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05Jun15
Vietnam eyes Western warplanes, patrol aircraft to counter China
Vietnam is in talks with European and U.S. contractors to buy fighter jets, maritime patrol planes and unarmed drones, sources said, as it looks to beef up its aerial defenses in the face of China's growing assertiveness in disputed waters.
The battle-hardened country has already taken possession of three Russian-built Kilo-attack submarines and has three more on order as part of a $2.6 billion deal agreed in 2009. Upgrading its air force would give Vietnam one of the most potent militaries in Southeast Asia.
The previously unreported aircraft discussions have involved Swedish defense contractor Saab (SAABb.ST), European consortium Eurofighter, the defense wing of Airbus Group (AIR.PA) and U.S. firms Lockheed Martin Corp (LMT.N) and Boeing (BA.N), said industry sources with direct knowledge of the talks.
Defense contractors had made multiple visits to Vietnam in recent months although no deals were imminent, said the sources, who declined to be identified because of the sensitivity of the matter. Some of the sources characterized the talks as ongoing.
One Western defense contractor said Hanoi wanted to modernize its air force by replacing more than 100 ageing Russian MiG-21 fighters while reducing its reliance on Moscow for weapons for its roughly 480,000-strong military.
Vietnam has ordered about a dozen more Russian Sukhoi Su-30 front-line fighters to supplement a fleet of older Su-27s and Su-30s.
"We had indications they want to reduce their dependence on Russia. Their growing friendship with America and Europe will help them to do that," said the defense contractor.
U.S. Defense Secretary Ash Carter, during a visit to Vietnam on Sunday, pledged $18 million to help Hanoi buy U.S. patrol boats. But any deal with Lockheed or Boeing would likely be the most significant involving a U.S. firm since Washington started easing a long-time embargo on the sale of lethal weapons to Vietnam in October.
The Vietnamese Foreign Ministry said it had forwarded questions from Reuters about the aircraft discussions to the appropriate authorities.
Boeing said in an email it believed it had capabilities in "intelligence, surveillance and reconnaissance platforms that may meet Vietnam's modernization needs". It gave no specifics.
Lockheed and Saab declined to comment. Eurofighter and Airbus did not respond to a request for comment.
Chinese Oil Rig
While communist parties rule both Vietnam and China and annual trade has risen to nearly $60 billion, Vietnam has long been wary of China, especially over Beijing's claims to most of the South China Sea.
China's placement of an oil rig in waters claimed by Vietnam for more than two months last year infuriated Vietnam and underscored the coastal country's need to upgrade its maritime patrol capabilities in particular.
Vietnam's military budget is a state secret, although data collated by the Stockholm International Peace Research Institute (SIPRI) put defense spending at $3.4 billion in 2013, more than double the amount a decade ago.
Experts say actual spending could be much higher given the hardware acquired over recent years.
Among the aircraft under discussion with Vietnam were Saab's Gripen E fourth-generation fighter jet as well as the Saab 340 or 2000 twin-engine turboprops fitted with maritime patrol and airborne early warning systems, said a source with direct knowledge of those talks.
Vietnam had held talks over the Typhoon warplane made by Eurofighter as well as the F/A-50 light fighter jointly developed by Korea Aerospace Industries (047810.KS) and Lockheed, separate sources said.
Lockheed had discussed its Sea Hercules, the maritime patrol version of its C-130 transport plane.
Meanwhile, an additional source said Boeing wanted to sell its maritime surveillance aircraft program, which involves putting state-of-the-art P-8 Poseidon plane surveillance technology, although not anti-submarine capabilities, on a business jet.
Vietnam had also looked at unarmed surveillance drones made by Western and Asian contractors.
Vietnam War Legacy
Vietnam has already started moving slowly away from Russia in recent years, buying Canadian Twin Otter amphibious planes and Airbus Defence CASA C-212 maritime patrol aircraft for its coastguard and Airbus C-295 transport planes.
Airbus Defence had been in talks to offer maritime patrol and airborne early warning systems on the C-295, a source said.
In addition, Airbus Helicopters had been in preliminary talks with the Vietnamese military.
Despite increasingly warm ties with Washington, some experts said the legacy of the Vietnam War might make Hanoi wary about buying too much U.S. weaponry, possibly giving Sweden an edge.
"There is no ideological bias (in Vietnam) with Sweden," said Tim Huxley, executive director of the International Institute of Strategic Studies in Asia.
"The Gripen E will be a cost-effective option. Saab can offer a package that includes maritime patrol and airborne early warning aircraft."
However, one U.S. source familiar with Vietnam's goals said Hanoi saw Washington as a more reliable partner should tension with China escalate.
"Vietnam is interested in building a much closer relationship with the United States, but they also don't want to anger China," said the source, who was not authorized to speak publicly.
"They're looking for a balanced, phased, or step-by-step approach.'
[Source: By Siva Govindasamy, Reuters, Singapore, 05Jun15]
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