U.S., Vietnam have work to do to build out new partnership

The agreement reached by Washington and Hanoi to upgrade bilateral ties, unveiled by U.S. President Joe Biden and Vietnamese Communist Party General Secretary Nguyen Phu Trong on Sept. 10, shows that this relationship is increasingly rooted in shared regional objectives and economic interests.

These include maintaining a rules-based maritime order, especially in the South China Sea where Hanoi has long-standing territorial disputes with China, and economic cooperation and integration. Hanoi has become the eighth-largest trading partner of the U.S., now the top destination for Vietnamese exports; the U.S. is now Vietnam’s second-largest trading partner, after China.

The new “comprehensive strategic partnership” will take the U.S. to the top level in Vietnam’s three-tier hierarchy of bilateral ties that until now had been reserved for China, India, Russia and South Korea.

Over the years, the prospect of upgrading relations was discussed quietly but never achieved, at least in part due to Vietnam’s worries about repercussions from Beijing. Indeed, only a few months ago, even a simple upgrade from the “comprehensive partnership” level to “strategic partnership” seemed in doubt.

The chances of an upgrade increased in March when Biden and Trong discussed the importance of strengthening the bilateral relationship during a phone call. In April, U.S. Secretary of State Antony Blinken traveled to Hanoi.

The U.S. expectation was that Trong would soon travel to Washington to formalize an upgrade. But during a meeting in June in Washington with U.S. National Security Advisor Jake Sullivan, senior Vietnamese diplomat Le Hoai Trung raised the possibility of Biden traveling to Vietnam instead.

In response, Sullivan reportedly directed his team to go to Vietnam to propose a two-tier upgrade in the bilateral partnership for Biden and Trong to announce in Hanoi. This plan was finalized in mid-August.

Meanwhile, the Vietnamese took steps to mitigate any potential Chinese backlash. In late August, Trong traveled to the border with Xiong Bo, Beijing’s ambassador to Hanoi, touting Vietnam’s friendship with Beijing. Top Chinese leaders are expected to visit Vietnam soon.

A central theme of the new agreement is economic innovation and cooperation in science and technology, as the U.S. seeks to diversify its manufacturing supply chains away from China, and Vietnam aspires to develop advanced technologies at home.

Washington and Hanoi have launched a partnership to build “resilient semiconductor supply chains, particularly to expand capacity in reliable partners where it cannot be re-shored to the United States.” The U.S. government has $100 million available for allocation annually for five years under the 2022 CHIPS and Science Act. A significant portion of that could now go to Vietnam, including for workforce development.

In addition, the agreement includes plans for technical cooperation to support Vietnam’s efforts to quantify its supplies of critical minerals, especially rare earths; expanded U.S. support for addressing legacies of the Vietnam War, including dioxin remediation; and establishment of a U.S.-Vietnam climate working group.

The agreement also contains a section on human rights and labor issues, though its brevity has elicited criticism that the administration is privileging strategic gains over human rights.

Defense cooperation was addressed only marginally as well, a reflection of Vietnam’s concerns over China’s reaction. New initiatives will address the “collective security of the region,” with programs to improve maritime domain awareness and build Vietnam’s capacity to counter illegal fishing.

What went unsaid was that Vietnam is seeking to reduce its long-standing arms dependence on Russia by diversifying procurement sources, with the expectation that it will take more defense equipment from the U.S.

These efforts do not seem in doubt despite the emergence of a report just before Biden’s visit that Vietnam is pursuing a new arms deal with Russia. According to a five-year moving average complied by the Stockholm International Peace Research Institute of Vietnam’s arms dependence on Russia, Hanoi’s reliance on Moscow was down to 55% as of 2022 from more than 90% in 2013.

It is difficult to pinpoint what motivated the Vietnamese to elevate relations with the U.S., but contributing factors probably included a slowing economy, ongoing Chinese challenges to Vietnam’s sovereignty in the South China Sea and Trong’s desire to cement his foreign policy legacy.

Yet the move should not be interpreted as a major tilt toward Washington at the expense of Beijing. To the contrary, it is consistent with Vietnam’s long-standing efforts to balance China without provoking it, while pursuing a “multidirectional” foreign policy that includes “no allying with one country to counter another” as a core tenet.

Hanoi has reason to be cautious of China, which supplies a third of Vietnam’s imports. In particular, Vietnam’s fast-growing manufacturing sector relies heavily on components from China. While this economic reliance no doubt incentivizes Vietnamese leaders to seek to diversify the country’s economic ties, it also motivates them to take great care in managing relations with Beijing.

These economic realities also reflect trends in Southeast Asia as a whole. In 2020, ASEAN became China’s largest trading partner. According to the Southeast Asia Aid Map, a new initiative from Australian think tank the Lowy Institute, China is the region’s single largest development partner and leads the way in infrastructure financing. Such activities create “connectivity power” that can often oblige countries to consider Chinese interests systematically.

All of these realities pose formidable challenges to the U.S. as it seeks to compete with the strategic implications of Chinese economic power. They also demonstrate the limits of alignment with the U.S. in a region where countries cannot afford to alienate their powerful neighbor to the north.

Still, the double upgrade with Vietnam shows that the Biden administration’s Indo-Pacific policy is producing important dividends by expanding cooperation not just with allies but also with emerging partners. Now Washington and Hanoi need to build upon the scaffolding provided by the upgrade in imaginative ways to capture these gains.

This is particularly true with regard to climate change. Vietnam consistently ranks among the top five countries that global warming will affect the most. Sizable portions of southern Vietnam could be underwater by 2050, and millions of people now living in the Mekong Delta could be displaced.

To address this challenge effectively, the composition of the new bilateral climate working group should be multisectoral, including academic experts, business leaders and nongovernmental practitioners, not just government officials. Ideally, the group would also catalyze collaborative research from emerging scholars in both countries on innovative climate practices and technologies.

Such an approach could become a model for other areas, helping to realize the full potential of the new comprehensive strategic partnership and turn it into a long-term reality.

By Jonathan Stromseth – Nikkei Asia – September 18, 2023