TNAG-1912-FCO40-2716-Financial-assistance-from-the-UK-Government-to-Vietnamese-re-1989 — Page 14

CONFIDENTIAL

donors support for a settlement between Vietnam and the IMF in

the run-up to the last IMF/IBRD Annual Meetings in September, but

were rebuffed by the UK as well as by the US and Japan.

The

11. If we wished to signal a new approach, it would be necessary

to instruct our Executive Director to IMF/IBRD, and also our

Executive Director to ADB, to advise Management that we would be prepared to work constructively with others towards a resumption

of normal relations between Vietnam and the IFIS. It would be

important, however, to emphasise two points in particular.

first is that any agreement must be based on a fully credible adjustment programme. The second is that any UK bilateral financial support could only be modest (we have provisionally

earmarked the equivalent of US$5 million from the additional

money made available by the Treasury: the French, probably

tongue in cheek, had sought $25 million when they visited London

in September). It would also be sensible to advise the French of

our more positive attitude, and to discuss with them whether and

when any further lobbying among G7 members might be productive.

The key to any bilateral package in support of Vietnam is the Japanese attitude, since any financing package would need a major Japanese contribution. So far, the Japanese have deferred to

American susceptibilities and taken an extremely cautious

attitude.

Conclusion

12. If the Vietnamese respond positively to our approach,

necessary action would be as follows:

a)

b)

c)

an early meeting between ODA and the key British NGOs;

a Ministerial decision to go ahead with extension of the

Joint Funding Scheme to Vietnam;

an early approach by the Embassy to the Vietnamese Government over sending trainees to the UK;

CONFIDENTIAL