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Cablegate: Vietnam Favors Global Solutions to Financial Crisis

VZCZCXRO5437
PP RUEHCHI RUEHDT RUEHFK RUEHHM RUEHKSO RUEHNAG RUEHNH RUEHPB
DE RUEHHI #1250 3120932
ZNR UUUUU ZZH
P 070932Z NOV 08
FM AMEMBASSY HANOI
TO RUEHC/SECSTATE WASHDC PRIORITY 8707
INFO RUEHHM/AMCONSUL HO CHI MINH 5276
RUCNASE/ASEAN MEMBER COLLECTIVE
RUEHZU/ASIAN PACIFIC ECONOMIC COOPERATION
RUEATRS/DEPT OF TREASURY WASHINGTON DC
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RHMFIUU/CDR USPACOM HONOLULU HI

UNCLAS HANOI 001250

SENSITIVE
SIPDIS

STATE FOR EAP/MLS MBROWN
SINGAPORE FOR TREASURY
TREASURY FOR SCHUN
USTR FOR DBISBEE

E.O. 12958: N/A
TAGS: ECON PGOV EAID VM
SUBJECT: VIETNAM FAVORS GLOBAL SOLUTIONS TO FINANCIAL CRISIS

1. (SBU) During his October 31 visit to Vietnam, S/P Director
Gordon met with officials at the State Bank of Vietnam (SBV) to
discuss the global financial situation and President Bush's G-20
Summit series. Quoting Alan Greenspan, he described the rapidly
spreading crisis as a "global tsunami" that called for immediate,
wide-spread action. Gordon then detailed President Bush's plans for
a series of summits for G-20 members, starting with the first
meeting on November 15. The purpose of the initial summit, he
explained, would be to restore confidence in global markets and to
set out the financial supervision principals that nations will
follow domestically and internationally. He added that President
Bush hopes to obtain recommitment on sustaining a global open
economy (especially via the Doha round) without resorting to
protectionist policies, as well as continued support from developed
countries on development assistance and cooperation, so that
developing countries would not bear the brunt of the crisis.

2. (SBU) The Director of the SBV's Foreign Exchange Department,
Nguyen Quang Huy, thanked Gordon for the information and explained
that although Vietnam is not suffering immediate impacts from the
financial crisis, it would incur relatively serious medium-term
impacts from a potential drop in (1) exports, (2) foreign
investment, and (3) remittances. He advocated for both developed
and developing countries to take swift and decisive measures to
mitigate the effects of the financial crisis. Huy agreed that such
issues were properly addressed at a global summit level and
expressed confidence that Indonesia would continue to represent
South East Asian economies in a capable fashion. He welcomed
additional information and updates on the summits, as the
"discussions and outcomes of those talks will impact Vietnam."

3. (SBU) Finally, Director Gordon asked about the effect of the
strengthening dollar on Vietnam. Huy responded that a stronger
dollar will affect exports, but that it would take two to three
weeks to see the impact. He added that the exchange rate has
already seen some pressure, but that it was likely due to capital
relocating from Vietnam to other, more developed countries. Lastly,
Huy said that Vietnam's reserves are often measured in dollars, so
that the overall value may appear to go down depending on the
exchange rate. Gordon explained that the recent strengthening of
the dollar was partially in response to Treasury actions, but that
stability should be restored so that emerging markets are not
adversely affected. He added that the U.S. hopes to avoid large
currency fluctuations but that it is difficult to anticipate
medium-term developments.

4. (U) This cable was cleared by S/P.

MICHALAK

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