Vietnam-US Strategic Partnership

With the historic visit of US destroyer USS John McCain to Danang port of Vietnam on August 11, 2010, a new chapter in the bilateral relations between these erstwhile adversaries has been written. Earlier on August 8, USS George Washington, America’s largest aircraft carrier docked in the same port before steaming off to South Korea. While US operations in Afghanistan have often been characterised as another Vietnam, the US itself is trying to mend fences with Vietnam. Though the scars of the Vietnam War still remain in the minds of the civil society and the military leadership, the two countries are trying to project a unified strategic stance so as to cater for emerging challenges like China. The US itself has been cajoling Vietnam for better relations between the two nations. Vietnam, for its part, now with no strong strategic ally like the former Soviet Union, is also reformatting ties with the US.

This reconciliation started with the visit of then President Bill Clinton to Vietnam in the year 2000, which opened new vistas in trade cooperation erasing the signs of war which included unexploded bombs, land mines and extensive search for US nationals Missing in Action (MIA). This was followed by the despatch of two Vietnamese officers to the US for military training. With the passing of Permanent Normalization of Trade Relations bill in the US senate in December 2006 and Vietnam’s accession to WTO in 2007, Vietnam was seen as an emerging market and a potential trade partner. The subsequent visit of Vietnamese President Nguyen Minh Triet to the United States in 2007 has fostered greater investment and trade between the two countries. While their bilateral relationship has been limping back to normal for some time, geo-strategic compulsions are accelerating their engagement now.

US engagement initiatives started with the business delegation in 2008 and with work on a microchip fabricating lab worth US$ 1 billion near Ho Chi Minh City. The lifting of the embargo on Vietnamese shrimp and cat fish imports has created a positive constituency in both countries. Despite these initiatives, the issue of the Missing in Action (MIA) persons and the after-effects of Agent Orange still haunt their bilateral ties. Though initiatives have been taken by both governments in this regard, there is lot expected by both sides.

Increasing Chinese investments in Bauxite mines in Vietnam and a skewed trade balance have led the most revered General Vo Nguyen Giap (principal commander in the 1954 Indo-China war and the Vietnam war) to make pronouncements against this. The ever increasing Chinese sovereignty claims in the South China Sea have also had domestic reverberations in Vietnam. But the Vietnamese people are not willing to trust China or place their confidence on the US.

For its part, the US has been alarmed by the harassment meted out to the USS Impeccable by the Chinese in 2009 and has been scouting for possible partners in the region. US Secretary of States’ proclamation in July 2009 during the ARF summit in Thailand about US returning to Southeast Asia was seen as a confidence restoring gesture among US partners in the region. This was followed up by the clear signal that Hillary Clinton gave at the ARF summit in Vietnam in 2010 when she said that the South China Sea is a global commons and China should settle sovereignty issues with contending nations. Many see this as a ploy to placate Vietnam. Vietnam occupies the maximum number of islands in the Spratlys island chain in South China Sea. Clinton’s statement was the harshest snub to China in recent times. But it is still to be seen whether these gestures and statements have any effect on the Vietnamese Communist party and the military brass.

The US has been trying to secure its interests in the region and again has been trying to build bridges with potential strategic partners including Indonesia and Vietnam. There has been a global appreciation for the second rung of emerging economies which includes Vietnam, Indonesia, South Africa, Turkey and Argentina, popularly termed VISTA, which have an annual rate of growth of 6 to 7 per cent and an expanding manufacturing sector. Also, even if one analyses the trends of investment of the small and medium enterprises (SMEs), there has been a gradual shift from production from China to Indonesia and Vietnam. The most common examples given are the US footwear majors. Japan too has been trying to cultivate these markets for their economic benefits as well as for creating alternative production hubs in Asia. But it is also true that neither of these countries is in a position to challenge China’s economic might but with the rising wages and possible revaluation of Yuan in future, they would erode the comparative cost advantage offered by China now.

The US has also been negotiating with Vietnam for a nuclear deal though there has been resistance within the US domestic constituency in this regard. Vietnam is aiming to set up 13 nuclear reactors with an installed capacity of 20,000 MW within two decades. Vietnam has been aspiring for nuclear energy to propel its domestic manufacturing and economic growth, but it would take a while for the two countries to negotiate the terms of a nuclear deal. Vietnam has been also trying to modernize its military and the items that have been listed in its shopping list included six Kilo-class submarines from Russia, some Sukhoi-30 fighters, frigates and anti- submarine warfare equipment. It would not be prudent to say that these items are solely aimed at countering China because in its Defence White Paper released in 2009 Vietnam has restrained from making any mention about China in an adverse way. This shows that Vietnam is calculating its strategic interests and the possible advantages offered by China and the US.

The US in the process of siding with Vietnam on the South China Sea issue has annoyed China. But it would be an exaggeration at this point to say that the US would support Vietnam in case of a conflict in the South China Sea. The one major strategic area where most of the major powers have been seeking docking rights has been Cam Ranh Bay in Vietnam. This military port which was built by the Soviet Union would prove to be a major strategic vantage point for the US. Though Vietnam has categorically denied any military use of the port but the issue of docking rights has been kept ambiguous. The US would like to gain access to the port so as to monitor Chinese submarine movements from the Sanya Submarine base in Hainan Islands.

While there are many positive developments between Vietnam and the US, it is still to be seen how the elites and military in Vietnam interpret US overtures. On the US side, the human rights record of Vietnam, issues of religious freedom and the slow disinvestment of government equity in many state enterprises has been a major concern. One thing is for sure though. Proactive engagement of Vietnam by US would surely create ripples in the strategic waters of South China Sea. Vietnam itself has been advocating the signing of a binding Code of Conduct Agreement in South China Sea in place of the non-binding Declaration of Code of Conduct of the Parties signed in 2002. China claims that it has respected the 2002 declaration but the turn of events lately have shown that China is adopting a non-negotiable strategic posture about the region including sovereignty rights as well as claiming a vast Exclusive Economic Zone (EEZ) in the ‘contentious’ region. More that any US pronouncements, it is the Chinese posture that is likely to unify Southeast Asian nations on this issue. All in all, one can say that strategic compulsions make for strange bedfellows.