Japan Close to Resuming Aid to Vietnam; Embargo Could Be Hurt

TOKYO — The Japanese government is close to deciding to resume aid to Vietnam, a move that would help undermine the U.S.-led economic embargo against the Hanoi government and could result in a flood of new Japanese investment in Indochina.

“The United States’ relations with Vietnam are relaxing, and we see this as a window of opportunity,” a Japanese official said Thursday. He said Japan is “moving in the direction” of restoring economic aid to promote economic development in the region.

Japan also will back Vietnam’s efforts to obtain development loans from the World Bank and the Asian Development Bank.

In what could be an important first step, Japan will renegotiate its $165-million debt with Vietnam. Vietnam’s failure to make payments on its large foreign debt has been a key reason it has been unable to get International Monetary Fund assistance, he said.

The official declined to confirm a Washington Post story that Japan has already told U.S. officials it will resume aid to Vietnam and will announce that decision Nov. 7. Acting Secretary of State Lawrence S. Eagleburger, here for a conference on aid to the former Soviet Union, said Thursday he is unaware of a reported Japanese decision to resume aid to Vietnam.

Japan has diplomatic relations with Vietnam; the Japanese business community has long viewed it as an important source of cheap, hard-working labor. But Japan has refrained from aggressively promoting economic ties with Vietnam in a show of support for the U.S. embargo of the Southeast Asian nation.

Washington has said it will maintain an embargo on Vietnam until Hanoi has fully accounted for more than 2,000 American servicemen missing in action during the Vietnam War.