Vietnam is opening up to Western defense firms as tensions in the South China Sea trigger subdued yet growing warnings of a regional arms race, defense executives and security analysts said on Friday.
The country is one of several Southeast Asian nations seeking to expand surveillance and maritime patrol capabilities, sparking fierce competition for regional deals estimated to be worth up to several hundred million dollars.
“Vietnam is opening to Western suppliers, which was not the case two or three years ago,” said Marie-Laure Bourgeois, vice president for South and Southeast Asia at France’s Thales, Europe’s largest defense electronics supplier.
“There has been a revival of tensions recently in the South China Sea and this is increasing demand for surveillance systems. Countries in the region want to ensure they have enough awareness of what is happening at sea and in the air,” Bourgeois said.
Vietnam is locked in a complex set of territorial disputes with China and four other parties — Taiwan, Brunei, Malaysia and the Philippines — over waters giving access to untapped oil and gas reserves and valuable fishing grounds.
China’s claims, the broadest, cover all of the Spratly (南沙群島) and Paracel (西沙群島) islands and most of the South China Sea.
Concern over an accidental confrontation or even hostilities spiked in May when Vietnam and China exchanged fresh accusations of sovereignty violations. The issue has come off the boil, but the region is bustling with deals from sonars to submarines.
“[Southeast Asian] states are boosting their military capabilities because they can afford to and as part of a hedging strategy both against China and each other,” said Nigel Inkster, former deputy chief of Britain’s Secret Intelligence Service, known as MI6.
“Though Southeast Asians don’t like to hear it, there is an arms race going on in the region,” Inkster said.
Half the globe’s oil tanker traffic passes through the disputed area, underpinning demand for surveillance systems expected to be on display at this week’s Singapore Air Show.
Vietnam has traditionally bought Russian hardware, including a recent purchase of six Kilo-class submarines, but is emerging as a market for other suppliers “as insurance against China,” said James Hardy, Asia-Pacific editor for Jane’s Defence Weekly.
Israel is seen as front-runner to win the Vietnam contract Thales was bidding for, but other possible deals lie ahead.
“There are discussions with the Vietnam authorities which are no longer just buying Russian equipment. We have participated in discussions on radar and are still in some discussions,” Bourgeois said.
Israel and Vietnam have stepped up bilateral contacts of late, but any defense deals are months away, a source at Israel Aerospace Industries said, when asked about the comments.
On Thursday, the Israeli company announced a US$150 million contract to supply radar to an unidentified Asian country.
US Assistant Secretary of State Kurt Campbell said in Hanoi last week that Vietnam needed to improve its human rights record before moving ahead with closer military ties.
“Growing tensions coupled with the wealth of Southeast Asia make it a very attractive market for defense companies, especially where the US precludes itself,” defense consultant Alexandra Ashbourne-Walmsley said.
In late December last year, Chinese Vice President Xi Jinping (習近平) called for better relations with Vietnam, saying the two countries should properly handle their differences and do more to build trust.
Still, Western diplomats and defense executives said ahead of the Singapore air show that uncertainty and overlapping disputes had pushed up defense budgets and buying interest across the region.
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