US embassy cable - 03HANOI1043

UNCLAS SECTION 01 OF 04 HANOI 001043 
 
SIPDIS 
 
SENSITIVE 
 
STATE FOR INL/AAE; EAP/BCLTV 
 
E.O. 12958:  N/A 
TAGS: SNAR, PREL, PGOV, EAID, LA, VM, UNODC, CNARC 
SUBJECT:  MONITORING VISIT TO KY SON PHASE II PROJECT 
 
REF:  01 Hanoi 3262 
 
1.  (SBU)  SUMMARY.  Much to the relief of district 
officials and following extensive delays, the UNODC-funded 
Ky Son Phase II is up and running.  Agriculture and 
livestock models -- the focus of the USG assistance to this 
project --  are being implemented in a number of communes 
dispersed around the district.  The selection process for 
those benefiting from the project is unclear, however.  The 
inventory control system currently in place is also not an 
effective management tool.  UNODC is aware of these problems 
and is attempting to address them, a process complicated by 
the new national project execution.  Septel will report on 
developments in and around the district's Nam Can border 
crossing.  END SUMMARY. 
 
2.  (U)  At the invitation of the United Nations Office of 
Drugs and Crime (UNODC -- formerly UNDCP), poloff and pol 
FSN visited Ky Son district in Nghe An Province April 21 - 
24.  (Embassy very much appreciates INL funding for this 
travel.)  Ky Son, which borders Laos, is one of the poorest 
districts in one of Vietnam's poorest provinces.  It is 
about a 10-hour drive from Hanoi.  Ky Son's population is 
about 60,000, nearly all ethnic minorities (mainly Hmong and 
Kho Mu).  Until 1993, approximately 1,000 hectares of opium 
poppy were grown in the district.  Cultivation has been 
essentially eliminated in Ky Son except in a few remote 
locations.  However, according to UNODC, there is "anecdotal 
evidence" that local Ky Son farmers are cultivating opium on 
the Lao side of the border for consumption and sale in 
Vietnam. 
 
3.  (U)  The visit included meetings with provincial and 
district authorities as well as observation of about 10 
separate crop substitution and alternative development 
activities in four different communes located in various 
areas of Ky Son district.  Activities visited included 
raising livestock (pigs) and "black" chickens as well as 
cultivating fruit trees (peach and plums), mushrooms, tea, 
terrace rice, and hybrid Chinese (flatland) rice.  Some 
activities were continuations of those begun under Phase I, 
which finished in February 2001; others are new under Phase 
II.  Officially titled "Capacity Building for Alternative 
Development to replace Opium Poppy Cultivation," the project 
was scheduled to begin January 2002.  Actual project 
implementation began in July 2002 (see paras 7 and 8 for 
reasons for this delay). 
 
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DISTRICT SUPPORT 
---------------- 
 
4.  (U)  At Mung Xem, the Ky Son district capital, People's 
Committee Chairman Mua No Tu stated that the people in his 
district had "benefited greatly" from the project and "are 
happy" that, after a long delay, Phase II was up and 
running.  He expected Phase II would be "as successful as 
Phase I."  Implementing Phase II meant that UNODC and the 
donor community were "still committed" to making the area 
free from opium poppy cultivation, he noted.  However, he 
lamented that a "small amount" of poppy recultivation had 
occurred this past year in a remote area in the southwestern 
part of the district, but claimed that authorities had 
"quickly eradicated it."  Other communes were "very much 
looking forward" to new project activities, he added.  Tu 
said that at a project review meeting among all relevant 
parties scheduled for "sometime" in May in Hanoi, the 
district and authorities from the Ministry of Agriculture 
and Rural Development (MARD) plan to ask for a project 
extension (with no additional funds) because to the "late 
start" for implementation. 
 
5.  (U)  According to Nguyen Xuan Phuong, the Phase II 
onsite project manager, Phase II will implement project 
models in 16 of Ky Son's 20 communes.  According to UNODC's 
technical advisor, Per Vogel, this is "very ambitious," 
considering the logistics involved and the weak 
infrastructure in most parts of the district.  However, if 
the project is indeed extended, it would be possible to 
reach more communes, he predicted. 
 
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LESS UNODC CONTROL - SUBSEQUENT DELAYS 
-------------------------------------- 
6.   (U)  According to Vogel, a key feature of Phase II is 
that the GVN assumed management control for most of the 
project's components.  The major exception is in the area of 
personnel and administration, which is essentially Vogel's 
responsibility.  Vogel, a former UNODC program officer, was 
also involved with Phase I.  Under Phase II, he is a 
contract employee based in Hanoi.  He said that he travels 
to Ky Son "about two or three times" per quarter. 
 
7.  (SBU)  The GVN's request to change the project's 
modality to national project execution ("NEX") came as a 
"surprise" to UNODC and made the original project document 
"somewhat obsolete," according to Vogel.  As a result of 
this request, it was impossible to transition quickly from 
Phase I and "some momentum" was lost, he admitted.  In 
addition, MARD's national project director insisted on 
hiring an onsite project manager whom he knew personally. 
The appointment was a "disaster," Vogel claimed.  Firing and 
replacing the national project manager also cost "a few 
months," he admitted.  Vogel said that he was unsure why the 
request to change to NEX came up so suddenly, but he opined 
that national authorities "might have looked" at UNDP, where 
he claimed most projects are NEX.  (Note:  An NGO source who 
has worked in the Ky Son area told poloff on April 25 that 
UNDP is "reevaluating NEX" in light of implementation and 
accountability problems on "several projects."  End Note.) 
 
8.  (SBU)  Another issue delaying implementation involved 
the hiring of "specialists" tasked with acting as advisors 
to villages for the various components of the project.  The 
pool of applicants was greatly reduced, according to Vogel, 
because UNODC required the candidates to have a high level 
of English.  Several of the specialists hired in May 2002 
have underperformed, according to Vogel; when their 
contracts expire in May, they will not be renewed.  Vogel 
concluded that that the English language requirement was 
"unrealistic."  Previously, UNODC required specialists to 
write their reports in English; that will no longer be the 
case -- specialists under the new contract will write their 
reports in Vietnamese and the reports will then be 
translated into English by the project's Hanoi office. 
 
-------------------------- 
SELECTION PROCESS PROBLEMS 
-------------------------- 
 
9.  (U)  Most of the households poloffs visited appeared to 
have some sort of official connection that resulted in their 
participation in the project.  Many were vague about exactly 
how they were selected (e.g., "officials contacted me").  A 
few said that they had previously received benefits from 
Phase I; those appeared relatively prosperous. 
 
10.  (U)  At Huoi Tu commune, about 10 miles northeast of 
Mung Xem, poloffs visited a tea nursery model supported by 
the project.  The objective of the model is to introduce a 
higher-quality tea in the region.  He could not say how many 
or which family households would eventually benefit from the 
project. 
 
11.  (U)  In Tac Ca commune, about five miles west of Mung 
Xem, poloffs visited a newly installed pigsty.  The 
household had received cement from the project to build the 
sty, as well as several sows.  The person in charge of the 
pigs admitted that he did "knew very little" about pigs but 
that his son, the village chief, had asked him to look after 
them.  In Hui Kiem commune, about six miles southeast of 
Mung Xem, the project is assisting a woman to grow 
mushrooms.  She said that while she had been helped with a 
similar project in Phase I, that crop had "failed." 
Subsequently, she reapplied and "the authorities decided to 
help me again."  Subsequently, the woman admitted that she 
was the chairperson of the commune farmers' association. 
 
12.  (U)  In Muong Long commune, about 20 miles northeast of 
Mung Xen, poloffs visited a relatively prosperous three 
hectare farm that consisted of plum and peach trees, a few 
other crops such as corn, and a well-tended chicken coop. 
The farmer said that he had received tree graftings from 
neighbors who had originally received peach trees (imported 
from Australia and France) during Phase I.  He said that he 
was "looking forward" to receiving more trees in Phase II. 
Project manager Phuong explained that this household had 
"shown much initiative" during Phase I and proved that that 
project could be successful with an individual who had once 
grown poppy on his land.  Therefore, "authorities" decided 
he should receive additional assistance under Phase II. 
Phuong also claimed that the project wanted to implement 
project models among households that had a "good chance to 
succeed." 
 
13.  (SBU)  In Huu Kiem commune, about 7 miles southeast of 
Mung Xem, poloffs visited a relatively large complex 
containing several fishponds, a pigsty, a chicken coop, and 
crops, including corn and vegetables.  While these 
activities were not project-supported, the farmer said that 
he was "expecting" the project to provide new fish for the 
fish ponds.  The farmer said that he had recently moved to 
the complex and had agreed to make rent payments totaling 
VND 14 million (about USD 980) for the next year to the 
district Agriculture and Forestry department to use the 
property.  He had also recently purchased 65 sows for about 
VND 500,000 each (about USD 35).  The farmer said he was 
expecting to receive fish from the project to stock the 
ponds.  When asked how he managed to pay the rent and buy 
the livestock, he replied "through my savings."  (Comment: 
In a poor area such as this one, having sufficient savings 
to pay rent and buy livestock from savings would seem highly 
unlikely.  End Comment.)  Subsequent questioning revealed 
that the "tenant" was the head of the local farmer's union. 
Vogel said that based on what he had seen at this site, he 
would inform the project management that funds should go to 
someone more in need because this individual already 
appeared well-established and the farmer appeared to be 
benefiting from official connections.  He speculated that 
the capital might have come (at least indirectly) from other 
donors active in the district. 
 
14.  (SBU)  Subsequent to the field visits, Vogel admitted 
that the selection process "was not working the way I would 
like."  He lamented that his ability to influence the 
process was "limited" due to NEX and the need for him to 
spend the majority of his time in Hanoi.  Despite a district- 
wide "needs assessment" carried out during the early stages 
of Phase II implementation as well as provisions for 
participatory selection, he agreed that the selection 
process "left much to be desired in terms of transparency." 
Vogel lamented that based on his observations during the 
field visit, it appeared that the authorities "were not 
paying much attention" to the criteria for participation. 
He said he would meet with officials to try to push for a 
more balanced approach; however, he cautioned that NEX 
limits his influence in the process. 
 
---------------------------------------- 
INVENTORY CONTROLS - NOT A CLEAR PICTURE 
---------------------------------------- 
 
15.  (U)  According to project manager Phuong,  normally 
there is not much expendable equipment around the UNODC 
project house.  As project material comes in, it is 
generally moved out to the project areas quickly.  The 
current inventory system is not a "living document" - 
despite Vogel's requests, the project secretary (who is 
responsible for inventory control) had not updated the list 
for nearly a year.  A spot check of a few items showed some 
discrepancies between on hand counts and the inventory.  The 
motorpool supply area was supposed to have 29 Toyota filters 
for various UNODC vehicles according to the inventory, but 
there were only 19 on hand when the secretary counted. 
Eventually, he was able to account for them through "stock- 
in" and "stock-out" forms, but this required about an hour's 
work with the files.  Similarly, we counted 316 hydro 
generators stored in three locations.  These were not even 
inventoried because they were "too new," according to the 
secretary.  After scouring several files, he was able to 
 
SIPDIS 
account for 300 of the generators through various receipts. 
The secretary claimed the remaining 16 had been returned to 
the vendor for various reasons, but he could not produce 
documentation to support this claim. 
 
16.  (U)  On the non-expendable side, inventory documents 
indicated about 20 Minsk motorbikes were intended for 
project-related activities in the district.  However, the 
inventory listed their locations as "communes."  Since there 
are 180 villages in 20 communes scattered around Ky Son 
district, this did not provide a very precise location.  No 
project officials could say with certainty where these 
motorbikes were located or how they were being used.  At an 
outbrief on April 23, Vogel and project manager Phuong 
pledged that they would update the inventory, keep it 
current, and endeavor to account for non-expendable property 
during field visits. 
 
17.  (U)  Subsequent to our visit, UNODC provided a summary 
copy of the outside auditor's report for calendar year 2002. 
The report recommended that, "project management should 
enhance control and monitoring over the project's non- 
expendable property." 
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COMMENT 
------- 
 
18.  (SBU)  Officials and the local population appear 
committed to fighting drugs and very pleased that Phase II 
is being implemented.  By all appearances, Phase I helped 
contribute both to the virtual elimination of opium poppy 
cultivation and to a general increase in the standard of 
living in parts of the district.  Theoretically, UNODC's 
checks and balances in NEX should provide assurances that 
project implementation will proceed according to plan; 
however, questions remain regarding the transparency of 
project participation and accountability for project 
material, issues about which UNODC is now even more clearly 
aware and attempting to address. 
BURGHARDT