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Vietnam has become the popular kid in class, which is why Australia has followed the US and China in signing a new deal

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It’s a nation at the heart of a fierce contest for influence, courted by powers great and small — as well as those somewhere in between.

On Thursday, Vietnam and Australia signed a “comprehensive strategic partnership”, officially elevating ties to the highest level adopted by the one-party state.

The distinction between a “strategic” partnership and a “comprehensive strategic” partnership — might strike almost every reader as a very, very fine one.

But there’s a reason why China, the United States, India, Japan, Russia and South Korea have all lined up to secure this official endorsement from the ruling party.

“Elevating our ties to a comprehensive strategic partnership today places Australia and Vietnam among each other’s significant partners,” Prime Minister Anthony Albanese told a media conference in Canberra.

So what’s in the new deal ?

A memorandum of understanding on energy and mineral cooperation has been signed.

The agreement will further embrace Australia’s exports of coal and liquefied natural gas, the Vietnamese ministry of industry and trade said in a statement.

It noted that Australia was a key coal supplier to Vietnam, accounting for 44 per cent of its total coal imports.

The ties between the nations would be upgraded to the level of comprehensive strategic partnership, from the strategic partnership agreed in 2018.

That puts Vietnam’s relations with Australia on the same footing as the US, Japan, Russia, India and China.

Vietnamese Prime Minister Pham Minh Chinh said the deal would boost political trust and cooperation in trade, science, education and culture.

Why has Australia become more important to Vietnam ?

In addition to Vietnam, ASEAN’s 10 member states are Brunei, Cambodia, Indonesia, Laos, Malaysia, the Philippines, Singapore, Thailand and Myanmar. 

Many of the nations, including Vietnam, have a strong need for Australia’s natural resources to feed their growing economies.

But beyond that, Vietnam grew closer to Australia during the pandemic when the latter responded during the country’s hour of need, according to Huong Le Thu, chair of the Australia-Vietnam Policy Institute Advisory Board.

“Australia helped Vietnam a lot through COVID-19 by donating vaccines … there is a good momentum that needs to be taken advantage of,” Dr Le Thu told the ABC.

“The desire for deeper and more encompassing cooperation is mutually shared. 

“It has been a long-term partner, but in recent years, strategic assessment of regional challenges has moved the two countries closer.” 

Last year’s Albanese visit built bridges

The prime minister made a groundbreaking, two-day trip to Hanoi last June.

Mr Albanese was given an elaborate welcome at the president’s palace in Hanoi, where he was greeted by a full military guard of honour and dozens of young children waving Australian and Vietnamese flags.

During the visit, Australia and Vietnam signed a raft of agreements, including a $105 million package to help Vietnam decarbonise its economy.

In addition, a deal was reached to share intelligence on money laundering and establish a regular trade ministers’ meeting.

Mr Albanese and Mr Chinh celebrated two new air routes linking Melbourne and Hanoi and Brisbane to Ho Chi Minh City.

He was also photographed enjoying street food and sipping a cold Vietnamese beer.

During his meeting with Mr Chinh, he raised the issue of Australian man Chau Van Kham, who had been imprisoned in Vietnam due to support for an anti-government group advocating for democracy.

The following month, Mr Chau — who had been detained in Vietnam since January 2019 after being sentenced to 12 years prison for “terrorist activities” — was freed and flew home to Sydney.

Vietnam is the world’s ‘second-most attractive’ market

Weaker global demand saw the Vietnamese economy slow in 2023, but it remains one of the region’s most vibrant nations in terms of its upward momentum, with a population closing in on 100 million people.

Vietnam’s economy grew by just over 5 per cent last year, missing the government’s official target of 6.5 per cent.

Its top exports include broadcasting equipment, mobile telephones, office machine parts and shoes, with the US, China and South Korea its biggest markets.

Vietnamese retail sales rose 9.6 per cent in 2023, reflecting a growing middle class with greater disposable income.

Dr Le Thu said a high rating from the Japan External Trade Organisation (JETRO) gave a glimpse of Vietnam’s bright future in terms of exports.

“Last year JETRO ranked Vietnam as second-most attractive market in the world, making many wanting to advance their relationship with Vietnam,” she said.

Tourism, a vital part of the Vietnamese economy, has also rebounded after the pandemic.

Foreign arrivals increased to 12.6 million visitors in 2023 from 3.6 million a year earlier, but still behind the 18 million in pre-pandemic 2019.

Known as the land of the blue dragon, Vietnam is set to roar in the second half of this decade.

Vietnam pursues ‘bamboo diplomacy’

Australia isn’t the only nation to prioritise its relationship with Vietnam over the past half a year.

The leaders of both the US and China made visits within three months of each other in late 2023.

Last September, US President Joe Biden visited Hanoi, half a century after a lengthy and brutal Cold War-era conflict.

The US and Vietnam signed the Comprehensive Strategic Partnership, aimed at providing stability in the region, and also secured deals on semiconductors and minerals.

“It’s not about containing China … it’s about having a stable base,” Mr Biden said during his visit.

Three months later, Chinese President Xi Jinping made his first state visit to Vietnam in six years to discuss “international and regional issues of common concern, in order to push bilateral relations into a new stage”.

The nations signed 37 agreements, including cross-border rail development and trade, and agreed to conduct joint patrols in the Tonkin Gulf, in the north-west of the contested South China Sea.

By staying on good terms with both China and the US, Vietnam is pursuing an approach called “bamboo diplomacy”, analysts say.

“The government is practising ‘bamboo diplomacy’ which means flexibility, pragmatism and multi-purpose,” Dr Le Thu said.

“Increasingly, Hanoi’s geo-strategic role is becoming more relevant and it is positioning itself among ‘pivotal states’.

“Even though the relationship with China is sometimes tense, we are seeing a significant surge of Chinese investment in Vietnam since last year, so the bamboo balancing is benefiting the country.”

What are next steps ?

In addition to the US and Australia, Japan and South Korea have also built closer relationships with Vietnam over the past few months.

During his visit to Hanoi last year, Mr Albanese said he wanted Vietnam to become one of Australia’s “top-tier” partners.

The signing of the partnership means that goal could become a reality, 51 years after the opening of the first Australian embassy in Hanoi.

“For Vietnam, Australia is seen not only as an important partner, but also as a consequential player on the global stage,” Dr Le Thu said.

“Australia has the best of both worlds … it is a part of the region — Indo-Pacific — by proximity, but it is not a part of ASEAN, albeit a close friend, so that’s actually to Canberra’s advantage.”

Closer ties with Vietnam could also help Australia’s push to diversify supply chains away from China.

By Jason Dasey &  Stephen Dziedzic – Australian Broadcasting Corporation – March 7, 2024

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