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PHUM PINR PTER PGOV PREL PREF PL PM PHSA PE PARM PINS PK PUNE PO PALESTINIAN PU PBTS PROP PTBS POL POLI PA PGOVZI POLMIL POLITICAL PARTIES POLM PD POLITICS POLICY PAS PMIL PINT PNAT PV PKO PPOL PERSONS PING PBIO PH PETR PARMS PRES PCON PETERS PRELBR PT PLAB PP PAK PDEM PKPA PSOCI PF PLO PTERM PJUS PSOE PELOSI PROPERTY PGOVPREL PARP PRL PNIR PHUMKPAL PG PREZ PGIC PBOV PAO PKK PROV PHSAK PHUMPREL PROTECTION PGOVBL PSI PRELPK PGOVENRG PUM PRELKPKO PATTY PSOC PRIVATIZATION PRELSP PGOVEAIDUKNOSWGMHUCANLLHFRSPITNZ PMIG PREC PAIGH PROG PSHA PARK PETER POG PHUS PPREL PS PTERPREL PRELPGOV POV PKPO PGOVECON POUS PGOVPRELPHUMPREFSMIGELABEAIDKCRMKWMN PWBG PMAR PREM PAR PNR PRELPGOVEAIDECONEINVBEXPSCULOIIPBTIO PARMIR PGOVGM PHUH PARTM PN PRE PTE PY POLUN PPEL PDOV PGOVSOCI PIRF PGOVPM PBST PRELEVU PGOR PBTSRU PRM PRELKPAOIZ PGVO PERL PGOC PAGR PMIN PHUMR PVIP PPD PGV PRAM PINL PKPAL PTERE PGOF PINO PHAS PODC PRHUM PHUMA PREO PPA PEPFAR PGO PRGOV PAC PRESL PORG PKFK PEPR PRELP PREFA PNG PGOVPHUMKPAO PRELECON PINOCHET PFOR PGOVLO PHUMBA PRELC PREK PHUME PHJM POLINT PGOVPZ PGOVKCRM PGOVE PHALANAGE PARTY PECON PEACE PROCESS PLN PRELSW PAHO PEDRO PRELA PASS PPAO PGPV PNUM PCUL PGGV PSA PGOVSMIGKCRMKWMNPHUMCVISKFRDCA PGIV PRFE POGOV PEL PBT PAMQ PINF PSEPC POSTS PHUMPGOV PVOV PHSAPREL PROLIFERATION PENA PRELTBIOBA PIN PRELL PGOVPTER PHAM PHYTRP PTEL PTERPGOV PHARM PROTESTS PRELAF PKBL PRELKPAO PKNP PARMP PHUML PFOV PERM PUOS PRELGOV PHUMPTER PARAGRAPH PERURENA PBTSEWWT PCI PETROL PINSO PINSCE PQL PEREZ PBS
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### Viewing cable 02HANOI3108, VIETNAM CONSULTATIVE GROUP MEETING: A REALISTIC

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Reference ID | Created | Released | Classification | Origin
--- | --- | --- | --- | ---
02HANOI3108 | 2002-12-31 06:32 | 2011-08-25 00:00 | UNCLASSIFIED | Embassy Hanoi

`

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

    310632Z Dec 02

                     UNCLASSIFIED     PTQ7499

    PAGE 01        HANOI  03108  01 OF 07  310719Z
    ACTION EAP-00

    INFO  LOG-00   NP-00    AID-00   AMAD-00  EVG-00   CIAE-00  CTME-00
          ITCE-00  DOTE-00  SRPP-00  DS-00    EB-00    EXME-00  OIGO-00
          E-00     FAAE-00  FBIE-00  UTED-00  VC-00    FRB-00   H-01
          TEDE-00  INR-00   IO-00    ITC-01   LAB-01   L-00     VCE-00
          AC-01    NSAE-00  OES-00   OMB-01   OPIC-01  PER-00   PM-00
          ACE-00   P-00     SP-00    STR-00   TEST-00  USIE-00  FMP-00
          EPAE-00  PMB-00   DSCC-00  PRM-00   DRL-02   G-00     NFAT-00
          SAS-00     /008W
                      ------------------1E7B77  310720Z /38
    FM AMEMBASSY HANOI
    TO SECSTATE WASHDC 8510
    INFO DEPTTREAS WASHDC
    NSC WASHDC
    USDOC WASHDC
    USDA WASHDC
    DEPTLABOR WASHDC
    SECDEF WASHDC
    AMCONSUL HO CHI MINH CITY
    AMEMBASSY TOKYO
    ASEAN COLLECTIVE

` `

    UNCLAS SECTION 01 OF 07 HANOI 003108

    SIPDIS

    STATE FOR EAP/BCLTV, EB/IFD/OMA AND EB/IFD/ODF
    STATE PASS USAID FOR ANE/SPOTS: DMCCLUSKEY AND
    ANE/AFERRARRA
                           UNCLASSIFIED

    PAGE 02        HANOI  03108  01 OF 07  310719Z
    STATE PASS USTR FOR ELENA BRYAN
    TREASURY FOR OASIA
    USDOC FOR 4431/MAC/IFP/OKSA/HPPHO
    USDA FOR FAS/FAA/STEVE HUETE
    SECDEF FOR ABLAGG

    E.O. 12958: N/A
    TAGS: EAID EFIN ETRD ECON PREL VM HUMANR ETMIN RELFREE SOE FINREF
    SUBJECT:  VIETNAM CONSULTATIVE GROUP MEETING: A REALISTIC
    VIEW OF PROGRESS

    REF: HANOI 02805

    ¶1.  (U)  SUMMARY: THE TENTH VIETNAM CONSULTATIVE GROUP OF
    DONORS (CG) MEETING TOOK PLACE IN HANOI DECEMBER 9-11,
    ¶2002. DONORS AT THE MEETING, CO-CHAIRED BY THE GOVERNMENT
    OF VIETNAM (GVN) AND THE WORLD BANK, EXPRESSED CONTINUED
    SUPPORT TO THE GVN'S ACTION PROGRAM FOR 2002-2007 AND
    URGED VIETNAM TO IMPLEMENT ITS COMPREHENSIVE POVERTY
    REDUCTION AND GROWTH STRATEGY (CPRGS).  FIVE KEY TARGETS
    WERE IDENTIFIED AT THE OUTSET: CONTINUED HIGH AND
    SUSTAINED ECONOMIC GROWTH; EQUITABLE SOCIOECONOMIC
    DEVELOPMENT; FURTHER INTEGRATION OF VIETNAM INTO THE
    WORLD ECONOMY; IMPROVED EDUCATION AND TRAINING; AND
    POLITICAL AND SOCIAL STABILITY.  DELEGATES EMPHASIZED THE
    NEED TO SPEED UP IMPLEMENTATION OF REFORMS IN ORDER TO
    ENSURE THAT VIETNAM ATTAINS ITS GOAL OF IMPROVING
    COMPETITIVENESS AND CREATING AN EFFICIENT PUBLIC
    ADMINISTRATION, WHILE ENSURING THAT THE POOR ALSO BENEFIT
    FROM GROWTH.  SOME OF THE OTHER MAJOR THEMES TOUCHED UPON
    BY PARTICIPANTS INCLUDED THE NEED TO EXPEDITE AND IMPROVE
                           UNCLASSIFIED

    PAGE 03        HANOI  03108  01 OF 07  310719Z
    THE EFFICIENCY OF OFFICIAL DEVELOPMENT ASSISTANCE (ODA);
    THE NEED FOR CLEAR GUIDELINES FOR BUSINESS PROTOCOL FOR
    BOTH PUBLIC AND PRIVATE SECTORS; CONTINUED SUPPORT FOR
    THE EQUITIZATION OF STATE-OWNED ENTERPRISES; IMPROVED
    CONTAINMENT OF CORRUPTION; STRONGER ACTIONS TO CURB THE
    SPREAD OF HIV/AIDS; AND ATTENTION TO THE WIDENING GAP
    BETWEEN THE WEALTHY AND THE POOR.  DURING THIS CANDID
    DISCUSSION, PARTICIPANTS ALSO RAISED CONCERNS REGARDING
    HUMAN RIGHTS, THE NEED FOR A FREE PRESS, GENDER EQUITY,
    UNDERSERVED POPULATIONS INCLUDING ETHNIC MINORITIES,
    TRANSPARENCY, AND GVN PROGRESS IN IMPLEMENTING ITS CPRGS.

    ¶2.  (U)  THE US DELEGATION, CO-CHAIRED BY AMBASSADOR
    BURGHARDT AND USAID REGIONAL MISSION DIRECTOR LISA
    CHILES, MADE A NUMBER OF WELL-RECEIVED INTERVENTIONS
    REGARDING THE IMPORTANCE OF TRANSPARENCY, CLEAN PUBLIC
    ADMINISTRATION, AN OPEN AND VIBRANT ECONOMY, FREE PRESS,
    TRULY OPEN COMPETITION AS THE STATE DISMANTLES STATE-
    OWNED MONOPOLIES SUCH AS TELECOMMUNICATIONS AND POWER,
    AND THE URGENT NEED TO CURB THE HIV/AIDS EPIDEMIC THROUGH
    INCREASED APPROPRIATE PUBLIC LEADERSHIP.  IN ADDITION,
    THEY HIGHLIGHTED THE NEED FOR ODA AND STATE INVESTMENT TO
    FOCUS ON THOSE AREAS THAT ONLY THEY CAN DO, SUCH AS
    HEALTH AND EDUCATION, WHILE ALLOWING THE PRIVATE SECTOR
    TO INVEST IN MANUFACTURING AND SERVICES. THE US
    DELEGATION FURTHER NOTED THE NEED FOR GREATER INVOLVEMENT
    OF LOCAL NON-GOVERNMENTAL ORGANIZATIONS IN CG
    DISCUSSIONS; THE NEED TO REINFORCE NON-TAXATION POLICIES
    FOR ODA; AND THE PROGRESS THE GVN HAS MADE IN
    CONTRIBUTING TO THE HARMONIZATION OF ODA PROGRAMS.  IN
    THE FINAL SESSION, THE USG PLEDGED $33.6 MILLION IN
                           UNCLASSIFIED

    PAGE 04        HANOI  03108  01 OF 07  310719Z
    ASSISTANCE TO VIETNAM, CONTINGENT ON THE AVAILABILITY OF
    FUNDS. THE TOTAL CONTRIBUTION TO VIETNAM IN THE FORM OF
    GRANT AND LOAN ASSISTANCE TOTALED $2.5 BILLION FOR THE
    COMING YEAR - AN OVERALL INCREASE FROM LAST YEAR BUT ONE
    THAT FALLS SHORT OF THE GVN'S ESTIMATION OF NEED -
    ROUGHLY $3 BILLION.  NONETHELESS, GIVEN THE CURRENT WORLD
    ECONOMIC CLIMATE, THIS WAS VIEWED AS A POSITIVE
    COMMITMENT AND A REFLECTION OF GENERAL SATISFACTION WITH
    THE GVN AMONG DONOR COMMUNITY CONSTITUENTS.  END SUMMARY.

    ¶4.  (U) THE CONSULTATIVE GROUP FOR VIETNAM MET UNDER THE
    CO-CHAIRMANSHIP OF MR. VO HONG PHUC, MINISTER OF PLANNING
    AND INVESTMENT, AND MR. KLAUS ROHLAND, THE WORLD BANK'S
    COUNTRY DIRECTOR FOR VIETNAM.  DEPUTY PRIME MINISTER VU
    KHOAN AND MINISTER PHUC LED THE VIETNAMESE DELEGATION.
    ROHLAND OPENED THE MEETING WITH A STATEMENT THAT FOCUSED
    ON THE CURRENT GLOBAL POLITICAL AND ECONOMIC CLIMATE AND
    THE NEED TO WORK FLEXIBLY WITH THE GVN'S COMPREHENSIVE
    POVERTY REDUCTION STRATEGY.  HE ALSO DESCRIBED THE
    PROGRESS VIETNAM HAD WITNESSED OVER THE LAST DECADE, AS
    WELL AS CERTAIN CHALLENGES THAT VIETNAM AND THE
    DEVELOPMENT COMMUNITY WILL FACE, INCLUDING EQUITIZATION
    OF STATE-OWNED ENTERPRISES (SOE'S), FISCAL, FINANCIAL AND
    PUBLIC SECTOR REFORM, AND THE SEARCH FOR NEW WAYS TO
    AVOID INEQUITIES AND INEQUALITIES IN IMPLEMENTING THE

                           UNCLASSIFIED

                               UNCLASSIFIED     PTQ7500

    PAGE 01        HANOI  03108  02 OF 07  310720Z
    ACTION EAP-00

    INFO  LOG-00   NP-00    AID-00   AMAD-00  EVG-00   CIAE-00  CTME-00
          ITCE-00  DOTE-00  SRPP-00  DS-00    EB-00    EXME-00  OIGO-00
          E-00     FAAE-00  FBIE-00  UTED-00  VC-00    FRB-00   H-01
          TEDE-00  INR-00   ITC-01   LAB-01   L-00     VCE-00   AC-01
          DCP-01   NSAE-00  OES-00   OMB-01   OPIC-01  PER-00   PM-00
          ACE-00   P-00     SP-00    IRM-00   STR-00   TEST-00  USIE-00
          FMP-00   EPAE-00  ECA-00   PMB-00   DSCC-00  PRM-00   DRL-02
          G-00     NFAT-00  SAS-00     /009W
                      ------------------1E7B80  310720Z /38
    R 310632Z DEC 02
    FM AMEMBASSY HANOI
    TO SECSTATE WASHDC 8511
    INFO DEPTTREAS WASHDC
    NSC WASHDC
    USDOC WASHDC
    USDA WASHDC
    DEPTLABOR WASHDC
    SECDEF WASHDC
    AMCONSUL HO CHI MINH CITY
    AMEMBASSY TOKYO
    ASEAN COLLECTIVE

    UNCLAS SECTION 02 OF 07 HANOI 003108

    SIPDIS

    STATE FOR EAP/BCLTV, EB/IFD/OMA AND EB/IFD/ODF
    STATE PASS USAID FOR ANE/SPOTS: DMCCLUSKEY AND
    ANE/AFERRARRA
                           UNCLASSIFIED

    PAGE 02        HANOI  03108  02 OF 07  310720Z
    STATE PASS USTR FOR ELENA BRYAN
    TREASURY FOR OASIA
    USDOC FOR 4431/MAC/IFP/OKSA/HPPHO
    USDA FOR FAS/FAA/STEVE HUETE
    SECDEF FOR ABLAGG

    POVERTY REDUCTION STRATEGY.

    ¶5.   (U)  DPM KHOAN EXPRESSED GRATITUDE TO THE DONOR AND
    NGO COMMUNITIES FOR ASSISTANCE AND NOTED THE NEED TO
    REVIEW VIETNAM'S SOCIOECONOMIC DEVELOPMENT PLAN.  HE
    POINTED OUT THAT, DESPITE NATURAL DISASTERS, VIETNAM'S
    GDP HAS GROWN 7% THIS YEAR AND THAT VIETNAM'S GENERAL
    PRODUCTIVITY IS ON THE RISE.  DPM KHOAN EXPRESSED
    SATISFACTION WITH THE DECREASE IN THE PERCENTAGE OF
    HOUSEHOLDS BELOW THE POVERTY LINE, WHICH FELL FROM 20% TO
    14.4%. FURTHERMORE, HE LAUDED THE 1.4 MILLION JOBS THAT
    WERE CREATED IN 2002.  HE ALSO HIGHLIGHTED SUBSTANTIAL
    DEVELOPMENT IN THE RURAL SECTOR OVER THE LAST YEAR.

    ¶6.  (U)  DPM KHOAN TOUCHED ON THREE PRIMARY TASKS FOR THE
    GVN: 1) THE ENHANCEMENT OF THE QUALITY AND EFFICIENCY OF
    THE COMPETITIVENESS OF VIETNAM'S ECONOMY IN THE WORLD
    MARKET, 2) COMPREHENSIVE HUMAN RESOURCES DEVELOPMENT,
    INCLUDING DEVELOPMENT OF SOCIAL AND ENVIRONMENTAL
    FACTORS, AND 3) STRONG AND EFFECTIVE PUBLIC
                           UNCLASSIFIED

    PAGE 03        HANOI  03108  02 OF 07  310720Z
    ADMINISTRATION REFORM WITH PROMOTION OF DEMOCRACY AND
    TRANSPARENCY IN ORDER TO REDUCE CORRUPTION AND INCREASE
    PRODUCTIVITY.  FINALLY, THE DPM INVITED DONORS TO
    PARTICIPATE IN THE IMPLEMENTATION OF THE 2001-2010 MASTER
    PLAN FOR PUBLIC ADMINISTRATION REFORM AND COMMENTED ON
    THE IMPORTANCE OF BUILDING PARTNERSHIPS AND HARMONIZATION
    OF INCOMING ODA AND ASSOCIATED PROGRAMS.

    ¶7.  (U)  THIS YEAR'S CONSULTATIVE GROUP MEETING FOCUSED
    ON THREE MAIN TOPICS: 1) IMPROVING COMPETITIVENESS AND
    EFFECTIVENESS, HUMAN DEVELOPMENT AND ADMINISTRATION
    REFORM TO GET FAST AND SUSTAINABLE DEVELOPMENT; 2)
    ORGANIZING THE IMPLEMENTATION FOR THE COMPREHENSIVE
    POVERTY REDUCTION AND GROWTH STRATEGY AND FORMULATING AN
    APPROPRIATE PUBLIC INVESTMENT PROGRAM; AND 3) IMPROVING
    ODA EFFECTIVENESS AND NEEDS.  MPI PHUC ADDITIONALLY
    IDENTIFIED FIVE KEY TARGETS: POLITICAL AND SOCIAL
    STABILITY; CONTINUED HIGH AND SUSTAINED ECONOMIC GROWTH;
    EQUITABLE SOCIOECONOMIC DEVELOPMENT; INTEGRATION OF
    VIETNAM INTO THE WORLD ECONOMY; AND, IMPROVED EDUCATION
    AND TRAINING.

    COMPETITIVENESS AND SUSTAINABLE DEVELOPMENT
    -------------------------------------------

    ¶8.  (U)  MPI PHUC OPENED THE FIRST SESSION WITH AN
    OUTLINE OF MEASURES THAT THE GVN WOULD LIKE TO TAKE,
    INCLUDING RESTRUCTURING THE RURAL ECONOMY AND BUILDING ON
    VIETNAM'S COMPARATIVE ADVANTAGES IN LAND AND LABOR
    RESOURCES.  HE TOUCHED ON INDUSTRIAL GROWTH AND THE NEED
    TO DEVELOP THE SERVICE SECTOR.  ADDITIONALLY, HE NOTED
                           UNCLASSIFIED

    PAGE 04        HANOI  03108  02 OF 07  310720Z
    THE GVN MANDATE FOR THE ABOLISHMENT OF MONOPOLIES IN
    CERTAIN SECTORS, INCLUDING POWER AND TELECOMMUNICATIONS.
    MPI PHUC ALSO EMPHASIZED THE NEED TO DEVISE EFFECTIVE
    ACTION PLANS FOR PUBLIC ADMINISTRATION REFORM.  THE WORLD
    BANK COMMENDED THE GVN ON PLACING GREATER EMPHASIS ON THE
    DEVELOPMENT AND INCLUSION OF RURAL POOR COMMUNITIES IN
    THE CENTRAL HIGHLANDS, WHICH HAVE HISTORICALLY BEEN
    NEGLECTED.

    ¶9.  (U)  THE FIRST DISCUSSION SESSION, WHICH WAS LED BY
    THE REPRESENTATIVES OF THE UNDP, JAPAN, FRANCE, AND THE
    IMF, EXAMINED THE NEED FOR ENHANCED COMPETITIVENESS,
    PARTICULARLY IN TERMS OF SETTING A REGULATORY FRAMEWORK
    AND IMPROVING THE ENVIRONMENT FOR BOTH FOREIGN AND
    DOMESTIC INVESTMENT.  PROMPTED IN PART BY THE UNDP'S
    STATEMENT ABOUT VIETNAM'S NEED TO MAKE VIETNAM THE "BEST
    PLACE TO LIVE," DISCUSSANTS FOCUSED ON THE NEED FOR
    IMPROVED HUMAN DEVELOPMENT BY PLACING VIETNAMESE CITIZENS
    AT THE CENTER OF DEVELOPMENT.  PARTICIPANTS SUPPORTED THE
    EDUCATION FOR ALL INITIATIVE, THE NEED TO ADDRESS
    VULNERABILITIES OF ETHNIC MINORITY GROUPS, STRONGER
    PUBLIC ACTIONS TO CONTAIN THE SPREAD OF HIV/AIDS, THE
    GROWING NEED FOR EMPLOYMENT OPPORTUNITIES FOR YOUTH,
    GREATER SUPPORT FOR DEVELOPMENT OF THE PRIVATE SECTOR,
    AND THE NEED TO ENSURE POLITICAL, CIVIL AND RELIGIOUS

                           UNCLASSIFIED

                               UNCLASSIFIED     PTQ7501

    PAGE 01        HANOI  03108  03 OF 07  310720Z
    ACTION EAP-00

    INFO  LOG-00   NP-00    AID-00   AMAD-00  EVG-00   CIAE-00  CTME-00
          ITCE-00  DOTE-00  SRPP-00  DS-00    EB-00    EXME-00  OIGO-00
          E-00     FAAE-00  FBIE-00  UTED-00  VC-00    FRB-00   H-01
          TEDE-00  INR-00   IO-00    ITC-01   LAB-01   L-00     VCE-00
          AC-01    NSAE-00  OES-00   OMB-01   OPIC-01  PER-00   PM-00
          ACE-00   P-00     SP-00    STR-00   TEST-00  USIE-00  FMP-00
          EPAE-00  PMB-00   DSCC-00  PRM-00   DRL-02   G-00     NFAT-00
          SAS-00     /008W
                      ------------------1E7B85  310720Z /38
    R 310632Z DEC 02
    FM AMEMBASSY HANOI
    TO SECSTATE WASHDC 8512
    INFO DEPTTREAS WASHDC
    NSC WASHDC
    USDOC WASHDC
    USDA WASHDC
    DEPTLABOR WASHDC
    SECDEF WASHDC
    AMCONSUL HO CHI MINH CITY
    AMEMBASSY TOKYO
    ASEAN COLLECTIVE

    UNCLAS SECTION 03 OF 07 HANOI 003108

    SIPDIS

    STATE FOR EAP/BCLTV, EB/IFD/OMA AND EB/IFD/ODF
    STATE PASS USAID FOR ANE/SPOTS: DMCCLUSKEY AND
    ANE/AFERRARRA
                           UNCLASSIFIED

    PAGE 02        HANOI  03108  03 OF 07  310720Z
    STATE PASS USTR FOR ELENA BRYAN
    TREASURY FOR OASIA
    USDOC FOR 4431/MAC/IFP/OKSA/HPPHO
    USDA FOR FAS/FAA/STEVE HUETE
    SECDEF FOR ABLAGG

    RIGHTS.

    ¶10.  (U)  ADDITIONAL COMMENTS, INCLUDING THOSE BY THE
    IMF, EMPHASIZED INCREASING VIETNAM'S COMPETITIVENESS,
    IMPROVING THE DOMESTIC LEGAL STRUCTURE AND TRANSPARENCY,
    ACCELERATING DEREGULATION, IMPLEMENTING THE ENTERPRISE
    LAW AGGRESSIVELY OUTSIDE MAJOR URBAN AREAS, AND PAYING
    GREATER ATTENTION TO OCCUPATIONAL HEALTH, SAFETY, AND
    ENVIRONMENTAL STANDARDS.  AMONG OTHERS, THE JAPANESE
    NOTED THAT LOW-COST LABOR ALONE WILL NOT ENSURE
    COMPETITIVENESS.  THE IMF STRESSED THAT SOE EQUITIZATION
    AND THE SUCCESSFUL IMPLEMENTATION OF THE US-VIETNAM
    BILATERAL TRADE AGREEMENT WILL ENHANCE THE PROSPECTS FOR
    VIETNAM'S COMPETITIVENESS IN THE WORLD ECONOMY.

    ¶11.  (U)_  A NUMBER OF PARTICIPANTS ALSO EXPRESSED
    CONCERNS ABOUT THE HIGH COSTS OF CURATIVE HEALTHCARE AND
    BASIC EDUCATION.  THE "LIKE-MINDED DONORS GROUP," AN AD
    HOC GROUPING OF NINE BILATERAL DONORS THAT ARE DRAWN
    TOGETHER BY A COMMON COMMITMENT TO THE CPRGS AND
                           UNCLASSIFIED

    PAGE 03        HANOI  03108  03 OF 07  310720Z
    IMPROVING THE QUALITY OF AID THROUGH DONOR HARMONIZATION,
    CITED THE WIDENING GAP BETWEEN THE RICH AND THE POOR AND
    MINIMAL PROGRESS ACHIEVED THUS FAR IN PUBLIC
    ADMINISTRATION REFORM.  SOME CONGRATULATED THE GVN FOR
    ITS WORK ON THE NATIONAL EDUCATION PLAN.  HOWEVER, SOME
    RAISED CONCERNS REGARDING VIETNAM'S LACK OF TRANSPARENCY,
    WHICH IS A PREREQUISITE FOR POSITIVE LEGAL REFORM,
    SUSTAINED ECONOMIC GROWTH, AND POVERTY REDUCTION. SEVERAL
    DELEGATES ALSO COMMENTED THAT THE GVN WOULD ONLY BE ABLE
    TO CONTAIN CORRUPTION IF IT REDUCES DISCRETIONARY AND
    DISCRIMINATORY PROCEDURES AND IMPROVES FINANCIAL
    MANAGEMENT.  IMPORTANT ACTIONS PROPOSED BY DELEGATES TO
    COMBAT CORRUPTION INCLUDED STRENGTHENING PROFESSIONALISM
    AND EFFICIENCY IN THE PUBLIC SECTOR, PAYING CIVIL
    SERVANTS A LIVING WAGE, IMPROVING SIMPLICITY AND
    TRANSPARENCY IN DECISION-MAKING PROCESSES, AND
    FACILITATING IDEA-SHARING AND DEBATE IN A FREE PRESS.

    ¶12.  (U)  MPI PHUC RESPONDED TO COMMENTS FROM THE
    DELEGATES BY NOTING THAT THE GVN IS DEVELOPING PROGRAMS
    FOR RURAL DEVELOPMENT, WITH SPECIAL ATTENTION TO LAND AND
    HOUSING CONCESSIONS FOR ETHNIC MINORITIES IN THE CENTRAL
    HIGHLANDS AND NORTHERN MOUNTAINOUS AREAS.  HE ALSO SAID
    THAT HUMAN RESOURCE DEVELOPMENT HAS BEEN AND WILL
    CONTINUE TO BE A STRONG FOCUS OF THE GVN.  ACCORDING TO
    PHUC, DEMOCRACY AND TRANSPARENCY ARE INTEGRAL COMPONENTS
    OF VIETNAM'S LEGAL REFORM.

    ¶13.  (U)  REFERRING TO PHUC'S ASSERTION THAT THE GVN WAS
    MOVING TOWARD ABOLISHING GVN MONOPOLIES IN
    TELECOMMUNICATIONS, POWER GENERATION, AND OTHER RELATED
                           UNCLASSIFIED

    PAGE 04        HANOI  03108  03 OF 07  310720Z
    INDUSTRIES, AMBASSADOR BURGHARDT NOTED THAT SUCH
    MONOPOLIES COME AT A HIGH COST TO VIETNAM.  HE EMPHASIZED
    THAT THE COST WOULD ONLY BE REDUCED IF TRUE COMPETITION
    WERE ALLOWED IN ALL SECTORS, INCLUDING SHIPPING,
    TRANSPORT, AND MINING.  AMBASSADOR EXPRESSED SATISFACTION
    WITH THE GVN MOVE TOWARD ABOLISHING MONOPOLIES, BUT
    CAUTIONED AGAINST THE CURRENT GVN NOTION OF INCREASING
    "COMPETITION," THAT IS, CREATING NEW SOE'S WITHIN THE
    GOVERNMENT MONOPOLY RATHER THAN INTRODUCING REAL
    COMPETITION BY ALLOWING THE ENTRY OF DOMESTIC AND FOREIGN
    PRIVATE ENTERPRISES.  SUCH REAL COMPETITION, HE STATED,
    WOULD PUT VIETNAM ON A POSITIVE PATH TOWARD WTO
    ACCESSION.  AMBASSADOR ALSO EXPRESSED SUPPORT FOR
    STATEMENTS MADE BY THE EU REGARDING CLEANER PUBLIC
    ADMINISTRATION, FREE PRESS, AND TRANSPARENCY OF
    INFORMATION FLOW, WHICH ARE KEY INGREDIENTS FOR COMBATING
    CORRUPTION.  AMBASSADOR CITED RECENT GVN DECREES DESIGNED
    TO MONITOR, CONTROL, AND INTERFERE WITH INFORMATION FLOW
    VIA THE INTERNET THAT RUN CONTRARY TO THE REGIONAL TREND
    TOWARDS A DIGITAL ECONOMY.  IN PARTICULAR, HE URGED THE
    GVN TO RECONSIDER ITS NEW REQUIREMENT TO LICENSE AND
    CENSOR WEBSITES, INCLUDING THOSE CRUCIAL FOR E-COMMERCE,
    EDUCATIONAL, DIPLOMATIC, AND OTHER INFORMATION SERVICES.
    HE ENCOURAGED THE GVN TO ALLOW ALL CITIZENS TO
    PARTICIPATE FREELY IN THE CIVIL, ECONOMIC, AND POLITICAL

                           UNCLASSIFIED

                               UNCLASSIFIED     PTQ7502

    PAGE 01        HANOI  03108  04 OF 07  310720Z
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          ITCE-00  DOTE-00  SRPP-00  DS-00    EB-00    EXME-00  OIGO-00
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          AC-01    NSAE-00  OES-00   OMB-01   OPIC-01  PER-00   PM-00
          ACE-00   P-00     SP-00    STR-00   TEST-00  USIE-00  FMP-00
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          SAS-00     /008W
                      ------------------1E7B95  310720Z /38
    R 310632Z DEC 02
    FM AMEMBASSY HANOI
    TO SECSTATE WASHDC 8513
    INFO DEPTTREAS WASHDC
    NSC WASHDC
    USDOC WASHDC
    USDA WASHDC
    DEPTLABOR WASHDC
    SECDEF WASHDC
    AMCONSUL HO CHI MINH CITY
    AMEMBASSY TOKYO
    ASEAN COLLECTIVE

    UNCLAS SECTION 04 OF 07 HANOI 003108

    SIPDIS

    STATE FOR EAP/BCLTV, EB/IFD/OMA AND EB/IFD/ODF
    STATE PASS USAID FOR ANE/SPOTS: DMCCLUSKEY AND
    ANE/AFERRARRA
                           UNCLASSIFIED

    PAGE 02        HANOI  03108  04 OF 07  310720Z
    STATE PASS USTR FOR ELENA BRYAN
    TREASURY FOR OASIA
    USDOC FOR 4431/MAC/IFP/OKSA/HPPHO
    USDA FOR FAS/FAA/STEVE HUETE
    SECDEF FOR ABLAGG

    LIFE OF THEIR NATION, REGARDLESS OF GENDER, ETHNICITY, OR
    RELIGION.  HE ALSO STRONGLY SUPPORTED THE UNDP POSITION
    REGARDING THE NEED TO CONTAIN THE HIV/AIDS VIRUS.

    ¶14.  (U)  A NUMBER OF DELEGATIONS SUPPORTED THE US
    INTERVENTION (AND MANY MORE SIGNALED SUPPORT WITH NODS
    AROUND THE ROOM).  MP PHUC RESPONDED IMMEDIATELY THAT THE
    FREEDOM OF RELIGION AND FREEDOM OF THE PRESS WERE
    GUARANTEED BY THE VIETNAMESE CONSTITUTION, THAT THE
    PROBLEM IN VIETNAM WAS NOT TOO FEW NEWSPAPERS BUT TOO
    MANY, AND THAT VIETNAMESE WERE FREE TO WORSHIP AS THEY
    CHOSE, AS EVIDENCED BY SOME ETHNIC GROUPS IN THE CENTRAL
    HIGHLANDS THAT STILL WORSHIPED SPIRITS IN THE TREES.

    REDUCING POVERTY AND PUBLIC INVESTMENT PRIORITIES
    --------------------------------------------- ----

    ¶15.  (U)  THE SECOND SESSION OF THE MEETING FOCUSED ON
    THE IMPLEMENTATION OF THE COMPREHENSIVE POVERTY REDUCTION
    AND GROWTH STRATEGY (CPRGS) AND THE FORMULATION OF AN
                           UNCLASSIFIED

    PAGE 03        HANOI  03108  04 OF 07  310720Z
    APPROPRIATE PUBLIC INVESTMENT PROGRAM (PIP).  LED BY THE
    ADB, AUSTRALIA, GERMANY, AND SWEDEN, THE DISCUSSION WAS
    MARKED BY A GENERAL CONSENSUS THAT THE GVN HAD DONE A
    GOOD JOB ON ITS CPRGS FOR 2001-2005 BUT THAT SERIOUS
    QUESTIONS REMAINED REGARDING THE PIP AND THE GVN'S
    PRIORITIES FOR PUBLIC INVESTMENT.  ACCORDING TO THE WORLD
    BANK, VIETNAM'S CPRGS IS UNIQUE FROM A GLOBAL
    PERSPECTIVE, BECAUSE OF ITS LEVEL OF GOVERNMENTAL
    OWNERSHIP.  THE CPRGS EMBODIES A PARTICIPATORY PROCESS
    THAT ENCOURAGES COOPERATION AMONG NUMEROUS STAKEHOLDERS.
    PARTICIPANTS EMPHASIZED THE NEED TO PUSH FORWARD ON
    IMPLEMENTATION OF THE CPRGS AND THE NEED TO MEASURE
    PROGRESS AND OUTCOMES THROUGH A UNIFIED MONITORING AND
    EVALUATION SYSTEM.  PARTICIPANTS ALSO NOTED THE NEED TO
    LINK RECURRENT AND CAPITAL PUBLIC RESOURCES TO THE
    PRIORITIES ARTICULATED IN THE CPRGS.

    ¶16.  (U)  THE GVN OUTLINED THE GOALS OF THE CPRGS AND
    ANNOUNCED THE ESTABLISHMENT OF A WORKING GROUP TO SUPPORT
    A DECENTRALIZED APPROACH TO MINISTRY INVOLVEMENT.  THE
    GVN HIGHLIGHTED THE LINKS AMONG THE PIP, THE CPRGS, AND
    POVERTY REDUCTION VIA THREE CHANNELS OF INVESTMENT:
    DIRECT INVESTMENT, THE NATIONAL TARGET PROGRAM, AND
    INVESTMENT IN EXISTING DEVELOPED INDUSTRIES WITH HIGH
    POTENTIAL.  THE ADB FOCUSED ON SUPPORT FOR THE GVN'S
    SOCIALLY INCLUSIVE DEVELOPMENT AND THE NEEDS TO MAXIMIZE
    EMPLOYMENT OPPORTUNITIES, TO REDUCE INEQUALITIES IN
    SOCIAL SECTORS INCLUDING HEALTH AND EDUCATION, TO DEFINE
    NON-STATE SECTOR INVOLVEMENT, TO ALIGN ODA RESOURCES
    BETTER, AND TO AVOID THE INCREASING THE POVERTY GAP.
    THIS LAST ISSUE WAS ECHOED BY THE AUSTRALIAN DELEGATION,
                           UNCLASSIFIED

    PAGE 04        HANOI  03108  04 OF 07  310720Z
    WHICH ALSO POINTED OUT THE CPRGS' LACK OF RELATION
    TO/INTEGRATION INTO THE PIP.  AN NGO REP STRESSED THE
    NEED FOR THE GVN TO FOCUS ON EDUCATION FOR THE POOR AND
    RAISED THE ISSUE OF HIGH EDUCATIONAL COSTS, ESPECIALLY IN
    THE PROVINCES, WHICH CONTRIBUTED GREATLY TO STUDENTS
    HAVING TO LEAVE SCHOOL AT AN EARLY AGE.

    ¶17.  (U) VICE MINISTER OF TRADE LUONG VAN TU MADE A
    STRONG PITCH FOR ASSISTANCE FROM THE DONORS IN SECURING
    GREATER MARKET ACCESS FOR AGRICULTURAL EXPORTS, CLAIMING
    THAT THE POOR HAVE SUFFERED FROM TRADE BARRIERS AND
    AGRICULTURAL SUBSIDIES ESTABLISHED BY INDUSTRIALIZED
    COUNTRIES.  SEVERAL DELEGATES, INCLUDING NEW ZEALAND,
    ECHOED THIS REQUEST.  DELEGATES ALSO NOTED THE NEED FOR
    BROAD-BASED PARTICIPATION, INCLUDING BY THE NATIONAL
    ASSEMBLY, PRIVATE SECTOR ASSOCIATIONS, AND CIVIL SOCIETY
    GROUPS, IN ORDER TO ENSURE EFFECTIVE IMPLEMENTATION OF
    THE CPRGS.  THIS BROAD STAKEHOLDER PARTICIPATION REQUIRES
    PERMANENT SUPPORT OF THE NATIONAL ASSEMBLY, GRASSROOTS
    DEMOCRACY, AND CONTINUED INVOLVEMENT OF INTERNATIONAL AND
    NATIONAL NGOS IN THE CONSULTATIVE GROUP FORUM.  DELEGATES
    ALSO POINTED OUT THE NEED TO INVOLVE LOCAL GOVERNMENTS IN
    EFFORTS TO DECENTRALIZE CPRGS IMPLEMENTATION,
    NECESSITATING STRENGTHENED CAPACITY AT THE LOCAL LEVEL.

                           UNCLASSIFIED

                               UNCLASSIFIED     PTQ7505

    PAGE 01        HANOI  03108  05 OF 07  310721Z
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          ACE-00   P-00     SP-00    STR-00   TEST-00  USIE-00  FMP-00
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          SAS-00     /008W
                      ------------------1E7BA6  310721Z /38
    R 310632Z DEC 02
    FM AMEMBASSY HANOI
    TO SECSTATE WASHDC 8514
    INFO DEPTTREAS WASHDC
    NSC WASHDC
    USDOC WASHDC
    USDA WASHDC
    DEPTLABOR WASHDC
    SECDEF WASHDC
    AMCONSUL HO CHI MINH CITY
    AMEMBASSY TOKYO
    ASEAN COLLECTIVE

    UNCLAS SECTION 05 OF 07 HANOI 003108

    SIPDIS

    STATE FOR EAP/BCLTV, EB/IFD/OMA AND EB/IFD/ODF
    STATE PASS USAID FOR ANE/SPOTS: DMCCLUSKEY AND
    ANE/AFERRARRA
                           UNCLASSIFIED

    PAGE 02        HANOI  03108  05 OF 07  310721Z
    STATE PASS USTR FOR ELENA BRYAN
    TREASURY FOR OASIA
    USDOC FOR 4431/MAC/IFP/OKSA/HPPHO
    USDA FOR FAS/FAA/STEVE HUETE
    SECDEF FOR ABLAGG

    ¶18.   (U) MS. CHILES EXPRESSED SUPPORT FOR THE GERMAN AND
    NGO POSITIONS REGARDING THE IMPORTANCE OF LOCAL NGO
    PARTICIPATION IN THE CG.  SHE ALSO NOTED CONCERN FOR THE
    RISING TREND IN HIV/AIDS AND ITS ENTRANCE INTO THE
    GENERAL POPULATION - BOTH OF WHICH REQUIRE STRONG
    LEADERSHIP AT THE HIGHEST LEVELS.  MS. CHILES ASSURED THE
    GVN THAT IT HAS MANY FRIENDS PREPARED TO ASSIST WITH THIS
    PROCESS.  AMBASSADOR BURGHARDT REFERRED TO THE ADB'S
    INTERVENTION REGARDING PRIVATE SECTOR DEVELOPMENT AND THE
    NEED TO FOSTER ITS GROWTH THROUGH TRANSPARENCY AND A
    CLEAR REGULATORY FRAMEWORK.  HE WARNED AGAINST CROWDING
    OUT POTENTIAL PRIVATE SECTOR CONTRIBUTIONS BY DEVOTING
    ODA AND STATE FUNDS TO AREAS THAT THE PRIVATE SECTOR IS
    BETTER SUITED TO PROVIDE.  HE FURTHER COMMENTED THAT IF
    THE PRIVATE SECTOR IS NOT ENABLED TO INVEST IN SUCH
    AREAS, PUBLIC RESOURCES MAY NOT BE AVAILABLE FOR AREAS
    THAT SHOULD BE RELEGATED TO PUBLIC SPENDING, SUCH AS
    HEALTH AND EDUCATION.

    ¶19.  (U)  THE WORLD HEALTH ORGANIZATION POINTED OUT THAT
                           UNCLASSIFIED

    PAGE 03        HANOI  03108  05 OF 07  310721Z
    THOSE WHO ARE ENGAGED IN HEALTH SECTOR PROGRAMMING HAVE
    OTHER GRAVE CONCERNS IN ADDITION TO HIV/AIDS. THE
    DELEGATION HIGHLIGHTED THE NEED FOR GREATER REGULATION OF
    BOTH PUBLIC AND PRIVATE SECTOR HEALTH-RELATED SERVICES,
    ESPECIALLY GIVEN THE GROWING ELDERLY POPULATION AND
    BURGEONING YOUTH POPULATION.  IN ADDITION, VIETNAM FACES
    GREAT CHALLENGES IN MANAGING OTHER HEALTH CONCERNS, SUCH
    AS THE DETRIMENTAL EFFECTS OF SMOKING, A HIGH PREVALENCE
    OF INJURIES FROM ACCIDENTS, AND TUBERCULOSIS.  THE
    DELEGATION NOTED THE NEED FOR INCREASED TRAINING AND
    PUBLIC SPENDING TO BUILD THE HUMAN CAPACITY AT LOCAL
    LEVELS.

    ODA EFFECTIVENESS AND PRIORITIES
    --------------------------------

    ¶20.  (U)  THE THIRD SESSION FOCUSED ON IMPROVING ODA
    EFFECTIVENESS AND CLARIFYING PRIORITIES.  THE GVN
    PRESENTED VIETNAM'S PUBLIC INVESTMENT REQUIREMENTS AS
    OUTLINED IN THE 5-YEAR PLAN, HIGHLIGHTING SOME OF THE
    STEPS TAKEN BY THE GVN TO IMPROVE EFFECTIVENESS AND
    EFFICIENCY OF ODA.  MPI PHUC NOTED THAT VIETNAM'S TOTAL
    INVESTMENT REQUIRED DURING THE FIVE-YEAR PLANNING PERIOD
    WILL BE $60 BILLION.  EFFICIENT ODA TRANSACTIONS AND
    ACCOUNTABILITY WILL BE ESSENTIAL, GIVEN THE SCARCITY OF
    RESOURCES.  THEREFORE, NECESSARY ACTIONS WILL HAVE TO
    INCLUDE THE ESTABLISHMENT OF AN INSTITUTIONAL AND LEGAL
    FRAMEWORK AND PROCEDURES FOR EFFECTIVE ODA USE, THE
    PROVISION OF COUNTERPART FUNDS, AND SOUND MONITORING AND
    EVALUATION OF ODA TRANSACTIONS AND USE.  THE GVN ALSO
    REMARKED THAT SOME PARTNERSHIPS AMONG THE DONOR COMMUNITY
                           UNCLASSIFIED

    PAGE 04        HANOI  03108  05 OF 07  310721Z
    HAVE CAUSED A BURDEN ON THE ODA PLANNING AND DISTRIBUTION
    SYSTEM.

    ¶21.  (U) ACCORDING TO THE DISCUSSANT PAPER PRODUCED BY
    THE UK, VIETNAM'S PROJECTS-BASED APPROACH TO ODA DELIVERY
    HAS A NUMBER OF NOTABLE DRAWBACKS.  THESE INCLUDE HIGH
    TRANSACTION COSTS, UNDERMINING OF GOVERNMENT SYSTEMS
    THROUGH THE ESTABLISHMENT OF PARALLEL PROJECT MANAGEMENT
    AND FINANCIAL ADMINISTRATION SYSTEMS, AND FRAGMENTATION
    OF THE DEVELOPMENT EFFORT, WHICH LEADS TO GAPS AND
    INEFFICIENT SPENDING.  THE PAPER FURTHER OUTLINED SOME
    RECOMMENDATIONS FOR THE GVN IN ORDER TO PROMOTE MORE
    SECTORAL AND PROGRAMMATIC APPROACHES, INCLUDING FIDUCIARY
    RISK ASSESSMENT, ELABORATION OF A PRIORITIZED AND
    PRACTICAL AGENDA TO IMPLEMENT THE CPRGS WITH GVN
    RESOURCES ALIGNED TO STRATEGIC OBJECTIVES, CONTINUED
    PUBLIC ADMINISTRATION REFORM, FINANCE MODERNIZATION, AND
    CAPACITY BUILDING FOR ODA MANAGEMENT.  THE PAPER ALSO
    EXAMINED THE PROS AND CONS OF DIRECT BUDGET SUPPORT TO
    NATIONAL STRATEGIES, WHICH HELPS TO PROMOTE OWNERSHIP,
    PARTNERSHIP, PUBLIC ACCOUNTABILITY, AND SUSTAINABILITY,
    BUT CARRIES FUDICIARY RISKS FOR TRACKING AND UTILIZATION
    OF FUNDS.  OVERALL, THE UK CALLED FOR INCREASED
    RESPONSIBILITY ON THE PART OF THE GVN, WHILE OTHER
    DELEGATES ENCOURAGED STREAMLINING OF BUREAUCRACIES AND

                           UNCLASSIFIED

                               UNCLASSIFIED     PTQ7506

    PAGE 01        HANOI  03108  06 OF 07  310721Z
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          TEDE-00  INR-00   IO-00    ITC-01   LAB-01   L-00     VCE-00
          AC-01    NSAE-00  OES-00   OMB-01   OPIC-01  PER-00   PM-00
          ACE-00   P-00     SP-00    STR-00   TEST-00  USIE-00  FMP-00
          EPAE-00  PMB-00   DSCC-00  PRM-00   DRL-02   G-00     NFAT-00
          SAS-00     /008W
                      ------------------1E7BAD  310721Z /38
    R 310632Z DEC 02
    FM AMEMBASSY HANOI
    TO SECSTATE WASHDC 8515
    INFO DEPTTREAS WASHDC
    NSC WASHDC
    USDOC WASHDC
    USDA WASHDC
    DEPTLABOR WASHDC
    SECDEF WASHDC
    AMCONSUL HO CHI MINH CITY
    AMEMBASSY TOKYO
    ASEAN COLLECTIVE

    UNCLAS SECTION 06 OF 07 HANOI 003108

    SIPDIS

    STATE FOR EAP/BCLTV, EB/IFD/OMA AND EB/IFD/ODF
    STATE PASS USAID FOR ANE/SPOTS: DMCCLUSKEY AND
    ANE/AFERRARRA
                           UNCLASSIFIED

    PAGE 02        HANOI  03108  06 OF 07  310721Z
    STATE PASS USTR FOR ELENA BRYAN
    TREASURY FOR OASIA
    USDOC FOR 4431/MAC/IFP/OKSA/HPPHO
    USDA FOR FAS/FAA/STEVE HUETE
    SECDEF FOR ABLAGG

    GREATER FLEXIBILITY ON THE PART OF DONORS.

    ¶22.  (U)  DELEGATES ALSO NOTED A NUMBER OF VIETNAM'S
    ACHIEVEMENTS IN THE MANAGEMENT OF ODA, INCLUDING
    COMMITMENT TO THE PUBLIC ADMINISTRATION REFORM MASTER
    PLAN, THE COMPLETION OF THE COUNTRY FINANCIAL
    ACCOUNTABILITY ASSESSMENT AND THE COUNTRY PROCUREMENT
    ASSESSMENT, AND THE MPA WEBSITE, WHICH HAS HELPED
    INCREASE TRANSPARENCY.  THESE ACCOMPLISHMENTS HAVE
    INCREASED DONOR OPTIMISM ABOUT USING SECTOR-WIDE
    APPROACHES AND DIRECT BUDGET SUPPORT. HOWEVER, DELEGATES
    NOTED CERTAIN REFORMS HAVE TO BE IMPLEMENTED IN ORDER TO
    ACCOUNT FOR THE MISMATCH BETWEEN ACTIONS PROPOSED IN THE
    CPRGS AND ACTIVITIES FUNDED IN THE PIP, AS WELL AS THE
    LACK OF A MEDIUM-TERM EXPENDITURE FRAMEWORK TO FACILITATE
    PRIORITIZATION.  ADDITIONALLY, DELEGATES NOTED THE
    DISCONNECT BETWEEN CAPITAL AND RECURRENT BUDGETING,
    WEAKNESSES IN DOMESTIC ACCOUNTABILITY, AND CONCERNS
    REGARDING CORRUPTION.  ALSO OF GREAT CONCERN WERE
    ACCOUNTABILITY ISSUES IN TRANSACTIONS AND DISBURSEMENTS,
                           UNCLASSIFIED

    PAGE 03        HANOI  03108  06 OF 07  310721Z
    AND SLUGGISH DISBURSEMENT PROCESSES.

    ¶23.  (U)  THE EU DELEGATION COMMENTED ON THE POSITIVE
    EFFECTS OF ODA HARMONIZATION, INCLUDING A REDUCTION IN
    TRANSACTION COSTS AND INCREASE IN VIETNAMESE OWNERSHIP.
    THE EU ALSO NOTED CONSTANT INTERNATIONAL STAFF TURNOVER
    AS ONE PARTICULAR DRAWBACK IN THE HARMONIZATION PROCESS.
    AN NGO REP CAUTIONED THE CG THAT, GIVEN THE CURRENT
    MISMATCH BETWEEN SECTORAL POLICIES AND PLANS, SECTOR-WIDE
    APPROACHES SHOULD BE APPROACHED WITH CARE. ADDITIONALLY,
    HE NOTED THE OVERWHELMINGLY DISPROPORTIONATE ALLOCATION
    OF EXPENDITURES ON TRANSPORTATION INFRASTRUCTURE, RATHER
    THAN ON ESSENTIAL HUMAN DEVELOPMENT PROGRAMS SUCH AS
    HEALTH AND EDUCATION. IN ADDITION, GVN INITIATIVES FOR
    PEOPLE WITH DISABILITIES HAVE BEEN NEGLECTED, INCLUDING
    EFFORTS TOWARD ENFORCEMENT OF BARRIER-FREE ACCESS TO
    PUBLIC AND PRIVATE BUILDINGS, VOCATIONAL TRAINING, AND
    INCLUSIVE EDUCATION.  ROUGHLY SEVEN MILLION PEOPLE LIVE
    WITH DISABILITIES IN VIETNAM; ONLY 30% OF CHILDREN WITH
    DISABILITIES RECEIVE PROPER EDUCATION AND ROUGHLY 96% OF
    ALL PEOPLE WITH DISABILITIES ARE UNEMPLOYED.  FINALLY,
    THE EU EMPHASIZED THAT, WHILE THERE ARE A SIGNIFICANT
    NUMBER OF ORGANIZATIONS WORKING IN PREVENTION ACTIVITIES
    FOR HIV/AIDS, NOT ENOUGH PUBLIC SUPPORT HAS BEEN PLACED
    ON CARE AND SUPPORT OF PEOPLE LIVING WITH HIV/AIDS.

    ¶24.  (U)  AMBASSADOR BURGHARDT NOTED CONCERNS REGARDING
    TAXATION OF ODA.  ALTHOUGH THE GVN IS SUPPOSED TO PROVIDE
    VAT REIMBURSEMENT FOR ODA, THE MINISTRY OF FINANCE RARELY
    REFUNDS VAT ON USG-FUNDED PROGRAMS.  THE AMBASSADOR
    EMPHASIZED THAT THESE NON-REIMBURSED FUNDS CANNOT BE USED
                           UNCLASSIFIED

    PAGE 04        HANOI  03108  06 OF 07  310721Z
    FOR ASSISTANCE PROGRAMS, CRIPPLING POTENTIAL PROGRAM
    SUCCESSES.  ON HARMONIZATION, THE AMBASSADOR REMARKED
    THAT COLLABORATION AND COORDINATION ARE AS ESSENTIAL FOR
    THE GVN AS THEY ARE FOR DONORS AND IMPLEMENTING AGENCIES.
    THE AMBASSADOR COMPLIMENTED THE GVN FOR ITS HARMONIZED
    APPROACH TO TECHNICAL COOPERATION IN SUPPORT OF THE BTA.
    SPECIFICALLY, THE USAID-FUNDED STAR PROGRAM HAS OVER 40
    COUNTERPARTS, AND THE GVN IS SYNCHRONIZING THEIR INPUTS
    ADMIRABLY.  BOTH DELEGATIONS FROM DENMARK AND THE EU
    ASSOCIATED THEMSELVES WITH THE AMBASSADOR'S STATEMENTS
    REGARDING ODA TAXATION.

    ¶25.  (U)  DURING THE FINAL SESSION, THE MINISTRY OF
    EDUCATION AND TRAINING REPORTED ON BUDGET ALLOCATIONS FOR
    2003 AND PREDICTIONS FOR 2005.  CURRENTLY, THE GVN
    PROVIDES 15.5 PERCENT OF ITS NATIONAL BUDGET FOR
    EDUCATION.  THIS PERCENTAGE WILL GROW TO 16 PERCENT NEXT
    YEAR, AND 18 PERCENT BY 2005.

    ¶26.  (U)  DONORS COLLECTIVELY PLEDGED $2.5 BILLION IN
    ASSISTANCE, A SUM EXCEEDING THE PRIOR YEAR'S PLEDGE LEVEL
    BY ONE MILLION DOLLARS, OR AN INCREASE OF 4.5% FROM THE
    PREVIOUS YEAR.  MS. CHILES INDICATED THE USG'S INTENTION
    TO PROVIDE $33.6 MILLION IN ASSISTANCE TO VIETNAM,
    SUBJECT TO CONGRESSIONAL APPROVAL AND AVAILABILITY OF

                           UNCLASSIFIED

                               UNCLASSIFIED     PTQ7507

    PAGE 01        HANOI  03108  07 OF 07  310721Z
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          AC-01    NSAE-00  OES-00   OMB-01   OPIC-01  PER-00   PM-00
          ACE-00   P-00     SP-00    STR-00   TEST-00  USIE-00  FMP-00
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    R 310632Z DEC 02
    FM AMEMBASSY HANOI
    TO SECSTATE WASHDC 8516
    INFO DEPTTREAS WASHDC
    NSC WASHDC
    USDOC WASHDC
    USDA WASHDC
    DEPTLABOR WASHDC
    SECDEF WASHDC
    AMCONSUL HO CHI MINH CITY
    AMEMBASSY TOKYO
    ASEAN COLLECTIVE

    UNCLAS SECTION 07 OF 07 HANOI 003108

    SIPDIS

    STATE FOR EAP/BCLTV, EB/IFD/OMA AND EB/IFD/ODF
    STATE PASS USAID FOR ANE/SPOTS: DMCCLUSKEY AND
    ANE/AFERRARRA
                           UNCLASSIFIED

    PAGE 02        HANOI  03108  07 OF 07  310721Z
    STATE PASS USTR FOR ELENA BRYAN
    TREASURY FOR OASIA
    USDOC FOR 4431/MAC/IFP/OKSA/HPPHO
    USDA FOR FAS/FAA/STEVE HUETE
    SECDEF FOR ABLAGG

    FUNDS.   THE ASSISTANCE WILL BE COMPRISED OF TECHNICAL
    TRAINING AND SUPPORT IN NUMEROUS FACULTIES INCLUDING
    HEALTH, TRADE, AND THE ENVIRONMENT, AS WELL AS
    HUMANITARIAN ASSISTANCE, DISASTER RELIEF, EDUCATION, AND
    FOOD ASSISTANCE.  USG AGENCIES INVOLVED INCLUDE USAID,
    THE CENTERS FOR DISEASE CONTROL, THE DEPARTMENT OF LABOR,
    THE DEPARTMENT OF DEFENSE, THE DEPARTMENT OF AGRICULTURE,
    AND THE AMBASSADOR'S EMERGENCY RESPONSE FUNDING
    MECHANISM.

    HUMAN RIGHTS
    ------------

    ¶27.  (U) ADDITIONALLY, SOME DELEGATES SHARED CONCERNS
    ABOUT HUMAN RIGHTS ISSUES, INEQUALITIES, AND THE WIDENING
    GAP BETWEEN THE WEALTHY AND THE POOR.  IN ITS OFFICIAL
    DELEGATION STATEMENT, THE US NOTED AS YET INSUFFICIENT
    PROGRESS WITH REGARD TO CERTAIN FREEDOMS, ESPECIALLY THAT
    OF RELIGIOUS FREEDOM.  THE DELEGATION STATEMENT URGED THE
    GVN TO DO MORE TO DEVELOP ITS HUMAN RESOURCES AND TO
                           UNCLASSIFIED

    PAGE 03        HANOI  03108  07 OF 07  310721Z
    INCREASE ACCESS TO THE INFORMATION NECESSARY FOR CITIZENS
    TO PARTICIPATE MEANINGFULLY IN LEGAL AND CIVIL
    INSTITUTIONS AS WELL AS IN THE POLITICAL PROCESS.  THE
    NGO DELEGATION, AMONG OTHERS, ALSO NOTED THAT THERE STILL
    REMAIN SOCIAL INEQUALITIES, MARGINALIZING ETHNIC
    MINORITIES WHO LIVE IN THE CENTRAL HIGHLANDS AND NORTHERN
    MOUNTAINOUS REGIONS.

    ¶28.  (U)  COMMENT: THIS YEAR'S VIETNAM CG WAS
    CHARACTERIZED BY POSITIVE SUPPORT FOR THE GVN'S PROGRESS
    ON DEVELOPING PLANS AND STRATEGIES TO INCREASE
    DEVELOPMENT AND COMBAT POVERTY, AS WELL AS DONOR
    ENCOURAGEMENT FOR FASTER REFORMS IN THE BANKING AND SOE
    SECTORS.  DELEGATES NOTED A NEED FOR MORE EFFICIENT
    TRANSACTIONS AND HARMONIZATION IN ODA DISBURSEMENT AND
    UTILIZATION.  THE USDEL COMMENTS WERE WELL-RECEIVED AND
    SUPPORTED AT THIS YEAR'S CONSULTATIVE GROUP MEETING.

    ¶29.  (U)  COMMENT CONTINUED:  THE GENERAL TENOR OF THE
    MEETING WAS REALISTIC, WITH BOTH BILATERAL AND
    MULTILATERAL DONORS ENGAGING IN A CONSTRUCTIVE DIALOGUE
    WITH THE GVN.  WHILE ALL PARTICIPANTS TOOK NOTE OF THE
    PROGRESS MADE IN THE PAST YEAR, THEY ALSO POINTED TO
    AREAS WHERE CONTINUED WORK REMAINS NECESSARY.  UNLIKE
    PAST YEARS, JAPAN, THE LARGEST DONOR, WAS VISIBLY
    DISSATISFIED WITH RECENT GVN POLICIES.  IN ITS PLEDGING
    STATEMENT, THE DELEGATION EXPLICITLY LINKED VIETNAMESE
    ECONOMIC POLICIES TO THE CONTINUATION OF GOJ ASSISTANCE,
    STATING THAT "THE POLICIES THAT THE VIETNAMESE GOVERNMENT
    ADOPT AND IMPLEMENT IN THE FIELD OF BUSINESS ENVIRONMENT
    WILL BE AN IMPORTANT ELEMENT FOR OUR EXAMINATION FOR
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    PAGE 04        HANOI  03108  07 OF 07  310721Z
    DETERMINING THE DIRECTION, CONTENT, AND SIZE OF JAPANESE
    ASSISTANCE IN THE FUTURE."  ALTHOUGH NOT EXPLICITLY
    MENTIONED, THIS POSITION IS LIKELY A RESULT OF THE GVN'S
    SUDDEN AND ARBITRARY DECISION IN OCTOBER TO CHANGE
    DRASTICALLY THE CONDITIONS OF INVESTMENT LICENSES OF
    SEVERAL JAPANESE MOTORBIKE PRODUCERS AND TO LIMIT THE
    IMPORTATION OF MOTORBIKE KITS, AN IMPORTANT JAPANESE
    INVESTMENT HERE. OVERALL, THE MEETING WAS SUCCESSFUL,
    PRODUCTIVE, AND A TRUE FORUM FOR SHARED IDEAS, CRITIQUE
    AND PRAISE.
    BURGHARDT

                           UNCLASSIFIED

`