U.S. AID -- INFLUENCING THE FUTURE OF VIETNAM

UNCLAS SECTION 01 OF 02 HANOI 000486 SIPDIS STATE FOR EAP/MLS AND F STATE PASS USTR DAVID BISBEE STATE PASS USAID FOR ANE/DAA CHILES/JENNINGS AMEMBASSY BANGKOK FOR RDM/A CARDUNER USDOC FOR 4431/MAC/AP/OPB/VLC/HPPHO TREASURY FOR OASIA SENSITIVE SIPDIS E.O. 12958: N/A TAGS: EAID EFIN ETRD ECON PREL VM SUBJECT: U.S. AID -- INFLUENCING THE FUTURE OF VIETNAM Ref A) 2005 Hanoi 17, B) 2005 Hanoi 568 ¶1. (SBU) Summary: U.S. foreign assistance programs in Vietnam, though low in dollar figures, are having a huge, direct impact in shaping Vietnam's reform program. Government of Vietnam (GVN) decision-makers seemingly cannot stop praising our flagship STAR (Support for Trade AcceleRation) program, which places U.S. experts in the boardrooms of over 30 GVN and Party ministries and agencies to provide direct assistance in the drafting of new laws and regulations. GVN officials have repeatedly indicated to us that they would welcome even greater involvement by the USG, including in some sensitive governance areas. During his upcoming visit, President Nguyen Minh Triet will likely reiterate Vietnam's interest in expanding USG programming into more emerging reform areas such as public administration, macroeconomic policy and legal development. Such forthright invitations present us with an opportunity to expand our influence in shaping Vietnam's future. End Summary. Proven Track Record -------------- ¶2. (SBU) Though Vietnam receives far greater amounts of developmental assistance from other countries in the international community, particularly the EU and Japan, GVN officials repeatedly single out and praise the impact and quality of USG assistance in both public and private settings. Because of this high estimation of U.S. programming, numerous ministries as well as the Prime Minister's Office have approached us both formally and informally over the past year to request further involvement by the USG, even in some of Vietnam's more sensitive reform areas. These requests are not just a developing country's blanket request for more aid dollars. GVN officials have made it clear that it is the effectiveness of U.S. assistance that they value. Refs A and B explain in detail the accomplishments of USAID STAR (Support for Trade AcceleRation),the flagship program for U.S. assistance in Vietnam. As detailed below, the success of the STAR program has been critical to Vietnam's ability to enter into the World Trade Organization, and Vietnamese officials recognize this contribution is uniquely different from the assistance of other donors. ¶3. (SBU) In fact, STAR, which advises the GVN on legal reform on an "as asked" basis with no direct involvement from Embassy Hanoi, receives far more requests than it can handle. Over 30 ministries, five key committees and offices in the National Assembly, the Supreme People's Court, the Supreme People's Procuracy, the Internal Affairs Committee of the Communist Party, the Vietnam Chamber of Commerce and Industry, and numerous provincial People's Committees have asked for STAR's help in the last year alone. Almost all of these recipients of STAR's technical advice are repeat customers who have learned from direct experience the benefits of involving STAR in the drafting of the hundreds of new decrees, implementing regulations and laws the GVN has had to write in recent years. ¶4. (U) In all, over the last five years of operations, STAR has helped Vietnam develop over 80 new laws and regulations, organize more than 260 workshops for over 18,000 state officials and business leaders, publish more than 60,000 copies of reference materials on new laws and decrees, and organize 27 study missions for 166 Vietnamese officials. Senior Level Attention -------------- ¶5. (SBU) The effectiveness of USG programming in Vietnam, and the credibility this effectiveness garners among senior GVN officials, gives the United States more influence on sensitive decisions than other donors who give far more money but do not have the same impact. An example of this positive disproportionate influence was the decision by the National Assembly to ask the United States as the only foreign donor to participate in its two-day closed-door debate on the ratification of the WTO protocol. President Triet made sure that U.S. assistance was mentioned as a key part of the bilateral relationship in the Joint Statement issued during President Bush's visit in November 2006. In the December 2006 Consultative Group Donors meeting, the Prime Minister himself singled out STAR as the kind of aid other donors should emulate. U.S. assistance programs have senior-level attention here, at a time when much work is left to be done. What's Next? -------------- HANOI 00000486 002 OF 002 ¶6. (SBU) While there have been substantial policy changes in Vietnam over the past five years, a number of critical challenges remain: further legal reform, implementation of new decrees and regulations, human resource development, public administration reform, implementation of WTO commitments, fighting corruption, central bank macro economic management, and problems arising from international integration, such as stock market regulation. In each of these areas, the GVN would welcome U.S. assistance. As another example, the Ministry of Agriculture and Rural Development (MARD) recently told us that when asked to choose a country on which they would like to model their organizational structure and methodological approach, a majority of MARD departments chose the United States. MARD asked if there was any assistance available to help them to do this. Ministry of Education and Training (MOET) officials have told us that their minister has made a "strategic decision" to model Vietnam's economic reforms on the U.S. model. An additional example is the State Bank of Vietnam's request that we help revise their basic banking law. The GVN has also asked us to be the lead donor in reforming their justice system. The requests continue to pour in, but our ability to respond is severely constrained. ¶7. (SBU) Given the limited budget numbers we have for assistance programming in Vietnam, we must be very cautious in taking on new challenges. Our total (non-PEPFAR) AID budget is only USD 6.056 million for FY2007 and USD 7.015 million for FY2008, which is barely able to keep our STAR and other economic growth and humanitarian programming on life support, much less enable them to respond to growing interest from the GVN. The Vietnamese interest in building their legal and economic framework on our advice will not last forever; this is an opportunity we should not miss, if in fact we want to develop a truly strategic partnership with this rising Southeast Asian dragon. MARINE