Washington, New Delhi, and Hanoi, Sept. 10 (Reuters) – As U.S. President Joe Biden begins his visit to Vietnam on Sunday, the two countries intend to strengthen existing ties. According to officials, the talks will centre on semiconductors and essential minerals.
Since the United States considers the manufacturing powerhouse of Southeast Asia to be a crucial nation in its strategy to protect global supply chains from China-related dangers, it has been lobbying for the upgrade for months.
However, a Saturday report that Vietnam was in discussions with Russia about a new military supply contract that would result in U.S. sanctions casts doubt on the revision.
A March paper from the Vietnamese finance ministry outlined plans for Hanoi to pay for the modernization of its forces through a Vietnamese-Russian oil cooperation in Siberia, according to the New York Times.
Documents indicating negotiations for a credit line that Russia would offer to Vietnam to purchase heavy equipment, such as anti-ship missiles, anti-submarine aircraft and helicopters, anti-aircraft missile systems, and fighter jets, have been seen by Reuters, but they have not been able to be verified.
Multiple inquiries for comment regarding the documents, which show that Vietnam had expressed “interest” while Moscow had been lobbying for months for a credit agreement that would avoid Western sanctions against Moscow, went unanswered by a representative for the Vietnamese foreign ministry.
Similar discussions between Hanoi and many arms suppliers, including the US, are ongoing. With top Russian officials, Vietnam has recently held multiple high-level defence consultations.
On the flight with Biden to Vietnam from a Group of 20 summit in India on Sunday, Jon Finer, the U.S. principal deputy national security advisor, told reporters that the upgrade will have a security component.
Despite stressing that the United States and its allies might assist Vietnam diversify away from Russian military supplies, he said Vietnam was open to the idea and had no arms deals to disclose at this time.
Vietnam’s military dependence on Moscow, which Finer described as “a relationship we think they are increasingly uncomfortable with,” would be lessened as a result.
Finer added that, as stated by Biden and other U.S. officials, the U.S. aims to elevate Vietnam to the same diplomatic status as China and Russia after a bloody and protracted war. In spite of initial worries about how massive neighbour China would respond, Vietnamese officials have expressed optimism about the anticipated upgrade.
In the coming days or weeks, senior Chinese officials, possibly including President Xi Jinping, are anticipated to visit Vietnam as Hanoi works to preserve cordial ties with all superpowers, according to officials and diplomats.
On Sunday afternoon, Biden is scheduled to arrive at Vietnam’s Presidential Palace for a formal welcome from Communist Party General Secretary Nguyen Phu Trong, the country’s most powerful leader. The two will then meet at party headquarters and make a public statement.
At 7:30 pm (1230 GMT), the president is set to conduct a press conference.
His visit comes as the two countries’ commercial and investment links are expanding and the South China Sea territorial conflict between China and Vietnam is becoming more heated.
Executives from Google, Intel, Amkor, Marvell, GlobalFoundries, and Boeing are scheduled to meet in Hanoi on Monday with Vietnamese tech executives and Secretary of State Antony Blinken to highlight Vietnam’s growing significance as a “friendshoring” destination for American technology companies.
A U.S. official stated that semiconductors are the focal point of an action plan that will be established during Biden’s visit, adding tangible results to the diplomatic upgrading. Given that Washington already has close connections with Hanoi, many people consider the elevation as merely symbolic.
With only $100 million per year for five years available under the CHIPS Act to boost semiconductor supply chains globally, it is uncertain how big the U.S. administration’s commitment to the sector could be, other from potential announcements by American businesses. It may go to Vietnam in major part, according to officials.
Given the severe lack of engineers in the semiconductors industry in Vietnam, additional funding for training talented people is also anticipated.
Strengthening supply chains for essential minerals, particularly rare earths, is another important concern, authorities said. According to U.S. estimates, Vietnam has the second-largest resources of rare earths in the world behind China.
An agreement on rare earths is anticipated during Biden’s visit, which ends on Monday when he departs for the United States, according to two people familiar with the arrangements.
However, there are few details. According to a person involved in one recent scheme, previous attempts by American companies to collaborate with Vietnamese rare earth companies have failed.
As Vietnam’s trade surplus with the United States is the third largest after China and Mexico, trade may also be brought up.
Human rights continue to be a contentious topic, with U.S. government representatives frequently denouncing Hanoi for imprisoning activists and restricting freedom of expression. Diplomats may argue that activists could be released as a sign of goodwill from Vietnam.