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Cablegate: Politburo Member Comments On Ambassador's Priorities And

VZCZCXRO8379
RR RUEHCHI RUEHCN RUEHDT RUEHHM
DE RUEHHI #0541/01 1291018
ZNR UUUUU ZZH
R 081018Z MAY 08
FM AMEMBASSY HANOI
TO RUEHC/SECSTATE WASHDC 7780
INFO RUEHHM/AMCONSUL HO CHI MINH 4688
RUEHBJ/AMEMBASSY BEIJING 7112
RUEHZS/ASEAN REGIONAL FORUM COLLECTIVE

UNCLAS SECTION 01 OF 02 HANOI 000541

SENSITIVE
SIPDIS

E.O. 12958: N/A
TAGS: ECON PHUM PGOV KCOR KPAO SOCI PREL CM VM

SUBJECT: POLITBURO MEMBER COMMENTS ON AMBASSADOR'S PRIORITIES AND
ECONOMIC CHALLENGES FACING VIETNAM

HANOI 00000541 001.2 OF 002


Summary
-------

1. (SBU) On May 5, influential Politburo member and Standing Member
of the Secretariat Truong Tan Sang met the Ambassador to discuss
U.S.-Vietnam relations, the Ambassador's priorities for his tenure
in Vietnam and economic issues. The "consensus" within Vietnam's
governing circles is that Hanoi should deepen its ties to
Washington; stronger relations are not only in Vietnam's interest
but the region's interests as well. Party leaders realize they have
much work to do before they achieve Ho Chi Minh's vision of a
Vietnam that is free and prosperous. The Ambassador said the GVN
needs to increase efforts to educate local officials about
central-level directives, especially those on WTO commitments and
religion. Sang asked that the Ambassador relay to the American
people that "the Vietnamese people just want to do business" and do
not have the stomach for "anti-dumping games." He acknowledged that
some state-owned enterprises had borrowed extensively to engage in
non-core expansion but was confident that the GVN will successfully
deal with current inflationary pressures. End Summary.

2. (SBU) On May 5, the Ambassador discussed U.S.-Vietnam relations
and his priorities for his tenure in Vietnam with Communist Party of
Vietnam (CPV) Politburo member and Standing Member of the
Secretariat Truong Tan Sang. After noting Vietnam's recent
socioeconomic achievements and the steady growth in U.S.-Vietnam
ties, the Ambassador stated his three main priorities: promotion of
human rights, strengthening the economic relationship, and
increasing educational bonds. Sang responded that he is "very
happy" about recent trends in U.S.-Vietnam relations. We have
different viewpoints on some issues, he said, but differences are
natural in any relationship. The "consensus" within Vietnam's
policy-making circles is that Hanoi should deepen its ties to
Washington, he stated. Stronger bilateral relations are in our
mutual interests and the greater region's interest, he added.

Appeal for Greater Understanding on Human Rights
--------------------------------------------- ---

4. (SBU) The Government of Vietnam (GVN) and CPV are "very
concerned" with human rights, Sang declared. Vietnam values its
independence, but Party leaders understand they have much work to do
to achieve Ho Chi Minh's vision of a land that is free and
prosperous, he added. America is a "civilized and developed
country" and Vietnam has "a long way to go" to catch up to America's
level of overall development, he said. Vietnam made primary
education universal only recently, but Japan did so 100 years ago,
he added, an example of how far Vietnam is behind other developed
countries.

5. (SBU) Vietnam has 54 ethnic minority groups but the level of
economic and cultural development among these groups varies, Sang
continued. Luckily for Hanoi, however, no conflicts have taken
place between these groups, he said. Americans do not seem to
appreciate the wide disparities in education levels that exist
across Vietnam, he continued. Local officials often come up with
excuses for not following central Party directives, such as those on
religion, Sang continued. The Party has ways to make these
officials understand the importance of following Central-level
directives, such as transferring poor performing officials to lower
level positions. The Ambassador agreed that the GVN needs to step
up efforts to educate local officials about central-level
directives, especially those on religion.

Working Toward a "State Governed by Laws"
-----------------------------------------

6. (SBU) The one thing developed western countries have in common is
that they are governed by the rule of law, Sang continued. About
ten years ago, Party leaders began efforts to make Vietnam a state
governed by laws. In this connection, Vietnamese leaders have
studied many different models, not just China's, Sang declared.
Suitable models are those countries that have about the same level
of development as Vietnam, he explained.

7. (SBU) The National Assembly (NA) has passed numerous laws and the
Party has sought to improve the professionalism of its members and
overall administrative efficiency, Sang continued. The GVN is
determined to accelerate reforms; building a law-governed state must
proceed in parallel with moves toward free market mechanisms, Sang
said. The Ambassador pointed out that political and economic
development usually go together, noting that GVN administrative
reform efforts under "Project 30" have been impressive.

Education Ties That Bind
------------------------

8. (SBU) Education also is a major concern for the Party, Sang said,

HANOI 00000541 002.2 OF 002


and the number of Vietnamese who study in the United States is bound
to grow under the Ambassador's tenure. He said the Party aims for
these returning students to help develop the country and serve as a
"strong bridge" between our two countries, viewpoints the Ambassador
told Sang he shares. Many high-ranking GVN officials have studied
in the United States, Sang added.

Economic Relations and Domestic Economic Issues
--------------------------------------------- --

9. (SBU) Sang then stressed the importance of the bilateral trade
and economic relationship. He asked the Ambassador to convey a
message to the U.S. that "the Vietnamese people just want to do
business" and do not want to "play anti-dumping games." Sang said
Vietnam's labor productivity is low and GDP "the same as a
medium-sized corporation's revenues." He added that the Vietnamese
people are hard-working and would soon raise the overall level of
development. Finally, he said Vietnam "must achieve happiness on
its own" but nonetheless was thankful for all the assistance it has
received. In terms of economics and trade, he said "there are no
obstacles."

10. (SBU) In response to the Ambassador's query on the CPV's role in
economic decision-making, Sang said the Party is working towards a
multi-sector economy with no limitations. Sang noted that the
private sector has grown to 70 percent of GDP in the last 15 years,
and said that private sector complaints about GVN favoritism towards
state-owned enterprises (SOEs) were "just low level" chatter. At a
high level, SOEs and the private sector are equal according to the
law, he explained. When pressed on the actual role of the CPV, Sang
stated that "what I have just told you is a product of our policy;
the Party's policies are legalized through the laws of Vietnam." He
went on to say that Vietnam will follow its WTO commitments, but may
implement some commitments earlier than required if it is beneficial
to domestic interests.

11. (SBU) The Ambassador replied that early implementation of WTO
commitments was always welcome, but questioned the effectiveness of
the bureaucracy in carrying out some reforms. Sang assured the
Ambassador that the PM would reprimand those not implementing the
laws as directed, and noted that the CPV could also discipline Party
members, including requiring the PM to fire people. Sang said that,
in the long term, the GVN would have to build administrative courts
to deal with these sorts of issues.

12. (SBU) Sang said it was the CPV itself that first reported that
some SOEs were borrowing extensively to engage in non-core
expansion. He said that the policy of the Party is to maintain a
public sector, but that SOEs will not dominate as before. Sang
cited the example of Vietcombank, noting that foreign investors now
own part of the company. He admitted that although the new policies
on reducing the number of SOEs had been in place for seven years,
implementation had been "lower than our expectations" because
implementation guidelines had to be made into law before being
carried out by government officials.

13. (SBU) Sang stated confidently that the GVN would cope with
current inflationary pressures. He said that the "PM has a good
plan - just be patient," adding that the CPV not only supports the
PM, but also requires him to take action. Sang explained that the
lack of a skilled civil service remains problematic for Vietnam,
often resulting in weak institutions and varying degrees of
performance among the provinces. The Ambassador said this was
affecting many projects awaiting approval, including GE, Sabre,
Alcoa, AES, and SSA Marine. Sang smiled and said that he would give
the projects his attention.

Comment: The Smiling Knife
--------------------------

14. (SBU) Truong Tan Sang is a Party stalwart who has been on the
Politburo since 1996 and on the Central Committee since 1991. He
also currently serves as a deputy in the National Assembly. Before
the 2006 10th Party Congress, Sang headed the CPV's Economic
Commission (which in early 2007 was rolled into the Office of the
Central Committee). In his meeting with the Ambassador, he came
across as confident and decisive and often smiled after the
Ambassador's words were translated as he pondered his replies.

MICHALAK

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