Vietnam’s Geostrategic Importance to the USA, China and India

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Vol 10 Issue-3 Jul - Aug 2016
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Detailed analysis of Vietnam’s growing strategic significance and clout in Asia Pacific region and its relations with global powers including India
Vice Admiral Pradeep Chauhan, AVSM & Bar, VSM, IN (Retd)
Saturday, July 23, 2016

Geostrategy, like its fraternal twin, geo-economics, is a subset of geopolitics.  It is guided principally by geographical factors that inform, constrain, and affect political and military planning.  In fact, nationhood and strategy are linked by geography, which is often called the mother of strategy.  Indeed, it is geography that confers greater or lesser geopolitical significance to a given state.  For instance, it is geography that has gifted Vietnam a very long coastline, spanning almost the entire western stretch of the South China Sea (SCS).  This is an important sea, incorporating within it major shipping routes that not only link the economies of several Pacific Ocean littorals, but also connect and bind the economies of much of the Indo-Pacific region.  Quite apart from its trade-based criticality, the SCS also has intrinsic economic value of a high order, given the significant offshore oil and gas reserves that lie within it, as also its abundant stocks of fish. Vietnam is geographically the most advantageous place from which to control the SCS.  Since ‘Flag’ and ‘Trade’ are symbiotically linked (see the March-April 2016 edition of this magazine), geostrategic game-moves by Vietnam and those of others — involving Vietnam — become inescapable.  For instance, in the contemporary context, Beijing knows that if Vietnam could be brought around to allying or aligning with China, this would significantly enhance the PRC’s control of the SCS.  By corollary, countries such as the USA, Japan and India, which have a strong interest in ensuring that regional and national Sea Lines of Communication (SLOCs) remain free from any overbearing influence, realise with equal clarity that if Vietnam were to oppose China, Beijing’s geostrategic game moves involving territorial claims over very nearly the entire SCS would be significantly weakened.
Even if the SCS were to be momentarily disregarded, Vietnam’s geopolitical significance is also seen in the influence it exerts upon other countries of the South-East Asian mainland.  With Vietnam warming to the USA, Thailand having officially been designated a US ‘Major Non-NATO Ally’ in 2003, and Myanmar moving strongly towards rapprochement with the West, it is evident that the three most populous countries of mainland South East Asia can, indeed, do much to counterbalance the often overbearing influence of Beijing. Vietnam’s geopolitical centrality has also been furthered by its own rapid economic growth — recent though it may be.  The country’s economic expansion has been particularly striking ever since 2007, and year-on-year GDP growth remains around 6.5%.  In 2015-16, although agricultural production suffered as a result of a severe drought, other sectors of the Vietnam economy continued to boom and available data confirms that the country’s macroeconomic fundamentals remain robust. Vietnam’s low cost of labour, coupled with its innovativeness and the hardworking nature of its youthful population, have made it an important manufacturing hub, increasingly displacing China. 
Thus, as a reunited and fiercely independent nation-state, the Socialist Republic of Vietnam enjoys abiding importance in the geostrategic matrices of its five principal suitors -China, the USA, Russia, Japan and India.  While China’s geostrategic calculus vis-à-vis Vietnam incorporates both continental and maritime components, the relevance of the geostrategic game-moves of the USA, Russia, Japan and India are a direct function of their independent or combined (or ‘aligned’) maritime power.  As Professor Eric Grove unequivocally states, “If one wishes to shape the contemporary security environment to reflect one’s own and allies’ geopolitical interests, one has to be a major sea power or a significant contributor to a maritime coalition.”
Both China and the USA have a deeply troubled historical relationship with Vietnam. Although younger lay-readers might recall little that is older than the US-Vietnam War of 1964-1973, the truth is that bitter animosity between Vietnam and China is a central part of a far more ancient legacy.  Indeed, Vietnam, which is reputed to have one of the longest recorded histories in the world, has some eleven hundred years of overt and covert acrimony, often deteriorating into direct hostility, against China.  Ever since the Han dynasty of China first invaded and colonised Vietnam, revolts against the Chinese empire have provided the Vietnam people with their most enduring heroes. 
Drawing from this historical perspective, the robustness of Vietnam’s maritime resistance to Beijing’s attempts to assert China’s sovereignty over the entire South China Sea (SCS) is unsurprising. Vietnam vigorously disputes China’s claim of historical control over the major island and reef formations of the SCS, namely, the Spratly, Paracel, Pratas and Natuna Islands, and the Scarborough Reef, averring that Beijing had never claimed sovereignty over any of the islands before the 1940s.  In sharp contrast, Hanoi presents far more convincing documentary evidence to show that Vietnam had actively ruled over both, the Paracel and the Spratly island-groups, since the 17th Century.  Indeed, Vietnam has consistently refused to listen to China’s seductive siren song of a peaceful rise.  Thus, when China, having successfully lulled much of ASEAN into complacency, suddenly precipitated matters by a formal submission to the UN on 07 May 2009 claiming some 90% of the South China Sea (SCS) as its own, through the now famous Nine-Dash Line, Vietnam resolutely opposed this unilateral declaration.  The recent ruling (on 12 July 2016) of the Permanent Court of Arbitration (PCA) in The Hague on the case filed by the Philippines has been overwhelmingly in favour of Manila.  The PCA has categorically declared China’s Nine Dash Line to be completely without legal merit.  As such, Vietnam’s own position has been greatly strengthened.  Paradoxically, so has its geopolitical importance to China.  On the other hand China has been unwavering in its view that the tribunal was not empowered to rule on cases of national sovereignty. It continues to insist that the only solution to the SCS imbroglio lies in a series of bilateral negotiations between the concerned State parties and the People’s Republic.  Although there has been much by way of angry (if not vituperative) polemics within official Chinese circles as well as well as within the Chinese media, Beijing is aware that now that its fig-leaf of generalised legality has been so unceremoniously ripped away by the PCA, it needs more than ever to talk to Vietnam and get the latter to temper the feistiness of its opposition. 
While Vietnam’s determined efforts to oppose Chinese hegemony in the Indo-Pacific in general and in the South China Sea in particular are deserving of both, respect and admiration, they do contribute significantly to the prevailing geopolitical fragility and this is something that Hanoi recognises as clearly as does Beijing. 
On the one hand, Vietnam’s effort to reach out to its erstwhile foe, the USA, is paying rich dividends and the visit (22-24 May 2016) of the US President to Vietnam has had an altogether favourable strategic outcome in terms of the formal lifting of the US arms embargo that had long hobbled Vietnamese military capacity.  As the USA consolidates its pivot to Asia and seeks to deploy six out of its 11 Carrier Strike Groups (and 60% of its warships) in the Pacific by 2020, it is significantly altering its erstwhile basing policy.  Having experienced the severe fallout of cultural and nationalistic sensitivities to exclusive US bases on allied soil, the US has switched to rotating its troops and equipment through military bases controlled by the national armed forces of its allies.  Vietnam’s Cam Ranh Bay is an attractive option for such rotations. 
On the other hand, Vietnam is leveraging its longstanding military ties with Russia and its historic ties with India — ties that have persisted through the post-independence period of both countries.  The Indian footprint upon Vietnam has an illustrious lineage, with a number of Indian or Indianised civilizations such as Cham and Funan having flourished in central and southern tracts of modern Vietnam. Indeed, the Vietnam offer — in 2011 — to allow the Indian Navy port-visit facilities in Nha Trang is entirely in accord with this whole business of history because Nha Trang was the last Cham seaport.  The more that India and the USA gradually align their own bilateral geopolitical approaches to the Indo-Pacific, the richer will be the dividends accruing to Vietnam by its dual-track (India-USA) geostrategy and the heavier will be its counterweight to China.  On the other hand, the closer that Russia and China get, the more the risks of Vietnam being isolated.
From India’s perspective, perhaps the most critical economic factor governing the drive to proactively engage Vietnam is petroleum-based ‘energy’.  Ongoing upstream (i.e., ‘Exploration and Production [E & P]) efforts, particularly in offshore fields, have led to a substantial increase in the country’s proven crude oil reserves which currently stand at 4.4 billion barrels.  Even this figure could increase sharply, because Vietnam’s waters are still relatively underexplored.  In any event, this is dramatically more than the 2011 figure of 0.6 billion barrels and implies that Vietnam now holds crude oil reserves that are second only to China’s in all of East Asia. Although Vietnam’s continental shelf covers an area of approximately one million square kilometres, and comprises several groups of basins such as Song Hong, Phu Khanh, Cuu Long, Nam Con Son, Malay-Tho Chu, Hoang Sa, Truong Sa basins, the Cuu Long Basin remains the principal area for oil production. However, Vietnam is seriously deficient in refining capacity and, consequently, depends heavily upon the imports of ‘refined’ products. This, of course, is the exact opposite of the situation obtaining in India, which is severely deficient in crude-oil production, but has so much refining capacity that it is a net ‘exporter’ of petroleum-products.  Acutely aware of her energy-dependence and consequent lack of energy security, India sees Vietnam as an important source of crude oil.  In terms of geopolitics, Vietnam’s rich energy resources offer India an economically viable opportunity to diversify her oil-import options.  This, in turn, has the potential to provide India a welcome degree of freedom from the ‘zero-sum games’ imposed upon West Asia in general, and, until very recently, upon Iran in particular, by the USA’s own geopolitical moves. 
Likewise, natural gas adds its own share of geopolitical imperatives into the regional mix.  Vietnam’s discovery, in 1995, of large gas reserves, have made her the third largest energy source in Southeast Asia, after Myanmar and Indonesia.   However, contrary to popular belief that Vietnam is a potential source of gas imports into India, all Vietnam’s production of natural gas is domestically consumed and there are apprehensions that the country’s current self-sufficiency will not last long.
The geopolitics of energy once again draws in both ‘flag’ and ‘trade’.  In 2011, India signed an agreement with Vietnam for the conduct of ‘upstream’ activities (i.e., Exploration and Production [E&P]) in Vietnam’s offshore blocks 127 and 128.  China reacted with predictable vigour and, after asking countries “outside the region” to stay away from the South China Sea, issued a démarche to India, seeking India’s official position in respect of OVL’s E&P activities and emphasising that Beijing’s permission was needed for exploration in Blocks 127 and 128.  India’s own reaction was uncharacteristically bold and its rebuff to China gave much cause for cheer, both domestically and in Vietnam.  However, after its initial demonstration of political will, India vacillated in somewhat typical fashion.  It first took the position that Block 128 was commercially unviable, but then, after Vietnam, on the one hand, publically insinuated that India had buckled in the face of Chinese pressure, and, on the other, simultaneously extended the contract period in which India was to show commercial viability, India decided to continue the joint exploration.  In June 2012, Beijing, displaying characteristic resoluteness, raised the ante by having CNOOC (China National Offshore Oil Company) put-up a global-bid for exploration in nine offshore blocks — including Vietnam’s Blocks 127 and 128!  In the following month’s meeting of the ARF (ASEAN Regional Forum) in Phnom Penh, India continued its baffling ‘blow-hot-blow-cold’ pattern, now reiterating its ‘commitment’ to freedom of navigation and reaffirming that resource-exploitation must be in accordance with the principles of international law.  With effect from 02 May 2014, China has been moving one or another of its oil rigs within the EEZ of Vietnam, as has already been outlined in the foregoing review of the geopolitical situation obtaining in the South China Sea. 
Other than energy, “major resources of Vietnam include phosphates, coal, manganese, rare earth elements, bauxite, chromate, offshore oil and gas deposits, timber, and, hydropower….. Vietnam is among the leading exporters of agricultural products such as coffee, cashews, rice and rubber.”  The share of Vietnam in ASEAN’s external trade is almost 10% with imports and exports almost perfectly balanced.  Vietnam’s global trade increased five-fold between 2003 and 2013 and this spectacular increase is also seen in the bilateral trade between India and Vietnam, which has grown from a mere US$ 412.4 million in 2003 to over US$ 9.2 billion in 2014 and the target for 2020 is US$ 15 billion.  India is currently one of the top ten trading partners of Vietnam with almost all trade comprising merchandise goods that must necessarily be transported aboard merchant ships.  Adverse impacts upon maritime trade as a consequence of geopolitical turbulence would be a major problem for both countries and is a significant driver of India’s geopolitical engagement with this segment of the Indo-Pacific.  And yet, critical as they are, India’s geopolitics vis-à-vis Vietnam transcends the imperatives of maritime trade.  “India, like Vietnam, is looking at the wider geopolitical implications of China’s rise.”As such, more reliable pointers of the geopolitical gains that India seeks are to be found in India’s ‘Look East’ and ‘Act East’ policies.  These policies are much more than just foreign policy alternatives.  They provide, in addition, development and security alternatives, stemming from recognition of “the globalization and the resurgence of Asia as an economic powerhouse.”  One of the many alternatives stemming from these policies is the ‘Mekong-Ganga Cooperation Project’ (MGCP), involving India, Myanmar, Thailand, Laos, Cambodia and Vietnam.  Set-up in the opening year of the millennium (2000), the initiative is aimed at the development of four aspects of engagement — overland trade, tourism, communications and transport linkages.  Similarly, Indian expertise and entrepreneurial skills are in great demand in Vietnam.  These range from the huge attraction that India holds for Vietnam thanks to the former’s English speaking intelligentsia to human-resource development and allied managerial and administrative skill-sets, as also niche areas of globally renowned expertise-for example in the hospitality, healthcare, and software industries. 
Ultimately, what Vietnam ‘wants’ from India is a stronger strategic card to play against China and enhanced economic engagement by way of trade and soft-skills.  For the first of these - which is the predominant ‘want’ by a large margin - defence cooperation in general and naval cooperation in particular is of the essence.  Similarly, what India ‘wants’ from Vietnam are strategic options to promote its own national and maritime interests in the face of assertive competition from China, enhanced legitimacy in the South China Sea as an oceanic area of great economic interest, enhanced energy-security especially by way of diversification and alternative sources of import of crude-oil, and, enhanced economic engagement by way of trade and enhanced cultural and societal influence by way of soft-power. For all except the last of these, once again we find that defence cooperation in general and naval cooperation in particular is of the essence. Fortunately, India’s defence cooperation and especially its naval cooperation with Vietnam is a striking success story. The conclusion of a protocol on ‘Defence Cooperation’, during the visit to Hanoi, of the then-Prime Minister of India (the late Shri Narasimha Rao), in September of 1994, provided the necessary impetus to establish a longstanding defence relationship between India and Vietnam, and, in May 2000, the two Defence Ministers signed a formal ‘Agreement on Defence Cooperation’.  Likewise, on 01 May, 2003, the Foreign Ministers of the two countries signed a ‘Joint Declaration on the Comprehensive Cooperation Framework between India and Vietnam’, in which, amongst other areas of agreed cooperation, was the commitment to “take gradual steps to expand cooperation in security and defence, anti-piracy measures, [and] preventing terrorist acts targeted at each other…”At the level of the Ministry of Defence, a bilateral, annual ‘Security Dialogue’ remains the principal vehicle of defence engagement between India and Vietnam. Through this dialogue, the Indian Armed Forces have been engaged with capacity-building and capability-enhancement of the Vietnamese Armed Forces, especially the Vietnam People’s Navy (VPN). Areas of cooperation have, naturally, been heavily biased towards the maritime domain.  As her own naval shipbuilding capacity picks up, Indian largesse by way of capacity-building within the Indo-Pacific is more evident.  In the case of Vietnam, India would be supplying 14 Fast Patrol Boats, in addition to four larger Patrol Vessels to the VPN.  Although the VPN is marginally diversifying its future holdings and has placed an order for two modern Sigma Class corvettes from Holland, the bulk of the combatants and equipment of the Vietnamese Armed Forces in general (and the VPN in particular) is of Russian origin.  Even in its current frenetic modernisation with US/NATO inductions now possible, Russian platforms nevertheless predominate - six new 3.9 Class guided-missile frigates and an equal number of upgraded Kilo Class submarines, along with four new Molniya Class guided-missile corvettes, are being inducted by the VPN.  Consequently, generic commonalities in the origin of major platforms and/or equipment between the navies of India and Vietnam continue to provide significant scope for enhanced cooperation in equipment and training. Likewise, with the VPN investing heavily in the creation of a Fleet Air Arm centred upon rotary-wing aircraft such as the ship-borne Kamov 27 helicopters, as also fixed-wing naval assets, there is much that Vietnam is looking to India for. Whether and to whom India should transfer the BrahMos missile is an intricate and complex question, with the potential of seriously disturbing the balance of power.  However, Vietnam’s case seems a particularly strong one and this may well be mutually beneficial.
To conclude, the world is witnessing the emergence of a new world order, in which Vietnam lies simultaneously at a main cleavage of geopolitical rivalry and a major integration of regional and extra-regional economies. This poses great challenges, but at the same time, offers golden opportunities for the country.