United States assistance to Vietnam
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Overview of the U.S. Aid Program in Vietnam

U.S.-Vietnam diplomatic and economic relations were non-existent for more than fifteen years following socialist North Vietnam's victory in 1975 over U.S. ally
South Vietnam South Vietnam, officially the Republic of Vietnam ( vi, Việt Nam Cộng hòa), was a state in Southeast Asia that existed from 1955 to 1975, the period when the southern portion of Vietnam was a member of the Western Bloc during part of th ...
. During that time, the United States maintained restrictions on foreign assistance to unified Vietnam. Normalization of relations—particularly in the economic sphere—began hesitantly in the early 1990s, progressed incrementally through the mid- and late 1990s, and then accelerated markedly following the signing of a Bilateral Trade Agreement (BTA) in 2000. One measure of the pace of the normalization of bilateral economic relations is the increase in trade flows, which rose from about $200 million in 1994 to over $1 billion in 2000, to nearly $4.5 billion in 2003. The United States is now Vietnam's largest trading partner. The resumption of U.S. aid to Vietnam has closely tracked the normalization of bilateral relations. U.S. assistance began as a trickle in 1991, when around $1 million was spent for prosthetics for Vietnamese war victims, and increased to nearly $50 million in
fiscal year A fiscal year (or financial year, or sometimes budget year) is used in government accounting, which varies between countries, and for budget purposes. It is also used for financial reporting by businesses and other organizations. Laws in many ...
(FY) 2004 covering a broad range of programs. Moreover, the level of assistance has more than doubled since FY2000. (See Table 1) For FY2005 through the end of April 2005, nearly $55 million in assistance had been spent. By far the two largest components of the U.S.
bilateral aid In international relations, aid (also known as international aid, overseas aid, foreign aid, economic aid or foreign assistance) is – from the perspective of governments – a voluntary transfer of resources from one country to another. Ai ...
program are food assistance and health-related assistance, which together comprised about 60% of the nearly $200 million in aid the United States has provided to Vietnam since U.S. assistance began to increase substantially in FY1999. Spending on HIV/AIDS treatment and prevention in Vietnam has risen, especially since President Bush's June 2004 designation of Vietnam as a "focus country" eligible to receive increased funding to combat
HIV The human immunodeficiency viruses (HIV) are two species of ''Lentivirus'' (a subgroup of retrovirus) that infect humans. Over time, they cause acquired immunodeficiency syndrome (AIDS), a condition in which progressive failure of the immune ...
-AIDS under PEPFAR. The United States provided $10 million in PEPFAR funds in FY2004, and over $27 million for FY2005 through the end of April. Since mid-December 2004, Vietnam has reported over 30 cases, at least 14 of them fatal, of the H5 avian influenza (also known as the "bird flu"), raising concerns that the disease is re-emerging after an outbreak in early 2004 spread across Asia. The wartime and tsunami supplemental, H.R. 1268, which was passed by the House on and the Senate on , includes $25 million to help combat the disease, of which the U.S. embassy in Hanoi expects approximately $4 million to be used in Vietnam. Other sizeable assistance items include demining activities and programs assisting Vietnam's economic reform efforts. This latter group of programs has been designed to help the Vietnamese government implement the economic liberalization reforms it committed to in the 2000 U.S.-Vietnam Bilateral Trade Agreement and will likely be required to undertake as part of its desire to join the World Trade Organization (WTO).2 Hanoi has set a goal of attaining WTO membership by the end of 2005. The U.S. also funds educational exchanges with Vietnam, principally the Vietnam
Fulbright program The Fulbright Program, including the Fulbright–Hays Program, is one of several United States Cultural Exchange Programs with the goal of improving intercultural relations, cultural diplomacy, and intercultural competence between the people of ...
, which receives more funding (typically $4 million annually) than any other Fulbright program in the world. These programs are not included in Table 1 because they are not funded through the foreign policy budget and confer benefits to both the U.S. and Vietnam. Additionally, the United States administers the Vietnam Education Foundation, which was established by Congress in 2000 to provide $5 million annually for scholarships and educational exchanges. Funds for the foundation are recycled from the Vietnamese government's repayments of the wartime debts South Vietnam owed the United States. Total annual funding for educational exchanges, including the Fulbright and Vietnam Education Foundation programs, has been in the $9–$11 million range since FY2003.


Vietnam and the Millennium Challenge Account

In May 2004, Vietnam was not selected as one of the first 16 countries eligible for the Millennium Challenge Account (MCA). Vietnam was deemed ineligible, despite meeting the technical requirements for MCA eligibility, because it scored very low on some of the indicators used to measure
political freedom Political freedom (also known as political autonomy or political agency) is a central concept in history and political thought and one of the most important features of democratic societies.Hannah Arendt, "What is Freedom?", ''Between Past and F ...
. Vietnam again was included in the list of candidate countries for FY2005, from which eligible countries will be selected in late 2004. In September 2004, Vietnam again received low scores on the indicators of political and
civil liberties Civil liberties are guarantees and freedoms that governments commit not to abridge, either by constitution, legislation, or judicial interpretation, without due process. Though the scope of the term differs between countries, civil liberties may ...
maintained used by the
Millennium Challenge Corporation The Millennium Challenge Corporation (MCC) is a bilateral United States foreign aid agency established by the U.S. Congress in 2004. It is an independent agency separate from the State Department and USAID. It provides grants to countries that h ...
to determine eligibility for the MCA. Relative to other countries in
Southeast Asia Southeast Asia, also spelled South East Asia and South-East Asia, and also known as Southeastern Asia, South-eastern Asia or SEA, is the geographical United Nations geoscheme for Asia#South-eastern Asia, south-eastern region of Asia, consistin ...
, Vietnam receives far less than Indonesia and the Philippines, front-line states in the war on terrorism that received an estimated $150 million and $110 million in FY2004, respectively. Assistance to Vietnam is roughly on a par with the next two largest Southeast Asian recipients of U.S. aid, Cambodia ($50 million) and
East Timor East Timor (), also known as Timor-Leste (), officially the Democratic Republic of Timor-Leste, is an island country in Southeast Asia. It comprises the eastern half of the island of Timor, the exclave of Oecusse on the island's north-weste ...
($30 million). Relative to the rest of the world, Southeast Asia is not a target for large U.S. aid programs, in part because many countries in the region have "graduated" from economic aid.


Future Areas for Possible Expansion

If U.S.-Vietnam relations continue to deepen, particularly in the political and military spheres, it is possible to foresee a continued expansion of the U.S. aid program in Vietnam. Possible areas for new or expanded programs include strengthening the
rule of law The rule of law is the political philosophy that all citizens and institutions within a country, state, or community are accountable to the same laws, including lawmakers and leaders. The rule of law is defined in the ''Encyclopedia Britannica ...
(particularly judicial
capacity building Capacity building (or capacity development, capacity strengthening) is the improvement in an individual's or organization's facility (or capability) "to produce, perform or deploy". The terms ''capacity building'' and ''capacity development'' ha ...
), counternarcotics,
anti-corruption Anti-corruption (or anticorruption) comprises activities that oppose or inhibit corruption. Just as corruption takes many forms, anti-corruption efforts vary in scope and in strategy. A general distinction between preventive and reactive measu ...
, education management, and the preservation of cultural and historical sites. On top of these items, two new programs currently are being considered for Vietnam:


IMET (International Military Education and Training)

Vietnam and the United States gradually have been expanding their embryonic security ties, which have lagged far behind the economic aspect of the relationship. Some in the United States see Vietnamese and U.S. security interests as mutually reinforcing, particularly with regard to China, and hope to develop military-to-military relations. These efforts culminated in November 2003, when Vietnamese Defense Minister Pham Van Tra visited Washington. Later that month, the
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USS Vandergrift and its 200 crew members made a four-day call at the port of Saigon. Both events were firsts since the end of the Vietnam War and were followed up by additional visits in 2004. One option for expanding military-to-military relations would be establishing a bilateral IMET program. Since FY2002, the Bush Administration has requested funds for Expanded International Military Education and Training (E-IMET) courses to enhance
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proficiency among Vietnamese military officers. The program is designed to "facilitate he officers'attendance at conferences and confidence building meetings hosted by Pacific Command Headquarters." No funds have been disbursed, however, because Vietnam and the United States have not yet signed an IMET agreement. Funding for IMET programs would be affected by the restrictions in the proposed Vietnam Human Rights Act. In an interview with
the Washington Post ''The Washington Post'' (also known as the ''Post'' and, informally, ''WaPo'') is an American daily newspaper published in Washington, D.C. It is the most widely circulated newspaper within the Washington metropolitan area and has a large nati ...
days before departing for his June 21, 2005 summit with President Bush, Vietnamese Prime Minister Pham Van Khai said that during his trip to Washington, the United States and Vietnam would announce the launch of a bilateral IMET program.


Peace Corps

The Vietnamese government in early 2004 invited the U.S.
Peace Corps The Peace Corps is an independent agency and program of the United States government that trains and deploys volunteers to provide international development assistance. It was established in March 1961 by an executive order of President John F. ...
to Vietnam to begin discussion of opening a country program. Over 20 countries, including Cambodia, have made similar invitations. The Peace Corps has welcomed the invitation and in the near future intends to conduct a country assessment. Generally, if a country assessment team makes a positive report, it takes 12 to 18 months for a program to be established. New programs typically cost on the order of $1 million-$2 million annually. In its report (S.Rept. 108–346) accompanying the FY2005 Foreign Operations bill (S. 2812), the Senate Appropriations Committee expressed its support for opening a new program in Vietnam. The Vietnam Human Rights Act's restrictions would not have directly affected the Peace Corps.


Agent Orange

Prime Minister Pham Van Khai indicated that one of his mid- level priorities during his trip to the United States in June 2005 is obtaining U.S. assistance for
Agent Orange Agent Orange is a chemical herbicide and defoliant, one of the "tactical use" Rainbow Herbicides. It was used by the U.S. military as part of its herbicidal warfare program, Operation Ranch Hand, during the Vietnam War from 1961 to 1971. It ...
victims. During President Bill Clinton's five-day trip to Vietnam in 2000, the United States agreed to set up a joint research study on the effects of dioxin/Agent Orange. Over three million Vietnamese suffering from the alleged effects of Agent Orange were part of a class action suit filed in U.S. Federal District Court in Brooklyn against the chemical companies that manufactured the defoliant. The case was dismissed in March 2005, in a ruling that was widely publicized in Vietnam. In April 2005, the Bush Administration discontinued funding of a grant to conduct research in Vietnam on the possible relationship between Agent Orange and birth defects. The justification for the decision was that the Vietnamese Ministry of Health had not given its approval for the study.


Recent Attempts to Restrict Aid

In recent years, Congress has devoted considerable attention to Vietnam's human rights record. Vietnam is a one-party, authoritarian state. Since at least the late 1990s, the ruling Vietnamese Communist Party (VCP) appears to have followed a strategy of relaxing most restrictions on most forms of personal and religious expression while selectively repressing individuals and organizations that it deems a threat to the party's monopoly on
political power In social science and politics, power is the social production of an effect that determines the capacities, actions, beliefs, or conduct of actors. Power does not exclusively refer to the threat or use of force (coercion) by one actor against ...
. Most prominently, the government has cracked down harshly on protests against various government policies by certain
ethnic minority The term 'minority group' has different usages depending on the context. According to its common usage, a minority group can simply be understood in terms of demographic sizes within a population: i.e. a group in society with the least number o ...
groups, particularly the Montagnards in the country's Central Highlands and the Hmong in the Northwest Highlands. The government also has stepped up repression of so-called cyber dissidents who have criticized the government over the Internet. On September 15, 2004, the State Department, under the International Religious Freedom Act (P.L. 105–292), for the first time designated Vietnam as a "country of particular concern," principally because of reports of worsening harassment of certain groups of ethnic minority Protestants and Buddhists. By law, within 90 days (extendable for another 90-day period), the President must decide on a course of action, including sanctions, with regard to Vietnam's religious rights situation. The President extended the review period, meaning that a decision must be made by mid-March 2005.


A Review of the U.S.-Vietnam Normalization Process and the Restoration of U.S. Aid to Vietnam

Congress played a key role in both the cessation of aid to Vietnam in the 1970s, and its restoration in the 1990s.


Cold War Restrictions on Aid

For much of
the Cold War The Cold War is a term commonly used to refer to a period of Geopolitics, geopolitical tension between the United States and the Soviet Union and their respective allies, the Western Bloc and the Eastern Bloc. The term ''Cold war (term), co ...
, aid to North Vietnam and most other socialist countries was prohibited. (Aid was prohibited under section 620(f) of the Foreign Assistance Act of 1961, among other statutes.) The United States provided significant military and economic assistance to its ally, South Vietnam, particularly after the U.S. became overtly involved in inter-Vietnamese hostilities in 1965. In 1973, following the conclusion of a Paris
Peace Agreement A peace treaty is an agreement between two or more hostile parties, usually countries or governments, which formally ends a state of war between the parties. It is different from an armistice, which is an agreement to stop hostilities; a surren ...
that brought an end to U.S. military involvement in Vietnam, Congress began cutting Nixon Administration requests for military and economic assistance to South Vietnam. President Richard Nixon's pledge to provide reconstruction aid to North Vietnam also proved unpopular in Congress, particularly after the collapse of the north–south
cease-fire A ceasefire (also known as a truce or armistice), also spelled cease fire (the antonym of 'open fire'), is a temporary stoppage of a war in which each side agrees with the other to suspend aggressive actions. Ceasefires may be between state act ...
negotiated in Paris. After the victory of socialist North Vietnam over South Vietnam in April 1975, the United States ended virtually all bilateral economic interchange, including foreign assistance, with unified Vietnam. (Prohibitions on assistance to Vietnam were included in P.L. 94–41, a continuing appropriations resolution signed into law by
President Gerald Ford Gerald Rudolph Ford Jr. ( ; born Leslie Lynch King Jr.; July 14, 1913December 26, 2006) was an American politician who served as the 38th president of the United States from 1974 to 1977. He was the only president never to have been elected ...
in the summer of 1975.) The restrictions included a halt to bilateral
humanitarian aid Humanitarian aid is material and logistic assistance to people who need help. It is usually short-term help until the long-term help by the government and other institutions replaces it. Among the people in need are the homeless, refugees, and ...
, opposition to financial aid from international financial institutions (such as the World Bank), a ban on U.S. travel to Vietnam, and an embargo on bilateral trade. President Gerald Ford linked the provision of economic assistance to Hanoi's cooperation in returning and accounting for POWs and MIAs. In the FY1977 foreign aid
appropriations bill An appropriation, also known as supply bill or spending bill, is a proposed law that authorizes the expenditure of government funds. It is a bill that sets money aside for specific spending. In some democracies, approval of the legislature is ne ...
Congress prohibited the use of any funds to provide assistance to Vietnam, a provision that was repeated annually until its removal in 1994. In the early months of his administration, President
Jimmy Carter James Earl Carter Jr. (born October 1, 1924) is an American politician who served as the 39th president of the United States from 1977 to 1981. A member of the Democratic Party (United States), Democratic Party, he previously served as th ...
(1977–1981) and the socialist regime in Hanoi attempted to negotiate the outlines of a normalization agreement that would include U.S. assistance. The negotiations stalled, however, when the Vietnamese responded that they would neither agree to establish relations nor furnish information on U.S. POW/MIAs until the United States pledged to provide several billion dollars in postwar reconstruction aid. Simultaneously, Congress objected to Carter's moves by reinforcing existing prohibitions on aid to Vietnam. Normalization efforts ultimately were thwarted in 1978 by Vietnam's decision to align with the Soviet Union, its invasion of Cambodia, and its expulsion of nearly half a million ethnic Chinese who then became refugees in Southeast Asia.


The Normalization Process since the Early 1990s

Washington and Hanoi gradually began to normalize relations in the early 1990s, following Vietnam's withdrawal from Cambodia and improvements in Hanoi's cooperation on the issue of American
prisoners of war A prisoner of war (POW) is a person who is held Captivity, captive by a belligerent power during or immediately after an armed conflict. The earliest recorded usage of the phrase "prisoner of war" dates back to 1610. Belligerents hold priso ...
(POWs) and
missing-in-action Missing in action (MIA) is a casualty classification assigned to combatants, military chaplains, combat medics, and prisoners of war who are reported missing during wartime or ceasefire. They may have been killed, wounded, captured, execu ...
(MIA) personnel in Vietnam. Economic assistance was resumed in 1991, when the administration of
George H. W. Bush George Herbert Walker BushSince around 2000, he has been usually called George H. W. Bush, Bush Senior, Bush 41 or Bush the Elder to distinguish him from his eldest son, George W. Bush, who served as the 43rd president from 2001 to 2009; pr ...
announced plans to send $1.3 million to fit disabled Vietnamese with
artificial limb In medicine, a prosthesis (plural: prostheses; from grc, πρόσθεσις, prósthesis, addition, application, attachment), or a prosthetic implant, is an artificial device that replaces a missing body part, which may be lost through trau ...
s.19 The announcement came days after Washington and Hanoi agreed to open an office in Vietnam to resolve outstanding MIA cases. In subsequent years, annual aid flows were generally small and limited to disaster assistance and humanitarian programs—such as prosthetics and aid to orphans—to ameliorate the effects of the war. Coinciding with these developments, in 1991 and 1992 the Senate Select Committee on POW/MIA affairs—chaired by
John Kerry John Forbes Kerry (born December 11, 1943) is an American attorney, politician and diplomat who currently serves as the first United States special presidential envoy for climate. A member of the Forbes family and the Democratic Party (Unite ...
and vice-chaired by Bob Smith—conducted what many consider the most extensive independent investigation of the POW/MIA issue undertaken. In early 1993, the committee issued its report, which concluded that there was "no compelling evidence" that POWs were alive after the U.S. withdrawal from Vietnam, and that although there was no "conspiracy" in Washington to cover up live POWs, the
U.S. government The federal government of the United States (U.S. federal government or U.S. government) is the national government of the United States, a federal republic located primarily in North America, composed of 50 states, a city within a fede ...
had seriously neglected and mismanaged the issue, particularly in the 1970s. The committee's televised hearings played a major role in defusing much of the passion that had surrounded the POW issue. The U.S. aid program in Vietnam expanded gradually through the 1990s, in step with the acceleration of the normalization process. In 1993, President Bill Clinton announced that the United States would no longer oppose international financial institution aid to Vietnam. The following year, President Clinton ordered an end to the U.S.
trade embargo Economic sanctions are commercial and financial penalties applied by one or more countries against a targeted self-governing state, group, or individual. Economic sanctions are not necessarily imposed because of economic circumstances—they may ...
on Vietnam, a move that followed shortly after a vote in the Senate urging the embargo to be lifted. Ambassadors were exchanged in 1997. In Title II of the FY1991 Foreign Operations bill (P.L. 101–513) provided these funds, notwithstanding other legal provisions, including the ban on bilateral aid to Vietnam. 1998, President Clinton granted Vietnam its first waiver from the requirements of the so-called
Jackson–Vanik Amendment The Jackson–Vanik amendment to the Trade Act of 1974 is a 1974 provision in United States federal law intended to affect U.S. trade relations with countries with non-market economies (originally, countries of the Communist bloc) that restrict fre ...
(contained in the
Trade Act of 1974 The Trade Act of 1974 (, codified at ) was passed to help industry in the United States become more competitive or phase workers into other industries or occupations. Fast track authority The Trade Act of 1974 created fast track authority for ...
, Title IV, section 402), which prohibit the President from normalizing commercial relations with selected socialist and formerly
socialist countries A socialist state, socialist republic, or socialist country, sometimes referred to as a workers' state or workers' republic, is a sovereign state constitutionally dedicated to the establishment of socialism. The term ''communist state'' is oft ...
if they do not meet certain requirements regarding freedom of emigration. A congressional resolution disapproving the waiver was defeated, as have such resolutions disapproving the presidential waivers issued every year since. All of these steps provoked considerable controversy in Congress, though opposition to normalization decreased incrementally throughout the 1990s. Following the signing of the BTA in 2000, Congress overwhelmingly approved the agreement, which paved the way for the two countries to extend normal trade relations (NTR) status on a nonpermanent basis to one another. The signing of the BTA marked the end to legal restrictions on virtually all commercial transactions and most forms of economic assistance to Vietnam. Also in 2000, the Clinton Administration, in an undated unpublished determination, on national interest grounds, exempted Vietnam from the prohibition on most forms of assistance to 'communist' countries contained in section 620(f) of the Foreign Assistance Act of 1961. Vietnam and the United States gradually have been expanding their political and security ties, although these have lagged far behind the economic aspect of the relationship. In 2003 and 2004, however, Vietnam's leadership appears to have decided to expand their country's ties to the United States, as indicated by the aforementioned military-to-military meetings and ship visits. It is still unclear how far, how fast, and in what form any new security relationship will develop.


Further reading


Public domain CRS Report: "Overview of the U.S. Aid Program in Vietnam"
*For more on U.S.-Vietnam relations, see CRS Issue Brief IB98033, The Vietnam-U.S. Normalization Process. *For more on the Bilateral Trade Agreement, see CRS Report RL30416, The Vietnam-U.S. Bilateral Trade Agreement, by Mark Manyin
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*For more on the Millennium Challenge Account, see CRS Report RL32427, Millennium Challenge Account: Implementation of a New U.S. Foreign Aid Initiative, by Larry Nowels. *For more on the POW/MIA issue, see CRS Issue Brief IB92101, POWs and MIAs: Status and Accounting Issues, by Robert Goldich
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*For a more detailed account of the history of U.S.-Vietnam normalization, see CRS Issue Brief IB98033, The Vietnam-U.S. Normalization Process, by Mark Manyin. {{DEFAULTSORT:United States Assistance To Vietnam United States–Vietnam relations