Asia Times: Moscow courts Vietnam to get Southeast Asian foothold


	March 3, 2001	atimes.com

Central Asia/Russia

Moscow courts Vietnam to get Southeast Asian foothold

HO CHI MINH CITY, Vietnam - Vietnam and Russia are putting their ties, for decades grounded in ideological roots, on a more mature, equal footing during Russian President Vladimir Putin's visit this week.

In a landmark deal agreed last September, Russia's Deputy Prime Minister Victor Khristenko announced this week that Vietnam's debt, estimated at US$11 billion, had been cut by 85 percent, with repayment restrucured over the next 23 years at about $100 million per year. The issue, a serious strain on bilateral relations for the past few years, was "completely solved", Khristenko added.

Meanwhile, Putin was quick to hail a new strategic partnership with Russia's old Cold War ally, announcing that Hanoi wanted to buy new Russian armaments, while Vietnam has come out in support of Moscow's stance on US missile defense. The two countries also agreed their energy joint venture, Vietsovpetro (VSP), would explore a new block off Vietnam's southern coast and Russia offered loans to finance hydropower projects in Vietnam.

For many Vietnamese, Putin's trip, coming after the visit by former US president Bill Clinton in November, is yet another sign of change since the end of the Cold War and in the decade of doi moi or economic renovation.

The trip by Putin, who arrived on Wednesday, was seen by many in Ho Chi Minh City as a "change in Russia's attitude, from a great power, a big brother who provided aid in the past, to a trade partner", one Vietnamese journalist here said.

The Russian president's presence was a good opportunity to "assess past performance and come to a consensus on major guidelines and measures to take bilateral and comprehensive cooperation to a new, higher level", said Vietnamese President Tran Duc Luong.

Indeed, Putin on Thursday said the ties that bind Vietnam and Russia go beyond ideology. "Common strategic interests were always behind them," he said. Thus, it would be "idiotic" to lose those relations now, he added.

Putin's visit sends a significant message because it is the first trip here by a Russian president. In fact, the visit by Clinton, the first by a US president since the Vietnam War, meant that a leader from the United States came first. No Soviet leader had come to Vietnam before.

On Thursday, Putin and Luong signed a 17-article agreement on a new "strategic partnership" designed to symbolize a mending of ties that soured after the collapse of the Soviet Union. Economic links between the two countries suffered severely after the break-up of the Soviet Union, for whom Vietnam was a pillar in Asia.

The former Soviet Union used to account for 80 percent of Vietnam's trade, but trade with Russia today is at a mere $420 million. Both sides are currently striving to show that business and economic ties can be revived. It is likely that this aspect of bilateral ties stands a better chance of growing faster than the much-heralded "partnership".

In the declaration on their new partnership, Vietnam supported the Kremlin's critical attitude toward US plans for a missile defense system against rogue states. The declaration said that limited anti-missile defense systems in Asia-Pacific may undermine regional stability and spark a new arms race.

But increasingly, Russia also sees Vietnam as a link to Southeast Asia, not to mention a host of a military base and a customer for arms sales. Putin also told journalists that Vietnam, Moscow's fifth largest customer in weapons sales, wanted and can buy new state- of-the-art Russian armaments.

He did not reveal the types of armaments sought by Vietnam, but in the past six years Vietnam has bought 12 Sukhoi-27 jet fighters at an estimated price of $330 million. Moscow has also offered Hanoi more Sukhoi-27 jet fighters, as well as the MiG-29 jetfighter, MiG training jets. Likewise, it has suggested technical assistance in upgrading Vietnam's military infrastructure, notably airfield and command posts.

Vietnam is reported to have expressed interest in purchasing other Russian military hardware, including modern diesel submarines of the "Varshvyanka" type for the Vietnamese navy, at $800 million apiece.

The Russian navy still maintains several hundred personnel at Cam Ranh Bay, 400 kilometers north of Ho Chi Minh City, a large US-built naval facility that once provided the former Soviet- Pacific fleet a strategic base. Russia's 25-year lease on Cam Ranh base expires in 2004, a deal that Moscow wants extended. The fate of the base was not discussed as Russia can still use the base free of charge until 2004, Putin's foreign policy adviser Sergei Prikhodko said this week. There continues to be talk in Vietnam, though, that an extension is possible.

During Putin's talks with Luong, Communist Party leader Le Kha Phieu, Prime Minister Phan Van Khai and National Assembly Chairman Nong Duc Manh, the leaders emphasized the need to give bilateral ties a new boost. All said that current bilateral trade was far below potential. But the one big obstacle to bilateral trade was removed in September, with the deal on Vietnam's Soviet-era debt.

During Putin's visit, Russian officials offered a $100 million loan to finance a joint hydropower project, the Pleikrong plant in central Vietnam. Its total price tag is $265 million. Russian RTR television described the loan offer as an "unprecedented" move, thought it is not really quite the case. In 1995, Russia offered a $30 million dollar to finance the Song Hinh hydropower plant, but the order still went to Swedish firms.

Putin and Tran Duc Luong also witnessed the signing of a number of bilateral agreements, including a deal to transfer yet another offshore block, No 04-3, to the Vietsovpetro joint venture. The deal stipulates that the 50 square kilometer block off Vietnam's southern coast is to be returned to Vietnam's oil monopoly PetroVietnam unless commercial deposits are discovered.

In case of economically viable discoveries, PetroVietnam agreed to set up a production-sharing venture with VSP to develop offshore oil and gas deposits for 25 years. VSP, the $1.5 billion Russian-Vietnamese joint venture which accounts for some four fifths of Vietnam's oil exports, remains the country's biggest oil producer.

(Inter Press Service)