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ABN # 65 648 097 123
Background Briefing: Vietnam’s New Defence White Paper Carlyle A. Thayer December 8-9, 2009
[Client name withheld] December 7th: QUESTION: Tomorrow the Ministry of National Defence is releasing a national defence white paper here in Hanoi. Is this a first? What will be included: South China Sea issues, border issues? Is the release of a White Paper by the Defence Ministry a new development? What is its significance? ANSWER: Vietnam has produced two white papers one in 1998 and the other in 2004. These are quite extensive and comprehensive documents - running more than 50 pages (but in pamphlet size). White Papers are part of the ASEAN Regional Forum's confidence building and transparency measures. All members of the ARF are encouraged to provide one. The point is to compare one version with another. The White Paper will provide an strategic overview of how Vietnam perceives its security environment. It will also mention border and South China Sea issues. It should mention some recent developments, a new air-naval region in the south. The White Paper usually does not provide any detail on budgets or weapons procurements. So it would be interesting to see (a) what weapon systems are featured in photographs and discussed and (b) if Vietnam says anything about defence budget or future arms procurement (the deal for six Kilo class subs and 12 Su-27Ks under negotiation). I am pasting below a chart comparing White Papers produced by China and eight ASEAN states prepared by researchers at the U.S. National Defense University. This is one chart from a series of three. The first chart (not produced) shows that China has increased transparency over time but still lacks transparency in key areas. The third chart (not produced) shows that China falls behind comparable states – Australia, Japan and South Korea – in the degree of transparency measures listed on the chart. In the chart below Vietnam ranks poorly on transparency of key data when compared to China and other regional states.
[client name deleted] December 8th: QUESTION: The White Paper was released today. It's a 155 page book (both English and Vietnamese versions). That includes a 49 page section of appendices with an overall organisation chart, addresses and phone numbers of attache offices abroad, list of academies and military institutes, pictures of flags, insignias and uniforms, and lists of delegation and ship visits since 2005. Quite comprehensive. It was published by Nha Xuat Ban The Gioi (firstname.lastname@example.org, or www.thegioipublishers.com.vn). What do you think of the following defence budget figures released today. 2005 - 16.278 trillion dong (1.872% GDP) 2006 - 20.577 trillion dong (2.194% GDP)
3 2007 - 28.922 trillion dong (2.529% GDP) 2008 - 27.024 trillion dong (1.813% GDP) Also, Deputy Defence Minister Nguyen Chi Vinh, who released the White Paper, said he was "concerned" about the situation in the South China Sea. Is that Vietnam’s stock line on this? ANSWER: These are the most detailed budget figures that Vietnam has produced. The 2004 White Paper revealed defence budget figures for the first time, it gave a figure of 2.5% of GDP. The figures just released by Vietnam show the trend of upward defence spending as a percent of GDP in line with the attached estimates by the International Institute of Strategic Studies (IISS) and the Australian Defence Intelligence Organisation (DIO). They also show a drop due to the global financial crisis when Vietnam's economic growth declined. Vietnam Defence Budget as percent of GDP, 2001‐08 (in billion U.S. dollars) VPA Size Defence GDP DB as % of 2009 Budget (DB) GDP White Paper % GDP 484,000 484,000 484,000 484,000 455,000 455,000 455,000 450,000 2.6 2.9 3.2 3.17 3.15 3.43 3.73 33 34 39 45.4 52.2 61.1 71.2 7.9 8.5 8.2 7.0 6.0 5.6 5.2 na 2.5% 1.872% 2.194% 2.529% 1.813% Average = 2.102
DB (2009 White Paper) 1.135* .977 1.341 1.801
2001 2002 2003 2004 2005 2006 2007 2008
Source: International Institute of Strategic Studies, The Military Balance (2000‐01 to 2007‐08). *Vietnam 2004 White Paper.
4 Estimates by IISS and DIO are more than double Vietnam's figures. See the chart below that incorporates foreign estimates with figures just released by Vietnam. Data for 2008 has not been published yet by IISS or DIO. This White Paper represents a major step forward in transparency. It address the red line (no transparency) shown in the chart above. Vietnam has referred to the East Sea as a hot spot in a previous White Paper. But saying Vietnam is “concerned” represents the most forthright statement by a defence official offering a strategic assessment of the South China Sea. Nguyen Chi Vinh is head of General Directorate II and is the intelligence chief who meets with foreign intelligence counterparts. [client name deleted], December 9th: QUESTON: I would like to ask you for your assessment of the following: ‐ Is it the first time that Vietnam reveals its defence budget? Is it going to be much larger in real life? ‐ What is the meaning of this announcement of the white paper ‐ is it timed to any of the ongoing events? ‐ What do you think is most important in the white paper? ‐ Any thoughts on the upcoming visit by Defence Minister Phung Quang Thanh to United States? ANSWER: Q1. ‐ Is it the first time that Vietnam reveals its defence budget? Is it going to be much larger in real life? Vietnam’s 2009 White Paper is a marked step up in transparency in one area Vietnam has been reticent about ‐ revealing data on the defence budget. The last White Paper, issued in 2004, provided a single figure of 2.5 percent of Gross Domestic Product (GDP) for the defence budget. The current White Paper provides figures for the past four years including percent of GDP and the actual amount in Vietnamese dong. Vietnamese figures show an average of just over 2 percent of GDP has been spent on defence over the four your period ending in 2008. Because Vietnam’s economy has grown this has meant an absolute increase in defence expenditure. Vietnam’s defence budget has nearly doubled from 2005 to 2008 from US $.997 billion to US $1.8 billion.
5 Estimates of Vietnam’s Defence Budget, 2004‐2007 (USD billion)
Year 2004 2005 2006 2007 DIO 3.0 3.2 3.2 3.3 IISS 3.17 3.15 3.43 3.73 Vietnam Defence 1.14 0.98 1.34 1.80
Source: Australia, Defence Intelligence Organisation (DIO), Defence Economic Trends in Asia‐Pacific (2008); International Institute of Strategic Studies (IISS), Military Balance (2001‐02‐2007‐08); and Vietnam, Ministry of National Defence, White Paper (2009).
Because Vietnam has not made its defence expenditure public before, foreign analysts have used estimates provided by the International Institute of Strategic Studies (IISS) and Australia’s Defence Intelligence Organisation (DIO). Generally IISS estimates are higher than the DIO’s. Nevertheless, both the IISS and DIO claim that Vietnam is spending just over five percent of GDP or double Vietnam’s publicly announced figure. It is impossible for outside analysts to know which sets of figures are more accurate until the methodology used to calculate defence expenditure is made public. A further complication is that both IISS and DIO use United States dollars while Vietnam uses the dong. Q2. ‐ What is the meaning of this announcement of white paper ‐ is it timed to any of the ongoing events? Vietnam’s two previous White Papers were issued six years apart. The first came out in 1998 and the second in 2004. This suggests that the current White Paper may have been brought forward by a year. The purpose of a White Paper is to set out a country’s strategic appreciation and future policies. While Vietnam is at pains to downplay friction with China in the South China Sea, this White Paper does highlight Vietnamese concerns. It also draws attention to the disparity in resources between Vietnam and China. A previous White Paper termed the South China Sea a hot spot. The current White Paper may be seen as part of a wider diplomatic campaign to draw international attention to the South China Sea and underscore Vietnam’s peaceful approach towards resolving conflicting territorial claims. This approach is to put China on the back foot. Q3. ‐ What do you think is most important in the white paper? The most important aspect of the White Paper is the step up in the level of transparency, not only in the defence budget, but across a range of topics and issues. A recent study by researchers at the U.S. National Defense University revealed that Vietnam’s defence White Paper is the least transparent of all Southeast Asian states that produce White Papers, and also less transparent that China’s White Paper. This has put Vietnam in an awkward position in the public relations stakes. The current White Paper goes some way in redressing this.
6 Q4. ‐ Any thoughts on the upcoming visit by Phung Quang Thanh to the United States? Last year Vietnam and the United States initiated a strategic dialogue and the forthcoming visit by Defence Minister Phung Quang Thanh is one of the outcomes. His visit will be in reciprocation for the visit by Defense Secretary Donald Rumsfeld in 2006. The timing could not be better as Vietnam searches for international support to curb Chinese assertiveness in the South China Sea. The United States has been pressing Vietnam to step up the level of defence cooperation in a number of areas, such as US assistance to train Vietnamese peacekeepers to serve under the United Nations. The US is also pressing for a cross servicing access agreement. The Vietnamese want US restrictions on the sale of military equipment to be eased. They also want more forthright US assistance to address the legacy of Agent Orange. On the surface General Thanh’s visit will be a carefully choreographed event. There will be no outward sign that Vietnam and the United States are combining to contain China. But beneath the surface both sides know that any step up in bilateral defence relations will be read that way in Beijing. [client name deleted], December 9th: QUESTION: Have you heard about Vietnam’ White Paper on national defense? There is one thing I really don’t understand: Vietnam often does not want to make public information relating to national defense, or security, but this time, Vietnam makes several things transparent in the White Paper. Why did they do that? Is it a move that should be welcomed? Vietnam’s defense minister Phung Quang Thanh will visit the Pentagon from December 13‐18; do you know what will be discussed? Do you think there will be breakthrough moves in the military relation between the US and Vietnam following Thanh’s visit? Are there anything relating to the release of White Paper with Thanh’s visit to the US? RESPONSE Q1. Have you heard about Vietnam’ White Paper on national defense? There is one thing I really don’t understand: Vietnam often does not want to make public information relating to national defense, or security, but this time, Vietnam makes several things transparent in the White Paper. Why did they do that? Is it a move that should be welcomed? ANSWER: Vietnam is a member of the ASEAN Regional Forum or ARF. The ARF has been pressing for confidence building and transparency measures for over a decade. One of these is the regular publication of a defence White Paper. Vietnam produced two White Paper in the past, one in 1998 and the other in 2004. These papers marked a major step forward in transparency on the part of the normally secretive Ministry of National Defence. In 2004, for example, the White Paper claimed that Vietnam spent 2.5 percent of its GDP on defence. A recent study by researchers at the U.S. National Defense University revealed that if you compare all the White Papers produced in Southeast and Northeast Asia, Vietnam ranks at the bottom in terms of transparency, especially on defence
7 expenditure. The 2009 White Paper provides for the first time figures on defence expenditure for the years 2005 to 2008. The standard western references to Vietnam only provide figures up to 2007. Vietnam’s defence establishment is growing more sophisticated as a result of defence diplomacy and the posting of Defence Attaches abroad. Vietnam has learned that much information it considers secret is freely available outside Vietnam. Vietnam has also learned that there is much incorrect information available as well. Vietnam is responding to the norms promoted by the ARF to be more transparent in defence matters. And Vietnam is now playing a more sophisticated game in providing information. After all, China produces far superior and detailed White Papers, why shouldn’t Vietnam? White Papers can be used to signal Vietnam’s strategic concerns and future policies. The present White Paper, for example, stresses Vietnam’s desire for a peaceful resolution of issues related to the South China Sea. But this also has the effect of raising this matter to the attention to the international community. Q2. Vietnam’s defense minister Phung Quang Thanh will visit the Pentagon from December 13‐18; do you know what will be discussed? Do you think there will be breakthrough moves in the military relation between the US and Vietnam following Thanh’s visit? Are there anything relating to the release of White Paper with Thanh’s visit to the US? ANSWER: Minister Phung Quang Thanh’s visit to the United States is a belated reciprocal visit of Defense Secretary Donald Rumsfeld’s trip to Hanoi in 2006. It is also follows the first strategic dialogue between Hanoi and Washington held in late 2008. The initiation of the strategic dialogue is the more important of the two events. It signals Vietnam’s willingness to advance the bilateral defence relationship after a long period of going slow. Vietnam is inherently cautious. In my opinion there will be progress but not a breakthrough. There are some leaders in Vietnam who are concerned about moving too closely to the United States. But there are also leaders in Vietnam who see the benefit of developing a comprehensive or all‐round relationship including defence ties. The United States is pressing Vietnam to become more involved in cooperative activities such as US support for Vietnamese involvement in peacekeeping and a cross service access agreement that would allow the regular visit to Vietnam of US naval ships and military aircraft. Under the terms of this agreement Vietnam would provide specified services, such a fuel, to support such visits. The US would like to see some joint activities by the military forces. Cooperation at sea is one area. Vietnam would like to see the US lift some of the current restrictions on access to US military technology and equipment. This would bring practical results to Vietnam. But Vietnam would also be seeking from the United States more direct assistance in addressing the legacy of war left by Agent Orange.
Vietnam’s Defence Spending (Billion US Dollars), 2004‐07
Vietnam’s Defence Budget as a Percentage of GDP, 2004‐08
DIO = Australia, Defence Intelligence Organisation figures for 2007 only; IISS = International Institute of Strategic Studies figures to 2007 only; and MND = Vietnam, Ministry of National Defence.
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