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U.S., HANOI AGREE ON REPAYMENT OF S. VIETNAM’S DEBTS

SHARE U.S., HANOI AGREE ON REPAYMENT OF S. VIETNAM’S DEBTS

Negotiators from the United States and Vietnam have reached a draft agreement on the repayment of debts incurred by Hanoi's defeated enemy, South Vietnam.

"A bilateral agreement was initialed and is subject to the review of both governments before signature," said a Vietnamese Finance Ministry news release Saturday.Resolving the debt issue will move the two countries closer to concluding a trade agreement, one of the final steps to resuming fully normal relations.

The United States is asking Vietnam to take responsibility for up to $150 million in debts from the former government of the U.S.-backed South Vietnam.

Washington channeled billions of dollars worth of military, humanitarian and development aid into South Vietnam during the 1960s and 1970s until Saigon fell to advancing communist troops in 1975. Divided Vietnam then was reunited under communist rule.

The outstanding military debt is not under consideration for repayment, but Washington wants loans for development and humanitarian purposes to be repaid.

A U.S. official familiar with the talks said the amount ultimately to be repaid would be significantly reduced since Vietnam is one of the poorest countries in Asia.

U.S. and Vietnamese officials have not agreed to whether the amount to be repaid should be calculated using the current value of the dollar or its value in the early 1970s, when many of the loans were offered.

Relieving Hanoi of some of the debt burden could be a contentious issue in Washington, where some U.S. senators and members of Congress continue to oppose normalizing relations with Hanoi.

The draft agreement stipulates that Vietnam must repay Saigon's old debt over a 25-year span, a Ministry of Finance official told The Associated Press.

Washington lifted its decades-old embargo on Vietnam in 1994 and established diplomatic relations a year later.