Where does Vietnam Education Foundation get its funding ?

Mark Ashwill is an American educator, PhD and former director of the International Institute for Education (IIE) until he and his wife Hang in 2009 created Capstone Vietnam, an educational consulting service based in Hanoi.  Mark spoke at a recent Vietnam-US Higher Education Forum in Hanoi, and was surprised to find that almost no one in the audience of 150 attendees knew that a much heralded scholarship program, the Vietnam Education Foundation (VEF) — assumed to be sponsored by the U.S. government — is actually funded by the Vietnamese government as a debt swap arrangement.  The Vietnamese government agreed, as part of the normalization process 20 years ago, to pay back $146 million in agricultural and other loans that the U.S. had provided to the defeated Saigon government.  With debt and the Greek crisis on everyone’s mind, details of the Vietnamese debt payback to the U.S. in the 2010 article below by Mark Ashwill may surprise many Americans as well as Vietnamese.



VEF: From Vietnam With Money ($)

In April 1997, during a three-day visit to Vietnam, then Secretary of the Treasury Robert Rubin announced that the Vietnamese government had agreed to repay the $146 million wartime debt of the former South Vietnam.  Four years earlier, Vietnam agreed in principle to assume the debt from its former enemy as part of a larger agreement that cleared the way for renewed international borrowing by Hanoi, previously blocked by Washington. 

As Nguyen Manh Hoa, director of the external financial division of the Finance Ministry, noted at the time, “We had to agree on old debts so we could have new relations, such as new loans and cooperation agreements.”  In other words, the U.S. government pressured Vietnam, which had no choice but to swallow its pride and set aside principle for the greater good of continued improvement in the two countries’ economic relationship, culminating in a bilateral trade agreement four years later.  (Excerpted from Moving Vietnam Forward, an article I wrote in 2005 about the Vietnam Education Foundation, or VEF.)

The VEF website refers to it as an independent federal agency created by the U.S. Congress and funded annually by the U.S. Government. Well, yes and no.  For the record, VEF is a scholarship-for-debt program that obligates the Vietnamese government to transfer millions of dollars a year to the U.S. government, which then provides an annual allocation ($5 million) to VEF for fellowships (80%) and administration (20%).  (The balance goes into the bottomless pit that is the U.S. Treasury.)  A classic example of power politics, the U.S. government “persuaded” (think arm-twisting and ultimatums) Vietnam to pay off a debt incurred by its former enemy, or else.

According to the U.S. Treasury Department, about $76 million of the wartime debt is principle from agricultural and development loans.  The remaining $70 million is negotiated interest payments.  …Most of the overdue loans date to the late 1960s, when the United States was funneling hundreds of millions of dollars to prop up South Vietnam in pursuit of a failed strategy of Vietnamization leading to “peace with honor” (i.e., U.S. withdrawal) in 1973, and those frenzied and desperate final days at the end of April 1975 as communist forces closed in on Saigon and national independence and peace in a unified Vietnam metamorphosed from distant dream to concrete reality ahead of schedule. 

Thus, the U.S. government is merely a conduit for money from Vietnam that ultimately represents an investment in the education of its own citizens and a valuable contribution to U.S.-Vietnam educational exchange and relations.  That so few people are aware of the circumstances surrounding VEF’s genesis is, in my opinion, a sin of omission. Rather than play politics with educational exchange, why not  just give credit where credit is due?

When I entered “vietnam education foundation scholarship-for-debt program” in Google, the first result was my 2005 article, the second was the VEF website and the third was a syllabus for a Georgetown University course from fall 2007 about U.S.-Vietnam relations.  Here is an excerpt:  The Foundation, which is funded by the former Saigon government’s war time debt to the United States, has a Scholarship Fund for the training of Vietnamese students in science, math, technology, and medicine at U.S. institutions of higher learning.  Attention:  If you find any references to the VEF as a scholarship-for-debt program whose funding source is the Vietnamese government, please let me know.

2 thoughts on “Where does Vietnam Education Foundation get its funding ?

  1. This is really an eye-opening news to me. I’ve never heard of this thing, either had any intention applying for VEF scholarship before. I agree that, if the scholarship holders don’t know where actually the money come from, it’s kind of deception.

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  2. I have had a discussion with the author at his website on this topic.
    phan Says:

    30/07/2015 at 05:38
    VEF doesn’t try to hide the information about the source of funding. Its fellows know about this fact. It is not necessary to mention clearly on website if nobody asks. (It might be mentioned though)
    However, it is still a program under the US government. And it is still the US money, regardless of if Vietnam or any other country gave it to the US in the first place. I see no difference between this source of money with another source of money, let say Vietnam pays the US to buy a Boeing.

    maavn Says:

    30/07/2015 at 09:38
    Like I’ve said before, it’s a sin of omission and disingenuous, at best. The only reference to the source of funding on the VEF is an article I wrote in 2005 that the founding executive director happened to like. In a sense, it’s “laundered money,” meaning it’s a scholarship program administered by the US govt but funded by the VN govt. I’ve spoken w/ quite a few VEF fellows and know people who have done the same and very few are aware of funding source. Sorry but your Boeing analogy doesn’t make sense. VN Airlines transfers funds directly to Boeing for passenger jets. There is nothing secret about this transaction, nothing to hide. 🙂

    Do you agree with the deal that was imposed upon the VN govt in April 1997 that later (and happily) resulted in a scholarship-for-debt program?

    Homework assignment: Google these search terms and see what you find: VEF scholarship for debt.


    phan Says:
    Your comment is awaiting moderation.
    31/07/2015 at 06:46
    Maybe you could Google more carefully, nothing is secret here https://home.vef.gov/download/2004%20VEF%20Annual%20Report.pdf . Search for this “Financially, VEF has operated within budget. VEF receives $5 million annually from the Vietnam Debt Repayment Fund, to which the Vietnamese government repays the pre-1975 debts owed to the United States by South Vietnam.” in the pdf please. You can easily find this information mentioned a number of years before this document.
    There are more than 500 VEF fellows, Vietnamese, US scholars benefited from VEF. I am not sure when you say a “very few” aware of this among “quite a few” is a good statistics.
    Not to mention they don’t hide anything, the comparison with Boeing makes sense since the payment for the debt is what coming first. In the other words, the US government asked for the payment without any thinking of using that money back for Vietnam at that point. Also, the Vietnamese government doesn’t transfer money directly to VEF, but the US government.


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