Asia Times: Comrades seek new spin to 'fraternal ties'



	March 23, 1999	atimes.com

Central Asia / Siberia

Comrades seek new spin to 'fraternal ties'
By Sergei Blagov

MOSCOW - The Russians got an early start in Vietnam, but their special relationship faded almost overnight after the collapse of Hanoi's main benefactor, the Soviet Union, in 1991.

That decline, however, may well be reversed with a revived interest by Moscow and Hanoi in deepening economic and other ties amid the global economic downturn.

From March 25 to 30 in Hanoi, Russian and Vietnamese officials will hold their first inter-government commission meeting since September 1997 to discuss trade and economic matters.

''Bilateral cooperation between Vietnam and the Russian Federation has not yet matched its potential,'' Viktor Shevelukha, deputy of the State Duma or lower house of Russian parliament, said in an interview.

''We should develop cooperation in science and technology, as well as between regions,'' added Shevelukha, a member of the Russian Communist party and a frequent visitor to Hanoi.

Preoccupied with internal problems in recent years, the Kremlin did not bother much with boosting trade with its former ideological comrade.

In the three and a half decades of their ideological ties, between the mid-1950s and 1990, the former Soviet Union flooded its ally in Southeast Asia with concessionary loans.

The legacy of ''fraternal ties'' is yet to disappear: there are scores of five-story buildings, the ugly legacy of Soviet architects, in Hanoi's suburbs, and ''Russian jeeps'' are still the main vehicle of the Vietnamese army and police.

Tens of thousands of Vietnamese speak Russian, but a new mutual understanding is yet to emerge.

In August 1998 Russia and Vietnam vowed to revitalize flagging economic ties, especially in the lucrative energy field, during a visit to Moscow by Vietnamese President Tran Duc Luong.

Russian President Boris Yeltsin has reportedly accepted an invitation to visit Vietnam in 1999, but this is unlikely in the near future due to his deteriorating health.

Among a stack of documents signed by the two presidents was an agreement to build an oil refinery in Vietnam with an annual capacity of 6.5 million tonnes.

In December 1998 Vietnam approved an investment license for the Dung Quat refinery, a 50-50 joint venture between Russia's state- run Zarubezhneft and Vietnam's state oil firm PetroVietnam.

More economic projects are on the agenda when Russian First Deputy Prime Minister Vadim Gustov and Vietnamese Deputy Prime Minister Ngo Xuan Loc hold a bilateral commission meeting this month.

The commission, a forum for talks on trade and other issues, is due to hold its sixth session during Gustov's visit. The Russian delegation will include officials from the Primorye and Khabarovsk regions in the Far East.

Since the Soviet collapse, ties between former Cold War allies have been overshadowed by an apparent deadlock over the repayment of Vietnam's ruble debt to the former USSR, inherited by Russia.

Vietnam still owes 10.5 billion transferable rubles (TR) - the Soviet quasi-currency - to Moscow. Much of the debt stems from showcase projects that Moscow backed in the past, including the 1,920-megawatt Hoa Binh hydropower station, Vietnam's biggest dam, which supplies roughly half of its electricity.

The amount that Vietnam will pay is expected to be far less than the original loans.

Russian negotiators used to say that one dollar is worth 0.7 TR, a rate used by the former Soviet central bank. Then Moscow offered to write off half the debt on condition that Hanoi agree to its exchange rate terms, but the two sides have not reached agreement.

Bilateral trade is hindered by high transport costs, lack of capital and cumbersome bureaucracy in both countries.

Trade volume in 1998 stood at $400 million, up from $280 million a year earlier, with Vietnam running a trade deficit with Russia, says Alexander Tikhonov, a Vietnam expert with the Russian trade ministry.

Moscow and Hanoi agree the figure is far below the potential. Last May, Yevgeny Primakov - now prime minister but at that time the foreign minister - said Moscow aimed to multiply its trade with Vietnam tenfold, to reach a volume of $3 billion, over the next few years.

Other experts suggest a more modest trade volume target of $1 billion, although even that is a long way off.

Russian armaments sales to Vietnam amount to roughly a third of their trade. In the past three decades, Moscow supplied Hanoi's army with most of its hardware because it saw Vietnam as a key outpost of the ''socialist camp'' in Southeast Asia.

After the Soviet Union's collapse, military aid was replaced by Russian commercial armament sales, because Vietnam's 500,000- strong army still needs Russian arms and spare parts. In the past four years, Vietnam bought 12 Sukhoi-27 jet fighters at some $330 million.

The Russian navy still maintains several hundred personnel at Cam Ranh Bay, 400 kilometers north of Ho Chi Minh City, a large U.S.- built naval facility that once provided the Soviet Pacific fleet with a strategic base.

Russia has a 25-year lease on the Cam Ranh base, which expires in 2004 and which it wants extended. Defense Minister Igor Sergeyev, visiting Vietnam in October, vowed that despite financial problems the military will make every effort to keep the lease.

Experts in Moscow say Russia will also take part in bidding to supply machinery and equipment to hydro-electric plants in Vietnam's north and center.

But the country's chances to take part in the construction of the 4,000-megawatt Son La plant, Vietnam's larges, are slim as Russia, desperately short of cash, is unable to offer any substantial financial package for the more than $3 billion project.

Russian officials routinely insist Moscow has no intention of neglecting long-standing ties with Hanoi.

But those statements have yet to be substantiated, not least because the Russian private sector, badly burned by the crisis, is reluctant to be jump into dealings with Vietnam.

(Inter Press Service)