US embassy cable - 05HOCHIMINHCITY1091

UNCLAS SECTION 01 OF 03 HO CHI MINH CITY 001091 
 
SIPDIS 
 
SENSITIVE 
 
E.O. 12958: N/A 
TAGS: PGOV, ECON, EINV, PREL, SOCI, ETRD, PHUM, PINR, VM, DPOL, HUMANR, RELFREE 
SUBJECT: CENTRAL VIETNAM'S TALE OF TWO PROVINCES:  POLITICS, 
LEADERSHIP AND DEVELOPMENT IN DANANG AND QUANG NAM 
 
REF:  A) HCMC 1082; B) O4 HCMC 1528 
 
Summary 
------- 
 
1. (SBU):  The Consul General led a team to Danang and Quang Nam 
provinces October 4-7 to broaden U.S. engagement in central 
Vietnam and to promote U.S. economic, human rights and religious 
freedom interests.  The style and substance of our interaction 
with the province's two Party Secretaries and their staffs brought 
into sharp relief contrasting approaches to economic development, 
party politics and views on ties to the United States that 
permeate Vietnam's Communist Party in southern and central 
Vietnam.  Ba Thanh, Danang's politically driven, calculating, 
status quo Party Secretary ofQred little beyond promoting 
Government-managed infrastructure development.  In contrast, Quang 
Nam's urbane Party Secretary Vu Ngoc Hoang sees his role as 
ensuring that Quang Nam's legal and administrative framework is 
transparent and attractive to foreign and domestic investors, with 
the private sector spearheading the province's growth.  Hoang sees 
the United States as a key ally in Quang Nam's development 
process; Ba Thanh was far less welcoming.  Although Quang Nam is 
starting from a much lower economic base than Danang, U.S business 
contacts tell us that Quang Nam is well on its way to creating the 
pro-growth, pro-private sector environment Hoang envisions. 
Septels will report in detail on Quang Nam's tourism and 
industrial development strategies.  Religious freedom issues 
affecting the Protestant community in Vietnam's central coast were 
reported in Ref A.  End Summary. 
 
Ba Thanh: Conservative King of Danang 
------------------------------------- 
 
2. (SBU) Nothing moves in Danang without the blessing of its 52- 
year old Party Secretary Ba Thanh, whom a reliable Vietnamese 
contact from the area called "the Dictator."  A fixture in Danang 
politics for nearly two decades, Thanh was People's Committee 
Chairman for seven years prior to being elevated to the Party 
Secretary post in 2004.  (Danang and Quang Nam were split to form 
 
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two separate provinces in 1997.) 
 
3. (SBU) Foreign and local contacts all say that Thanh thrives on 
cultivating an image of a hardnosed, socially conservative but 
populist politician; as People's Committee Chairman and Party 
Secretary he routinely dispenses favors and allocates land, 
 
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accepting and approving petitions from Danang's citizens on his 
walkabouts through the city or on his Saturday morning "meet the 
people" sessions. 
 
4. (SBU) Danang's development strategy is one-dimensional and 
mirrors the hardnosed style of Ba Thanh.  According to contacts in 
Danang, Thanh believes that a good infrastructure base -- coupled 
with the opening of the East-West corridor to Laos and Northern 
Thailand -- will attract foreign investors in droves.  Thus, over 
the past few years, he has undertaken an ambitious program of road 
building and widening.  In typical Ba Thanh style, he reportedly 
decides where the roads and bridges go, going as far as to donate 
a new bridge to Quang Nam Province to ease travel to his hometown. 
 
5. (SBU) Although Thanh told the CG tQt all the road building was 
internally financed, a well informed American businessman told us 
Thanh directs financing from State-owned banks in Danang to 
finance the construction.  As a result, the Danang private sector 
faces a credit crunch.  A local furniture manufacturer told us he 
could not obtain credit to expand his operations.  One businessman 
complained that three major building projects with which his 
company has been involved have been frozen for the past year 
because contractors had not been paid by state agencies or state- 
owned enterprises. 
 
6. (SBU) Thanh highlighted for the CG his leading role in 
transforming Le Quy Don high school into a showcase institution 
for cultivating Danang's and Quang Nam's future leaders.  Danang 
invested at least ten million dollars into building the high 
school campus, which will boast an Olympic-size swimming pool, a 
spacious dormitory, a huge IT section and top teachers who earn 
three times the national average.  In addition to having an 
outstanding academic record and passing a rigorous entrance exam, 
the school's 750 students also must demonstrate that they are of 
"high moral caliber." 
 
7. (SBU) Our contacts in Danang say that Thanh is intensely 
ambitious and is lobbying Hanoi hard for a promotion in advance of 
next year's tenth Party Congress.  He is arguing that his 
"transformation" of Danang merits his elevation into a more 
prominent political position in Hanoi or in HCMC. 
 
8. (SBU) While Thanh has a clear political agenda, neither he, nor 
his colleagues in the People's Committee and Danang Trade 
Promotion Center, could explain what economic development strategy 
Danang would follow once the roads were built (which they largely 
are).  Despite the CG's prompting, Thanh would not articulate how 
he would promote Danang overseas or what other policies were 
needed to attract foreign investment and stimulate the private 
sector.  Thanh and other key Danang leaders demonstrated no 
awareness of or interest in policy debates surrounding key 
economic legislation such as the common investment law, despite 
their impact on Danang's economic growth.  In his meeting with the 
CG, Thanh also reflected that Vietnamese business needs "more time 
to adjust" to international competition.  He pooh-poohed 
agricultural reform and said that only through industrialization 
could Vietnam become a wealthy state.  He shrugged when the Consul 
General pointed out that the United States remains the world's 
largest agricultural exporter.  Using standard Party terminology, 
Thanh told the CG of the success of his "five NOs" campaign (no 
illiteracy, beggars, drugs, hunger and murder) and of his plans to 
launch the follow up "three YESes" campaign (housing, jobs and 
civilized social lifestyle).  Some of our contacts told that the 
five NOs policy runs only on four main streets of Danang City. 
However, in separate meetings with Danang Police, RSO found a well- 
trained and motivated police force starkly loyal to hizzoner. 
 
9. (SBU) Wearing a short sleeve shirt and sporting a heavy five 
o'clock shadow, Ba Thanh closed his meeting with the CG with a 15- 
minute monologue on how the United States should manage its 
relationship with Vietnam.  Thanh said he operates under the 
principal of "not cooperating with those who oppose us."  He 
criticized displays of the flag of the Republic of Vietnam in the 
United States.  Referring to the attendance of prominent 
dissidents at ConGen's Fourth of July reception, Ba Thanh said 
that, were he in charge, he would refuse to "have a beer with us" 
while "lawbreakers" were in the room.  In reply, the Consul 
General observed that, while we would continue to have dealings 
with dissidents, all our activities would be completely 
transparent.  Moreover, we welcomed a sustained dialogue with the 
Party and the GVN to narrow differences whenever possible. 
 
Hoang: Reformist "CEO" of Quang Nam 
----------------------------------- 
 
10. (SBU) Although they were one province eight years ago, Quang 
Nam's senior leaders could not be any further in style, substance 
and approach from Ba Thanh and Danang.  In meetings in the 
provincial capital of Tam Ky October 6 and in HCMC October 18, 
Party Secretary Vu Ngoc Hoang laid out his plan to transform Quang 
Nam into the industrial and tourism hub of Central Vietnam, 
centered respectively around the Chu Lai Open Economic Zone and 
the UNESCO world heritage site of Hoi An. 
 
11. (SBU) Flanked in both meetings by representatives from the 
HCMC-based Fulbright Economic Teaching Program (FETP), Hoang was 
professional, articulate, frank and thoughtful when discussing his 
province's strengths and weaknesses with the CG.  He made it clear 
that he understands the importance of effective management at all 
levels of government administration.  He portrayed himself as CEO 
of Quang Nam Inc., developing broad policy outlines and objectives 
and then allowing his senior staff to flesh out and execute the 
plan.  Quang Nam People's Committee Chairman Nguyen Xuan Phuc, 
himself a FETP graduate, acts as Hoang's highly capable Chief 
Operating Officer. 
 
12. (SBU) Hoang and this team welcome and solicit outside advice; 
Quang Nam has asked FETP to act as de facto consultants as the 
province moves to develop the Chu Lai OEZ, particularly its legal 
and regulatory framework.  In HCMC, he sought a meeting with 
AmCham to intensify Quang Nam's dialogue with U.S. business. 
Hoang said the province also has solicited input from potential 
OEZ investors to ensure the zone's master plan meets as many of 
their needs as possible.  Hoang said that it was his 
responsibility to take that proposal to Hanoi and sell it to the 
Politburo and the GVN, just as he did with the original concept of 
an OEZ, the first in Vietnam. 
 
13. (SBU) Belying his years of study in the former Soviet Union, 
Hoang was firm that only the private sector could deliver the 
economic growth that the Vietnam needs.  Government's role is to 
create the environment -- legal and administrative -- that allows 
the private sector to flourish.  He said he and his team had 
studied intensively the experience of Binh Duong province near 
HCMC, which has transformed itself in  ten years from a 
predominately agrarian economy to one of Vietnam's fastest growing 
industrial provinces (ref b). 
 
14. (SBU) Hoang was comfortable and well versed on national level 
issues.  He acknowledged that the current draft of the common 
investment law was unsatisfactory and noted there is a push 
underway to modify it.  Turning to the upcoming tenth Party 
Congress, Hoang said there is general consensus that the Congress 
will accelerate Vietnam's economic reform process.  However, 
differences between party factions still are being hammered out 
over contentious issues such as whether Party members can also 
have business interests.  Vietnam's inability to accede to the WTO 
before the Party Congress would not have an appreciable impact on 
the push to accelerate reform.  Hoang looked to the Party Congress 
to boost his ability to adopt more liberal economic polices in 
Quang Nam. 
15. (SBU) Turning to bilateral ties, Hoang made it clear that he 
saw the United States as a key partner.  He wanted his staff to 
learn U.S. management skills and sought Mission assistance in 
establishing a sister-city/state relationship with a suitable 
partner in the United States. 
 
16. (SBU) Comment:  One contact close to Ba Thanh said his 
monologue on bilateral ties and dissidents was particularly 
intense because Thanh, lobbying hard for a promotion, wanted to 
burnish his credentials with the conservative faction of the Party 
with which he associates.  Even so, the numerous contrasts between 
Quang Nam and Danang and between Hoang and Ba Thanh illustrate the 
gap between reformists in the Party, who generally look to the 
U.S. as a key partner, and conservatives, who tend to be wary of 
the implications of more rapid economic reform and international 
integration on their power and privilege. 
 
17. (SBU) Comment Continued:  Throughout southern and central 
Vietnam, local leadership is the ingredient that explains why one 
province outshines the other in Vietnam's increasingly competitive 
and globally integrated economy.  U.S business contacts tell us 
that Quang Nam is well on its way to creating the pro-growth, pro- 
private sector environment Hoang envisions.  Although Quang Nam is 
starting from a much lower economic base than Danang (USD 264 GDP 
per capita to USD 581 in 2004), U.S. investors are placing their 
investment bets that it will eclipse Danang.  End Comment. 
 
Additional BIO Notes 
-------------------- 
 
18. (SBU) Born in 1953, Ba Thanh served his entire political 
career in Danang.  He was Danang People's Committee Chairman for 
seven years prior to becoming Party Secretary in 2004.  Prior to 
that, he was Party Chairman of Danang City from 1994-96 and 
Director of the Department of Agriculture of Quang Nam-Danang 
Province from 1992-94.  Ba Thanh has a B.S. in Forestry and a 
Ph.D. in Economics.  He has not studied overseas.  Known for his 
quick temper and brash style, Ba Thanh is the unquestioned 
strongman of Danang.  Ba Thanh's father was a friend of current 
Politburo member and Danang strongman Phan Dien.  During the 
Vietnam War, Ba Thanh was selected to study in the North at a 
special Party school for promising future leaders (truong hoc sinh 
Mien Nam).  Ba Thanh is married and has two children, a son who 
has just graduated from Danang University College of Economics, 
and a daughter attending Le Quy Don High School. 
 
19. (SBU) Born in 1952, Vu Ngoc Hoang has been Party Secretary 
since 2002.  From 1995 to 2002, he served as Vice-Chairman and 
then Chairman of the provincial People's Committee, in charge of 
planning and finance.  Prior to that, he was Party Secretary of 
Tam Ky District, Quang Nam-Danang province.  Hoang studied 
Agricultural Economics in Minsk in the former Soviet Union.  He 
confided to us that even in school he had a reputation as an 
independent and critical thinker.  Hoang has at least one 
daughter, who is working towards her bachelor's degree in language 
and economics at the Sorbonne.  Hoang indicated that he wants her 
to continue her post-graduate studies in the United States. 
 
20. (SBU) Quang Nam People's Committee Chairman, Nguyen Xuan Phuc 
was born in 1954.  He holds a B.A. in industrial economics from 
the National Economics University of Hanoi.  Phuc was one of the 
first graduates of the Fulbright Economic Teaching Program based 
in HCMC.  From 1978 to 2001, he held a number of positions within 
the provincial government including the Director of the Department 
of Planning and Investment and director of the Tourism Department. 
Phuc is regarded as one of the individuals responsible for Hoi 
An's emergence as a tourist center.  In Central Vietnam he is 
rumored to be a possible candidate for promotion to Hanoi should 
the GVN decide to create a Minister for Tourism. 
 
WINNICK