Vietnam tops Russia's arms client list

HANOI, Vietnam, Jan. 22 (UPI) -- Vietnam is now officially Russia's biggest arms client thanks to recent orders for six Kilo-class submarines and 12 Su-30 fighter jets, according to a Moscow-based think tank.

Vietnam's deal for its first submarines is Russia's second-biggest contract for subs in the post-Soviet period, after a 2002 contract with China for eight submarines, said the independent Center for Analysis of Strategies and Technologies that monitors Russian military exports.

The analysis by CAST confirms what observers believed when the deal was signed during Vietnamese Prime Minister Nguyen Tan Dung's Dec. 15 visit to Moscow. Vietnam joins India, Algeria, Venezuela and China as Russia's top clients, according to an article on the Defense News Web site, which quotes the Russian news agency ITAR-Tass as the source.

The article did not, however, give any figures for sales to Vietnam.

Russia stands to make another $2 billion for maintenance and repair work, much of it carried out in Vietnam within new facilities at a naval base. Russia is also likely to construct a communications center, said CAST analyst Konstantin Makiyenko. The subs will be designed by the Rubin Central Design Bureau for Machine Engineering and built by the Admiralteiskiye Verfi shipyard, both in St. Petersburg.

The deal for the Su-30MK2 fighters, to be built at the Komsomolsk-on-Amur plant, comes on top of a previous 12-plane agreement signed in January 2009. Delivery starts later this year.

The two contracts have been a boost to Rosoboronexport, an official government arms exporter that cemented the deals. In a brief news article by the ITAR-Tass agency this week Anatoly Isaikin, chief executive officer of Rosoboronexport, was optimistic.

Despite the global financial crunch, Rosoboronexport's order book rose from $32 billion at the end of 2009 compared to $22 billion at the end of 2008. "The crisis hasn't prevented our major foreign clients from paying for the contracts, and there were no hitches in how Russia performs its export obligations," he said.

The submarine contract is being watched closely by Beijing, which sees Vietnam go from having no submarines to operating a dozen of one of the most sophisticated ships in its own back yard, the South China Sea, where there remains a small but niggling territorial dispute.

According to a report in the Hong Kong-based South China Morning Post, the deal for submarines and jet fighters -- Hanoi's biggest since the end of the Vietnam War 35 years ago -- reflects a widening belief in the region that "Beijing's vaunted show of soft power in the past decade" is taking on a harder edge.

"It comes as Australia, Indonesia and Malaysia seek to expand submarine programs amid concerns that the U.S. will gradually see its traditional naval dominance and influence across East Asia eroded by China's naval expansion."

In the same article, retired People's Liberation Army Gen. Xu Guangyu played down the Hanoi purchase. "It is not a surprise or a threat to China," he said. "Vietnam has a long coastline and we understand they need to upgrade their naval fleet. Maybe they feel urgency because of our own modernization program. Most navies in the region need to upgrade themselves and it's all perfectly understandable."

But the South China Morning Post article does point out the issue of the two "strategic" Paracel and Spratly island groups consisting of between 100 and 200 reefs, islets and islands, depending on tides.

China and Vietnam have had confrontations in the past. In March 1988 the Chinese navy fired on a group of Vietnamese sailors standing waist deep in water on a tiny reef, killing more than 60 and taking two prisoner.

"The islands sit above a seabed considered rich in oil and gas deposits. Beijing has repeatedly warned Vietnam and the Philippines against continuing oil exploration deals with overseas firms," the Post said. Beijing holds all of the Paracels after driving off the South Vietnamese navy in the closing days of the Vietnam war in 1974. Vietnam, meanwhile, occupies the most islands in the Spratly grouping.

"As tensions rise, Vietnam has been quietly attempting to internationalize the issue -- a move reflected in the latest deal with Russia and growing ties with the U.S."