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Cablegate: Ambassador's Economic and Political Engagement In

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

241012Z Aug 05




E.O. 12958: N/A

REF: A: HCMC 586; B: HCMC 623

1. (SBU) Summary: During a mid-August visit to Vietnam's
central coastal provinces of Thua Thien Hue, Quang Nam and
Danang, the Ambassador told provincial leaders that
continued reform and privatization were essential for strong
economic growth. The Ambassador also focused on MIA issues
and local implementation of Vietnam's new legal framework on
religion. Responding to local government and media
questions on Agent Orange, the Ambassador emphasized the
need to avoid polemics and propaganda and focus on concrete
scientific research. While all provinces said they are
committed to economic reform, Hue clearly lags behind Quang
Nam and Danang. End Summary.

2. (SBU) The Ambassador traveled to the provinces of Thua
Thien Hue, Quang Nam and Danang August 11-13 to explore
economic, social and religious freedom issues in Vietnam's
central coastal region. He gave press interviews in Quang
Nam and Hue and participated in a Danang repatriation
ceremony for the recovered remains of five MIAs. The
Ambassador's meeting in Hue with Thich Thien Hanh, a senior
monk of the Unified Buddhist Church of Vietnam, is reported

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Quang Nam Province's Social and Economic Development
--------------------------------------------- --------

3. (SBU) The Ambassador called on Quang Nam Province
People's Committee Chairman Nguyen Xuan Phuc on August 12.
Turning first to economic development, the Ambassador noted
that a USAID-funded study, the Vietnam Provincial
Competitiveness Index, rated Quang Nam's provincial
government highly, a testament to the province's pro-
business and pro-development ethic. In this regard, the
Ambassador told Phuc that he was going to tour a 100 percent
foreign-owned, USD 30 million tourist resort under
development in Quang Nam. While Quang Nam's progress has
been good, the Ambassador cautioned that it must not rest on
its laurels. The province must continue to promote the
private sector and to accelerate the privatization of state-
owned-enterprises (SOEs) in Quang Nam. The Ambassador
observed that the SOES have a plethora of negative effects
on the economy. For example, not only do SOEs borrow at
concessional rates, they crowd out the private sector and
use capital inefficiently. The Ambassador also noted that
the province must continue to develop its road
infrastructure, which is becoming a serious bottleneck to
rapid economic growth.

4. (SBU) Chairman Phuc said that Quang Nam's strategy is to
develop its tourism and industrial sectors simultaneously.
The province boasts good airport and seaport access, two
UNESCO World Heritage sites (Hoi An and My Son), and miles
of beaches. Quang Nam also has the Chu Lai Economic Zone,
which the GVN plans to develop as part of a new industrial
hub for central Vietnam. (Note: the GVN plans to build its
first oil refinery in Dung Quat, immediately to the south of
Chu Lai, in neighboring Quang Ngai province. End Note.) In
recent years, Quang Nam has had economic growth of 11-12%
annually, among the highest rates in Vietnam. Phuc noted
that the province also has attracted 50 foreign direct
investment projects.

5. (SBU) The Ambassador said that while Quang Nam has made
good progress recently, it still has a lower GDP and a
higher percentage of the population below the poverty line
than the national average. A disproportionate number of
these persons are ethnic minorities living in more remote,
rural areas. The Chairman acknowledged that as a whole,
ethnic minorities are poor, but contended that conditions
have improved in recent years.

6. (SBU) The Chairman asked the Ambassador for his
assistance in promoting investment from the Vietnamese
community in the United States. The Ambassador pledged his
good offices in this effort. He told Phuc that in his
interactions with the Vietnamese community in the United
States, the older generation still harbors animosity from
the war, but the youth are more open to returning and
working to develop the country.

7. (SBU) Phuc stated that the local government respects
religious freedom. He said that 12 percent of the people in
Quang Nam have declared that they follow a recognized
religion. He added that there are 60 churches and places of
worship in the province. The Ambassador replied that he had
not seen evidence of serious religious freedom problems in
Quang Nam and encouraged the provincial chairman to continue
to implement positively and consistently the new legal
framework on religion.

HIV/AIDS in Quang Nam

8. (SBU) The Ambassador briefed the Chairman on the U.S.
commitment to assist Vietnam in its war against HIV/AIDS.
The chairman thanked the Ambassador for the USG partnership
on this matter and emphasized that, while AIDS in Quang Nam
is low compared to other provinces, it is a concern
nonetheless. Phuc stated that the province is opening drug
rehabilitation centers and vigorously enforcing the central
government's strong penalties for drug traffickers. The
Ambassador agreed that drug trafficking must be prosecuted,
but added that users should be treated as victims, not
criminals. The government focus needs to be on prevention,
care and treatment. The Ambassador also stated that Vietnam
must do more to remove the stigma of HIV, which even extends
to children of HIV-positive parents.

Thua Thien Hue

9. (SBU) During a visit to Thua Thien Hue Province on August
13, the Ambassador met with Nguyen Xuan Ly, provincial
People's Committee Chairman. Chairman Ly said that the
province has the attributes to become Vietnam's premier
tourism and services-sector magnet: a low-cost, well
educated workforce; a comprehensive university system;
beaches, mountains and national parks; and some of Vietnam's
most impressive cultural and historical heritage sites. He
emphasized that the province boasts the deepest natural
harbor in Vietnam and has plans to expand it to accommodate
80,000-ton ships. He spoke of the cooperative relationship
Hue has established with the state of Hawaii and expressed
hoped that a similar partnership could be formed between Hue
University and a U.S. university.

10. (SBU) The Chairman acknowledged that the Provincial
Competitiveness Index ranked Thua Thien Hue well below
neighboring Danang and Quang Nam Provinces. He asserted that
he and other provincial authorities recognize th need o
prvatize state-owned enterprises. He claimed that there
are now four private banks in the province and that the
Huong Giang Hotel is the only remaining state-owned hotel in

11. (SBU) Chairman Ly told the Ambassador that Hue's family-
oriented conservative culture and effective local government
operation have kept the drug and HIV/AIDS problems in Thua
Thien Hue to a minimum. Turning to human rights and
religious freedom, Ly asserted that the situation, not only
in his province, but also throughout Vietnam, is "perfect."
Under Vietnam's legal framework on religion, the province
has guaranteed the people the right of religious freedom.
Thua Thien Hue has religious schools, and has created
favorable conditions for all religious activities. For
example, two religious festivities were underway in Hue
city, and the province recently had helped Phu Cam Church to
build two new stone pillars that had been destroyed before
1975. The Ambassador said that if the religious situation
is this good, then the province could become a model for
other provinces. Unfortunately, there still are black marks
in the picture of Vietnam's religion. For example, there are
bans on the churches of ethnic people in the Central
Highlands, as well as incidents involving the Hoa Hao in the
provinces of the Mekong Delta.

MIA Issues

12. (SBU) In his meetings with both provincial leaders, the
Ambassador emphasized that the USG values highly Vietnam's
cooperation on recovering the remains of American MIAs.
This was the first issue President Bush raised with
Vietnam's Prime Minister during their recent meeting in
Washington. The Ambassador said that, unfortunately, the
recovery teams have been limited in the amount of time they
are allotted to conduct searches. The USG would like to
expand the search times, and asked for the provinces'
support in that process. The Quang Nam Chairman pledged
assistance for the next round of recovery missions,
scheduled for early 2006. On August 13, the Ambassador
attended a repatriation ceremony in Danang at which five
sets of remains and personal effects believed to be those of
missing U.S. servicemen were returned with full military
honors to the United States. (The remains were sent to
Honolulu where further tests will be conducted.)

Agent Orange

13. (SBU) Local government officials and journalists raised
their concerns over Agent Orange. The Ambassador reiterated
that while the USG has a heartfelt concern for all
handicapped persons -- the U.S. has provided USD 35 million
to Vietnam since 1991 to assist persons with disabilities --
more cooperative scientific research on the effects of Agent
Orange must be done. In this regard, he noted, it was
positive that the two countries were able to work together
to sponsor a workshop on cleanup techniques for dioxins and
chemicals associated with Agent Orange in Hanoi from August

Social and Development Projects
14. (U) On August 12, the Ambassador visited a vocational
training center for street children in Danang, funded by the
DeMatteis Foundation, a U.S. NGO. The center offers
training in sewing, embroidery, computer use and machine-
repair for street children and disadvantaged children in the
Danang area. (Note: The Ambassador's Fund has provided a
grant of USD 16,000 to the center. End Note.) The center
has graduated more than 1,000 young people since 2001, and
80 percent now have jobs, according to center officials.

15. (SBU) Comment: The Ambassador's visit highlighted why
Quang Nam -- and to a lesser extent Danang -- have been able
to promote economic growth, while Hue lags behind. All the
provinces talk a good game, but Quang Nam practices what it
preaches; not so Hue. A case in point is the Hue provincial
chairman's claims that almost all hotels are no longer state
owned. While he may wish it to be so, all major hotels in
the province are either state-run or co-owned by the state
or the province, including the flagship hotel in which the
Ambassador's delegation stayed. Similarly, Hue's claims
that the religious freedom environment is "perfect" is
belied by Hue's restrictions on the activities of Protestant
house churches, Catholic activists Father Nguyen Van Ly and
the United Buddhist Church of Vietnam (reftels).


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