Russia-Vietnam ties put US in a sanctions dilemma

Vietnam’s plan to hold military exercises with Russia could revive calls to hit Hanoi with CAATSA-related penalties

Vietnam could soon be hit by US sanctions over its continuing military relations with Russia as the West seeks new secondary pressure points to punish Moscow for its invasion of Ukraine.

Vietnam, Moscow’s closest ally in Southeast Asia, has dismayed American officials by abstaining from UN General Assembly resolutions against Russia. This month, Hanoi was one of only 24 states to vote against Russia being kicked off the UN Human Rights Council.  

Vietnam now finds itself in potentially hotter diplomatic water after Russian state media reported this week that Moscow is planning with Vietnamese defense officials to conduct new joint military exercises later this year.

The reports quoted Russian military official Colonel Ivan Taraev as saying the joint exercise, potentially to be named “Continental Alliance 2022”, will aim “to improve practical skills of commanders and staffs in organizing training operations and managing units in a difficult situation, as well as developing unconventional solutions when performing tasks.”

If so, the exercises could imperil Hanoi’s improving strategic links with the United States, which have expanded considerably in recent years with an eye on containing China’s aggression in the South China Sea.

In 2017, the US Congress passed the Countering America’s Adversaries Through Sanctions Act (CAATSA), which, among many things, threatens sanctions against any country buying weapons from Russia. 

Russia is Vietnam’s largest provider of military arms, with almost 80% of Hanoi’s military equipment sourced from Moscow since 2000, according to figures from the Stockholm International Peace Research Institute.

In an opinion piece published last month, security analysts Ian Storey and William Choong speculated that following the Russian invasion of Ukraine, Washington “could signal that it is ready to impose” CAATSA sanctions on Southeast Asian countries “planning to purchase new military equipment from Russia.” 

“This would make regional states think twice about signing contracts with Russian defense companies,” they surmised. 

However, controversy has stalked CAATSA ever since it was enacted in late 2017. Then-president Donald Trump said CAATSA was “seriously flawed”, claiming it infringed on the executive branch’s authority over foreign policy while several European states reckon it may violate international law.

Dovish foreign policymakers in Washington said it would severely hamper diplomacy; hawks feared it would punish the likes of Vietnam, India and Indonesia, whose friendship is invaluable in order to contain China in the Indo-Pacific. 

The US faces a dilemma because it is pursuing contradictory objectives, said Carl Thayer, an emeritus professor from the University of New South Wales in Australia and a prominent Vietnam expert. 

“CAATSA aims at punishing Russian defense entities with sanctions because of Russia’s annexation of the Crimea [in 2014] and disrupting their arms sales by threatening states who procure Russian arms,” said Thayer. “At the same time, the US seeks to enlist Vietnam as a strategic partner in the Indo-Pacific.” 

CAATSA sanctions have only been imposed on China and Turkey for their purchase of Russian-made S-400 surface-to-air missile systems. 

Last November, the Biden administration said it was still undecided about whether India, traditionally Russia’s biggest foreign buyer of weapons, should be given a waiver after its procurement of the S-400 system. 

Indonesia and Vietnam, two other leading purchasers of Russian military equipment, have so far neither been sanctioned nor received official waivers from Washington. The former US Defense Secretary, Jim Mattis, had sought a waiver from Congress for Vietnam but with no success. 

The issue needs to be separated into two periods, says Khang Vu, a doctoral candidate in the Political Science Department at Boston College. “Before the Russian invasion of Ukraine, the chances Vietnam could be sanctioned under CAATSA were low,” Khang said.

In early 2018, American defense officials under the Trump administration were pressuring Vietnam to cut its dependence on Russian arms and military technology or face the possibility of sanctions, said Thayer. Vietnam was urged to buy American weapons instead, he said.

The US arms embargo on Hanoi was only lifted in May 2016, the same month that Barack Obama became the first sitting US president to visit reunified Vietnam. 

In September 2018, however, at the conclusion of an annual Defense Policy Dialogue held in Hanoi, Vietnam “stunned” US officials by canceling 15 military exercises planned with American troops for 2019, Thayer noted.  

“It is my assessment that Vietnam was responding to American pressures by demonstrating its independence,” said Thayer. 

Le Hong Hiep, a senior fellow at the Vietnam Studies Program at the ISEAS–Yusof Ishak Institute in Singapore, speculated at the time that “Vietnam might have canceled the defense engagements with the US as a bargaining tactic to make sure that Washington would issue a [CAATSA] waiver for the country.”

But the Russian invasion of Ukraine on February 24 has changed dynamics. Along with communist Laos, Vietnam abstained on a UN General Assembly resolution on the Ukraine war, making them the only two Southeast Asian states that didn’t vote in favor of rebuking Moscow for its invasion.  

Communist Party authorities have since arrested protestors demonstrating inside Vietnam against the Russian invasion, although state-run media has shown some flexibility in reporting on the conflict. 

Potentially more serious for US-Vietnam relations are Russia-Vietnam plans to hold a joint military training exercise.

The two sides “agreed on the subject of the upcoming drills, specified the dates and venue for them” and “discussed issues of medical and logistic support, cultural and sports programs,” Russian state news agency RIA Novosti reported.

This could “dampen US expectations that they can enlist Vietnam as a strategic partner in the Indo-Pacific,” said Thayer. The timing is significant as it comes just weeks before Washington expects to host a major summit with the Association of Southeast Asian Nations (ASEAN) bloc between May 12-13. 

If CAATSA sanctions were to be applied to Vietnam, then it probably wouldn’t happen until after the ASEAN-US Summit, “as a gesture of goodwill”, said Khac Giang Nguyen, an analyst at the Victoria University of Wellington. 

But the chances of America sanctioning Vietnam are still low, reckons Khang, noting that America’s interests in the Indo-Pacific haven’t changed since the Ukraine war. As war rages in Europe, there are increased concerns Beijing may think the time is ripe to launch an invasion of Taiwan, a dynamic that means the US is now more in need of goodwill in Hanoi than ever. 

“Vietnam is an important partner of the United States, and Washington is willing to let its partners use Russian arms if those partners use those arms to balance against US enemies,” Khang said, meaning China, with which Vietnam is engaged in heated disputes over territory in the South China Sea.

“It is not about where the arms come from but about whom they are for,” he added.

Stratfor, a geopolitical consultancy, argued back in 2018 that “the CAATSA process could discourage Vietnam from further building its defense relationship with the United States if only to avoid future compromises to its strategic autonomy.” 

It went on: “In today’s world, middle powers are increasingly assertive and refuse to tie themselves to any single great power. The United States’ reliance on the blunt tool of extraterritoriality could eventually backfire if it’s not careful.” 

Until now, Washington has turned a blind eye to Hanoi buying Russian arms for several reasons, analysts say.  

For one, the US reckons a militarized Vietnam is key to constraining Chinese aggression in the Indo-Pacific. If Vietnam buys from Russia it means it isn’t buying from China, although it’s debatable whether Hanoi, if squeezed, would even consider buying Chinese weapons. 

There is also the belief that given its economic size, Vietnam cannot afford to purchase weapons from more-expensive Western arms contractors. That is debatable, however: Before CAATSA was introduced in 2017, Indonesia was negotiating the purchase of Russian-made Sukhoi Su-35 fighter aircraft. 

But the threat of US sanctions reportedly stymied that deal, and earlier this year Jakarta announced an US$8.1 billion contract to buy 42 Rafale jets from France. The United States has also authorized Indonesia to buy F-15 jets.

Yet Indonesia’s defense spending isn’t that much greater than Vietnam’s at US$7.5 billion in 2018 compared with Hanoi’s US$5.5 billion, according to World Bank figures. 

Washington likely understands that Vietnam’s policy has long been not to become entangled in any superpower bloc to placate Beijing.

If Hanoi purchased weapons from America, or even from a US ally like France, Beijing could perceive the procurement as Hanoi fully tilting to the Western camp, and thereafter step up its already considerable aggression against Vietnam.  

Neither is Moscow about to start negotiating arms sales whilst its troops are engaged in a failing invasion of Ukraine; the Russian army needs all the weapons it can muster, and current Western financial sanctions on Moscow would put Vietnam at risk – CAATSA or not – if it tries importing arms from Russia during wartime. 

Vietnam has not made any big-ticket purchases from Russia since CAATSA was adopted, even though it was rumored to be in the market for new ground attack aircraft and fifth-generation fighters, said Thayer.  

Since Moscow provides a majority of Vietnam’s weapons, which need updating and maintenance, “it is impossible to drastically reduce this proportion in a short period of time,” noted Khac Giang.

How the Ukraine war will impact on Vietnam’s procurement of arms is difficult to ascertain; Vietnam had already started to winnow its arms procurements in recent years. Vietnam’s expenditure on arms peaked in 2018 at $333 million and decreased in the Covid era to $72 million in 2021. 

Diplomacy, rather than sanctions, appears to be working for the US elsewhere. India has reduced its share of weapons bought from Russia since 2017, the Economist noted this month. At the same time, defense trade between India and America rose from $200 million in 2000 to $6.2 billion by 2019.

These growing defense links were hammered home at a meeting between senior Indian and American officials this month, although no one really expects New Delhi to cut all of its military ties with Russia so quickly. 

Storey and Choong argued last month that “Washington may issue a waiver on CAATSA sanctions against Vietnam given the growing strategic ties between the two countries in the face of China’s assertive activities in the South China Sea.”

Alternatively, it may serve Washington’s interests to leave the door open for sanctioning Vietnam as a means of keeping Hanoi on its toes. “As long as Vietnam restricts its arms procurements from Russia, it is unlikely to be sanctioned under CAATSA,” Thayer reckons. 

By David Hutt  – Asia Times – April 20, 2022