Identifier
Created
Classification
Origin
09HANOI413
2009-04-29 10:09:00
CONFIDENTIAL
Embassy Hanoi
Cable title:  

IN VIETNAM, CHINA AND BAUXITE DON'T MIX

Tags:  PGOV PREL PHUM ECON EMIN EINV ESTH SENV CM VM 
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VZCZCXRO1790
OO RUEHCHI RUEHCN RUEHDT RUEHGH RUEHHM RUEHVC
DE RUEHHI #0413/01 1191009
ZNY CCCCC ZZH
O 291009Z APR 09
FM AMEMBASSY HANOI
TO RUEKJCS/SECDEF WASHINGTON DC IMMEDIATE
INFO RUEHZS/ASEAN REGIONAL FORUM COLLECTIVE IMMEDIATE
RUEHOO/CHINA POSTS COLLECTIVE IMMEDIATE
RUEHHM/AMCONSUL HO CHI MINH IMMEDIATE 5825
RUCNDT/USMISSION USUN NEW YORK IMMEDIATE 0297
RHEHNSC/NATIONAL SECURITY COUNCIL WASHINGTON DC IMMEDIATE
RUEAIIA/CIA WASHINGTON DC IMMEDIATE
C O N F I D E N T I A L SECTION 01 OF 03 HANOI 000413 

SENSITIVE
SIPDIS

FOR EAP/MLS AND EEB

E.O. 12958: DECL: 04/29/2019
TAGS: PGOV PREL PHUM ECON EMIN EINV ESTH SENV CM VM
SUBJECT: IN VIETNAM, CHINA AND BAUXITE DON'T MIX

HANOI 00000413 001.2 OF 003


Classified By: PolCouns Brian Aggeler. Reasons 1.4 (b/d)

C O N F I D E N T I A L SECTION 01 OF 03 HANOI 000413

SENSITIVE
SIPDIS

FOR EAP/MLS AND EEB

E.O. 12958: DECL: 04/29/2019
TAGS: PGOV PREL PHUM ECON EMIN EINV ESTH SENV CM VM
SUBJECT: IN VIETNAM, CHINA AND BAUXITE DON'T MIX

HANOI 00000413 001.2 OF 003


Classified By: PolCouns Brian Aggeler. Reasons 1.4 (b/d)


1. (C) Summary: Planned Chinese involvement in bauxite
exploitation projects in the Central Highlands, especially
the use of Chinese laborers, has triggered an unusually
high-profile "open" public policy debate. Prominent
Vietnamese, including famed war hero General Vo Nguyen Giap,
have called for the project to be scrapped, or at least
delayed. Though the mainstream media generally repeats the
official line, thousands of blog writers have written about
the project on a daily basis, with journalists writing online
what the censors wouldn't let them publish in their columns:
jeremiads decrying environmental damage, jobs lost to
foreigners and even a "quiet Chinese invasion" of the
sensitive highlands region. While the government has
insisted that it intends to proceed with bauxite
exploitation, the outcry -- echoed in a petition authored by
prominent Vietnamese intellectual Nguyen Hue Chi and
presented to the National Assembly -- has prompted
Central-level authorities to address public concerns. On
April 26, the influential Chair of the Politburo Standing
Committee, Truong Tan Sang, announced that bauxite projects
would remain in Vietnamese hands; meanwhile, the government
announced that it would review the qualifications of foreign
workers. End summary.

Feasibility and Environmental Concerns
--------------


2. (C) The bauxite mining projects -- Nhan Co in Dak Nong
province and Tan Rai in Lam Dong province (septel) -- have
generated on-line criticism almost since their inception.
Many questioned the projects' feasibility, given the
difficulties in attracting financing during a period of
global recession, the highly volatile world market for
aluminum, and possibly inadequate energy and water supplies.

Others argued that the projects themselves make poor economic
sense, particularly when compared to the area's current
production of rubber, coffee, and tea. The director of the
Consultancy on Development, a Dutch-funded NGO, Pham QUang
Tu, commented that the inability to smelt aluminum seriously
undermines the economic rationale for the undertaking. At a
much-publicized October 2008 conference attended by officials
from the state-owned Vietnamese Coal and Minerals Company
(Vinacomin) and its potential foreign partners, the director
of one of Vinacomin's subsidiaries, Dr. Nguyen Thanh Son,
called attention to theQow domestic demand for aluminum and
called for more attention to be paid to sustainable
development.


3. (SBU) Particular attention was focused on the possible
environmental effects of the project as well. In a gesture
widely discussed on the internet, the revered war hero and
Party patriarch General Vo Nguyen Giap issued an "open
letter" to Prime Minister Nguyen Tan Dung, declaring the
environmental costs of bauxite development to be too high and
calling for a temporary halt to the bauxite project until
international experts could review its ecological impact.
Giap's January 5 letter noted that he had overseen a study on
bauxite in the early 1980s, and that Soviet advisors had
recommended against the project because of the environmental
risks involved. Buoyed by Giap's example, scientists,
environmentalists, and other interested citizens voiced
concern for Vietnam's "green roof" in the Central Highlands.
Critics pointed to the possibility of water contamination by
"red mud" (a combination of iron, manganese, and soda
discharged during the production of alumina),the devastating
effects of bauxite mining on soil, and Vietnam's failure to
protect the environment in the coal mining region of Quang
Ninh.

A "Chinese Military Base" in the Highlands
--------------


4. (SBU) Though the project's environmental effects provided
the hook for much of the public opposition, anxieties about
China's involvement in the project provided the emotional
core. The GVN always expected challenges, and early on
recognized the need to line up foreign investors. (Note:
Neither the World Bank nor the Asian Development Bank (ADB)
are currently interested in the project: the ADB does not
finance projects in the extractive sector, and the World
Bank's resident environment officer recommended that the Bank
stay away from bauxite in Vietnam. End note.) As described

HANOI 00000413 002.2 OF 003


by Nhan Co Alumni Joint Stock Company Director Bui Quang
Tien, the Central Highlands' utter lack of human resources,
infrastructure, environmental remediation capacity and
capital always meant that the Vietnamese companies would have
to rely heavily on foreign partners -- including a
significant Chinese presence. Agreements were signed in 2008
to bring Chinese (Chinalco),Russian and U.S. partners into
the various bauxite projects. But it was the Chinese
involvement that drew people's ire, particularly the
potential presence of "thousands" of Chinese workers.


5. (SBU) Vietnamese luminaries -- old-line Party stalwarts
such as Vietnam's ambassador to China, General Nguyen Trong
Vinh -- asserted that the presence of "up to 10,000 Chinese
workers" posed an "unacceptable" national security threat, a
"Chinese military base" in the middle of the strategically
sensitive Central Highlands. Documents were posted online by
a consultant for Vinacomin asserting that the bauxite
exploitation tender terms were written specifically to favor
low-tech, low-cost Chinese investors that would not be able
to meet Vietnam's environmental standards. In a typical
posting, one blogger referred to bauxite mining as an
"attempt by Chinese capitalists... to take over Southeast
Asia and the South China Sea," while another wondered whether
China would openly back Montagnard separatists in the Central
Highlands. Still another saw the project as a plot to shift
its pollution-causing industries to a pristine part of
Vietnam.

Publicly Indignant--From Paper to Blogs to Petitions
-------------- --------------


6. (C) Newspapers gently probed the edges of the environment
story -- press contacts told us their "official guidance"
allowed reporting on the environment, though not about the
China angle -- but photos of Chinese laborers in Lam Dong
provinces began to appear on blogs alongside essays raising
concerns about national security. The Office of the
Government (#17/TB-VPCG) instructed journalists to stop
reporting on bauxite, but indirect reporting continued as
various press outlets ran stories decrying the number of
Chinese workers active on other projects that have been
awarded to Chinese contractors, as well as the tendency of
Chinese general contractors to use exclusively Chinese-origin
equipment and supplies even when competing local products are
available at competitive prices. Further instructions
limiting reporting on Chinese contractors in particular did
nothing to quell continued press attention to (unnamed)
foreign firms bringing in excessive number of laborers and
showing a marked preference for imported inputs. The
attention most likely led to the April 21 decision by the
Ministry of Labor, Invalids and Social Affairs (MoLISA) to
announce plans for a crackdown on illegal foreign workers.


7. (C) Official instructions limiting the mainstream media's
ability to report directly on the Bauxite/Environment/China
controversy only served to further aggravate the already
heated discussion in the blogs. One ConGen spot check found
more than 3,400 Yahoo360 blogs discussing bauxite, with
another 4,300 on Google Blogs. Former Central Committee
Party Ideology Chief Huu Tho probably stoked the flames even
more when he alluded to "new forms of invasion" (read: from
China) on the internet news source VietnamNet, and advised
the authorities to "trust the patriotism of the young people."


8. (SBU) Against this backdrop, on April 12 the Hanoi-based
Nguyen Hue Chi, Vietnam's version of a public intellectual,
submitted a petition, with the signatures of 150 other
intellectuals in and outside of Vietnam, to the National
Assembly asking the government to reconsider Vietnam's
bauxite development. By April 27, the list of signers had
grown to over 1,000. One HCMC signatory reported that when
Chi tried to deliver the petition to the offices of the Prime
Minister and President, staff told him there was "no
precedent for receiving petitions" and asked him to mail the
petition instead.

Dissidents Sense an Opening
--------------


9. (C) More traditional opponents of the regime quickly
jumped on the bandwagon as well. Petition signatories
include the prominent Hanoi-based dissident Pham Hong Son,
usually considered a relative moderate. Perhaps sensing an

HANOI 00000413 003.2 OF 003


opportunity to tie their ongoing land disputes to the bauxite
controversy, on April 26, over one thousand Vietnamese
Catholics affiliated with Hanoi's Thai Ha parish staged a
prayer vigil to protest bauxite mining. Afterwards, the
vigil protestors signed a petition against bauxite mining.
Other outspoken critics of the regime such as the
internationally recognized dissident Dr. Nguyen Dan Quei and
the leader of the banned Unified Buddhist Church of Vietnam
Thich Quang Do have also attempted to use this issue to
undercut the GVN, as has the outlawed U.S.-based opposition
party Viet Tan, which in an editorial in the Asia Times
blasted Vietnam's leadership for failing to "stand up" to
China.

Putting the Genie Back in the Bottle
--------------


10. (C) ConGen HCMC and Embassy contacts speculate that the
government recognizes that it misjudged the depth of public
dissatisfaction with the bauxite project, China's involvement
in particular, and is scrambling to remedy the situation. As
early as April 9, DPM Hoang Trung Hai hosted a seminar in
which he reiterated the government's commitment to bauxite
development but suggested that the government would be
prepared, in the name of environmental protection, to delay
the projects. (Note: On the eve of the seminar, General Giap
issued a second letter in which he declared that "the
exploitation of bauxite should not be allowed as it would
cause extremely serious damage to the environment, society,
and national defense." End note.)


11. (C) On April 21 PM Dung asked the Ministry of Labor, War
Invalids and Social Affairs (MoLISA) to review regulations on
managing foreign workers and their enforcement. More
importantly, on April 26, the influential Chair of the
Politburo Standing Committee Truong Tan Sang announced a new
Politburo decision on bauxite that allows small-scale
excavation by Vinacomin subsidiaries Nhan Co (Dak Nong) and
Tan Rai (Lam Dong) but limits future development. Press
reports with titles like "Miners Should Not Profit to
Detriment of Environment: Politburo" described the decision
as centered on environmental concerns. While no mention is
made of China, the decision instructs Nhan Co and Tan Rai not
to sell project shares to foreign partners, to prioritize
Vietnamese companies and workers, and not to employ foreign
manual workers "unless necessary."

Comment: Back to the Drawing Board?
--------------


12. (C) While these moves may calm Vietnamese patriots, it
is unclear what long-term impact they will have. Even as
they hedge, the central-level leadership has consistently
reaffirmed its commitment to bauxite development. Proponents
of bauxite excavation, moreover, have the firm support of
provincial party leaders hoping to develop the impoverished
provinces with the help of foreign, most notably Chinese,
investors. And finally, there is the simple fact that the
projects represent a high-profile commitment to the Chinese,
affirmed in joint statements.
Still, the "public debate" that the bauxite controversy has
engendered is significant, both for its widespread
dissemination and emotional content and for the apparent
effect it has had on the government. It is difficult to say
for certain that public letters, leaked memos, blogs and
petitions forced the government to recalibrate its position,
the episode provides heavy circumstantial evidence that
public opinion in some instances can have a marked influence
on policy. End comment.


13. (U) This cable is a joint product of Embassy Hanoi and
ConGen HCMC.
MICHALAK