Japan Resumes Vietnam Aid, Further Weakens U.S. Embargo

TOKYO —  Japan resumed aid to Vietnam today by offering a concessionary loan worth up to $370 million in another blow to the crumbling U.S.-led economic embargo on Hanoi.

The United States lags far behind many of its allies in improving relations with Hanoi. Washington first seeks more progress in determining the fate of more than 2,000 Americans missing in action during the Vietnam War.

U.S. business leaders have urged an end to the economic embargo, saying it has prevented American companies from competing for lucrative contracts in Vietnam.

Japan joined other countries in freezing aid to Vietnam after Vietnam’s 1978 invasion of Cambodia. But the government said in a statement that it decided to resume assistance in order to contribute to Communist Vietnam’s efforts at economic openness and market-oriented reform.

France and Italy are among other U.S. allies that have resumed official aid in recent years.

Japanese companies, which curtailed trade and investment ties with Vietnam in deference to the U.S. economic embargo, have rapidly expanded their operations.

The Bush Administration is reviewing the future of the U.S. trade embargo, dating from the end of the Vietnam War in 1975, and normalization of diplomatic relations following the opening of Vietnamese records, including 4,800 photographs of American war dead and prisoners.

The U.S. Embassy in Tokyo said it would have no comment on the Japanese loan.