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Cablegate: Vietnam Shrugs Off Cuban and Venezuelan Economic Ties

VZCZCXRO9551
PP RUEHCHI RUEHFK RUEHHM RUEHKSO RUEHNAG RUEHPB
DE RUEHHI #0145/01 0360802
ZNR UUUUU ZZH
P 050802Z FEB 08
FM AMEMBASSY HANOI
TO RUEHC/SECSTATE WASHDC PRIORITY 7142
INFO RUEHHM/AMCONSUL HO CHI MINH 4269
RUEHZU/ASIAN PACIFIC ECONOMIC COOPERATION
RUEHWH/WESTERN HEMISPHERIC AFFAIRS DIPL POSTS

UNCLAS SECTION 01 OF 02 HANOI 000145

SIPDIS

SENSITIVE
SIPDIS

E.O. 12958: N/A
TAGS: ETRD ECON PREL VM
SUBJECT: VIETNAM SHRUGS OFF CUBAN AND VENEZUELAN ECONOMIC TIES


HANOI 00000145 001.3 OF 002


1. (U) This cable is sensitive but unclassified. For official use
only, not for dissemination outside USG channels or posting on the
internet.

2. (SBU) Summary: Cuba does not appear to be in a rush to learn
about Vietnam's successful free market experiments, according to
officials from Vietnam's Foreign Ministry Latin America division.
The Cubans have not made approaches to Vietnam on economic reform,
they added. The senior diplomats did not see much room to grow or
much in common with Venezuela, either. They are disappointed by the
low trade numbers throughout the region, especially Mexico's and
Brazil's, but are hopeful for free trade negotiations with Chile.
End summary.

3. (SBU) Econoff met with Ministry of Foreign Affairs (MOFA)
Americas Department Deputy Director for Latin America, Le Thanh
Tung, and Chief of the Latin American Division, Do Doinh Truong, on
an informal introductory meeting on January 25. Truong and Tung are
the Government of Vietnam's (GVN) highest-ranking Latin American
specialists.

TRADE GROWING BUT VIETNAM RUNS DEFICITS
---------------------------------------

4. (U) Two-way trade with Vietnam's largest Latin American trading
partners (Argentina, Brazil, Chile, Colombia, Mexico, Cuba, Panama
and Peru) was one billion dollars in 2005, according to the GVN's
most recent numbers, of which $539.9 million were Vietnamese exports
and $464.3 million imports from these countries, representing 55%
growth in exports and 47% in imports from the previous year.
Vietnam had trade deficits with Brazil ($43. million), Chile ($46.6
million), Argentina ($253 million) and Peru ($23.8 million).

CUBA: IF THEY WANT TO LEARN, THE DOORS ARE OPEN
--------------------------------------------- --

5. (SBU) The MOFA officials dismissed reports that Cuba has reached
out to Vietnam for advice on economic reform, in particular making
the transition from a command to a market economy. "No, they have
not approached us," Tung said, shrugging, "Vietnam is a market
economy and they are not, there is not much that can be done about
that." He added that the "doors are always open" to Cuba's
leadership, "if they want to learn from us," but that Vietnam would
not offer unsolicited advice. The diplomats said that, these days,
most of the Cuba - Vietnam relations are carried out between each
other's Communist parties, and that they expected this relationship
to remain close but largely symbolic.

6. (U) Trade between Cuba and Vietnam heavily favors Vietnam, and
Cuban exports to Vietnam have been in steady decline for the last
decade. In 2004, the most recent numbers released by the GVN,
Vietnam exports amounted to $10.5 million, while imports from Cuba
totaled $137,000 (down from $689,000 in 2001). During an official
visit by Cuba's Minister of Light Industry in October 2007, the GVN
announced that Vietnam would invest in a light bulb plant in Cuba,
although few details were provided and the plan has not resurfaced
since.

VENEZUELA: DIFFERENT POLITICAL SYSTEMS
--------------------------------------

7. (SBU) Tung and Truong also minimized the potential for closer
relations with Venezuela. "They have a political program that is
different to ours," the former said. He explained that economic
relations between the two would not amount to more that "a few joint
agreements for [oil] exploration." Vietnam exports to Venezuela
amounted to $4.7 million while imports from Venezuela were $727,000,
the most recent figures available.

MEXICO AND BRAZIL: DISAPPOINTING NUMBERS
----------------------------------------

8. (SBU) The diplomats also said that the balance of trade with
Mexico and Brazil exemplified the low intensity of Vietnam's
commercial relations with Latin America. Mexico, Truong said, was
overly focused on trade north of the border and did not seem too
interested in furthering ties with Vietnam. Mexico has a trade
deficit with Vietnam, which stood at $96 million for the first
quarter of 2006. Tung saw great potential in two-way trade with
Brazil ($208.4 million in 2006), but complained that Vietnam had not
been able to penetrate their markets effectively. In 2006, Vietnam
had an $84.7 million trade deficit with Brazil, mostly caused by
imports of pulp, plastics and cotton, while its exports to Brazil
were mostly in shoes.

HIGH HOPES ON CHILE
-------------------

9. (SBU) The MOFA officials had high hopes on Chile, especially for
negotiations for a free trade agreement that were officially

HANOI 00000145 002.3 OF 002


announced in late January. Prime Minister said at the announcement
that he hoped Chile would be the "gateway for Vietnamese goods to
enter the Latin American market." Trade volume between Vietnam and
Chile has increased in recent years, reaching over $200 million in
2007.

NICARAGUA SILENT, PERU SUPPORTIVE
---------------------------------

10. (SBU) Rounding up the discussion, Tung said that his office had
not had much contact with Nicaragua, since the Sandinistas won back
the Presidency in 2006. In Peru, he noted with interest President
Alan Garcia's newfound faith in free trade and open markets, but did
not draw comparisons with Vietnam's own conversion. He said that
Vietnam was very grateful to Garcia for having recognized Vietnam as
a "market economy" in 2006.

MICHALAK

3

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