Pragmatic Diplomacy: Vietnam's Relations with

UNCLAS SECTION 01 OF 04 HANOI 000719

SIPDIS

SENSITIVE

E.O. 12958: N/A
TAGS: PREL ETRD PGOV SOCI RS EZ PL HU MG VM
SUBJECT: Pragmatic Diplomacy: Vietnam's Relations with
Post-Communist Russia, Eastern Europe and Mongolia

Summary and Comment
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1. (SBU) Vietnam's relations with post-Communist Russia,
Eastern Europe and Mongolia have shown the GVN's willingness
to move beyond ideology and politics to satisfy practical
foreign policy, economic and security needs. In the years
following the collapse of the Soviet Union and the demise of
Communism in Eastern Europe, Vietnam's "pragmatic diplomacy"
led it to reach out to its formerly Communist, yet
nonetheless traditional, "friends" to lessen its
international isolation and for help as a counterbalance
against China. In more recent years, Vietnam's "strategic
partnership" with Russia has yielded modest trade and
investment gains, and Hanoi continues to look to Moscow to
be its primary arms supplier and, perhaps unreasonably, a
regional actor with the ability to play a balancing role
against China.


2. (SBU) Summary, cont'd: Vietnam has recently viewed its
relations with Eastern Europe, particularly with new EU
member states Poland, Hungary and the Czech Republic, as a
means to use its traditional friendships with these
countries to gain "back door" access to the EU. In the case
of post-Communist Mongolia, a lack today of ideological and
political ties, combined with little in the way of practical
benefits, has led to a largely symbolic relationship based
on the two countries' "traditional friendship." While
personal ties persist between the leaders and citizens of
Vietnam and their counterparts in Russia and Eastern Europe,
these are diminishing, making way for the rise of leaders
and others with personal ties to countries outside of
Vietnam's traditional orbit, including the United States.
End Comment.

Put Away Those Russian Grammars
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3. (SBU) The collapse of the Soviet Union and the demise of
Communism in Eastern Europe were unexpected and painful
shocks to Vietnam and its leadership. In 1990, trade with
the Soviet Union made up close to 70 percent of Vietnam's
overall trade turnover, with the remainder covered by
Vietnam's other Council for Mutual Economic Assistance
(COMECON) partners. Vietnam's commodities and military-
related imports received favorable Soviet financing, and
Hanoi relied on Soviet loans to cover its trade deficit.
Following the USSR's collapse in 1991, the Soviet Union's
economic and military support for Vietnam effectively dried
up, and, in one year, trade between the two fell by more
than half. "At that time, many Vietnamese believed that
Vietnam's economy would collapse as a result of what
happened," Bui Huy Khoat, Director of the Institute for
European Studies (IES),told us.


4. (SBU) No less dramatic was the psychological impact of
the events taking place in Eastern Europe and the Soviet
Union. The Soviet Union and its European satellites were
the ideological and political models for Vietnam, and many
of Vietnam's elites (including today's Communist Party
Secretary General, State President and Prime Minister) were

SIPDIS
products of the Soviet education system. Thousands of guest
workers - Vietnamese labor exported to the Soviet Union and
Eastern Europe to help to pay for imports - had started
families and put down roots in these countries. Russian
language study had been a key part of most Vietnamese
students' curricula. Following the events of the early
1990's, much of this changed. Most guest workers were
forced to return home, and Vietnam's Ministry of Education
began to phase out the study of Russian. According to one
Vietnamese in her mid-30's, "We learned Russian until 1991,
and then we started learning English. Hardly anyone our age
can speak Russian anymore."

Pragmatism Rules
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5. (SBU) Between 1991 and 1994, relations between Vietnam
and Russia and post-Communist Eastern Europe "did not
progress smoothly," according to IES' Khoat. Part of the
reason was Vietnam's "inability to understand" what was
happening within the borders of its former allies. Two
other reasons specific to Russia were "President Yeltsin's
lack of goodwill towards Vietnam" and the "difficult time"
Vietnam and Russia had in resolving the issue of Vietnam's
debt to the former Soviet Union, Khoat continued. (Note:
In 2000, Russia announced that it would cut Vietnam's
estimated USD 11 billion debt by 85 percent, with repayment
restructured over the next 23 years at about USD 100 million
per year. End note.)


6. (SBU) However, in 1993-1994, Vietnam "came to the
conclusion" that it needed to reach out to its former allies
to "rebuild the traditional friendships" it had previously
enjoyed with the new Russia and newly post-Communist Eastern
Europe, Nguyen Thai Yen Huong of the MFA's Institute for
International Relations (IIR) told us. This was based on
Vietnam's "conscious and pragmatic decision to diversify its
foreign relations and not to allow ideology become an
obstacle in its ties with Russia and Eastern Europe," Huong
continued. Most pragmatic of all was Vietnam's attempt to
renew ties with Russia and the nations of Eastern Europe as
a way to lessen Vietnam's isolation (only partially
diminished by its withdrawal from Cambodia) and as a
counterbalance against China. Vietnamese Government and
Party leaders' personal ties to Russia and the Eastern bloc
also spurred on and helped to facilitate a renewal of
relations, Huong added.

Russia: "Strategic Partner," with Constraints
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7. (SBU) With the exchange of several high-level visits
(including Russian President Putin's to Vietnam in 2001 and
Communist Party of Vietnam General Secretary Nong Duc Manh's
to Russia in 2004),frequent Ministerial-level contacts and
growing trade and investment ties, Vietnam-Russia relations
"have returned to normal," Deputy Director General Nguyen
Ngoc Binh of the MFA's Europe 1 (Russia and Eastern Europe)
Department told us. Where once Vietnam and Russia were
"strategic allies," they are now "strategic partners."
According to DDG Binh, this "partnership" includes bilateral
cooperation in multilateral forums, Russian arms sales to
Vietnam (including advanced fighters and air defense
systems) and "significant" Russian investments in Vietnam's
oil and gas sectors and power industry. Vietnam also counts
on Russia to be a "balancing force" in the Asia-Pacific
region, Binh said. "They straddle two continents and aim to
regain their superpower status and global influence; they
too are seeking to check China," he noted.


8. (SBU) However, there are limits to the Vietnam-Russia
partnership. According to IIR's Huong, trade and investment
levels are "not living up to their potential and growing
slowly" because the economies of both countries are "in
transition." "Perhaps after Russia and Vietnam accede to
the World Trade Organization (WTO),things will get better,"
he opined. (Note: Both Russia and Vietnam are looking to
accede to the WTO by the end of 2005. End Note.) In terms
of arms sales, while true that Russia is the major supplier
of arms and spare parts to Vietnam, "the Russians still sell
their more advanced equipment to China," IES' Khoat ruefully
observed. Finally, according to Russian Embassy Political
Counselor Sergey Tolchenov, "We recognize that Vietnam looks
to us for big things in this part of the world, namely with
respect to China. But we cannot always live up to their
expectations."

Eastern Europe: Vietnam's Back Door into Europe?
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9. (SBU) Compared to Vietnam's relationship with Russia, its
ties with the nations of Eastern Europe improved relatively
more quickly "because they had less far to fall," Khoat
said. Freed of ideology and based largely on "mutual
interest," Vietnam's relations with Poland, the Czech
Republic and Hungary moved forward rapidly, and now Vietnam
enjoys good ties with them in many areas, including trade,
technology transfers, modest arms sales and educational and
cultural relations. With many Vietnamese businesses and
traders active in Eastern Europe "for decades," they are
well positioned to take advantage of the EU entry of the
Czech Republic, Poland and Hungary to expand Vietnamese
exports to the EU as a whole, IIR's Huong predicted.


10. (SBU) Problems persist, however. Although Vietnamese
items exported to Poland and Hungary are of "high quality
and could be sold" anywhere in Europe, EU rules governing
the value of imports and tariff rates have raised the prices
of Vietnamese goods, making them less competitive, IES'
Khoat said. Another problem that has emerged is that the
EU's expansion has diminished Vietnam's share of EU
investment, with new money being directed towards the new
member economies. Finally, according to Czech Republic
Embassy Political Counselor Michaela Fejfarova, "The
Vietnamese think that, with EU expansion, their companies
doing business in Prague can now just as easily do business
in Paris. It doesn't work that way, and many will be in for
a disappointment."

Vietnam and Mongolia: Friendship, but not much more
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11. (SBU) Mongolia's transition to democracy in the early
1990's was another jolt to one of Vietnam's traditional
friendships. Although Vietnam's decision to "move beyond
ideology" helped eventually to get Vietnam-Mongolia
relations back on track, "we really don't have that much to
talk about," Mongolia's Ambassador to Vietnam Baasanjav
Ganbold told us. Bilateral trade is quite modest (the two
sides recently agreed to try to raise two-way trade to USD
10 million by 2010) and transportation links are limited.
"Our political systems are moving in different directions
and, without much else upon which to base our relations, we
rely on our traditional ties," Ganbold said.

Personal Ties Persist, but are Diminishing
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13. (SBU) The personal ties between the leadership and
citizens of Vietnam and Russia and post-Communist Eastern
Europe persist, aided by the language and educational
experiences of many Vietnamese. For example, during
President Putin's 2001 visit to Vietnam, he was able to
conduct many of his official meetings virtually entirely in
Russian. "Many Government and Party leaders speak Polish,
and it is very easy for me to pick up the phone and make an
appointment or get information," Polish Embassy Counselor
Zbigniew Polanczyk told us. To shore up these personal
ties, both Vietnam and its traditional friends continue to
make efforts to promote educational and cultural exchanges,
such as through the annual Russian scholarships for 250
Vietnamese students, MFA's Binh said.


14. (SBU) However, Russia and Eastern Europe, while still
attractive as sources of scientific and technological
expertise, are increasingly less popular destinations for
Vietnamese students and researchers. According to Nguyen
Khoa Son, Vice President of the Vietnamese Academy of
Science and Technology, "Our scientists prefer to go to the
United States, Japan and Germany; these are the real cradles
of high technology. It also increasingly difficult for our
researchers to find guest positions at Russian institutes
and universities." There is also the perception that Russia
is "not a safe place" following the murders of several
Vietnamese students in Moscow, MFA's Binh told us. Of
potentially longer term impact, however, is the perception
that Russia and Eastern Europe "represent Vietnam's past,
and the United States represents Vietnam's future," IES'
Khoat said. "When President Putin visited, he joined a
gathering of Russian university alumni. Everyone was over

50. The relationship with Russia is tied to the past and
based on emotion and nostalgia. However, when President
Clinton visited that same year (2001),he met with Hanoi
National University students. The image, in contrast to
Putin's audience, was one of youth and dynamism," Khoat
observed.

Comment
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15. (SBU) Over the past 15 years, Vietnam has had to change
the basis of its relationship with Russia and the countries
of the former Eastern bloc from an ideological partnership
to interests-based one, a change that it has executed mostly
successfully. Still, many policymakers in Vietnam want to
believe in the potency of Russia's global reach and the
importance of its role in the region. They see a Vietnam-
Russia strategic partnership as one potential pole in a
multipolar world and as a hedge against growing Chinese
influence in the region. However, some academics and even
our Russian colleague quoted above have expressed skepticism
about Vietnam's expectations.


16. (SBU) Longer term, while personal ties persist between
the leaders and citizens of Vietnam and its traditional
friends in Russia and Eastern Europe, they are diminishing.
This is making way for the rise of leaders and others with
personal ties to countries outside of Vietnam's traditional
orbit, including the United States. This transition is
already apparent in the Mission's applicant pool for
Humphrey and Fulbright scholarships and International
Visitors Programs. Many applicants whose resumes share a
common motif of Russian study and travel in the 1980's are
now demonstrating a readiness to study, do research and
travel to the United States. Furthermore, we are beginning
to see Government and Communist Party leadership with U.S.
academic credentials: Vietnam's Minister of Agriculture and
State Bank Governor are Harvard alumni and a rising star in
the Party's External Relations Commission is a SAIS
graduate. End Comment.

MARINE