) for Agent
Orange/dioxin, which brings together scientists and researchers
from both nations to provide science-based advice to policy
makers for potential environmental and health cooperation, will
meet for the second time while you are in Hanoi. Projects have
included dioxin containment at the Danang airport as well as a
USD 3 million Congressional appropriation for "dioxin mitigation
and health activities," which USAID has begun to implement.
USAID will soon announce awards to partners to strengthen
services for the disabled in Danang. The USG is continuing to
work with the GVN, UNDP, Ford Foundation and other NGOs to
discuss the next steps in a multilateral approach to
environmental remediation of three priority hotspots in Danang,
Hoa Binh and Phu Cat airfields. Despite this progress, it is
not uncommon to hear every child born with a birth defect
anywhere in Vietnam described as a "victim of agent orange" and
AO remains a favorite propaganda tool for persons opposed to
closer U.S.-Vietnam relations.

Fullest Possible Accounting
---------------------------

19. (SBU) U.S. military and DoD elements efforts achieve the
fullest possible accounting of Americans missing from the
Vietnam Conflict predate. Since 1988, the Joint POW/MIA
Accounting Command (JPAC), a USPACOM subordinate element, has
evolved to include forward Detachments in Vietnam, Laos, and
Thailand/Cambodia. Its Vietnam Detachment (Det 2) has completed
90 Joint Field Activities (JFA), which incorporated extensive
research, interviews, analysis, and excavations. In December
2006 the GVN approved the use of U.S. naval vessels within their
territorial waters to enhance JPAC's underwater investigations
towards the identification of potential recovery sites.
Ultimately, JPAC's efforts in Southeast Asia have resulted in
accounting for 880 Americans previously listed as MIA; 1766
remain missing throughout Southeast Asia. Senior Vietnamese
leaders remain attuned to their own internal political optics,
saying they want us to focus attention on their MIA as well.

U.S. Assistance Areas: Health, Humanitarian and Governance
--------------------------------------------- -------------

20. (U) Since 1995, we have had an active program in health
diplomacy. Programs have provided aid in legal reform,
governance, economic growth, HIV/AIDS, environmental protection
and disaster prevention. For FY 2008, total U.S. assistance
from all agencies for the President's Emergency Plan for AIDS
Relief (PEPFAR) was about USD 88.9 million, and since 2004, USD
234 million, which has gone towards providing assistance in the
area of HIV/AIDS treatment and prevention. Vietnam is one of
fifteen countries with a PEFAR program. Over 50 percent of our
overseas development assistance is devoted to health in areas
such as influenza, tuberculosis, vaccine development, and
tobacco control. For example, the USG is the largest single
bilateral donor in implementing the President?s Three Pillar
Strategy to avert the next influenza pandemic. These efforts
are complemented by the provision of in-kind technical
assistance, for example, in human capacity development, cholera
control, and road safety. Our fundamental goal is to assist
Vietnam in the challenging road of health sector reform, given
the rapid pace of economic change and modernization.

21. (SBU) The flagship of USAID assistance is the economic
reform program represented by the STAR and VNCI projects. These
activities are important resources to help the GVN introduce
administrative and regulatory reforms that will strengthen the
market oriented economy, and support private investment. USAID
is also introducing new activities in rule of law/governance and
education.

Adoptions
---------

22. (SBU) Foreign adoptions of Vietnamese children have been
plagued by corruption and allegations that children are sold or
trafficked and we allowed our bilateral adoption agreement to
lapse September 1. Recent police actions to identify and arrest
individuals engaged in trafficking in children for the purposes
of adoption is an important step forward, as it the National
Assembly?s recent statement supporting Vietnam?s accession to
the Hague Convention. These measures give us newfound hope that
Vietnam may be able to reform its corruption-plagued
international adoption system so that it protects the rights of

HANOI 00001010 005 OF 005

children and birth families. We are seeking sources of U.S.
assistance to help Vietnam with the technical aspects of this
transition.

Increasingly Conscious of International Role
--------------------------------------------

23. (SBU) The GVN recognizes the strategic importance of the
United States in the region and the world, but is not shy about
criticizing the U.S. for ?interference in its internal affairs?
or other U.S. actions it perceives as outside the multilateral
system. There is a significant faction within the communist
party, particularly in the security forces, that constantly
warns that ?peaceful evolution? from a communist to a democratic
government represents the gravest long-term security risk facing
Vietnam. They routinely chafe over U.S. criticism of Vietnam's
human rights and religious freedom record. Nonetheless,
Vietnam's leaders are also pragmatic and recognize that
Vietnam's own continued economic well-being, growth and security
are, in large measure, inexorably tied to its relationship with
the United States.

24. (SBU) Vietnam has begun to explore opportunities within
regional organizations to increase joint efforts against
terrorism, narcotics, maritime piracy and other issues of shared
concern. Vietnam recently began joint sea patrols with its
neighbors in the Gulf of Thailand and has established hotlines
to help facilitate coordination along sea boundaries.
Nevertheless, for historic and foreign policy reasons, the GVN
is generally reluctant to speak out against its "traditional
friends" such as North Korea and Iran when they engage in
behavior that the rest of the international community condemns,
and in its current role as a non-permanent member of the
Security Council it has adopted traditionally Non-Aligned
Movement positions that do not generally line up with our own.

What You Can Expect
--------------------

25. (SBU) You can expect your interlocutors not only to be
articulate and well informed, but also to speak in terms
generally supportive of growth in the bilateral relationship.
As noted above, lingering suspicions still exist among
conservatives in leadership about the development of closer ties
with the United States, but the overall tenor is one of support
and interest at a measured pace that will not upset the GVN's
calibrated attempts to maintain balance among its other regional
partners. Your trip to Hanoi will continue to help translate
those good feelings into measurable accomplishments in the
defense and security relationship. Press interest in your visit
will be very high, and you can expect media stakeouts outside
your official meetings, significant turnout of international and
Vietnamese journalists at your press conference and extensive
coverage of your program in Hanoi.

26. (SBU) We look forward to your visit and stand ready to do
everything we can to make your time in Vietnam as productive as
possible.

Michalak

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