TREASURY SECRETARY PAULSON MEETS WITH VIETNAMESE PRIME

UNCLAS SECTION 01 OF 02 HANOI 002315 SIPDIS STATE FOR EAP/MLS AND EB/TPP/BTA/ANA STATE PASS USTR DAVID BISBEE COMMERCE FOR 4431/MAC/AP/OPB/VLC/HPPHO TREASURY FOR OASIA SENSITIVE SIPDIS E.O. 12958: N/A TAGS: PREL ECON ETRD OVIP VM SUBJECT: TREASURY SECRETARY PAULSON MEETS WITH VIETNAMESE PRIME MINISTER NGUYEN TAN DZUNG HANOI 00002315 001.2 OF 002 SENSITIVE - DO NOT POST ON INTERNET ¶1. (SBU) Summary: On September 7, Secretary Paulson met with Vietnamese Prime Minister Nguyen Tan Dzung, who was accompanied by Vice Minister of Finance Tran Xuan Ha. Ambassador Michael Marine accompanied the Secretary. Secretary Paulson emphasized Treasury's support for deeper bilateral cooperation and economic relations with Vietnam, Vietnam's WTO accession, Congressional passage of PNTR, action by Vietnam to combat abuse of its financial system for illicit uses including proliferation of WMD, and continued progress towards a market economy and openness. Dzung emphasized Vietnam's desire for further development of bilateral relations as well as WTO accession and PNTR. He agreed about the importance of combating money laundering, terrorist financing, and organized crime and asked for U.S. assistance in those areas. He noted that Vietnam's economic priorities were further economic reform, international integration, poverty reduction, improved education and efforts at fighting corruption. End Summary. ¶2. (SBU) Bilateral relationship: Dzung underscored that a good bilateral relationship would benefit both sides and bring greater regional and global stability. He said he had been happy to see the bilateral relationship expand following the Bilateral Trade Agreement in 2001 and looked forward to further growth in investment and trade. He also cited bilateral cooperation in the sciences and education/training and said he wanted relations between the Ministry of Finance and Treasury to move forward. Paulson said he couldn't agree more. Dzung then alluded to the Vietnam War, saying Paulson needed to understand why per capita income was USD 640. The Vietnamese people and government want the support of the American people and USG for a new, bright chapter of cooperation. He appreciated Paulson's comment that Vietnam is progressing in the right direction. ¶3. (SBU) WTO Accession and PNTR - A Treasury and Bush Administration priority: Dzung placed very strong emphasis on Vietnam's desire for WTO accession and achieving Permanent Normal Trade Relations (PNTR) status. He said he was very pleased with prospects for WTO accession and welcomed the Bush administration's outstanding support. Secretary Paulson affirmed the Administration's support for WTO accession and said Congressional passage of PNTR is a high priority for him and President Bush. Paulson said he would work hard in Washington to advance passage in Congress as soon as possible. He noted, however, that conditions in Congress are less easy than normal because it is election season. Dzung responded that he understood the situation and wanted to send the message to Paulson and through Paulson to President Bush that Vietnam would do any necessary work to advance PNTR. ¶4. (SBU) Money Laundering/Terrorist Financing: Paulson noted his strong appreciation for actions Vietnam took to protect its financial system from illicit use following Treasury U/S Levey's visit in July, noting in particular actions to counter the proliferation of weapons of mass destruction. He urged continued action. Dzung agreed on the importance of combating money laundering, terrorist financing, and organized crime. He said Vietnam had shown its commitment to the international community. He invited U.S. assistance in combating terrorism against Vietnam, which stands in the way of Vietnam's development. Paulson agreed, noting it was a two-way street. ¶5. (SBU) Economic reform: Paulson referenced his experience visiting developing countries where he saw the power of reforms for a market-driven approach. Opening the economy and privatization of state-owned enterprises are important. Opening up the financial system to competition has a multiplier effect for the whole economy. Paulson encouraged maintaining momentum for reforms favoring competition and market mechanisms, while noting that such reforms always face domestic resistance from those who do not want competition. He commended Dzung on Vietnam's progress to date, but noted that progress only becomes more difficult. Dzung agreed that Vietnam needed to boost reform and move forward quickly towards a market economy. Dzung listed several priorities: 1) movement toward a market economy, which depended on further development of the legal system, greater economic cooperation, and improvement in the business environment; 2) integration of Vietnam in the global economy, for which WTO accession would be a bright milestone; 3) balancing market development, equality, and poverty reduction; 4) HANOI 00002315 002.2 OF 002 improved training and education; and 5) fighting corruption. ¶6. (U) This cable has been cleared by Treasury staff. MARINE