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Thayer Vietnam's New Defence White Paper

Thayer Vietnam's New Defence White Paper

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Published by Carlyle Alan Thayer
An analysis of Vietnam's publicly announced defence budget and new defence White Paper. An enlarged chart may be found at Thayer White Paper Comparisons, Scribd.com
An analysis of Vietnam's publicly announced defence budget and new defence White Paper. An enlarged chart may be found at Thayer White Paper Comparisons, Scribd.com

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Published by: Carlyle Alan Thayer on Dec 10, 2009
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11/30/2010

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Thayer Consultancy

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.

2

[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 (thegioi@hn.vnn.vn, 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 

Year 

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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