ELUSIVE TANGIBLE BENEFITS
Besides sentimental attachments and the leadership’s political consideration, tangible benefits for Vietnam from Putin’s visit are elusive. Bilateral trade stood at US$3.6 billion in 2023, half of the 2021 figure and a mere fraction of Vietnam’s trade with China (US$171 billion), the US (US$111 billion) and EU (US$72 billion).
In 2023, Russian tourists, once among the top 10 sources of foreign visitors to Vietnam, dropped to only 19 per cent of the 2019 (pre-COVID 19 pandemic) figure.
The prospects of furthering economic ties are dim, given the US tightening sanctions against Russia. The only exception may be in the energy sector, as Vietnam still pins its hopes on Russia’s continued participation in its hydrocarbon projects in the South China Sea amid China’s intensifying obstruction.
Additionally, Vietnamese investments in Russian oil and gas reserves through Rusvietpetro – a joint venture between state-owned Zarubezhneft and Petrovietnam – are reaping profits with Russian tax concessions.
In the arms trade, where Russia matters the most to Vietnam, Russia’s reliability as a defence partner is increasingly in question as its defence industry looks towards Chinese, North Korean and Iranian support to sustain its war machine in Ukraine.
Even before the war in Ukraine, Vietnam had begun to diversify its arms supply, and this trend is likely to accelerate. Russian arms transfers to Vietnam have steadily decreased since peaking at around US$1 billion in 2014, plunging further after Russia’s invasion of Ukraine to only US$72 million in 2022.
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