US embassy cable - 05HANOI1115

UNCLAS SECTION 01 OF 06 HANOI 001115 
 
SIPDIS 
 
SENSITIVE 
 
STATE FOR EAP/BCLTV 
USDOC FOR 4430/MAC/ASIA/OPB/VLC/HPPHO 
STATE PASS USAID FOR CHAPLIN/ANE 
BANGKOK FOR USAID 
 
E.O. 12958: N/A 
TAGS: ECON, EAID, VM, HUMANR, ETMIN 
SUBJECT:  INTERNATIONAL ASSISTANCE STRATEGY AND DELIVERY IN THE 
CENTRAL HIGHLANDS OF VIETNAM 
 
REFS: A) 04 HCMC 000210 B) 04 HCMC 001581 C) Hanoi 1111 
 
This cable contains sensitive information.  Please do not post 
on the Internet. 
 
1.   (SBU) Summary:  Ongoing poverty and political unrest in 
2001 and 2004 have led many international donors to develop a 
new plan of engagement in the Central Highlands.  The Group of 
4 (G4) (Canada, New Zealand, Norway and Switzerland), the 
European Union (EU) and the United Nations (UN) agencies have 
all moved to align their assistance, varying from issuing a 
joint strategy statement to formulating a joint agency program 
for the region.  Official Development Assistance (ODA) in the 
Central Highlands is largely aligned with main GVN priority 
areas such as education and health programs that target 
disadvantaged children and ethnic minorities, rural 
infrastructure development, and forestry management and 
protection.  A number of donors are also addressing areas that 
help the GVN tackle troublesome issues like decentralization 
and human capacity building, as well as bilingual and mother 
tongue education.  Delivery strategies include increasing 
direct budget support and donor co-financing, forming sector 
wide partnerships and multi-donor trust funds and seeking more 
structured and systematic local planning and participation. 
End Summary. 
 
Balancing Human Rights and Socioeconomic Development 
--------------------------------------------- ------- 
 
2.   (SBU) A mantra repeated widely among the international 
community in Hanoi is, "The situation in the Central Highlands 
is a development problem with a development solution."  While 
there is considerable agreement on not abandoning the issue of 
human rights as a priority in the region, the common view is, 
as the Chief of Planning at the United Nations Children's Fund 
(UNICEF), put it: "You can't let social issues be drowned out 
by human rights because human rights will shut down the 
development game."  EU member countries conceded that allowing 
the EU to take the lead on human rights, which it addresses 
through an annual joint statement and dialogue with the GVN, 
allowed each member country more freedom in engaging the GVN on 
development issues.  In a statement at the December 2004 
Consultative Group Meeting (CG), the G4 noted its concern about 
the disproportionate share of the poor represented by the 
Central Highlands ethnic minorities and a desire to seek 
solutions to "avoid the kind of social dislocation and 
dissatisfaction that has been evident in recent times."  Many 
other donors stressed this desire to stabilize the region with 
socioeconomic assistance. 
 
Donors Coordinate and Align Assistance 
-------------------------------------- 
 
3.   (SBU) The G4 joint CG statement was an outgrowth of 
discussions on a Central Highlands strategy the G4 began with 
the GVN following the 2001 riots.  While the G4 has not yet 
reached the point of initiating a joint program for the region, 
its members prioritize development in the mountainous areas and 
look for ways to align their efforts.  Similarly, the EU has 
formed a Central Highlands Working Group and is currently 
designing a Joint EU Action Plan for the region.  The GVN has 
recently approved an EU study mission to the Highlands to help 
shape the development of the Action Plan. 
 
4.   (SBU) The UN agencies are moving to harmonize further 
their development strategy in the region.  According to Nguyen 
Tien Phong, UNDP's Assistant Resident Representative and Head 
of Poverty and Social Development Cluster, the GVN has 
requested a joint UN family program, including the United 
Nations Development Program (UNDP), the United Nations 
Population Fund (UNFPA), UNICEF and possibly other agencies as 
well.  This UN Central Highlands Program will focus on 
strengthening local capacity, decentralized planning and public 
resource management.  Phong said activities and funding levels 
were still being discussed, but was optimistic that the program 
would be finalized in 2005. 
 
5.   (SBU) Representatives from France and Japan noted that 
they do not yet have a special strategy toward the Central 
Highlands.  Although there is considerable French assistance 
that covers the region, French Development Agency (AFD) and 
French Embassy officials emphasized that the Highlands is not 
an important development region since their focus is mainly the 
two poles of Hanoi and Ho Chi Minh City.  Japan International 
Cooperation Agency (JICA) representatives described Japan's 
strategy in the Central Highlands as a "blank slate."  As a 
result of the Vietnam Foreign Minister's visit to Japan in 
January 2005, during which the two governments discussed new 
directions for Japan's assistance in the development triangle 
(including the provinces surrounding the intersection of 
Cambodia, Laos and Vietnam), JICA is about to conclude planning 
for its first bilateral technical assistance project on forest 
protection in Kon Tum Province. 
 
Strategies for Planning and Financing 
------------------------------------- 
 
6.   (SBU) The international community is moving toward direct 
budget support and donor co-financing in Vietnam.  Acting Head 
for the UK's Development for International Development (DFID), 
Phil Harding, notes that since 1997, DFID has not financed any 
purely bilateral projects in Vietnam, choosing to work in 
partnership with the GVN or to co-finance large World Bank and 
Asian Development Bank (ADB) projects.  According to Harding, 
this reflects DFID's confidence in the GVN's ability to target 
and manage assistance effectively.  Other donors choose co- 
financing to increase the impact of their funding by maximizing 
the scope of a project while minimizing extra administrative 
structures or parallel activities. 
 
7.   (SBU) Another means to streamline operational and funding 
mechanisms is establishing sector-wide multilateral 
partnerships and trust funds.  The Forest Sector Support 
Partnership Program (FSSP) is a multi-donor, NGO and GVN sector 
wide initiative created in 2002.  According to Ben Zech, 
Forestry and Biodiversity Officer at the Royal Netherlands 
Embassy, the FSSP has led to coordinated planning, financing 
and technical assistance in a sector that is critical to 
addressing the development challenge in the Central Highlands. 
The GVN has recently signed financing agreements establishing a 
USD 60 million multi-donor forestry trust fund administered 
through the World Bank.  As a primary architect of the FSSP and 
the sector wide Trust Fund, Zech said that he has been invited 
to advise the donors in the education sector to facilitate 
changes in the same direction. 
 
8.   (SBU) In contrast to direct budget support at the central 
level or sector wide approaches, some donors and agencies are 
pursuing more targeted and direct engagement with the local 
levels to improve planning, implementation and supervision.  As 
part of its strategy to help build local capacity, UNICEF will 
begin changing its delivery mechanism both to develop annual 
work plans with Provincial People's Committees (PPCs) and to 
fund the PPCs directly instead of through the central line 
ministries.  In 2006, UNICEF will phase in this process in 
twelve provinces, including Kon Tum.  UNICEF expressed concern 
that an overreliance on external budget support may undermine 
the sustainability of ODA activities.  As one strategy to 
improve UNICEF's effectiveness while keeping its funding level 
low, the agency has mapped its various strands of Central 
Highland activities down to the commune level in order to 
concentrate its impact in select communes.  Under the UN Family 
Program, the UNDP will also prioritize capacity building for 
provincial governments, especially in the area of public 
participation in elected bodies and pro-poor budgeting. 
 
9.   (SBU) Other donors and governments are trying to localize 
their support by pursuing multisectoral work in fewer 
geographic areas.  The Danes will narrow their activities to 
fewer provinces, including those of the Central Highlands. 
Danida is also changing its implementing structure by shifting 
away from placing long-term technical staff at the central and 
provincial levels.  To promote greater local implementation, 
Danida will greatly increase local capacity building. 
 
10.  (SBU) The Asian Development Bank (ADB) uses both 
geographic and socioeconomic targeting that concentrates nearly 
one third of its total funding to Vietnam in the Central 
Region, and especially the Central Highlands.  Two key co- 
financed projects targeted at the central region on livelihood 
improvement and health care total over USD 60 million. 
Although primarily a source of financing, ADB has also 
initiated steps to increase local accountability and will 
require the development and review of provincial project plans 
in the beneficiary provinces. 
 
Picture of ODA 
-------------- 
 
11.  (SBU) It is difficult to get a clear or complete picture 
of international assistance to the Central Highlands.  Only a 
certain level of ODA is targeted directly to specific regions 
or provinces.  Some projects are multi-province and may include 
Highlands provinces.  Others may target groups such as ethnic 
minorities or disadvantaged children.  Many projects at the 
central level affect the Central Highlands, such as improving 
the use of data in planning or capacity building for the 
Committee on Ethnic Minorities.  Most donors stressed that the 
proportion going to Central Highlands is hard to quantify. 
Implementing agencies reported the added difficulty of 
distinguishing the proportion of operational costs (as opposed 
to program funds) devoted to a region.  The following section 
outlines major direct and indirect ODA to the Central Highlands 
where possible. 
 
12.  (SBU) Among the G4, Canada has dedicated one third of 2004 
funding and will dedicate one half of 2005 fiscal year funding 
of its Canada Fund to carry out small projects targeted at 
reducing poverty in the Central Highlands.  Canada Fund 
expenditures for 2004 totaled about USD 500,000.  Canada and 
Norway also co-finance the World Bank's Primary Education for 
Disadvantaged Children Project (PEDC), which targets many 
districts in the Highlands, at levels of USD 12.4 million and 
USD 22 million, respectively.  Switzerland, which emphasizes a 
participatory approach, supports a USD 645,000 sustainable 
forestry management initiative in Gia Lai Province as well as a 
USD 5.5 million extension training project in seven provinces, 
including Dak Lak. New Zealand contributed USD 250,000 to 
UNICEF's early childhood activities in the Northern Uplands 
(Northwest and Northeast Highlands) and the Central Highlands. 
Finally, Norway funded a USD 75,000 project to develop 
education glossaries in six ethnic minority languages. 
 
13.  (SBU) Among EU member states, Denmark, France and the 
Netherlands have the highest levels of bilateral assistance 
that includes the Highlands.  Danida has worked in water 
sanitation since 1995 and public administration reform since 
1997.  In 2006, Danida plans to expand its fisheries work into 
Dak Lak, and a newly launched Business Sector Program will help 
private sector development in Lam Dong Province around Dalat. 
Total commitment to the region is USD 47 million with support 
in FY 2004 of USD 6 million. The French Embassy funds numerous 
small grants for social development such as leprosy relief, 
ethnic minority kindergartens and cultural research.  Agence 
Francaise de Developpement (AFD) also funds two projects in 
cotton and rubber development, covering mainly the south but 
including some Highlands activities, and totaling over 44 
million Euros (USD 57 million).  The Netherlands' bilateral 
assistance in health care training and conservation in the 
region totals nearly USD 10 million.  In addition, Germany also 
supports a program in rural development in Dak Lak totaling USD 
3.2 million and Italy recently approved a USD 1.5 million grant 
to Gia Lai for a pilot project to be executed by the 
International Fund for Agricultural Development (IFAD). 
 
14.  (SBU) Sweden, France, the Netherlands and the UK also 
contribute high levels of co-financing to ADB and World Bank 
projects that affect the Central Highlands.  Sweden contributes 
USD 7 million to ADB's Health Care for the Poor in five central 
provinces.  France will support a multi-province agricultural 
diversification project of the World Bank at nearly USD 20 
million.  The Dutch are most active in the forestry sector, 
with total commitments of over USD 20 million for initiatives 
including the Central Highlands.  In 2004, DFID gave USD 55 
million in grant assistance to Vietnam with 51 percent going to 
budget support and the other 49 percent supporting co-financed 
projects in education, rural transport and public 
administration reform.  The UK also co-finances two major ADB 
livelihood and capacity building projects (USD 27 million 
total) in the Central Region, which includes the Central 
Highlands and the Central Coast. 
 
Budding NGO Presence 
-------------------- 
15.  (SBU) Until recently, the GVN has made it difficult for 
major international NGOs (INGO) to establish a presence in the 
Central Highlands.  The World Wildlife Fund (WWF) is the only 
large INGO with a lengthy and substantial presence in the 
region and has worked in a narrow niche in forestry protection 
and conservation.  There are several small French, Dutch and 
Swiss NGOs and even a few U.S. NGOs working on small-scale 
projects in the region.  Poverty specialists, who attribute the 
steady progress made in the Northern Uplands to the long-term 
commitment of donors and also the long-term and extensive 
presence of NGOs, suggest that the absence of these 
organizations in the Central Highlands has limited new ideas 
and models for development and that this lack has been a 
barrier to mobilizing engagement at the grassroots level. 
 
16.  (SBU) The Director of the NGO Resource Center, David 
Payne, speculates that attitudes might be changing, at least at 
the central government level.  He reported that the State 
Committee on NGO Affairs (COMINGO) has made repeated trips to 
the Central Highlands in the last year to learn how to promote 
NGO activity there.  In a major step forward, Action Aid began 
working in the Highlands in 2005.  Through a memorandum of 
understanding with the local governments, Action Aid is 
launching a new initiative in Dak Lak, Kon Tum and Gai Lai 
provinces.  Payne notes that in addition to Action Aid, Oxfam 
UK has also initiated talks with the GVN about working in the 
Central Highlands.  Both organizations are well regarded in 
Vietnam and have good partnerships with the Vietnamese both at 
the central, local and grassroots levels.  According to Payne, 
they have also advocated on behalf of Vietnam on fair trade 
issues and are largely seen as independent from political 
agendas or association. 
 
Attitudes toward U.S. Assistance 
-------------------------------- 
 
17.  (SBU) At the central level, the party line from the GVN 
consistently welcomes international assistance from the United 
States to the Central Highlands, at least rhetorically. 
Ministry of Agriculture and Rural Development (MARD) officials 
expressed the hope that this study of the development context 
would be aimed at finding ways to generate U.S. assistance.  In 
terms of specific areas for assistance, a steady refrain from 
the GVN was the great potential to develop industrial crops in 
the Highlands.  To varying degrees, all of the ministries 
mentioned assistance in the top two GVN priorities in the 
region, industrial agriculture and processing and 
infrastructure development with an emphasis on irrigation. 
Ministry of Labor, Invalids and Social Affairs (MOLISA) and 
Ministry of Planning and Investment (MPI) also pointed to the 
need for better vocational and job skill training. 
 
18.  (SBU) While the message from other donors and from NGOs 
was much less certain, there was general agreement that the 
trend in the Central Highlands was probably towards more 
openness.  The frequency of international missions and visitors 
to the Highlands since the April 2004 riots seems to support 
this trend, as does the emerging presence of INGOs there. 
Action Aid, which has just recently begun working in the 
region, cautioned that any sign of unrest would immediately 
shut down access to the region once more.  The Canadian 
International Development Agency (CIDA) recounted a comment in 
2003 at the far end of the spectrum by a provincial official 
who stated that any assistance except that of the United States 
or UNDP would be welcome.  Other donors suggested that U.S. 
reluctance to fund directly the GVN through co-financed or 
bilateral budget support would be a barrier.  It was widely 
agreed that the most critical step to successful entry into the 
Central Highlands was support at the provincial level. 
 
19.  (SBU) ECON/C, USAID Director and HCMC Econoff visited Kon 
Tum in December 2004 and found provincial officials eager for 
U.S. assistance (Ref A). The provincial leadership even 
indicated the possibility of allowing active U.S. NGO presence. 
Following an INGO visit to the Highlands in May 2004, American 
Red Cross Country Representative also noted that Kon Tum 
officials expressed interest in cooperating on projects 
involving health and education and specifically pointed to the 
USDA-backed school nutrition program that the American Red 
Cross is implementing in neighboring Quang Ngai province (Ref 
B).  The Gia Lai provincial government also expressed interest 
in U.S. assistance.  However, the Chairman of Dak Lak People's 
Committee told us that his province already had sufficient 
international assistance and was not interested in U.S. aid or 
technical support. 
 
Possible Entry Points 
--------------------- 
 
20.  (SBU) While the need is great across many sectors, the 
following is a short list of possible ideas, initiatives and 
organizations that could offer an entry point for U.S. 
engagement with or assistance to the Central Highlands. 
 
 
--Build on the U.S. Government's development programs already 
underway implementation in Vietnam:  There are currently 
elements of the present USG development assistance portfolio 
that might be readily transferable to the Central Highlands. 
These include work in expanding cocoa production, a non- 
plantation crop with strong international demand and conducive 
to small landowners; extending coverage of our program to 
address the spread of HIV/AIDS under the Presidential 
Initiative, or an expansion of an aspect of our disability 
assistance.  Doing so would have the advantage of allowing us 
to begin implementation more quickly with actual on the ground 
experience already in hand.  It would also lessen the 
management challenge and overhead of an initiative into an area 
where we have not yet been very active. 
 
--Start small.  Currently, assistance under USD 500,000 can be 
implemented directly with provincial authorities and avoid the 
lengthy Prime Minister's approval process.  Many of the 
projects funded by the G4 and by the French Embassy have annual 
funding levels of less than USD 50,000. 
 
--Join a partnership.  For example, the Forestry Sector Support 
Partnership welcomes involvement by non-signatory donors.  This 
could be an opportunity to learn more about the specific 
forestry initiatives in the region to see if there is an 
appropriate entry venue to U.S. environmental assistance. 
 
--World Wildlife Fund (WWF) is an international NGO with 
established partnerships in the Central Highlands.  The United 
States has had partnerships with WWF in other regions. 
 
--The USDA Food for Education Fund supports initiatives such as 
the Vietnam Education and Child Nutrition Initiative, including 
school feeding, school-based nutrition and hygiene education 
and community-based health programming, implemented by the 
American Red Cross and Vietnam Red Cross.  This was a project 
pointed out with interest by Kon Tum officials during a May 
2004 INGO visit. (Ref B) 
 
--Land O'Lakes has also implemented a similar initiative under 
the Food for Education Fund, with specific links to developing 
fortified school foods to boost nutrition.  This type of 
initiative could be promoted as a public-private partnership. 
 
--A University of Michigan community education project 
established a model in Thailand that combines forestry 
conservation with community-based education.  This organization 
is currently working in Can Tho Province on a similar community- 
based education model.  The increasing alarm over environmental 
degradation and efforts to train ethnic minorities in forest 
protection means this area may get increasingly more attention. 
 
--Committee on Population, Families and Children.  This 
committee was recommended as a progressive and strongly staffed 
Vietnamese government organization that has an established 
local network and oversees a diverse intersection of social 
issues. 
 
--UNICEF addresses issues of child welfare, health, safety, 
nutrition and education at the local level.  The agency has a 
network of established programs in the Highlands and has used 
funding from New Zealand and Luxembourg on single-source 
projects targeted to the region. 
 
--Helvetas is a Swiss NGO implementing a USD 5 million 
extension training project in seven provinces including Dak 
Lak.  It also works in the Central Highlands on a social 
forestry project and in the Northern Uplands on empowerment of 
local peoples to manage natural resources.   Both its sectoral 
and grassroots level experience could be instructive. 
 
--Doctors Without Borders, also known as Medecins Sans 
Frontieres, is already present in Vietnam and serves as an 
international agency for medical relief to victims of armed 
conflict, epidemics, disasters as well as others who lack 
health care due to geographic remoteness or ethnic 
marginalization. 
--East Meets West Foundation is a U.S. non-profit humanitarian 
organization that partners with the people of Vietnam at the 
grassroots level to improve their health, education and 
economic conditions.  Its projects include the construction of 
village water systems, the building and renovation of 
elementary and kindergarten schools and the establishment of a 
free dental health clinic.  It has been operating in Central 
Vietnam since 1988 so has a long history, and does not have a 
political or religious affiliation. 
 
--A number of sources suggested that research could be funded 
at a relatively low level, could help develop Vietnamese 
capacity and, if targeted correctly, could effectively inform 
policy or produce direct assistance tools like the Norway- 
funded education glossaries in ethnic minority languages. 
Vietnam Living Standard and Household Survey data also offer 
interesting possibilities for policy analysis. 
 
--The U.S. Department of Labor could consider possible 
vocational training assistance in continuation of the U.S.- 
Vietnam labor cooperation program. 
 
MARINE