ALLOCATION OF ADDITIONAL ESF FOR VIETNAM

UNCLAS HANOI 000036 SIPDIS SENSITIVE SIPDIS EAP FOR ASSISTANT SECRETARY HILL FROM THE AMBASSADOR F FOR DEPUTY DIRECTOR GREENE FROM THE AMBASSADOR STATE FOR EAP/MLS AMEMBASSY BANGKOK FOR RDM/A CARDUNIER E.O. 12958: N/A TAGS: EAID VM SUBJECT: ALLOCATION OF ADDITIONAL ESF FOR VIETNAM ¶1. (SBU) Summary: The Omnibus Appropriations Bill signed on December 26 contains the appropriation of $5.0 million in additional ESF for Vietnam. The Senate Report on the 2008 Foreign Operations Appropriations Bill contains the following language with regard to this appropriation: "The Committee supports judicial and economic reform programs in Vietnam which strengthen the rule of law, protect human rights, and expand economic opportunities...The Committee provides $10,700,000 in ESF assistance for Vietnam, almost double the request, to support the STAR program and other activities." In this cable, Mission Vietnam lays out its plans for the allocation of these funds, which fulfils the intent of the legislators and Mission Strategic Plan goals. Indeed, our suggested allocation among current activities is in line with how we intend to utilize a similar increase in funding now contained in our draft FY-2009 budget request to Congress. End Summary. ¶2. (SBU) The appropriation of an additional FY 2008 $5 million to support judicial and economic reform programs in Vietnam is critical to strengthening further the rule of law, protecting human rights and expanding economic opportunities in one of the fastest reforming economies in the world. As highlighted in the Senate Report language, the success of the USAID "STAR" (Support for Trade Acceleration) program has been nothing short of remarkable. STAR and its partner program VNCI (Vietnam Competitiveness Initiative) are unique in that they have facilitated a partnership with the GVN which has resulted in Vietnamese agencies seeking technical assistance from the United States in drafting well over 100 major regulations and pieces of legislation. Current requests for technical assistance, many of which could not be met without additional funding, include support in redrafting the Criminal Procedure Law, redesigning key legal and court procedures, and transforming the judiciary. As such, I believe that a portion of the additional funds should best be devoted to the expansion of existing programs and to build on public-private partnerships where our budget dollars can be stretched farthest. Programs relating to governance, democracy building, and human rights will be further reviewed in accordance with the report entitled "Governance in Vietnam: Program Options for USAID," which was received by post in January 10. I suggest that the amount be allocated as follows: -- (A) $2 million to be allocated to the STAR program to expand its focus more vigorously towards supporting the rule of law, legislative processes and justice system reform as well as to deepen further its assistance for Vietnam's post-WTO and BTA implementation. Examples of new activities that could be supported by additional resources include building capacity for the National Political Academy (the "party school") to provide training programs for key state officials on principles of good governance and market economy operations; further strengthening the capacity of the National Assembly to create stronger checks and balances in the system; enhancing the independence, reliability and transparency of the justice system; assisting the resolution of issues raised in the implementation of the recently signed bilateral Trade and Investment Framework Agreement (TIFA) with a focus on IPR enforcement, investment, and labor issues; and enforcing the laws and regulations which were recently developed in response to WTO and BTA commitments; -- (B) $750,000 to be used for expanding Vietnam Competitiveness Initiative (VNCI)'s efforts in supporting good governance through the administrative and regulatory reform process. This far-reaching, radical reform led by the GVN Prime Minister will establish a new way of governing the economy with more transparency and a mechanism for public participation and consultation, which will ultimately create an enabling regulatory environment and pave the way for promoting democracy and broader systemic changes. Some of the funds can also be used to leverage the success of the Provincial Competitiveness Index (PCI) to support provincial governments in seeking innovative ways to tap capital markets for infrastructure financing, to link national and provincial reform initiatives through a best practice provincial governance tool called TIGER and to advocate for a stronger decentralization trend, especially in fiscal management; -- (C) $250,000 for capital markets development with the SEC and related institutions, such as NASDAQ and NYSE. This money will be used to support Vietnam's securities regulators in their efforts to manage better the recently booming and yet volatile capital markets, as well as to enhance financial literacy among the population. This is critical to mobilize private capital market resources for economic development and to eliminate the risk of a financial turmoil that may erode recent achievements; -- (D) $300,000 for ICT/rural socioeconomic development programs using corporate partnerships with companies such as Intel and Microsoft. USAID estimates that corporate contributions could total an additional $2-3 million in services, training, and products if we move forward with this additional funding. These projects are designed to greatly expand internet availability throughout the nation; -- (E) $340,000 to enhance the capacity of the Vietnam Lawyers Association (VLA) to effectively promote the rule of law, enhance popular participation, and strengthen civil society. The VLA has requested support for this effort to assist VLA to develop codes of professional ethics and train its members (legal professionals) to become activists in anti-corruption, protectors of the rule of law, and advocates for popular participation and civil society development. VNAH will partner with the U.S.-based International Center for Not-for-Profit Law (ICNL),which has worked with VNAH since 2000 on the efforts to develop a sound legal framework for a strong civil society; -- (F) $550,000 to promote implementation of grassroots democracy and mediation legislation at the local level. The Vietnamese government has issued several laws and regulations on Grassroots Democracy (GD) (1998, 2003 and 2007) and Community Mediation Groups (1998, 1999) that remain poorly understood and implemented at the district, commune and town levels. While falling short of promoting a truly representative system, these legal documents provide a foundation for increased popular participation in governance, strengthened rule of law, and combating corruption through greater citizen participation in local government; -- (G) $200,000 to build the capacity of legal and law enforcement agencies at national and local levels, thus strengthening the criminal justice responses to prevent and respond to domestic violence. The proposed activities can be implemented in conjunction with UNODCs larger project "Building capacity of law enforcement and justice sectors to prevent and respond to domestic violence;" and - (H) $610,000 for continuation and expansion of the current program and other socio-economic development programs for the rural poor of the Central Highlands area, which aim to improve access to social and health services, increase economic opportunities and protect the basic rights of ethnic minority and persons with disabilities. Activities include agriculture development, sustainable cocoa farming, building and strengthening capacity for self-helps groups of vulnerable people, promoting people's participations in the local decision making and the national socio-economic development planning process through community development activities. ¶3. (SBU) Again, given the deep impact, established track record, potential to support transformational change of STAR and VNCI, and the nature of the earmark, I believe that the bulk of the additional allocation should go to these two programs. Mission Vietnam looks forward to working with Washington as we implement an expanded program in support of reform in Vietnam. MICHALAK