INTERNATIONAL ASSISTANCE STRATEGY AND DELIVERY IN THE

UNCLAS SECTION 01 OF 06 HANOI 001115

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E.O. 12958: N/A
TAGS: ECON EAID VM HUMANR ETMIN
SUBJECT: INTERNATIONAL ASSISTANCE STRATEGY AND DELIVERY IN THE
CENTRAL HIGHLANDS OF VIETNAM

REFS: A) 04 HCMC 000210 B) 04 HCMC 001581 C) Hanoi 1111

This cable contains sensitive information. Please do not post
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1. (SBU) Summary: Ongoing poverty and political unrest in
2001 and 2004 have led many international donors to develop a
new plan of engagement in the Central Highlands. The Group of
4 (G4) (Canada, New Zealand, Norway and Switzerland),the
European Union (EU) and the United Nations (UN) agencies have
all moved to align their assistance, varying from issuing a
joint strategy statement to formulating a joint agency program
for the region. Official Development Assistance (ODA) in the
Central Highlands is largely aligned with main GVN priority
areas such as education and health programs that target
disadvantaged children and ethnic minorities, rural
infrastructure development, and forestry management and
protection. A number of donors are also addressing areas that
help the GVN tackle troublesome issues like decentralization
and human capacity building, as well as bilingual and mother
tongue education. Delivery strategies include increasing
direct budget support and donor co-financing, forming sector
wide partnerships and multi-donor trust funds and seeking more
structured and systematic local planning and participation.
End Summary.

Balancing Human Rights and Socioeconomic Development
-------------- --------------


2. (SBU) A mantra repeated widely among the international
community in Hanoi is, "The situation in the Central Highlands
is a development problem with a development solution." While
there is considerable agreement on not abandoning the issue of
human rights as a priority in the region, the common view is,
as the Chief of Planning at the United Nations Children's Fund
(UNICEF),put it: "You can't let social issues be drowned out
by human rights because human rights will shut down the
development game." EU member countries conceded that allowing
the EU to take the lead on human rights, which it addresses
through an annual joint statement and dialogue with the GVN,
allowed each member country more freedom in engaging the GVN on
development issues. In a statement at the December 2004
Consultative Group Meeting (CG),the G4 noted its concern about
the disproportionate share of the poor represented by the
Central Highlands ethnic minorities and a desire to seek
solutions to "avoid the kind of social dislocation and
dissatisfaction that has been evident in recent times." Many
other donors stressed this desire to stabilize the region with
socioeconomic assistance.

Donors Coordinate and Align Assistance
--------------


3. (SBU) The G4 joint CG statement was an outgrowth of
discussions on a Central Highlands strategy the G4 began with
the GVN following the 2001 riots. While the G4 has not yet
reached the point of initiating a joint program for the region,
its members prioritize development in the mountainous areas and
look for ways to align their efforts. Similarly, the EU has
formed a Central Highlands Working Group and is currently
designing a Joint EU Action Plan for the region. The GVN has
recently approved an EU study mission to the Highlands to help
shape the development of the Action Plan.


4. (SBU) The UN agencies are moving to harmonize further
their development strategy in the region. According to Nguyen
Tien Phong, UNDP's Assistant Resident Representative and Head
of Poverty and Social Development Cluster, the GVN has
requested a joint UN family program, including the United
Nations Development Program (UNDP),the United Nations
Population Fund (UNFPA),UNICEF and possibly other agencies as
well. This UN Central Highlands Program will focus on
strengthening local capacity, decentralized planning and public
resource management. Phong said activities and funding levels
were still being discussed, but was optimistic that the program
would be finalized in 2005.


5. (SBU) Representatives from France and Japan noted that
they do not yet have a special strategy toward the Central
Highlands. Although there is considerable French assistance
that covers the region, French Development Agency (AFD) and
French Embassy officials emphasized that the Highlands is not
an important development region since their focus is mainly the
two poles of Hanoi and Ho Chi Minh City. Japan International
Cooperation Agency (JICA) representatives described Japan's
strategy in the Central Highlands as a "blank slate." As a
result of the Vietnam Foreign Minister's visit to Japan in
January 2005, during which the two governments discussed new
directions for Japan's assistance in the development triangle
(including the provinces surrounding the intersection of
Cambodia, Laos and Vietnam),JICA is about to conclude planning
for its first bilateral technical assistance project on forest
protection in Kon Tum Province.

Strategies for Planning and Financing
--------------


6. (SBU) The international community is moving toward direct
budget support and donor co-financing in Vietnam. Acting Head
for the UK's Development for International Development (DFID),
Phil Harding, notes that since 1997, DFID has not financed any
purely bilateral projects in Vietnam, choosing to work in
partnership with the GVN or to co-finance large World Bank and
Asian Development Bank (ADB) projects. According to Harding,
this reflects DFID's confidence in the GVN's ability to target
and manage assistance effectively. Other donors choose co-
financing to increase the impact of their funding by maximizing
the scope of a project while minimizing extra administrative
structures or parallel activities.


7. (SBU) Another means to streamline operational and funding
mechanisms is establishing sector-wide multilateral
partnerships and trust funds. The Forest Sector Support
Partnership Program (FSSP) is a multi-donor, NGO and GVN sector
wide initiative created in 2002. According to Ben Zech,
Forestry and Biodiversity Officer at the Royal Netherlands
Embassy, the FSSP has led to coordinated planning, financing
and technical assistance in a sector that is critical to
addressing the development challenge in the Central Highlands.
The GVN has recently signed financing agreements establishing a
USD 60 million multi-donor forestry trust fund administered
through the World Bank. As a primary architect of the FSSP and
the sector wide Trust Fund, Zech said that he has been invited
to advise the donors in the education sector to facilitate
changes in the same direction.


8. (SBU) In contrast to direct budget support at the central
level or sector wide approaches, some donors and agencies are
pursuing more targeted and direct engagement with the local
levels to improve planning, implementation and supervision. As
part of its strategy to help build local capacity, UNICEF will
begin changing its delivery mechanism both to develop annual
work plans with Provincial People's Committees (PPCs) and to
fund the PPCs directly instead of through the central line
ministries. In 2006, UNICEF will phase in this process in
twelve provinces, including Kon Tum. UNICEF expressed concern
that an overreliance on external budget support may undermine
the sustainability of ODA activities. As one strategy to
improve UNICEF's effectiveness while keeping its funding level
low, the agency has mapped its various strands of Central
Highland activities down to the commune level in order to
concentrate its impact in select communes. Under the UN Family
Program, the UNDP will also prioritize capacity building for
provincial governments, especially in the area of public
participation in elected bodies and pro-poor budgeting.


9. (SBU) Other donors and governments are trying to localize
their support by pursuing multisectoral work in fewer
geographic areas. The Danes will narrow their activities to
fewer provinces, including those of the Central Highlands.
Danida is also changing its implementing structure by shifting
away from placing long-term technical staff at the central and
provincial levels. To promote greater local implementation,
Danida will greatly increase local capacity building.


10. (SBU) The Asian Development Bank (ADB) uses both
geographic and socioeconomic targeting that concentrates nearly
one third of its total funding to Vietnam in the Central
Region, and especially the Central Highlands. Two key co-
financed projects targeted at the central region on livelihood
improvement and health care total over USD 60 million.
Although primarily a source of financing, ADB has also
initiated steps to increase local accountability and will
require the development and review of provincial project plans
in the beneficiary provinces.

Picture of ODA
--------------


11. (SBU) It is difficult to get a clear or complete picture
of international assistance to the Central Highlands. Only a
certain level of ODA is targeted directly to specific regions
or provinces. Some projects are multi-province and may include
Highlands provinces. Others may target groups such as ethnic
minorities or disadvantaged children. Many projects at the
central level affect the Central Highlands, such as improving
the use of data in planning or capacity building for the
Committee on Ethnic Minorities. Most donors stressed that the
proportion going to Central Highlands is hard to quantify.
Implementing agencies reported the added difficulty of
distinguishing the proportion of operational costs (as opposed
to program funds) devoted to a region. The following section
outlines major direct and indirect ODA to the Central Highlands
where possible.


12. (SBU) Among the G4, Canada has dedicated one third of 2004
funding and will dedicate one half of 2005 fiscal year funding
of its Canada Fund to carry out small projects targeted at
reducing poverty in the Central Highlands. Canada Fund
expenditures for 2004 totaled about USD 500,000. Canada and
Norway also co-finance the World Bank's Primary Education for
Disadvantaged Children Project (PEDC),which targets many
districts in the Highlands, at levels of USD 12.4 million and
USD 22 million, respectively. Switzerland, which emphasizes a
participatory approach, supports a USD 645,000 sustainable
forestry management initiative in Gia Lai Province as well as a
USD 5.5 million extension training project in seven provinces,
including Dak Lak. New Zealand contributed USD 250,000 to
UNICEF's early childhood activities in the Northern Uplands
(Northwest and Northeast Highlands) and the Central Highlands.
Finally, Norway funded a USD 75,000 project to develop
education glossaries in six ethnic minority languages.


13. (SBU) Among EU member states, Denmark, France and the
Netherlands have the highest levels of bilateral assistance
that includes the Highlands. Danida has worked in water
sanitation since 1995 and public administration reform since

1997. In 2006, Danida plans to expand its fisheries work into
Dak Lak, and a newly launched Business Sector Program will help
private sector development in Lam Dong Province around Dalat.
Total commitment to the region is USD 47 million with support
in FY 2004 of USD 6 million. The French Embassy funds numerous
small grants for social development such as leprosy relief,
ethnic minority kindergartens and cultural research. Agence
Francaise de Developpement (AFD) also funds two projects in
cotton and rubber development, covering mainly the south but
including some Highlands activities, and totaling over 44
million Euros (USD 57 million). The Netherlands' bilateral
assistance in health care training and conservation in the
region totals nearly USD 10 million. In addition, Germany also
supports a program in rural development in Dak Lak totaling USD
3.2 million and Italy recently approved a USD 1.5 million grant
to Gia Lai for a pilot project to be executed by the
International Fund for Agricultural Development (IFAD).


14. (SBU) Sweden, France, the Netherlands and the UK also
contribute high levels of co-financing to ADB and World Bank
projects that affect the Central Highlands. Sweden contributes
USD 7 million to ADB's Health Care for the Poor in five central
provinces. France will support a multi-province agricultural
diversification project of the World Bank at nearly USD 20
million. The Dutch are most active in the forestry sector,
with total commitments of over USD 20 million for initiatives
including the Central Highlands. In 2004, DFID gave USD 55
million in grant assistance to Vietnam with 51 percent going to
budget support and the other 49 percent supporting co-financed
projects in education, rural transport and public
administration reform. The UK also co-finances two major ADB
livelihood and capacity building projects (USD 27 million
total) in the Central Region, which includes the Central
Highlands and the Central Coast.

Budding NGO Presence
--------------

15. (SBU) Until recently, the GVN has made it difficult for
major international NGOs (INGO) to establish a presence in the
Central Highlands. The World Wildlife Fund (WWF) is the only
large INGO with a lengthy and substantial presence in the
region and has worked in a narrow niche in forestry protection
and conservation. There are several small French, Dutch and
Swiss NGOs and even a few U.S. NGOs working on small-scale
projects in the region. Poverty specialists, who attribute the
steady progress made in the Northern Uplands to the long-term
commitment of donors and also the long-term and extensive
presence of NGOs, suggest that the absence of these
organizations in the Central Highlands has limited new ideas
and models for development and that this lack has been a
barrier to mobilizing engagement at the grassroots level.


16. (SBU) The Director of the NGO Resource Center, David
Payne, speculates that attitudes might be changing, at least at
the central government level. He reported that the State
Committee on NGO Affairs (COMINGO) has made repeated trips to
the Central Highlands in the last year to learn how to promote
NGO activity there. In a major step forward, Action Aid began
working in the Highlands in 2005. Through a memorandum of
understanding with the local governments, Action Aid is
launching a new initiative in Dak Lak, Kon Tum and Gai Lai
provinces. Payne notes that in addition to Action Aid, Oxfam
UK has also initiated talks with the GVN about working in the
Central Highlands. Both organizations are well regarded in
Vietnam and have good partnerships with the Vietnamese both at
the central, local and grassroots levels. According to Payne,
they have also advocated on behalf of Vietnam on fair trade
issues and are largely seen as independent from political
agendas or association.

Attitudes toward U.S. Assistance
--------------


17. (SBU) At the central level, the party line from the GVN
consistently welcomes international assistance from the United
States to the Central Highlands, at least rhetorically.
Ministry of Agriculture and Rural Development (MARD) officials
expressed the hope that this study of the development context
would be aimed at finding ways to generate U.S. assistance. In
terms of specific areas for assistance, a steady refrain from
the GVN was the great potential to develop industrial crops in
the Highlands. To varying degrees, all of the ministries
mentioned assistance in the top two GVN priorities in the
region, industrial agriculture and processing and
infrastructure development with an emphasis on irrigation.
Ministry of Labor, Invalids and Social Affairs (MOLISA) and
Ministry of Planning and Investment (MPI) also pointed to the
need for better vocational and job skill training.


18. (SBU) While the message from other donors and from NGOs
was much less certain, there was general agreement that the
trend in the Central Highlands was probably towards more
openness. The frequency of international missions and visitors
to the Highlands since the April 2004 riots seems to support
this trend, as does the emerging presence of INGOs there.
Action Aid, which has just recently begun working in the
region, cautioned that any sign of unrest would immediately
shut down access to the region once more. The Canadian
International Development Agency (CIDA) recounted a comment in
2003 at the far end of the spectrum by a provincial official
who stated that any assistance except that of the United States
or UNDP would be welcome. Other donors suggested that U.S.
reluctance to fund directly the GVN through co-financed or
bilateral budget support would be a barrier. It was widely
agreed that the most critical step to successful entry into the
Central Highlands was support at the provincial level.


19. (SBU) ECON/C, USAID Director and HCMC Econoff visited Kon
Tum in December 2004 and found provincial officials eager for
U.S. assistance (Ref A). The provincial leadership even
indicated the possibility of allowing active U.S. NGO presence.
Following an INGO visit to the Highlands in May 2004, American
Red Cross Country Representative also noted that Kon Tum
officials expressed interest in cooperating on projects
involving health and education and specifically pointed to the
USDA-backed school nutrition program that the American Red
Cross is implementing in neighboring Quang Ngai province (Ref
B). The Gia Lai provincial government also expressed interest
in U.S. assistance. However, the Chairman of Dak Lak People's
Committee told us that his province already had sufficient
international assistance and was not interested in U.S. aid or
technical support.

Possible Entry Points
--------------


20. (SBU) While the need is great across many sectors, the
following is a short list of possible ideas, initiatives and
organizations that could offer an entry point for U.S.
engagement with or assistance to the Central Highlands.


--Build on the U.S. Government's development programs already
underway implementation in Vietnam: There are currently
elements of the present USG development assistance portfolio
that might be readily transferable to the Central Highlands.
These include work in expanding cocoa production, a non-
plantation crop with strong international demand and conducive
to small landowners; extending coverage of our program to
address the spread of HIV/AIDS under the Presidential
Initiative, or an expansion of an aspect of our disability
assistance. Doing so would have the advantage of allowing us
to begin implementation more quickly with actual on the ground
experience already in hand. It would also lessen the
management challenge and overhead of an initiative into an area
where we have not yet been very active.

--Start small. Currently, assistance under USD 500,000 can be
implemented directly with provincial authorities and avoid the
lengthy Prime Minister's approval process. Many of the
projects funded by the G4 and by the French Embassy have annual
funding levels of less than USD 50,000.

--Join a partnership. For example, the Forestry Sector Support
Partnership welcomes involvement by non-signatory donors. This
could be an opportunity to learn more about the specific
forestry initiatives in the region to see if there is an
appropriate entry venue to U.S. environmental assistance.

--World Wildlife Fund (WWF) is an international NGO with
established partnerships in the Central Highlands. The United
States has had partnerships with WWF in other regions.

--The USDA Food for Education Fund supports initiatives such as
the Vietnam Education and Child Nutrition Initiative, including
school feeding, school-based nutrition and hygiene education
and community-based health programming, implemented by the
American Red Cross and Vietnam Red Cross. This was a project
pointed out with interest by Kon Tum officials during a May
2004 INGO visit. (Ref B)

--Land O'Lakes has also implemented a similar initiative under
the Food for Education Fund, with specific links to developing
fortified school foods to boost nutrition. This type of
initiative could be promoted as a public-private partnership.

--A University of Michigan community education project
established a model in Thailand that combines forestry
conservation with community-based education. This organization
is currently working in Can Tho Province on a similar community-
based education model. The increasing alarm over environmental
degradation and efforts to train ethnic minorities in forest
protection means this area may get increasingly more attention.

--Committee on Population, Families and Children. This
committee was recommended as a progressive and strongly staffed
Vietnamese government organization that has an established
local network and oversees a diverse intersection of social
issues.

--UNICEF addresses issues of child welfare, health, safety,
nutrition and education at the local level. The agency has a
network of established programs in the Highlands and has used
funding from New Zealand and Luxembourg on single-source
projects targeted to the region.

--Helvetas is a Swiss NGO implementing a USD 5 million
extension training project in seven provinces including Dak
Lak. It also works in the Central Highlands on a social
forestry project and in the Northern Uplands on empowerment of
local peoples to manage natural resources. Both its sectoral
and grassroots level experience could be instructive.

--Doctors Without Borders, also known as Medecins Sans
Frontieres, is already present in Vietnam and serves as an
international agency for medical relief to victims of armed
conflict, epidemics, disasters as well as others who lack
health care due to geographic remoteness or ethnic
marginalization.
--East Meets West Foundation is a U.S. non-profit humanitarian
organization that partners with the people of Vietnam at the
grassroots level to improve their health, education and
economic conditions. Its projects include the construction of
village water systems, the building and renovation of
elementary and kindergarten schools and the establishment of a
free dental health clinic. It has been operating in Central
Vietnam since 1988 so has a long history, and does not have a
political or religious affiliation.

--A number of sources suggested that research could be funded
at a relatively low level, could help develop Vietnamese
capacity and, if targeted correctly, could effectively inform
policy or produce direct assistance tools like the Norway-
funded education glossaries in ethnic minority languages.
Vietnam Living Standard and Household Survey data also offer
interesting possibilities for policy analysis.

--The U.S. Department of Labor could consider possible
vocational training assistance in continuation of the U.S.-
Vietnam labor cooperation program.

MARINE