VFM PHUNG RESPONDS TO CONCERNS ABOUT NORTH KOREAN

S E C R E T SECTION 01 OF 02 HANOI 001950

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E.O. 12958: DECL: 08/01/2016
TAGS: EFIN CTERR ECON IO PREL KN VM
SUBJECT: VFM PHUNG RESPONDS TO CONCERNS ABOUT NORTH KOREAN
BANKING IN VIETNAM

REF: A. REF A) SECSTATE 105317


B. REF B) HANOI 1594

C. REF C) HANOI 1595

Classified By: Ambassador Michael W. Marine, Reasons 1.4 (b/d)


1. (S) Summary: In a July 19 meeting with Ministry of Foreign
Affairs (MFA) Standing Vice Minister Le Cong Phung, Treasury
Under Secretary Stuart Levey and the Ambassador raised U.S.
concerns over North Korean interactions with two of
Vietnam,s State-owned commercial banks. Phung made clear
that U.S. priorities were more important to Vietnam than
North Korean concerns and that Vietnam will do all it can to
ensure that no illicit activities take place within its
banks. At the end of the meeting, Phung confided that he has
an early morning meeting with the State Bank of Vietnam on
July 20 to discuss in greater detail how to ensure that this
policy is carried out. End Summary.

Banking In Vietnam
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2. (S) Phung began the meeting by commending the progress of
U.S.-Vietnam bilateral relations, which he characterized as
&moving smoothly8 since then Prime Minister Phan Van
Khai,s visit to the United States last June. Under
Secretary Levey agreed with this assessment and added that,

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in light of the many upcoming exchanges, notably Treasury
Secretary Paulson,s participation in the September APEC

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Finance Minister,s Meeting and the President,s visit in
November, the United States does not want North Korean
banking activities in Vietnam to negatively affect this
relationship. For this reason, said Levey, we are asking
Vietnam to take specific, concrete actions to ensure that
North Korea,s Tanchon Commercial Bank,s accounts with
Vietcombank and any other banks in Vietnam are frozen (ref
A). We also request, added Levey, that the GVN block the
efforts of other North Korean banks seeking to establish
financial relationships here and to ensure DPRK proliferators
such as KOMID are unable to do business in Vietnam. The
United States is approaching Vietnam on this issue in the
spirit of friendship, since trading with North Korean
companies and banks that have such established links to
illicit North Korean activity could be damaging to the
reputation of Vietnam,s financial sector at a critical time
in its development. He also said that it was not necessary
for action to be taken publicly, but rather that this
business be shut out of Vietnam and any relevant accounts or
transactions frozen.


Phung on North Korea
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3. (S) Phung admitted that relations with North Korea have
not been &good,8 and that the North Koreans have vocally
criticized Vietnam,s highly successful &doi moi8
(renovation) policy. While Vietnam has a tradition of
relations with North Korea, Phung emphasized that Vietnam
attaches greater importance to relations with the United
States. Phung also stressed that Vietnam does not cooperate
on any efforts to promote the proliferation of Weapons of
Mass Destruction (WMD) or terrorism, and he expressed
satisfaction with the quality of Vietnam,s counterterrorist
cooperation activities with the United States. (Note: While
Vietnam does cooperate on a basic level with some information
sharing, they are not particularly engaged in
counterterrorism. End Note.) Phung also emphasized that the
Government of Vietnam (GVN) is very concerned about the
missile tests of July 4 and expressed puzzlement as to North
Korea,s thinking. Phung promised Vietnam will be &very
strict8 and will not tolerate &terrorist or WMD8 related
activities in their banking system. He assured the Under
Secretary that the two Vietnamese banks &had been warned.8

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4. (S) The Ambassador also encouraged Phung to look closely
at the language of UN Security Council Resolutions 1540 and
1673, especially as they relate to financial transactions
with North Korea. Levey also highlighted that the new
resolution on North Korea ) UNSCR 1695 ) further compelled
states to ensure that no financial resources are transferred
in support of DPRK WMD and missile programs. Phung noted

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that Vietnam always follows international regulations and
will do the same here. As the meeting was breaking up, Phung
confided that he has an early morning meeting with the State
Bank of Vietnam on July 20 to discuss this issue in greater
detail.


5. (U) This message was cleared by Treasury staff.

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MARINE