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Background Brief: Vietnam-Russia Comprehensive Strategic Partnership Carlyle A. Thayer September 2, 2012

On July 27, Vietnamese President Truong Tan Sang met with his Russian counterpart President Vladimir Putin in the resort city of Sochi. The two presidents issued a joint statement on raising their relations to a comprehensive strategic partnership. This development raises a number of questions for strategic analysts. First, why are Vietnam and Russia seeking a closer relationship at this time? Russia became Vietnams first strategic partner in 2001. Their bilateral relations developed gradually and picked up pace with Russias economic recovery. The elevation of relations to the level of comprehensive strategic partner is a natural development. But this factor alone is not a sufficient explanation. Since 2001, Vietnam developed strategic partnerships with seven other countries: Japan (2006), India (2007), China (2008), South Korea (2009), Spain (2009), United Kingdom (2010) and Germany (2011). Only one of these strategic partnerships has been raised to the next level; in 2009 Vietnam and China became comprehensive strategic partners. President Putkin has been proactive in pushing Russias return to Asia. A comprehensive strategic partnership with Vietnam serves this objective. Vietnam negotiations with the United States on a strategic partnership have stalled. Vietnam, which seeks to multilateralism and diversity its external relations, responded to the opportunity offered by Putin. American companies will now have to calculate whether they risk missing out on commercial opportunities in Vietnam. Second, what does each seek to gain from this relationship? There are four longstanding major components of the strategic partnership: oil and gas cooperation, energy cooperation (hydro and nuclear power), military equipment and technology, and trade and investment. There are also three other areas of importance: science and technology, education and training, as well as culture and tourism. Vietnam and Russia formed Vietsovpetro, an oil and gas joint venture, in 1981. It has been active on Vietnams continental shelf and more recently in Russia as well. This has been Russias most profitable enterprise. The joint venture has been extended to 2030. Further, Vietnam and Russia agreed to facilitate the operations of other joint ventures such as Rusvietpetro, Gazpromviet and Vietgazprom to expand oil and gas exploration and exploitation activities to third countries.

2 Russia agreed to give Vietnam a soft loan of $10.5 billion to build its first nuclear power plant, Ninh Thuan 1. Russia is Vietnams largest provider of military weapons, equipment and technology. The two presidents pledged to continue cooperation in this sector. Vietnam and Russia will co-produce anti-ship cruise missiles. Vietnam is expected to order more Su-30 Sukhoi multirole jet fighters. There is obvious mutual benefit in this aspect of their relationship. In August, Russia launched the first of six Kilo-class conventional submarines due for delivery to Vietnam over the next five years. Part of the sales package includes provision for Russia to build a maintenance and service facility at Cam Ranh Bay and training for Vietnamese submariners. Vietnam has made it clear that no country will be allowed to establish a base at Cam Ranh Bay. Vietnam will open its commercial facilities to all countries and Russia will be given special access as a strategic partner. Trade and investment are both growing but the overall figures are modest. Two-way trade reached US $2 billion in 2011 and it is hoped to raise this to US$5 billion in 2015 and US$10 billion in 2020. Russia ranks twenty-third on the table of countries and territories investing in Vietnam. Third, are Vietnam and Russia seeking to balance a third party - China in Vietnams case, and the United States in Russias case? Vietnam prefers a multipolar world. Vietnam seeks to develop relations with all the major powers. Improving relations with Russia is part of this larger strategy. Russia does not seek to balance against the United States so much as to re-establish itself as a major player in the Asia-Pacific. Fourth, how will this new alignment impact on the geo-politics of the Asia-Pacific Region in general and the South China Sea in particular? Russia is a major supplier of military weaponry to both China and Vietnam. Russia has the option of withholding or cancelling the supply of military armaments at a time of crisis. As for the South China Sea, Russian military assistance will improve Vietnams capacity for defence and enable it to develop its own version of anti-access/areadenial in the Spratly archipelago. The joint statement issued by the two presidents upheld the status quo by reiterating that territorial disputes should be resolved by peaceful means without the use of force or the threat to use force based on international law including the United Nations Convention on Law of the Sea. Both also agreed to include regional security on the agenda of the East Asia Summit. In sum, the Vietnam-Russia comprehensive strategic partnership is overwhelming focused on bilateral relations for mutual benefit. It will have a marginal impact on the geo-politics of the Asia-Pacific Region.

3 It is important to note that Vietnam has promoted the concept of strategic partnership to signify a bilateral relationship that has breadth and depth.

Suggested citation: Carlyle A. Thayer, Vietnam-Russia Comprehensive Strategic Partnership, Thayer Consultancy Background Brief, September 2, 2012. Thayer Consultancy Background Briefs are archived and may be accessed at: http://www.scribd.com/carlthayer.