Cablegate: Vietnam-Russia: Strong but "Pragmatic"

This record is a partial extract of the original cable. The full text of the original cable is not available.

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DOEE-00 ITCE-00 DOTE-00 SRPP-00 DS-00 MEDE-00 EB-00
EXME-00 EUR-00 E-00 FAAE-00 FBIE-00 UTED-00 VC-00
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FM AMEMBASSY HANOI
TO SECSTATE WASHDC 8054
INFO AMCONSUL HO CHI MINH CITY
AMEMBASSY MOSCOW
ASEAN COLLECTIVE
USCINCPAC HONOLULU HI
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E.O. 12958: N/A
TAGS: PREL PTER ETRD ECON EPET ENRG RS VM
SUBJECT: VIETNAM-RUSSIA: STRONG BUT "PRAGMATIC"
-- RELATIONSHIP

REF: A. HANOI 2622 B. HANOI 857
C. HANOI 2621 D. HANOI 2209

1. (U) SUMMARY. SINCE THE BREAKUP OF THE SOVIET UNION,
VIETNAM'S TIES WITH RUSSIA HAVE EVOLVED FROM CLIENT STATE TO
A RELATIONSHIP BASED ON " MUTUAL PRACTICALITY AND
PRAGMATISM." POLITICAL AND DEFENSE TIES STILL COUNT, BUT
THE ECONOMIC RELATIONSHIP APPEARS INCREASINGLY IN THE
FOREFRONT. THE RETURN OF THE RUSSIAN BASE AT CAM RANH BAY
PROCEEDED SMOOTHLY WITHOUT ANY APPARENT NEGATIVE IMPACT ON
THE BILATERAL RELATIONSHIP. VIETNAMESE STILL CONSIDER
RUSSIA A GOOD PLACE FOR ADVANCED STUDIES. ONE RELATIVELY
MINOR BUMP IN THE ROAD AHEAD IS THE STATUS OF THE VIETNAMESE
COMMUNITY RESIDENT IN RUSSIA. END SUMMARY.

---------------------------------------------
BILATERAL AGREEMENTS, STEADY STREAM OF VISITS
---------------------------------------------

2. (U) WHILE NO LONGER A CLIENT STATE AS IN THE DAYS OF
THE SOVIET UNION, VIETNAM STILL CONSIDERS RUSSIA A
"TRADITIONAL" (I.E., LONG-TIME) FRIEND. A NOVEMBER 7 "NHAN
DAN" (PEOPLE'S DAILY) PRESS REPORT COMMEMORATING THE 85TH
ANNIVERSARY OF THE OCTOBER REVOLUTION STRESSED THAT, AS AN
OFFICIAL FROM THE RUSSIA-VIETNAM FRIENDSHIP ASSOCIATION HAD
TOLD GENERAL SECRETARY OF THE COMMUNIST PARTY OF VIETNAM
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(CPV) NONG DUC MANH DURING HIS OCTOBER VISIT (REF A), "WHILE
VIETNAM IS CHANGING, THE WARM SENTIMENT BETWEEN THE RUSSIAN
AND VIETNAMESE PEOPLE WILL NOT CHANGE." (NOTE: "NHAN DAN"
IS THE CPV'S MOUTHPIECE. END NOTE.)

3. (U) NGUYEN QUANG MINH, SENIOR EXPERT IN THE MINISTRY OF
FOREIGN AFFAIR'S (MFA) EUROPE I DEPARTMENT, POINTED TO THE
"LONG AND STEADY" COOPERATION BETWEEN THE TWO COUNTRIES AS
EVIDENCE OF THIS CONTINUITY. WHILE ACKNOWLEDGING A "BRIEF
DOWNTURN" FOLLOWING THE COLLAPSE OF THE SOVIET UNION, MINH
SAID THE "TRADITIONAL RELATIONSHIP" GOT BACK ON TRACK WITH
THE SIGNING OF A TREATY GOVERNING BILATERAL TIES IN JUNE
1994, AS WELL AS JOINT STATEMENTS ON THE DEVELOPMENT OF
ECONOMIC, COMMERCIAL, SCIENTIFIC, AND TECHNICAL COOPERATION
AND ON A BILATERAL "STRATEGIC PARTNERSHIP" IN 1997. VIETNAM
AND RUSSIA SIGNED AN AGREEMENT ON MILITARY AND TECHNICAL
COOPERATION IN 1998, HE ADDED. THE NOVEMBER 7 "NHAN DAN"
REPORT OBSERVED THAT THE BILATERAL AGREEMENTS HAVE SERVED TO
"STABILIZE THE RELATIONSHIP AND ASSIST VIETNAM IN
INDUSTRIALIZATION AND MODERNIZATION."

4. (U) IN ADDITION TO THESE MAJOR AGREEMENTS, THERE HAS
BEEN A STEADY STREAM OF HIGH LEVEL VISITS SINCE THE MID-
1990S. ON THE GVN SIDE, THEN-FOREIGN MINISTER NGUYEN MANH
CAM VISITED IN 1993; THEN-PRIME MINISTER VO VAN KIET IN
1994; CAM AGAIN IN 1998 BUT AS THEN-DEPUTY PRIME MINISTER;
PRESIDENT TRAN DUC LUONG IN 1998; PRIME MINISTER PHAN VAN
KHAI IN 2000; FOREIGN MINISTER NGUYEN DY NIEN IN 2001; AND
MANH IN OCTOBER 2002.

5. (U) ON THE RUSSIAN SIDE, THEN-FOREIGN MINISTER A.V.
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KOZYREV VISITED IN 1995; DUMA (LOWER HOUSE) SPEAKER DENNADY
SELEZNYOV IN 1997, THEN-PRIME MINISTER VIKTOR CHERNOMYRDIN
IN 1997; FOREIGN MINISTER IGOR IVANOV IN 2000; PRESIDENT
PUTIN IN 2001; AND PRIME MINISTER MIKHAIL KASYANOV IN 2002
(REF B). A KEY DELIVERABLE FROM PRESIDENT PUTIN'S VISIT WAS
THE CANCELLATION OF 85 PERCENT OF VIETNAM'S ESTIMATED DEBTS
OF USD 11 BILLION OWED TO RUSSIA FROM THE VIETNAM WAR ERA,
WITH THE REMAINING 15 PERCENT TO BE REPAID IN THE FORM OF
BARTER TRADE SPREAD OVER 2000-2023. PRIME MINISTER
KASYANOV'S MARCH 2002 VISIT WAS NOTEWORTHY FOR THE SIGNING
OF SIX AGREEMENTS, WHICH WERE MORE CONCRETE VERSIONS OF
AGREEMENTS IN PRINCIPLE DISCUSSED DURING PRESIDENT PUTIN'S
MARCH 2001 VISIT. THESE INCLUDED AGREEMENTS ON (1) HEALTH
CARE AND MEDICINE; (2) BORDER DEFENSE; (3) LAW ENFORCEMENT
INFORMATION EXCHANGE; (4) HYDRO-METEOROLOGY; (5) A LOAN FOR
HYDROELECTRIC PLANT CONSTRUCTION IN VIETNAM'S CENTRAL
HIGHLANDS; AND (6) A FRAMEWORK FOR NUCLEAR ENERGY RESEARCH.

--------------------
WE MUST BE PRACTICAL
--------------------

6. (SBU) VLADIMIR TOKMAKOV, RUSSIAN EMBASSY FIRST
SECRETARY, DESCRIBED HOW BOTH SIDES VIEW THE RELATIONSHIP IN

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TERMS OF "MUTUAL PRACTICALITY." BOTH HE AND THE NGUYEN MANH
HUNG, DEPUTY DIRECTOR OF THE CPV CENTRAL COMMITTEE'S
COMMISSION FOR EXTERNAL RELATIONS, SAID SEPARATELY THAT THE
BILATERAL RELATIONSHIP IS NOW "MATURE" AND HAD EVOLVED INTO
ONE WHERE BOTH SIDES PRIMARILY CONSIDER "THEIR OWN

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TO SECSTATE WASHDC 8055
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INTERESTS." TOKMAKOV ADDED THAT RELATIONS HAVE BECOME "MORE
PRAGMATIC" THAN IN THE SOVIET DAYS. FROM THE RUSSIAN
PERSPECTIVE, FOREIGN POLICY PRAGMATISM EMANATES FROM
RUSSIA'S CHANGED POSITION IN A MULTI-POLAR WORLD, TOKMAKOV
CONTINUED. "WE NO LONGER NEED MILITARY BASES AND WE'RE NO
LONGER A MAJOR WORLD POWER," HE CONCLUDED. HE ASSESSED
RUSSIA'S OVERALL RELATIONSHIP WITH VIETNAM AS "WARM AND
BASED ON MUTUAL BENEFIT." TOKMAKOV ALSO CITED THE THREE
MOST RECENT MAJOR VISITS - THE 2001 PUTIN VISIT, THE 2002
KASYMANOV VISIT, AND THE RECENTLY CONCLUDED MANH VISIT - AS
"PARTICULARLY IMPORTANT," NOT NECESSARILY BECAUSE OF
SPECIFIC RESULTS OR AGREEMENTS, BUT RATHER BECAUSE OF THE
"ENDURING PERSONAL RELATIONSHIPS" THEY HAVE INSPIRED AMONG
THE LEADERSHIP OF BOTH SIDES. TOKMAKOV OPINED THAT IT IS
IMPORTANT FOR THE LEADERSHIP "JUST TO MEET REGULARLY -
FRIENDLY TALKS CAN SOLVE MANY PROBLEMS."

7. (SBU) THE ASSESSMENT OF DR. BUI HUY KHOAT, DIRECTOR OF
THE INSTITUTE OF EUROPEAN STUDIES OF THE NATIONAL CENTRE FOR
SOCIAL SCIENCES AND HUMANITIES, PARALLED THAT OF EMBOFF
TOKMAKOV. DR. KHOAT SAID THAT PERHAPS THE BIGGEST CHANGE IS
THAT THE "OLD SOVIET" RELATIONSHIP WAS BASED ON A "STRATEGIC
ALLIANCE," WHEREAS THE "NEW" RELATIONSHIP IS BASED MORE ON
"ECONOMIC BENEFITS AND NEW REALITIES." VIETNAM AND RUSSIAN
BOTH VIEW EACH OTHER IN TERMS OF THEIR POTENTIAL MARKETS, HE
CLAIMED. DR. KHOAT PREDICTED THAT THIS TREND WILL BE
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EVIDENT OVER THE NEXT FIVE YEARS, ASSUMING THE ECONOMIES OF
BOTH COUNTRIES CONTINUE TO DEVELOP. HE EXPRESSED A HOPE
THAT RUSSIA, WHICH RANKS NINTH IN FOREIGN INVESTMENT IN
VIETNAM (MOSTLY IN PETROLEUM SECTOR) WOULD "WORK HARD TO
IMPROVE ITS STANDING IN THAT AREA" STILL FURTHER. (NOTE:
ON PAPER, RUSSIAN INVESTMENT IS AHEAD OF THAT FROM THE U.S.
-- WHICH IS TECHNICALLY IN 15TH PLACE AMONG FOREIGN SOURCES
OF INVESTMENT -- BUT MUCH US INVESTMENT, INCLUDING IN THE
PETROLEUM SECTOR, COMES FROM US SUBSIDIARIES IN THE REGION
AND SHOWS UP AS THIRD COUNTRY INVESTMENT, IN PARTICULAR FROM
SINGAPORE. END NOTE)

8. (SBU) SERGEY ISAIEV, POL/C AT THE UKRAINE EMBASSY,
SEPARATELY ASSESSED THAT THE RUSSIANS AND VIETNAMESE ARE
VIEWING EACH OTHER THROUGH A "PRISM OF PRAGMATISM." ISAIEV
SAID THAT UKRAINE IS INTERESTED IN FOLLOWING THE RUSSIA -
VIETNAM RELATIONSHIP BECAUSE "TO AN EXTENT, WE ARE
COMPETITORS AND NO ONE IS GIVING GIFTS THESE DAYS." ISAIEV
NOTED, HOWEVER, THAT, SINCE PUTIN CAME TO POWER, THERE
APPEARED TO BE RENEWED RUSSIAN INTEREST IN SOUTHEAST ASIA IN
GENERAL AND VIETNAM IN PARTICULAR. HE POINTED TO A
REORGANIZATION IN THE RUSSIAN MINISTRY OF FOREIGN AFFAIRS
THAT RESULTED IN THE ESTABLISHMENT OF TWO NEW DEPARTMENTS
FOCUSED ON SOUTHEAST ASIA. SEPARATELY, S.K. KALRA, FIRST
SECRETARY OF THE INDIAN EMBASSY, DESCRIBED THE RUSSIA -

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VIETNAM RELATIONSHIP AS ANOTHER MANIFESTATION OF VIETNAM'S
GENERAL WORLD OUTLOOK "TO BE FRIENDS WITH ALL COUNTRIES" AND
SEEK IMPROVED ECONOMIC RELATIONSHIPS AROUND THE WORLD (REF
C).

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MILITARY COOPERATION STILL A FACTOR
-----------------------------------

9. (SBU) DR. KHOAT NOTED THAT, WHILE MILITARY-TO-MILITARY
COOPERATION IS STILL A FACTOR IN THE RELATIONSHIP, THIS
ASPECT IS LIKELY TO "REMAIN MODEST FOR THE FORESEEABLE
FUTURE." DR. KHOAT SUGGESTED THAT RUSSIA WOULD NONETHELESS
REMAIN AN IMPORTANT SOURCE FOR MILITARY SUPPLIES AND WEAPONS
(ALBEIT NOT THE MOST MODERN OR HIGH-QUALITY) "AT A
REASONABLE PRICE." DR. KHOAT POINTED TO THE OCTOBER VISIT
TO RUSSIA OF A VIETNAMESE MILITARY SEARCH AND RESCUE
DELEGATION (REF A) AS AN EXAMPLE OF THIS TYPE OF ENDURING
COOPERATION. DR. KHOAT ADDED THAT WHILE VIETNAM "MIGHT
PREFER" TO OBTAIN HIGHER QUALITY MATERIEL FROM EUROPE, ITS
EXISTING INVENTORY AND INFRASTRUCTURE WILL REMAIN TIED TO
THE RUSSIAN STANDARD FOR "MANY YEARS." INDIAN EMBOFF KALRA
SEPARATELY NOTED THAT VIETNAM (LIKE INDIA) "WILL BE
MILITARILY TIED TO THE RUSSIANS" FOR MANY YEARS. IN
ADDITION, THE HIGH COST OF EUROPEAN MATERIAL IS ANOTHER
FACTOR KEEPING VIETNAM IN THE RUSSIAN MILITARY MARKET.
WITHOUT GOING INTO DETAILS, THE CPV'S HUNG ADMITTED THAT
THERE ARE "REGULAR" EXCHANGES BETWEEN THE TWO MILITARIES AND
THAT EACH YEAR "SOME" VIETNAMESE MILITARY OFFICERS RECEIVE
ADVANCED TRAINING IN RUSSIA.

10. (SBU) ON A STRATEGIC LEVEL, INDIAN EMBOFF KALRA OPINED
THAT RUSSIA AND VIETNAM WILL CONTINUE TO SHARE A MUTUAL
INTEREST. RUSSIA VIEWS VIETNAM, EVEN AFTER HANDING OVER THE
BASE AT CAM RANH BAY, AS A FOOTHOLD IN SOUTHEAST ASIA;

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CEA-01 CG-00 CIAE-00 COME-00 CTME-00 INL-00 DINT-00
DOEE-00 ITCE-00 DOTE-00 SRPP-00 DS-00 EB-00 EXME-00
EUR-00 E-00 FAAE-00 FBIE-00 UTED-00 VC-00 FRB-00
H-01 TEDE-00 INR-00 INSE-00 ITC-01 LAB-01 L-00
VCE-00 MOFM-05 MOF-01 M-00 AC-01 NRCE-00 NSAE-00
NSCE-00 OCS-03 OES-00 OMB-01 OPIC-01 PA-00 PM-00
PRS-00 ACE-00 P-00 SCT-00 SP-00 SSO-00 SS-00
STR-00 TEST-00 TRSE-00 T-00 USIE-00 USSS-00 SA-00
ASDS-00 EPAE-00 PMB-00 DSCC-00 PRM-00 DRL-02 G-00
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FM AMEMBASSY HANOI
TO SECSTATE WASHDC 8056
INFO AMCONSUL HO CHI MINH CITY
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ASEAN COLLECTIVE
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VIETNAM VIEWS ITS STRONG RELATIONSHIP WITH RUSSIA AS A
COUNTERBALANCE TO THE PRC'S LONG SHADOW. KALRA EMPHASIZED
THAT THIS STRATEGIC ELEMENT HAD NONETHELESS DECLINED OVER
THE YEARS AND IS LIKELY TO CONTINUE TO DO SO AS THE ECONOMIC
RELATIONSHIP TAKES ON GREATER IMPORTANCE.

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ECONOMIC RELATIONSHIP A DRIVING FORCE
-------------------------------------

11. (SBU) THE RUSSIAN EMBASSY'S TOKMAKOV AND THE MFA'S
MINH SAID SEPARATELY THAT THE PUSH FOR MUTUAL ECONOMIC
BENEFIT IS THE CURRENT FOCUS OF BOTH COUNTRIES. FOR
EXAMPLE, MOST PRESS REPORTS FROM THE KASYMANOV AND MANH
VISITS FOCUSED ON ECONOMIC ISSUES, INCLUDING HOW TO IMPROVE
TWO-WAY TRADE, ANNOUNCEMENTS OF JOINT VENTURE PROJECTS, AND
A CALL FOR VIETNAMESE ENTREPRENEURS TO "WORK HARDER TO FIND
A MARKET NICHE IN RUSSIA."

12. (SBU) ARGUABLY, COOPERATION IN THE ENERGY FIELD IS THE
BIGGEST SINGLE TICKET ITEM IN THE ECONOMIC SECTOR. THE
VIETNAM-SOVIET OIL AND GAS JOINT VENTURE, (VIETSOVPETRO,
WHICH IS A HOLDOVER FROM THE DAYS WHEN ONLY THE SOVIETS WERE
ALLOWED TO "INVEST" IN THE ENERGY SECTOR) EARNS USD 300-500
MILLION PER YEAR, ACCORDING TO PRESS REPORTS. DURING THE
VISIT OF PM KASYANOV LAST MARCH, THE TWO SIDES ANNOUNCED
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PLANS TO EXPAND VIETSOVPETRO TO DEVELOP NEW OIL AND GAS
DEPOSITS FOUND ON VIETNAM'S CONTINENTAL SHELF. THIS
ANNOUNCEMENT CAUSED DISCOMFORT WITH FOREIGN INVESTORS, GIVEN
THAT VIETSOVPETRO IS A STATE-STATE COMPANY AND THAT, AS OF
YET, THERE HAS BEEN NO INVITATION TO PRIVATE FIRMS TO BID ON
THE DEVELOPMENT OF THOSE DEPOSITS. LOCAL OIL COMPANY REPS
ALSO QUESTION THE TECHNICAL EXPERTISE OF THE VIETSOVPETRO.

13. (SBU) IN ADDITION, RUSSIA IS PARTICIPATING IN THE
CONSTRUCTION OF VIETNAM'S FIRST JOINT OIL REFINERY (AT DONG
QUAT IN CENTRAL VIETNAM). HOWEVER, THIS PROJECT IS A
POTENTIAL WHITE ELEPHANT THAT HAD BEEN REJECTED BY OTHER
FOREIGN INVESTORS, DONORS, AND THE IFIS, SINCE THE LOCATION
OF THE REFINERY IS DISTANT FROM THE SOURCE OF THE PETROLEUM,
WITH LITTLE EXISTING INFRASTRUCTURE (ROADS, PORTS) TO
SUPPORT THE TRANSPORT. THIS PROJECT IS AN ADMITTED ATTEMPT
BY THE GVN TO "DISTRIBUTE DEVELOPMENT" TO THE CENTRAL REGION
AND, ACCORDING TO EXPERTS, HAS LITTLE REAL ECONOMIC
RATIONALE. ACCORDING TO A MARCH 2001 RUSSIAN MFA
ANNOUNCEMENT, THE REFINERY, WHEN COMPLETED, WILL PRODUCE AN
ESTIMATED 6.5 MILLION TONS OF OIL A YEAR. THE PROJECT IS
EXPECTED TO COST A TOTAL OF USD 1.3 BILLION. ACCORDING TO
RUSSIAN EMBOFF TOKMAKOV, THE PROJECT SHOULD BE COMPLETED BY
THE END OF 2004.

14. (U) RUSSIA HAS ALSO INVESTED ABOUT USD 7.5 MILLION IN
ANOTHER JOINT VENTURE WITH PETROVIETNAM FOR OIL AND GAS
PRODUCTION. IN ADDITION, RUSSIA HAS ALLOCATED USD 100
MILLION FOR THE CONSTRUCTION OF TWO POWER PLANTS IN THE
CENTRAL HIGHLANDS. THESE PROJECTS ARE FOR NOW JUST ON THE
"WISH LIST," AND IT IS NOT CLEAR HOW MUCH/HOW SOON WILL
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ACTUALLY BE INVESTED IN SUCH PLANTS.

15. (SBU) ASIDE FROM THE ENERGY FIELD, TOKMAKOV POINTED TO
OTHER JOINT VENTURES IN AREAS SUCH AS RUBBER PROCESSING,
AQUACULTURE, CARGO TRANSPORTATION, TEA CULTIVATION, AND
FRUIT AND VEGETABLE PROCESSING. TOKMAKOV ALSO NOTED THAT
THERE HAS BEEN "MUTUALLY BENEFICIAL" COOPERATION IN
SCIENTIFIC RESEARCH PROJECTS, CULTURE, AND EDUCATION.
HOWEVER, HE LAMENTED THAT THESE AREAS "LAG WELL BEHIND THE
ENERGY SECTOR."

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PUSHING TWO-WAY TRADE
---------------------

16. (SBU) PRESS ARTICLES AND OFFICIAL STATEMENTS FROM THE
PUTIN AND KASYANOV VISITS DESCRIBED THE NEED TO INCREASE TWO-
WAY TRADE "UP TO ITS POTENTIAL." PUTIN ADMITTED PUBLICLY
THAT IT WAS "ABSURD" THAT TWO-WAY TRADE WAS ONLY (AT THE
TIME OF HIS VISIT) ABOUT USD 500 MILLION A YEAR. SIMILARLY,
KASYANOV COMMENTED DURING HIS VISIT THAT BILATERAL TRADE
"NEEDS TO GROW." THE EUROPEAN STUDIES CENTRE'S DR. KHOAT
OBSERVED THAT THE BILATERAL TURNOVER DURING THE SOVIET ERA
REPRESENTED OVER 60 PERCENT OF VIETNAM'S TOTAL TRADE, BUT BY
2001 RUSSIA ACCOUNTED FOR JUST ABOUT THREE PERCENT OF
VIETNAM'S EXPORTS AND TWO PERCENT OF ITS IMPORTS. IN
ADDITION, VIETNAM IS RUNNING A SIGNIFICANT TRADE DEFICIT
WITH RUSSIA - RUSSIA'S EXPORTS TO VIETNAM ARE ABOUT DOUBLE
ITS IMPORTS, ACCORDING TO PRESS REPORTS AND THE VIETNAM

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INFO LOG-00 NP-00 AGRE-00 AID-00 A-00 CA-01 CCO-00
CEA-01 CG-00 CIAE-00 COME-00 CTME-00 INL-00 DINT-00
DOEE-00 ITCE-00 DOTE-00 SRPP-00 DS-00 EB-00 EXME-00
EUR-00 E-00 FAAE-00 FBIE-00 UTED-00 VC-00 FRB-00
H-01 TEDE-00 INR-00 INSE-00 ITC-01 JUSE-00 LAB-01
L-00 VCE-00 MOFM-05 MOF-01 M-00 AC-01 NRCE-00
NSAE-00 NSCE-00 OCS-03 OES-00 OMB-01 OPIC-01 PA-00
PM-00 PRS-00 ACE-00 P-00 SCT-00 SP-00 SSO-00
SS-00 STR-00 TEST-00 TRSE-00 T-00 USIE-00 USSS-00
SA-00 EPAE-00 PMB-00 DSCC-00 PRM-00 DRL-02 G-00
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FM AMEMBASSY HANOI
TO SECSTATE WASHDC 8057
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ASEAN COLLECTIVE
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TRADE PROMOTION AGENCY.

17. (SBU) TWO-WAY TRADE, WHILE STILL MODEST COMPARED TO
THE U.S. AND ESPECIALLY TO THE PRC, IS GROWING. (NOTE: TWO
WAY TRADE WITH THE U.S. IS EXPECTED TO REACH ABOUT USD 2.2-
2.5 BILLION THIS YEAR, WHILE TWO WAY TRADE WITH THE PRC WILL
PROBABLY EXCEED USD 3 BILLION. END NOTE.) VIETNAM - RUSSIA
TWO-WAY TRADE IS REPORTEDLY EXPECTED TO INCREASE ALMOST 40
PERCENT FROM 2001 TO 2002 - TO ALMOST USD 700 MILLION. THE
MFA'S MINH AND TOKMAKOV OBSERVED SEPARATELY THAT THE VISIT
OF PUTIN, AND HIS "SINCERE" INTEREST IN DEVELOPING THE
BILATERAL ECONOMIC RELATIONSHIP, SERVED AS A CATALYST AND
HELPED SPUR INCREASED LINKS BETWEEN RUSSIAN AND VIETNAMESE
BUSINESSES. TOKMAKOV PREDICTED, WITHOUT EXPLAINING HOW,
THAT THERE IS A "GOOD CHANCE" TWO-WAY TRADE COULD REACH USD
ONE BILLION OVER THE NEXT FEW YEARS. (COMMENT: THIS IS
HIGHLY UNLIKELY UNLESS RUSSIA REDUCES ITS TARIFF RATES FOR
VIETNAMESE GOODS, HOWEVER. END COMMENT)

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CAM RANH BAY HANDOVER - LITTLE IMPACT
-------------------------------------

18. (U) IN A 1978 TREATY AND A SUBSEQUENT BILATERAL
PROTOCOL, VIETNAM GRANTED THE THEN-SOVIET UNION A RENT-FREE
LEASE OVER THE FORMER US BASE AT CAM RANH BAY UNTIL 2004.
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DURING A TIME OF COLD WAR TENSIONS IN THE FIRST HALF OF THE
1980S, THE SOVIETS STATIONED MIG-23 FIGHTERS, MEDIUM RANGE
BOMBERS, MARITIME RECONNAISSANCE AIRCRAFT, ANTISUBMARINE
WARFARE AIRCRAFT AND NUMEROUS NAVAL VESSELS AT THE BASE.
ACCORDING TO A 2001 PAPER PREPARED FOR THE AUSTRALIAN
DEFENSE FORCE ACADEMY, BY 1984, "CAM RANH BAY WAS THE USSR'S
LARGEST OVERSEAS MILITARY BASE OUTSIDE OF THE WARSAW PACT."
FOLLOWING THE COLLAPSE OF THE SOVIET UNION IN 1991, ALL
REMAINING AIRCRAFT AND NAVAL VESSELS WERE WITHDRAWN, AND
RUSSIA BEGAN RETURNING BUILDINGS TO VIETNAMESE CONTROL.
"SEVERAL HUNDRED" RUSSIAN MILITARY PERSONNEL STAYED BEHIND,
MAINLY TECHNICIANS TO OPERATE A SIGNALS INTELLIGENCE
STATION, ACCORDING TO THIS PAPER.

19. (SBU) THE UKRAINE EMBASSY'S ISAIEV OPINED THAT WHILE
RUSSIA "MIGHT HAVE WANTED" TO RETAIN CAM RANH BAY, THEY
COULD NOT PAY FOR IT. TOKMAKOV WAS UNABLE TO SUPPLY DETAILS
ON HOW MUCH "RENT" THE GVN WAS ASKING, BUT ADMITTED
SEPARATELY THAT RUSSIA COULD NOT AFFORD TO MAINTAIN THE BASE
ANY LONGER. HE COMMENTED THAT RUSSIA, NO LONGER A
SUPERPOWER, HAD "NO NEED" FOR SUCH A BASE. ISAIEV SAID THAT
PUTIN "SHOWED GREAT COURAGE" IN FACING DOWN OPPOSITION FROM
HARDLINERS REGARDING RUSSIA'S PULLOUT.

20. (SBU) DR. KHOAT AND THE CPV'S HUNG NOTED SEPARATELY
THAT THE RETURN OF CAM RANH BAY HAD NOT HAD A NEGATIVE
IMPACT ON THE BILATERAL RELATIONSHIP. DR. KHOAT OBSERVED
THAT NOWADAYS "CAM RANH BAY IS NOT A VERY IMPORTANT PART OF
THE BILATERAL RELATIONSHIP." HUNG CONFIRMED THAT CAM RANH
BAY AND ITS FUTURE HAD NOT BEEN ON THE AGENDA FOR THE MANH
VISIT (ALTHOUGH OTHER REPORTS INDICATED THAT IT CAME UP
UNCLASSIFIED

PAGE 04 HANOI 02709 04 OF 05 080504Z
DURING GENERAL DISCUSSION), NOR WAS IT RAISED DURING THE
KASYANOV VISIT, ACCORDING TO THE MFA'S MINH.

21. (SBU) IN TERMS OF FUTURE USE, TOKMAKOV AFFIRMED THAT
RUSSIA "HOPES" IT WILL HAVE ACCESS TO CAM RANH BAY TO THE
EXTENT VIETNAM GRANTS ACCESS FOR INTERNATIONAL SHIP VISITS.
FOR THEIR PART, THE GVN HAS CONSISTENTLY STATED THAT CAM
RANH BAY WILL BE USED FOR "APPROPRIATE NATIONAL DEVELOPMENT
AND DEFENSE." FOLLOWING A CEREMONY FOR THE HANDOVER OF CAM
RANH BAY IN MAY 2002, THE MFA ANNOUNCED THAT VIETNAM "WILL
NOT COOPERATE WITH ANY COUNTRY WISHING TO USE CAM RANH PORT
FOR MILITARY PURPOSES." TOKMAKOV NOTED THAT, SHOULD THE GVN
WANT TO TURN THE AREA INTO A "FREE TRADE ZONE," THE
TRANSPORTATION INFRASTRUCTURE IN THE AREA WILL NEED
"CONSIDERABLE IMPROVEMENT."

---------------------
A GOOD PLACE TO STUDY
---------------------

22. (SBU) THE MFA'S MINH OBSERVED THAT CLOSE TIES WITH
RUSSIA ARE REINFORCED BY A STEADY STREAM OF VIETNAMESE
STUDYING IN RUSSIA. IN ADDITION, "MANY AMONG VIETNAM'S
PRESENT LEADERSHIP" (INCLUDING THE THREE CURRENT TOP
LEADERS) SPENT FORMULATIVE YEARS IN THE SOVIET UNION. WHILE
THE TREND TO STUDY IN THE WEST IS GROWING, THE LOW COST OF A
RUSSIAN EDUCATION REMAINS ATTRACTIVE TO SOME VIETNAMESE
STUDENTS. HOWEVER, MINH ESTIMATED THAT THERE ARE CURRENTLY
ONLY ABOUT 750 STUDENTS IN RUSSIAN HIGHER EDUCATION,

UNCLASSIFIED

PAGE 05 HANOI 02709 04 OF 05 080504Z

UNCLASSIFIED

UNCLASSIFIED PTQ8800

PAGE 01 HANOI 02709 05 OF 05 080505Z
ACTION EAP-00

INFO LOG-00 NP-00 AGRE-00 AID-00 A-00 CA-01 CCO-00
CEA-01 CG-00 CIAE-00 COME-00 CTME-00 INL-00 DINT-00
DOEE-00 ITCE-00 DOTE-00 SRPP-00 DS-00 EB-00 EXME-00
EUR-00 E-00 FAAE-00 FBIE-00 UTED-00 VC-00 FRB-00
H-01 TEDE-00 INR-00 INSE-00 ITC-01 LAB-01 L-00
VCE-00 MOFM-05 MOF-01 M-00 AC-01 NRCE-00 NSAE-00
NSCE-00 OCS-03 OES-00 OMB-01 OPIC-01 PA-00 PM-00
PRS-00 ACE-00 P-00 SCT-00 SP-00 IRM-00 SSO-00
SS-00 STR-00 TEST-00 TRSE-00 T-00 USIE-00 USSS-00
SA-00 ASDS-00 EPAE-00 PMB-00 DSCC-00 PRM-00 DRL-02
G-00 NFAT-00 SAS-00 /019W
------------------0546C3 080505Z /38
R 080447Z NOV 02
FM AMEMBASSY HANOI
TO SECSTATE WASHDC 8058
INFO AMCONSUL HO CHI MINH CITY
AMEMBASSY MOSCOW
ASEAN COLLECTIVE
USCINCPAC HONOLULU HI
SECDEF WASHDC//ISA/ACHAO//

UNCLAS SECTION 05 OF 05 HANOI 002709

SIPDIS

SENSITIVE

STATE FOR EAP/BCLTV, EUR/RUS

UNCLASSIFIED

PAGE 02 HANOI 02709 05 OF 05 080505Z

ALTHOUGH THIS NUMBER SHOULD GROW, HE CLAIMED. SEPARATELY,
TOKMAKOV SAID THE NUMBER MIGHT IN FACT BE "SIGNIFICANTLY
HIGHER," AS THERE ARE MANY PRIVATE VIETNAMESE STUDENTS WHO
GO TO RUSSIA FOR HIGHER EDUCATION. WITHOUT PROVIDING
DETAILED NUMBERS, MINH ESTIMATED THAT DURING THE SOVIET DAYS
"THOUSANDS" OF VIETNAMESE STUDIED IN THE USSR ANNUALLY. ON
THE OCCASION OF RUSSIA'S NATIONAL DAY IN 2002, THE RUSSIAN
GOVERNMENT ANNOUNCED IT WOULD PROVIDE AN ADDITIONAL 150
SCHOLARSHIPS FOR VIETNAMESE STUDENTS.

-----------------
BUMP IN THE ROAD?
-----------------

23. (SBU) THERE REMAIN SOME CONCERNS OVER THE STATUS OF
THE 120,000-STRONG VIETNAMESE COMMUNITY IN RUSSIA. FROM THE
RUSSIAN POINT OF VIEW, "SOME VIETNAMESE" ARE "ILLEGAL
IMMIGRANTS" AND HAVE ENGAGED IN "ILLEGAL ACTIVITIES," SUCH
AS SELLING COUNTERFEIT GOODS. IN AUGUST, RUSSIAN
AUTHORITIES CLOSED A VIETNAMESE-RUN TRADE CENTER AND SEIZED
"COUNTERFEIT" GOODS AT ANOTHER. THERE HAVE ALSO BEEN
SEVERAL REPORTS OF RUSSIAN YOUTHS ATTACKING VIETNAMESE IN
MOSCOW AND OTHER CITIES. THE GVN FLATLY REJECTS THE RUSSIAN
CLAIMS ABOUT "ILLEGAL IMMIGRANTS." THE CPV'S HUNG STATED
THAT THERE ARE "NO ILLEGAL VIETNAMESE" IN RUSSIA. HE
EXPLAINED THAT MANY VIETNAMESE HAD GONE TO RUSSIA DURING THE
UNCLASSIFIED

PAGE 03 HANOI 02709 05 OF 05 080505Z
SOVIET ERA ON CONTRACTS; SOME WERE THE VICTIMS OF THE
"RESULTING CHAOS" THAT ENSUED WHEN THE SOVIET UNION
COLLAPSED AND MANY FACTORIES CHANGED OWNERSHIP. HE ADMITTED
THAT THERE MAY BE "MISUNDERSTANDINGS" REGARDING THEIR
STATUS, HOWEVER. HUNG CONFIRMED THAT MANH HAD PRESSED PUTIN
DURING THE OCTOBER VISIT TO ENSURE THE SAFETY OF ALL
VIETNAMESE LIVING IN RUSSIA. WITHOUT GOING INTO SPECIFICS,
TOKMAKOV SAID THAT THE RUSSIAN GOVERNMENT IS CONTINUING TO
WORK WITH VIETNAM'S EMBASSY IN MOSCOW TO RESOLVE THESE
PROBLEMS.

-------
COMMENT
-------

24. (SBU) GOOD RELATIONS WITH RUSSIA REMAIN A KEY
COMPONENT OF VIETNAM'S STRATEGY OF DIPLOMATIC
DIVERSIFICATION SINCE 1991, A PROCESS THAT HAS ALSO ENTAILED
ESTABLISHMENT OF DIPLOMATIC TIES WITH THE U.S. AND SOUTH
KOREA, RESTORATION OF GOOD RELATIONS WITH THE PRC, EXPANDED
CONTACTS WITH THE EU AND ITS MEMBER STATES (REF D) AND
TAIWAN, AND INTEGRATION INTO THE REGION VIA ASEAN. PERSONAL
LINKS -- FROM EDUCATIONAL EXPERIENCES AND OTHER SOVIET-ERA
EXCHANGES -- OF MANY OF VIETNAM'S TOP AND MID-LEVEL
OFFICIALS ALSO PLAY A ROLE IN THE KEEPING A FOCUS ON THE
RELATIONSHIP, ALTHOUGH THE RELATIVELY SMALLER NUMBER OF
STUDENTS THESE DAYS MAKES THIS A DECLINING INFLUENCE. OTHER
VESTIGES OF THE OLD PARADIGM -- ESPECIALLY MILITARY
PROCUREMENT -- WILL REMAIN AS FACTORS IN THE CLOSENESS OF
BILATERAL TIES AS WELL, ALTHOUGH STRATEGIC LINKS BETWEEN THE
TWO COUNTRIES NOW ARE MORE IN THE CONTEXT OF THE ASEAN
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PAGE 04 HANOI 02709 05 OF 05 080505Z
REGIONAL FORUM RATHER THAN ON THE PREVIOUS BILATERAL BASIS.
NO MATTER HOW HARD LEADERS IN BOTH COUNTRIES TRY TO PUSH THE
ECONOMIC RELATIONSHIP, VIETNAM'S ECONOMIC FUTURE IS LIKELY
TO BE MUCH MORE TIED TO CONTINUED IMPROVEMENTS IN RELATIONS
WITH THE U.S., EU, AND ASIAN PARTNERS, HOWEVER.
BURGHARDT

UNCLASSIFIED

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