SCENESETTER FOR SENATOR HAGEL

UNCLAS SECTION 01 OF 04 HANOI 002420

SIPDIS

SIPDIS

DEPARTMENT FOR EAP/MLS, H
FROM THE AMBASSADOR FOR SENATOR HAGEL

E.O. 12958: N/A
TAGS: PGOV PREL OTRA VM
SUBJECT: SCENESETTER FOR SENATOR HAGEL

HANOI 00002420 001.2 OF 004


Introduction
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1. (SBU) Senator Hagel: Vietnam looks forward to welcoming
you to Hanoi. Your visit will be an important step in
strengthening our cooperative relationship with Vietnam while
bringing into focus key issues, including those our two
countries will need to address in the run-up to the
President's visit. With Vietnam's new senior leadership now
in place following the 10th Communist Party Congress in
April, now is the perfect time to stress to your
interlocutors the United States' desire to highlight our
mutual interests and deepen our engagement with Vietnam.
Vietnam' new leadership will play a critical role in
maintaining a positive trajectory in our bilateral
relationship in the years to come.


2. (SBU) The bilateral relationship has enjoyed positive
momentum over the past 18 months, thanks in part to a series
of high-level bilateral visits, including that of then-Prime
Minister Phan Van Khai, to the United States and of
Secretaries Rumsfeld, Nicholson and Leavitt, and USTR Schwab

SIPDIS
to Vietnam. Two other reasons for the positive trend in
relations have been Vietnam's wish to join the WTO and its
desire for a successful APEC 2006 and a visit by President
Bush. Both WTO and APEC are seen here as hallmarks of
Vietnam's emergence on the global stage.


3. (SBU) Looking beyond discrete events and visits, our
relationship is strengthening due to two factors. First, the
United States represents an important force in the
maintenance of a stable Asian geopolitical environment in
which even "small" countries like Vietnam are assured their
independence and freedom of action. Perhaps more important
as a factor for change, the United States has also emerged as
a vital source of financial and technical assistance and a
huge market for Vietnamese goods. Since the signing of our
Bilateral Trade Agreement in 2001, our two-way trade volume
has quintupled. For these reasons, Vietnam's new leaders are
committed to continued progress in bilateral relations and
will likely speak warmly and optimistically about the future
of the U.S.-Vietnam relationship.


4. (SBU) During your visit, we hope that you will:

-- underline that President Bush's November visit can provide
an opportunity for the United States and Vietnam to advance
our bilateral agenda in a number of areas, including through
the conclusion of several government-to-government and
commercial agreements;

-- express USG support for Vietnam's WTO accession while
explaining that the U.S. Congress now has the lead on PNTR;

-- encourage further economic reform and pro-business
regulations to attract and maintain investors' interest in
Vietnam;

-- suggest that Vietnam's efforts to emerge on the world
stage, including its aspirations to join the UN Security
Council (UNSC) in 2008-2009, mean that it will necessarily
have to start taking public positions on certain issues of
global concern, such as Iran, Burma and North Korea.

President Bush's Visit
--------------


5. (SBU) In the run-up to then Prime Minister Phan Van Khai's
visit to the United States last summer, the Vietnamese
bureaucracy was ordered to be proactive in reaching a number
of agreements with the United States. We expect that the
President's visit will be a similar action-forcing event, and
we hope that you will stress to Vietnam's senior leadership
the need to accelerate action on a number of positive
developments we hope to conclude in the months ahead. For
example, we are looking for progress in deals involving
Boeing aircraft, port development and power plants, as well
as closure on a number of official agreements, including the
establishment of a Peace Corps program and a maritime
agreement. We are separately providing a paper on
deliverables which list these initiatives and provides a
&state of play.8

The Economy and WTO
--------------


6. (SBU) Vietnam today is fueled by a dynamic economy, which
grew at a rate of 8.4 percent last year. Per capita annual
income jumped from about USD 220 in 1994 to USD 638 in 2005.

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The 20-year-old economic reform program known as "Doi Moi"
(renovation) has been effective in promoting market-oriented
changes and improving the quality of life for many
Vietnamese. Foreign trade and foreign direct investment have
increased dramatically and poverty rates have dropped.
Vietnam's chief exports are crude oil, textiles, footwear and
aquatic products. The United States is currently Vietnam's
third largest overall trade partner (behind China and Japan),
but its largest export market.


7. (SBU) The economy still faces challenges, however, from
the problems caused by difficulties in transforming old
command-economy structures, systemic corruption and the slow
pace of reform in many areas. The banking system, in
particular, suffers from a lack of transparency and
inadequate managerial and auditing standards, deterring
foreign investors who might otherwise inject new inflows into
the financial sector and limiting potential growth across all
sectors of the economy.


8. (SBU) The United States and Vietnam reached a bilateral
market access agreement in May, paving the way for Vietnam's
WTO accession. The Vietnamese will no doubt press you on the
PNTR vote in Congress in advance of the President's arrival
for APEC. Accession in the next two months is seen here as
critical because of Vietnam's role as APEC host. Vietnam
does not want to be the first-ever APEC host that is not also
a WTO member. Time may be running short, however, as, in
addition to the PNTR vote, there are a number of hurdles the
Vietnamese still face in a final round of multilateral
negotiations in Geneva.

Role for U.S. Firms
--------------


9. (SBU) Vietnam's need to modernize and improve its
infrastructure creates opportunities for U.S. firms. The
quality and cost of Vietnam's telecommunications, ports,
transportation and waste management infrastructure, as well
as its supplies of power and fresh water, are significant
concerns for any investor. The foundation of the information
highway is a competitive telecommunications system, a glaring
weakness here. Electricity blackouts occur and are also a
major disincentive for any new investment. Furthermore,
Vietnam must improve its handling of solid and industrial
waste. Already some manufacturing firms are putting their
expansion plans on hold because the Port of Saigon will reach
capacity by December 2006. U.S. firms can help Vietnam
address these concerns. Several U.S. companies are actively
pursuing contracts to address these infrastructure needs.


10. (SBU) Your meetings with GVN officials will provide an
opportunity to advocate on behalf of a number of pending
commercial projects involving U.S. businesses, noting
competitive advantage that U.S. companies, experience and
high standards offer.

Vietnam on the Global Stage
--------------


11. (SBU) On issues of regional and global concern, such as
terrorism, proliferation and the rise of China, the
Vietnamese are coming to understand that they share interests
with the United States. Among these shared interests is
ensuring that China "rises peacefully" and is not allowed to
dominate the region or regional organizations. Vietnam's
relations with China are complex. Both countries share
similar forms of government and ideological beliefs, but they
also share a long history of conflicts and disagreements.
China is a major economic partner of Vietnam, but also is a
competitor in many economic areas as well. Vietnam-China
bilateral talks have cooled frictions about disputed border
claims, but some are still unresolved claims, including in
the Paracel and Spratly island chains. Although your
interlocutors will probably not mention China directly, they
will likely note that Vietnam welcomes the role of the United
States in the region and hopes that the United States will
strengthen its relations with the Association of Southeast
Asian Nations (ASEAN).


12. (SBU) Furthermore, beyond APEC 2006, Vietnam is seeking
to play a greater role internationally by joining the UNSC as
a non-permanent member for the 2008-2009 term. While this is
an aspiration we should encourage, at the same time we should
make clear to Vietnam that with a stronger international role
comes a responsibility to take responsible stands on certain
issues of international concern. To date, Vietnam's "friends
with all" foreign policy has dissuaded it from speaking out
about Iran, Burma or North Korea, and we have been

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encouraging the GVN to stake out a more proactive stance on
these and other matters.

Human Rights/Religious Freedom
--------------


13. (SBU) Your interlocutors may raise the issues of human
rights and religious freedom, noting how much progress they
have made in responding to U.S. concerns. Indeed, there has
been progress, and we have seen slow, but significant,
improvements in some previously troublesome regions, such as
the Central Highlands. However, Protestants in northern
Vietnam and the Northwest Highlands continue to have
problems, and the registration of churches and congregations
-- a key issue related to Vietnam's designation as a Country
of Particular Concern (CPC) for religious freedom violations
-- has been too slow.


14. (SBU) I hope you will impress upon your interlocutors the
importance of keeping up the momentum in the areas of human
rights and religious freedom, particularly in advance of the
President's visit. For example, the timeline for making a
decision on Vietnam's CPC status is very short now, and the
GVN should take advantage of the next 3-4 weeks to spur on
progress. At the same time, releasing additional prisoners
of concern would grab headlines and send an important message
about Vietnam's readiness to address our human rights
concerns.

Health Cooperation
--------------


15. (SBU) Our cooperative efforts to prevent and treat
HIV/AIDS and Avian Influenza have become major pillars of the
bilateral relationship, and your interlocutors will likely
offer thanks for our support in these areas. They may also
seek further assistance. You may also be asked to address
Vietnamese concerns about "war legacy" issues, such as Agent
Orange/dioxin. While the need for a better understanding of
the science remains, we are working to find acceptable and
appropriate ways to approach this matter, focusing on
remediation of dioxin's impact on the environment in areas of
high concentration, which are limited to a small number of
former storage sites, not broad areas of the countryside.

Assistance, Bilateral Cooperation Continue to Expand
-------------- --------------


16. (SBU) U.S. assistance to Vietnam is becoming as varied as
the many areas in which our two countries cooperate. In
addition to working with Vietnam to combat HIV/AIDS and Avian
Influenza, other highlights of our assistance and cooperative
programs are:

-- USAID is supporting Vietnam's transition to an open market
economy by strengthening trade liberalization, particularly
the legal and trade reforms needed to implement commitments
in the U.S.-Vietnam Bilateral Trade Agreement and WTO
accession through a USD three million program. This program
has been especially effective at ensuring Vietnam's changes
to its legal code are creating an investor-friendly
environment.

-- Our disability assistance of USD 3.5 million focuses on
key vulnerable groups, including victims of war injuries,
disabilities and disasters.

-- We support Vietnam's counterterrorism capacity with police
training provided by the International Law Enforcement
Academy (ILEA) in Bangkok and through military exchanges. We
are seeking to expand bilateral cooperation to combat trade
in illegal narcotics. We also support anti-trafficking
programs run by NGOs operating at the borders of China and
Cambodia. Furthermore, we provide assistance in humanitarian
demining, clearance of unexploded ordnance and measures to
enhance the security of our trade.

-- Finally, through a combination of Fulbright grants and the
Vietnam Education Foundation (VEF),the United States
sponsors over 100 students yearly for graduate study in the
United States, primarily in science and technology. The
Fulbright program is the second largest in Asia. The VEF was
established with the unpaid proceeds of loans extended to the
former South Vietnamese government.

The Media
--------------


17. (SBU) There will be media interest in your visit, and

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reporters will be eager to seek opportunities to meet with
you. All domestic media in Vietnam are under the control of
the Communist Party and its censors. Aside from Agent Orange
and occasional anniversary events surrounding the Vietnam
War, media coverage about the Mission's activities is
positive and extensive. There is a small corps of
international press situated in Hanoi, including Reuters,
TIME, Associated Press, Boston Globe, NHK, Agence France
Press and National Public Radio. A burgeoning online news
community and web bloggers are increasing the quality and
content of information distribution in the country.

Defense and Other Cooperation
--------------


18. (SBU) Our mil-mil cooperation remains modest but
positive. Secretary of Defense Rumsfeld recently had a
productive visit to Vietnam, and two U.S. Navy ships made the
fourth port call to Vietnam since 2003 in early July. Under
the International Military Education and Training (IMET)
Program, two Vietnamese officers are now studying English in
the United States. This program is seen by the GVN as an
important part of their preparations for participation, at
some undetermined future date, in peacekeeping activities.
In other areas, we have a nascent nonproliferation
cooperation program composed primarily of building capacity
among Vietnamese officials. In this regard, we are seeking
Vietnam's agreement to convert the fuel at its reactor to low
enriched uranium.

Fullest Possible Accounting
--------------


19. (SBU) We continue to have good cooperation with the
Vietnamese in the fullest possible accounting of our
personnel missing from the war, but there are a number of
issues we would like to see concrete progress, including
underwater recovery operations and archival access. It would
be useful for you to thank your interlocutors for Vietnam's
continued cooperation to date and express the USG's hope for
further assistance in the future.


20. (SBU) In closing, I want to thank you for coming to
Vietnam. We have important U.S. national interests to
protect and promote here, and your visit will prove important
in this regard. It will not only help to lay the foundation
for a successful visit by the President, but will also spur
on continued progress in our bilateral ties. This will
ensure that the U.S.-Vietnam relationship in 2007 and beyond
will be the full expression of the friendly partnership that
is now coming into view. We look forward to welcoming you,
and stand ready to assist you in any way necessary in order
to ensure a successful visit that furthers U.S. goals and
interests in Vietnam.
ALOISI