Vietnamese Prime Minister Nguyen Tan Dung has announced that contracts worth billions of dollars to purchase Russian submarines, fighter jets and other military hardware were signed during his official state visit to Moscow, in addition to agreements encouraging closer cooperation in the fields of oil and gas, mining and financial services. The announcement that Vietnam is to replace its ageing Russian-made hardware comes at a time of rising tensions over sovereignty disputes in the South China Sea.
The Disputed South China Sea
Vietnam has agreed to order six Russian Kilo-class submarines at an estimated cost of $2 billion, an acquisition which could, in the long term, shift the balance of power in the disputed South China Sea in their favour. Currently, Vietnam disputes the ownership of several potentially oil and gas-rich archipelagos in the region with China, Malaysia and several other South-East Asian states and strengthening their naval power will strengthen their negotiating position in the future.
Vietnam's defence spending, according to a recently released government White Paper, was $1.4 billion for the year 2008. Figures have yet to be released for 2009 but, given the size of the contracts already agreed, spending looks set to rise for this year and also in 2010 making it one of Russia's most important military clients.
Vietnam Order Important for Russian Arms Industry
The Vietnamese order for submarines, in addition to a contract for eight Sukhoi fighter jets scheduled for delivery in 2010 is an important contract for the Russian military at a time when the country is looking to Rossobornexport - the country's main exporter of military hardware - to make significant inroads into the Western-dominated arms market despite the global financial crisis which has caused many countries to cut back on military spending. This year alone has seen Russia sign major arms deals with Venezuela and Libya, in addition to carrying out joint military exercises with both China and Venezuela.
Vietnam and Russia Strengthen Economic Cooperation
It is customary for headline-grabbing arms deals to herald closer cooperation in civilian fields, and the agreements signed between Russia and Vietnam are no exception. Prime Minister Dung announced that a whole host of accords and bilateral agreements have been signed between the two countries aimed at increasing cooperation in fields as diverse as mining and financial services.
Other agreements will help to increase Russian access to Vietnam's growing energy and telecommunications markets, whilst Hanoi has also promised to promote closer regional cooperation with Russia when it assumes the chairmanship of ASEAN in 2010.
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