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New Vietnam Ruling Could Open Door To Further Exports

Carlyle A. Thayer  C3S Paper No. 2048


WASHINGTON — The decision by the US to legalize the sale of lethal equipment for maritime security to Vietnam could have major impacts on both the regional balance of power and US industry.

The decision to allow arms sales to Vietnam for the first time since the Vietnam War comes at a time of increased Chinese aggression in the South China Sea.

Sales of equipment will be restricted to maritime defense, a nebulous term that allows the US to decide on a case-by-case basis what equipment can be sold to the Vietnamese military.

The goal, State Department officials told reporters during an Oct. 2 briefing, is to bolster Vietnam’s maritime security without giving them equipment that could be used in violation of human rights.

“Just because we’ve shifted the nonlethal policy is not an indication we’re going to provide all lethal assistance,” one official said. “I don’t want you to get the sense the floodgates are opening.”

The State Department is casting this as a decision based on improved relations with Vietnam, rather than a move to blunt Chinese aggression in the region.

“This is not an anti-China move,” another official said. “This is not something where we would feel we had to alert China to. This is really a move on the continuum of things we’ve been talking about to help countries build maritime capacity.”

Indeed, relations between the US and Vietnam have been warming for years, particularly since a 2010 trip to Hanoi by then-Secretary of State Hillary Clinton. The State Department officials were quick to point to internal improvements inside Vietnam as well, particularly on the human rights front.

But it is impossible to deny the growing aggression of China in the region, something that came to a head over the summer when Chinese forces set up an oil rig inside water claimed by Vietnam, leading to confrontations between the two navies.

Beijing eventually removed the oil rig, but Murray Hiebert, deputy director of the Sumitro Chair for Southeast Asia Studies at the Center for Strategic and International Studies, said the incident reminded Vietnam of the need to “look over their shoulders” at their northern neighbor.

He added that the US has been interested in increasing military-to-military relationships in recent years, but the oil rig incident may have given the impetus for both sides to make things happen.

“Vietnam is trying, like a lot of regional countries, to balance its relations with China and the US,” Hiebert said. “China is Vietnam’s biggest trading partner. It provides electricity in the north, it provides component parts for export products, so Vietnam can only go so far. It’s a very calibrated, cautious approach.”

Zhuang Jianzhong of Shanghai Jiao Tong University warns that China will not be happy with what it could view as the arming of its southern neighbor.

“It’s a prepositioning of equipment against China and we are not happy with this decision,” he said. “We will not overreact, for there is no immediate conflict or war between China and Vietnam. But we will talk about that when Obama comes to Beijing” for the Asia-Pacific Economic Cooperation meeting in November.

Hiebert agrees Beijing won’t be happy with the move, but is unlikely to raise a public stink over it. Other nations in the region are unlikely to make much fuss about the decision, he added.

“I think most countries, particularly the other claimants [to the South China Sea], are going to just see this as increasing the capability of Vietnam’s very weak Navy,” he said.

Boon for Industry?

The State Department officials acknowledged that the definition of maritime security will likely include aircraft. And for a US industrial base that is hoping for foreign sales to boost profits amid domestic budget cuts, Vietnam could represent a goldmine, said Richard Aboulafia of the Teal Group.

“There is a very high degree of inevitably that one day Vietnam will be a major US defense equipment market, and for quite a few years they’ve been heading in that direction,” Aboulafia said. “Once again, the No. 1 promoter of the US cause, in terms of diplomacy, military cooperation and defense sales, is Beijing.”

He expects Vietnam to move quickly to procure some form of maritime surveillance aircraft, likely excess P-3 aircraft the US Navy is looking to retire as it brings its more advanced P-8 fleet online.

He added that used C-130 cargo planes could make “an awful lot of sense” for maritime search-and-rescue operations. That could come in the form of excess C-130H models, as the US National Guard wants to divest those in favor of the more modern C-130J.

Carl Thayer, a professor at the Australian Defence Force Academy, said “both sides would benefit” from a P-3 agreement. He adds that Vietnam may look to add a coastal radar of some sort, and helicopters that could be launched from its Molinya-class frigates.

Of note is an agreement, announced by Secretary of State John Kerry in late 2013 to provide Vietnam with five fast, unarmed patrol vessels. Thayer said Vietnam might be interested in another order of cutters, this time armed.

The first State Department official said it has not received any signs from Vietnam that it wants the original tranche of five boats to have weapons added back, but did not rule out the possibility of arming those cutters down the line.

While the short term market may be filled quickly, the true prize is the potential for a long-term, reliable military customer, particularly withVietnamese naval forces willing to spend on modernization.

Andrew Shapiro, a former senior State Department official who headed Political-Military Affairs, called the decision “a very positive firststep that could lead to further expansion in the years ahead.”

US companies are “bullish” on Vietnam as a market, Shapiro said, and so is the US government.

“The US military is greatly interested in deepening cooperation with Vietnam and working more closely together,” he said “This is a significant indicator that the Vietnamese are becoming more comfortable with us as a potential partner, and I think DoD and state areinterested in building on the progress.”

Shapiro added that lifting the ban on lethal equipment could also lead to growth in non-defense industries.

The state officials said there are no plans to lift the remaining restrictions on military trade, but left the possibility open.

“As the relationship progresses, and if there is continued progress on human rights, that makes it easier and more likely we take othersteps to build the relationship,” the first official said. “So we’re not ruling it out down the road, assuming there is continued progress.” ■

Wendell Minnick in Taipei contributed to this report.

(Article reprinted with the permission of the author Carlyle A. Thayer, Emeritus Professor,The University of New South Wales at the Australian Defence Force Academy, Canberra email: Carlthayer@webone.com.au)

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