RUSSIA AND VIETNAM KEEP UP THE ILLUSION OF A

UNCLAS SECTION 01 OF 03 HANOI 000453

SIPDIS

SIPDIS
SENSITIVE

E.O. 12958: N/A
TAGS: PREL RU VM
SUBJECT: RUSSIA AND VIETNAM KEEP UP THE ILLUSION OF A
STRATEGIC PARTNERSHIP

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1. (SBU) Summary: Russian Prime Minister Mikhail Ephimovich
Fradkov was Vietnam's first high-ranking foreign visitor
since Tet, the Vietnamese New Year. The February 16-17
visit was the third by a Russian Prime Minister to Vietnam
since 1997. The primary purposes of this visit were to
strengthen cooperation with the GVN in such forums as APEC,
the EAS and ASEAN; to meet with GVN leaders ahead of
Vietnam's APEC chairmanship; and, to prepare for President
Putin's trip to Vietnam for the 14th APEC Summit. Fradkov
also discussed economic and energy cooperation. Through
this visit, the two countries' leaders once again reaffirmed
their "strategic partnership for mutual interest." However,
according to Russia watchers in Vietnam, this visit had more
to do with Russia's general "Looking East" foreign policy
than it did specifically with Vietnam. End Summary.

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PM Fradkov with GVN Leaders
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Prime Minister Phan Van Khai


2. (SBU) The meeting between the two PMs on February 16
concluded with the largely substance-free decision to
"continue their strategic partnership for mutual interest."
During the talks, PM Khai acknowledged that past cooperation
with Russia has made major contributions to the
industrialization and modernization process in Vietnam. PM
Fradkov officially agreed, and affirmed that Russia will
continue to be a "strategic partner" and promote their
traditional friendship and cooperation for "common benefits
and sustainable development."

3. (SBU) Beyond the two countries' existing cooperation,
especially in oil and gas exploration and exploitation, PM
Fradkov said Russia is also interested in Vietnam's Son La
hydroelectric power project (the biggest in Southeast Asia),
and that Russian companies are willing to participate in
projects on exploiting and processing bauxite and iron ores,
and to expand cooperation in automobile assembly and
electronic equipment manufacture.

4. (SBU) The two leaders agreed to maintain regular high-
level political dialogues; intensify bilateral cooperative
ties in traditional areas such as oil and gas, electric
energy, science and technology, and education and training,
especially in economic cooperation; and, expand cooperation
to other fields, including transport, tourism, technology
and the use of nuclear energy for peaceful purposes.
Concerning tourism, PM Fradkov acknowledged that Russians
have gravitated towards Thailand and Malaysia since these
countries allow visa-free travel while Vietnam does not.

Communist Party General Secretary Nong Duc Manh


5. (SBU) This was a "handshake" meeting, according to MFA
and think tank sources. Party General Secretary Nong Duc
Manh recited the usual script about Vietnam attaching
importance to intensifying the traditional friendship and
strategic partnership with Russia and wishing to further
boost cooperative ties in areas of significant potential.

6. (SBU) In response, PM Fradkov affirmed that Russia
considers Vietnam a strategic partner and expressed his
determination to consolidate and enhance the traditional
friendship and comprehensive cooperation between the two
countries, particularly in the areas of economic
cooperation, commerce, culture, science and technology. The
meeting was important more for its symbolic value than
anything else; a meeting with the General Secretary is
reserved for visits to which the Vietnamese assign the
highest protocol value.

National Assembly Chairman Nguyen Van An


7. (SBU) In another relatively ceremonial meeting, An said
that the visit was a significant step forward in bilateral
relations. According to An, the Vietnamese National
Assembly would do its best to implement agreements signed
between the two countries. In return, the Russian PM said
he agreed with the Chairman's ideas and affirmed Russia's
agreement with Vietnam's international and regional
positions.

President Tran Duc Luong


8. (SBU) In addition to the regular diplomatic rhetoric,
President Luong said during his meeting with PM Fradkov that
he considers this visit an important step of development in
the implementation process of the two countries' framework

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for relations reached during President Putin's 2001 visit to
Vietnam.

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Deliverables
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9. (SBU) During PM Fradkov's visit, Vietnam and Russia
signed agreements on personnel training and drug control.
The documents were a protocol on the amendment of the
agreement on training Vietnamese citizens at Russian
training establishments and universities, and an agreement
on cooperation between the Vietnamese Ministry of Public
Security and Russian Federal Agency for Drug Control in
fighting the production, stockpiling, trafficking and
trading of drugs and additive substances. The GVN declined
to make the texts of either agreement available to us.

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Trade, Investment and Economic Cooperation
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10. (SBU) After plunging in the aftermath of the collapse of
the Soviet Union, two-way trade between Russia and Vietnam
has steadily increased over the past years, with 2005 volume
passing the 1 billion USD mark for the first time. Russia
experts say the trade is about 60 percent barter and 40
percent cash, and Vietnam incurs a deficit. Vietnam's main
exports include rice, textiles, footwear, rubber, seafood,
fruits and vegetables, cashew nuts and tea while its imports
are fertilizer, steel and petroleum products. (Note: Our
GVN interlocutors somehow forgot to mention the hundreds of
millions of dollars in arms transfers from Russia to
Vietnam; most of Vietnam's arms purchases are from Russia.
End Note.)


11. (SBU) Russia has so far invested USD 278 million in 47
projects in Vietnam, while Vietnam has 11 projects
capitalized at USD 38 million in Russia, making Russia
Vietnam's second largest investment market after Laos. PM
Fradkov did not travel with a retinue of businessmen, which
disappointed the Vietnamese slightly, because there was no
concrete trade or investment benefit from the visit. This,
according to local Russia experts, makes sense because "the
Russians are practical; they only do things when they see
immediate benefits." Our GVN interlocutors noted that in
the old days, a Russian delegation would have resulted in
"quite a lot" of trade and commercial projects.


12. (SBU) Russian Industry and Energy Minister V. B.
Khristenko, who accompanied the PM, said Russia will
increase cooperation in automobile assembly, hi-tech
development and construction of a metallurgy plant with
Vietnam, but provided no specifics for this cooperation.
His Vietnamese counterpart said the visit helped boost
economic and commercial relations between the two countries,
and contributed some quick facts about Russo-Vietnamese
industrial cooperation, such as the fact that VietSovPetro
has pumped 150 million tons of crude oil in 25 years,
helping recover its investment capital of USD 1.5 billion
and turn a regular profit. (Note: VietSovPetro is one of
the world's most profitable oil companies and provides a
substantial percentage of Vietnam's official foreign
exchange earnings.) During the visit there was no
discussion of Vietnam's remaining debt to Russia, which
stands at around USD 10 billion.


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Russia Watchers in Vietnam Comment
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13. (SBU) Russia expert Nguyen Quang Thuan, Director of the
Europe Studies Institute, said that the two agreements
signed, and the relatively non-substantive meetings with the
GVN leaders, were not sufficient reasons to compel a visit
by the Russian head of government. Instead, he said, the
visit is related to Russia's "Looking East" foreign policy.
Under this policy, according to Thuan, Russia has recently
enhanced its activities in the region through the East Asia
Summit, the Russia-ASEAN Meeting, and other multilateral
forums, such as the upcoming APEC meeting. Influencing
Vietnam is certainly very important in Russia's strategy to
"move east," Thuan opined. Bilateral relations between
Vietnam and Russia are maintained, he said, because "the two
countries need to keep good relations, not necessarily
because they now have things to do together, but because

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they are hopeful for breakthroughs in their relations."


14. (SBU) Dr. Nguyen Vu Tung, Head, Vietnamese Foreign
Policy Section, Department of World Politics and Vietnamese
Diplomacy, Institute of International Relations, conceded to
Poloff that the "strategic relationship" was more about
intention and attitude than it was about existing common
strategic goals, and that Vietnam and Russia had a
"strategic history" that makes them "strategic partners"
today.

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Our Comment
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15. (SBU) Comment: Russia and Vietnam are like old friends
getting reacquainted after falling out of touch. Russia's
economic and military pullback in the early 1990s was
traumatic for Vietnam's economy and security policy, due
largely to the fact that Russia started requiring cash and
hard loans to pay for crucial arms and commodity imports
that previously had been paid for with soft loans or (pre-
1979) given free. After a chilly couple of years in the
early 1990s when Vietnam routinely vented its bitterness at
Russia's abandonment of Communism and lack of engagement in
Southeast Asia, Vietnam and Russia restored good relations.
Vietnam still sees Russia as a friendly state and a
"traditional ally" in the international arena.


16. (SBU) Comment continued: Russia and Vietnam are good
partners in international forums. They have common views on
terrorism; disarmament; sovereignty and territorial
integrity of states; the role of the UN; maintaining
Southeast Asia as a nuclear weapons-free zone; opposition to
the wars in Yugoslavia and Iraq; and, denuclearization of
the Korean peninsula. In addition, Vietnam is Russia's
formal link to ASEAN. In the absence of a Russian
capability or interest in maintaining a strong presence in
Southeast Asia, it has been more and more difficult for the
two foreign ministries to come up with substantive areas of
cooperation. Now, however, Russia appears to be taking a
greater interest in Southeast Asia, especially in Asian
security and economic forums such as ARF, APEC, EAS and
ASEAN, and Vietnam is happy to escort its old friend back to
the party. End Comment.

MARINE