US embassy cable - 04HOCHIMINHCITY1383

UNCLAS SECTION 01 OF 02 HO CHI MINH CITY 001383 
 
SIPDIS 
 
SENSITIVE 
 
E.O. 12958: N/A 
TAGS: PGOV, PREL, PINR, ECON, EAID, EFIN, ETRD, VM, WTO, SOE 
SUBJECT: FORMER PM VO VAN KIET ON U.S. TIES, WTO, ECONOMIC REFORM 
 
REF:  HANOI 2926 
 
1. (SBU) Summary:  Former Prime Minister Vo Van Kiet, one of the 
fathers of Vietnam's economic reform policy and an informal 
advisor to the GVN and the Party, stressed to the Consul General 
October 30 that Vietnam is on the verge of eliminating the last 
vestiges of its central planning system, divesting all but a few 
"strategic" state owned enterprises and creating a level playing 
field that will foster entrepreneurship and spur economic growth. 
A firm majority in the Party favors taking more dramatic steps to 
spur double-digit economic growth.  At the same time, the 
contention that the United States seeks to use economic reform to 
undermine the Party -- so-called "peaceful evolution" -- no longer 
resonates much.  Vietnam, Kiet maintained, is ready to take our 
bilateral relationship to a new level of cooperation.  End 
Summary. 
 
2. (SBU) In a two-hour tour d'horizon with the CG and PolOff 
October 30, former Prime Minister Vo Van Kiet (1991-97), one of 
the Party's elder statesmen from the South and an architect of 
Vietnam's economic liberalization policy, underscored the 
commitment of the GVN and the Communist Party to deeper economic 
reform and to a substantially improved relationship with the 
United States.  Kiet agreed with the CG that Vietnam has the clear 
capacity to move to double-digit rates of economic growth from its 
current annual seven percent rate.  He said the Party is acutely 
aware that, should Vietnam fail to further catalyze economic 
growth, it will fail in its top-priority objective to catch up 
with its "neighbors" (China, Thailand and Malaysia). 
 
3. (SBU) Sometimes sounding more like an investment banker than a 
former Politburo member and current informal advisor to the GVN 
and Party, Kiet said that the GVN now recognizes that it needs to 
do more to promote the non-state sector of the economy, to 
catalyze domestic entrepreneurship and to attract greater foreign 
investment.  The GVN, he maintained, is prepared to take new 
measures to streamline the regulatory process and to minimize 
corruption.  The GVN also will move more determinedly to divest 
all but a few "strategic" state-owned enterprises and create a 
level playing field in which SOEs and private companies would 
compete fairly for credit, market share and survival.  Subsidies 
for SOEs would be cut and legal and administrative remnants of 
Vietnam's old centrally planned economic system also will be 
removed.  Kiet maintained that these reforms do not need to wait 
until the 10th Party Congress in 2006 for resolution.  He said 
that the legal framework exists or can be supplemented quickly to 
implement reform, particularly as the National Assembly 
understands that the negative effects of waiting outweigh the 
positive ones of prompt action. 
 
Peaceful Evolution warnings losing steam 
---------------------------------------- 
 
4. (SBU) Kiet agreed that there are those in the Party -- "older 
cadre and government officials" -- who still resist economic 
reform because such reform "would create social instability." 
(Note:  Party leaders equate social instability with a weakening 
of the Party's control over society.  End note.)   Publicly, these 
concerns are sometimes manifested as a warning against "peaceful 
evolution," an attempt by "external forces" such as certain 
elements in the United States to use peaceful means to bring 
"unwanted" change to Vietnam. 
 
5. (SBU) Unlike when he was Prime Minister, Kiet believed that the 
naysayers are a minority and will not halt the reform process. 
Within the Party, fear of lagging behind Vietnam's neighbors and 
failing to meet the economic expectations of the Vietnamese people 
outweigh concerns over the implications of pushing for a more 
open, private-sector oriented economy. 
 
A strengthened bilateral relationship 
------------------------------------- 
 
6. (SBU) Kiet also was firm that the "peaceful evolution" group 
within the Party and GVN would not be able to impede the 
strengthening of the U.S.-Vietnam bilateral relationship.  Now 
that Vietnam had "resolved" most bilateral issues with China other 
than the Spratlys, there is more of an emphasis within the Party 
and GVN on the relationship with the United States.  Kiet said 
that the strategy of making trade and economic issues the bedrock 
of the relationship is the correct one; in particular, the 
Bilateral Trade Agreement is a "needed precondition" that allows 
Vietnam to address other problems in the relationship.  He said it 
is the "common view of Vietnam's leadership" that there is no 
reason why the U.S.-Vietnam relationship could not be modeled on 
the U.S. bilateral relationship with Japan or the very friendly 
ties that Vietnam has developed with France. 
 
7. (SBU) Kiet also made a pitch for U.S. support for Vietnam's 
rapid entry into the WTO.  However, unlike his successor PM Phan 
Van Khai, Kiet did not call for U.S. concessions during the WTO 
accession negotiations (see reftel for the Ambassador's recent 
conversation with PM Khai).  Kiet did rail against hardliners 
within the Party who had held up Vietnamese approval of the BTA in 
the late 1990s.  He argued that, because Vietnam delayed signing 
the BTA, it was put in the position of having to negotiate with 
its neighbors (Cambodia, Laos and China) for Vietnam's WTO 
accession rather than have them seek Vietnam's approval for their 
own entry into the WTO. 
8. (SBU) Only on religious freedom issues did Kiet sound less like 
a reformer and more like a traditional Party representative.  Kiet 
acknowledged a number of "incidents" and said that some local 
officials still have unfortunate "prejudices."  He maintained, 
however, that these incidents belie the tremendous growth of 
religious freedom and religious practice in Vietnam.  The CG 
pointed out to Kiet that our dialogue with the GVN on religion 
does not focus on the freedom of belief but on how people can 
organize themselves to practice their faith. 
 
WINNICK