STAFFDEL HEARS VOICES OF REFORM FROM WITHIN

C O N F I D E N T I A L SECTION 01 OF 03 HANOI 002151 SIPDIS STATE FOR EAP/BCLTV STATE ALSO FOR DRL SECDEF FOR ISA/LSTERN E.O. 12958: DECL: 08/29/11 TAGS: PGOV ECON PHUM VM SOE FINREF DPOL SUBJECT: STAFFDEL HEARS VOICES OF REFORM FROM WITHIN ¶1. (U) CLASSIFIED BY CHARGE D'AFFAIRES ROBERT PORTER. CONFIDENTIAL PAGE 02 HANOI 02151 01 OF 03 310844Z REASON: 1.5 (B) AND (D). ¶2. (C) SUMMARY: STAFFDEL REES AND GUNDERSON MET SEPARATELY ON AUGUST 10 AND AUGUST 14 WITH TWO MEMBERS OF THE PRESIDIUM OF THE FATHERLAND FRONT - PHAN DINH DIEU IN HANOI AND NGUYEN XUAN OANH IN HCMC. ALTHOUGH NEITHER BELONGS TO THE COMMUNIST PARTY, BOTH HAVE ACTIVELY PARTICIPATED IN PARTY AND GOVERNMENT AFFAIRS DURING THEIR CAREERS AND REPORTEDLY CONTINUE TO BE INFLUENTIAL. BOTH ARE STRONG ADVOCATES OF REFORM, ECONOMIC AS WELL AS POLITICAL. END SUMMARY. MEETING WITH PHAN DINH DIEU -------------- ¶3. (C) JOSEPH REES (COUNSEL TO THE HOUSE COMMITTEE ON INTERNATIONAL RELATIONS) AND BRIAN GUNDERSON (CHIEF OF STAFF TO HOUSE MAJORITY LEADER),ALONG WITH CONGENOFF, MET WITH PROF. PHAN DINH DIEU ON AUGUST 10 AT HIS HOME IN HANOI. DIEU WAS A NATIONAL ASSEMBLY DELEGATE IN THE 1970'S. CURRENTLY HE IS DEPUTY CHAIRMAN OF THE STEERING COMMITTEE OF THE NATIONAL PROGRAM ON INFORMATION TECHNOLOGY AND, ALTHOUGH NOT A MEMBER OF THE COMMUNIST PARTY, IS A MEMBER OF THE CENTRAL PRESIDIUM OF THE PARTY'S NATIONAL FATHERLAND FRONT. ¶4. (C) SPEAKING MOSTLY IN ENGLISH, BUT OCCASIONALLY RELYING ON AN INTERPRETER, SIXTY-FOUR-YEAR-OLD DIEU DESCRIBED HIMSELF TO THE STAFFDEL AS A MATHEMATICS AND COMPUTER SCIENCE RESEARCHER. HE TOLD THEM THAT HE WAS A NATIONAL ASSEMBLY DELEGATE IN THE 1970'S BOTH BEFORE AND AFTER REUNIFICATION. HE DESCRIBED THE FATHERLAND FRONT AS AN CONFIDENTIAL PAGE 03 HANOI 02151 01 OF 03 310844Z UMBRELLA ORGANIZATION FOR VARIOUS ORGANIZATIONS AND SOCIETIES, BUT NOTED THAT HE PARTICIPATED IN THE FRONT AS AN INDIVIDUAL AND AS A SCIENTIST. "I AM NOT A POLITICIAN," HE CLAIMED, "I AM A CITIZEN AND A PATRIOT." ¶5. (C) DIEU SAID HE STUDIED IN THE SOVIET UNION IN THE 1960'S. HE SAID THAT ALTHOUGH HE BELIEVED IN THE SOCIAL AND HUMANITARIAN GOALS OF COMMUNISM, HIS YEARS IN THE SOVIET UNION TAUGHT HIM THAT THOSE GOALS COULD NOT BE REACHED THROUGH THE POLITICAL AND ECONOMIC MECHANISMS HE SAW THERE. HE SAID THAT VIETNAM'S COMMUNIST PARTY HAD MADE GREAT CONTRIBUTIONS TO THE COUNTRY, BUT THAT HE FELT THE COMMUNIST ORGANIZATION OF SOCIETY THAT WAS EFFECTIVE IN WARTIME COULD NOT BE EFFECTIVE FOR DEVELOPMENT IN PEACETIME. "I SAID THAT OPENLY IN THE NATIONAL ASSEMBLY IN THE LATE 1970'S, AND I STILL SAY SO TODAY QUITE OPENLY AND PUBLICLY," HE DECLARED. ¶6. (C) IN 1980, HE SAID, PRIME MINISTER PHAM VAN DONG REQUESTED HIM TO PREPARE A PAPER CLARIFYING HIS IDEAS AND SUGGESTIONS. HE SAID HE CRAFTED A LONG STATEMENT ON ECONOMIC DEVELOPMENT BASED ON SCIENTIFIC METHODS, MARKET MECHANISMS, AND A LOOSENING OF CENTRAL PLANNING AND CONTROL. HE SAID HE PARTICULARLY CRITICIZED THE IDEA OF VIETNAM'S MILITARY BEING IN CHARGE OF MANAGING PEACETIME BUSINESS ENTERPRISES. IN 1980, DIEU SAID, THE LEADERS WERE NOT PREPARED TO ACCEPT THESE IDEAS, BUT BY 1986, THEY RECOGNIZED THE NEED FOR CHANGE. HE SAID HE ENCOURAGED THEM TO ACCEPT THE IDEA OF GRADUAL REFORMS, BEGINNING WITH THE INTRODUCTION OF LIMITED MARKET MECHANISMS IN THE ECONOMY. CONFIDENTIAL PAGE 04 HANOI 02151 01 OF 03 310844Z ¶7. (C) HE SAID HE WAS WITH PARTY SECRETARY GENERAL DO MUOI IN 1989 DURING THE EVENING THE COUP TOOK PLACE IN THE SOVIET UNION. THAT EVENT HAD A PROFOUND EFFECT ON THE SECRETARY GENERAL, DIEU SAID. AFTERWARDS, DIEU SAID HE SIPDIS ADVISED DO MUOI TO ACCEPT CHANGE BECAUSE IT WAS INEVITABLE, AND FURTHER ADVISED THAT CHANGE COULD OCCUR STEP BY STEP, RATHER THAN AS A CATACLYSMIC EVENT SUCH AS WHAT OCCURRED IN THE SOVIET UNION AND OTHER COMMUNIST STATES IN EASTERN EUROPE. ¶8. (C) REES INTERJECTED THAT WHAT DIEU SUGGESTED SOUNDED LIKE "PEACEFUL EVOLUTION." DIEU REPLIED THAT ALTHOUGH THE PARTY DETESTS THE PHRASE "PEACEFUL EVOLUTION," THAT IN FACT IS WHAT HAS BEEN OCCURRING FOR THE PAST TEN YEARS. ¶9. (C) DIEU SAID PARTY LEADERS ARE AFRAID OF THE POTENTIAL FOR INSTABILITY THAT A CHANGE OF LEADERSHIP WOULD ENTAIL. HE SAID HE HIMSELF BELIEVES A CHANGE OF LEADERSHIP IS NOT NECESSARY FOR THE DEVELOPMENT OF THE COUNTRY; INSTEAD, A CHANGE IN THE WAY OF THINKING WAS ESSENTIAL. VIETNAM HAS CONFIDENTIAL PAGE 02 HANOI 02151 02 OF 03 310844Z NEVER HAD A HISTORY OF DEMOCRACY, HE STATED, AND THERE ARE TIMES IN A COUNTRY'S DEVELOPMENT WHEN A MULTI-PARTY SYSTEM IS INAPPROPRIATE. ¶10. (C) DIEU SAID HE BELIEVED VIETNAM WOULD EVENTUALLY DEVELOP A FREE MARKET ECONOMY AND A DEMOCRATIC SOCIETY. HE QUICKLY ADDED THAT A COUNTRY MIGHT TAKE MANY DIRECTIONS ON THE ROAD TO A MULTI-PARTY SYSTEM, HOWEVER. HE SAID HE WOULD NOT ATTEMPT TO PREDICT WHAT VIETNAM'S NEXT STEPS WOULD BE, BUT ADDED, "WE ARE ALREADY EMBARKED ON A NON- REVERSIBLE TREND TOWARD ECONOMIC AND POLITICAL REFORM." HE SAID THE GREATEST HOPE FOR FURTHER REFORM IN VIETNAM IS THE FRESH OUTLOOK AND DYNAMISM OF VIETNAM'S YOUTH. MEETING WITH NGUYEN XUAN OANH -------------- ¶11. (C) REES, GUNDERSON AND CONGENOFF MET WITH NGUYEN XUAN OANH AT HIS OFFICE IN HCMC ON AUGUST 14. OANH WAS DEPUTY PRIME MINISTER FOR ECONOMY AND FINANCE IN SOUTH VIETNAM FROM 1963-67, AND WAS ACTING PRIME MINISTER FOR A SHORT TIME IN 1965-66. IN THE LATE 1970'S HE RE-EMERGED AS AN ADVISOR FOR TO VO VAN KIET. CURRENTLY, HE IS PRESIDENT OF N.X. OANH ASSOCIATES, A BUSINESS, MANAGEMENT & FINANCE CONSULTING AGENCY IN HCMC. OANH, WHO IS IN HIS LATE 70'S OR EARLY 80'S, RECEIVED A BA IN ECONOMICS AT THE KYOTO IMPERIAL UNIVERSITY IN JAPAN IN 1949 AND A PH.D. FROM HARVARD UNIVERSITY IN 1954. LIKE PHAN DINH DIEU, OANH IS NOT A COMMUNIST PARTY MEMBER, BUT IS A MEMBER OF THE CENTRAL PRESIDIUM OF THE PARTY'S NATIONAL FATHERLAND FRONT. CONFIDENTIAL PAGE 03 HANOI 02151 02 OF 03 310844Z ¶12. (C) OANH TOLD THE STAFFDEL THAT AFTER 1975, THE NEW GOVERNMENT PLACED HIM UNDER HOUSE ARREST FOR NINE MONTHS UNTIL THEY DECIDED HE WAS A "HARMLESS TECHNOCRAT." HE SAID HE IMMEDIATELY BEGAN WRITING FOR THE "TIN SANG" ("MORNING NEWS") NEWSPAPER, AND THAT MANY OF HIS ARTICLES WERE CONSTRUCTIVE CRITICISMS OF THE BANKING SYSTEM AND OF GOVERNMENT ECONOMIC POLICIES. HE SAID THAT IN 1978, VO VAN KIET (THEN COMMUNIST PARTY SECRETARY FOR HO CHI MINH CITY) SUMMONED HIM TO HIS OFFICE. OANH RECOUNTED THAT KIET ORDERED HIM TO STOP HIS PUBLIC NEWSPAPER CRITICISMS, BUT ALSO SAID HE FOUND THE IDEAS IN OANH'S ARTICLES THOUGHT PROVOKING AND WISHED TO DISCUSS THEM FURTHER. ACCORDING TO OANH, THUS BEGAN A CONFIDENCE THAT CONTINUED AS OANH ADVISED KIET ON MONETARY AND FISCAL MATTERS EVEN AFTER KIET WENT TO HANOI IN 1988, EVENTUALLY BECOMING PRIME MINISTER. ¶13. (C) OANH SAID THAT DURING THE 1980'S, HE ADVOCATED PRIVATE OWNERSHIP OF CAPITAL AND OF ENTERPRISES. HE RECOUNTED THAT PARTY SECRETARY GENERAL DO MUOI ONCE ASKED HIM, "BUT HOW CAN PRIVATE INDIVIDUALS OWN A BANK?" OANH SAID THAT CURRENT LEADERS STILL SUFFER FROM THE OLD COMMUNIST MINDSET, AND THAT IS WHY THE SCOPE OF THE PRIVATE SECTOR IS STILL LIMITED IN VIETNAM. AS AN EXAMPLE, HE NOTED THAT THREE YEARS EARLIER, THE GOVERNMENT DISBANDED THE MINISTRY OF HEAVY INDUSTRY AND REPLACED IT WITH SEVERAL CORPORATIONS. "BUT THE CAPITAL FOR THESE CORPORATIONS STILL COMES FROM THE GOVERNMENT," HE SAID, "AND THE MANAGEMENT IS STILL DIRECTED BY THE GOVERNMENT." HE SAID VIETNAM SHOULD GIVE UP ALTOGETHER THE NOTION OF STATE-OWNED ENTERPRISES IF IT WANTS ITS ECONOMY TO WORK. CONFIDENTIAL PAGE 04 HANOI 02151 02 OF 03 310844Z ¶14. (C) REES ASKED OANH IF HE THOUGHT ECONOMIC REFORM COULD PROGRESS WITHOUT POLITICAL REFORM. OANH SAID HE BELIEVED POLITICAL REFORM HAD ALREADY "COME IN THROUGH THE BACK DOOR OF ECONOMIC REFORM," ALBEIT AT A VERY SLOW PACE. HE NOTED THAT SEVERAL NATIONAL ASSEMBLY DELEGATES ARE NON-PARTY MEMBERS. HE SAID HE KNEW MANY PEOPLE, PARTICULARLY UNIVERSITY PROFESSORS, WHO WOULD LIKE TO SEE THE DEVELOPMENT OF A "LOYAL OPPOSITION, AS IN ENGLAND." HE FURTHER SAID, "WE ALL, INCLUDING NONG DUC MANH AND THE OTHERS, BELIEVE THERE WILL BE A MULTI-PARTY SYSTEM IN VIETNAM IN 10-15 YEARS." THEN HE ADDED THAT THE COMMUNIST PARTY WOULD MANAGE THE TRANSITION SO THE RESULTING MULTI- PARTY SYSTEM WOULD NOT BE WHAT OUTSIDERS MIGHT EXPECT. IT WILL BE A POLITICAL SYSTEM UNIQUE TO VIETNAM, HE CONCLUDED. ¶15. (C) REES NOTED THAT MANY OF THE THINGS OANH SAID SOUNDED SIMILAR TO THINGS DISSIDENT NGUYEN DAN QUE HAD SAID IN THE PAST, BUT QUE ENDED UP IN PRISON FOR HIS COMMENTS. OANH ADMITTED THAT THE BOUNDARY BETWEEN WHAT YOU CAN AND CANNOT SAY IS VERY FUZZY. OANH SAID HE NEVER ADVOCATED CONFIDENTIAL PAGE 02 HANOI 02151 03 OF 03 310844Z OVERTHROWING THE GOVERNMENT, BUT INSTEAD CRITICIZED POLICIES IN A CONSTRUCTIVE WAY. "IF ONE CRITICIZES, ONE SHOULD ALSO OFFER PRACTICAL SOLUTIONS. IT IS AS IMPORTANT HOW YOU SAY THINGS, AS IT IS WHAT YOU SAY," HE EXPLAINED. ¶16. (U) THE STAFFDEL DID NOT HAVE AN OPPORTUNITY TO CLEAR THIS MESSAGE BEFORE DEPARTURE. PORTER CONFIDENTIAL