As Joe Biden arrives to bolster US-Vietnam relations against China


The United States and Vietnam are poised to strengthen their diplomatic relations as US President Joe Biden embarks on his visit to the country on Sunday. The primary focus of the discussions will revolve around semiconductors and critical minerals.

For several months, the US has been advocating for this upgrade, recognizing Vietnam as a pivotal nation in its strategy to safeguard global supply chains from risks associated with China. However, recent reports of Vietnam engaging in talks with Russia regarding a potential arms supply deal have cast a shadow over the diplomatic proceedings, as such a deal could potentially trigger US sanctions.

According to a March document from Vietnam's finance ministry, Hanoi intends to invest in the modernization of its military forces through a Vietnamese-Russian oil venture in Siberia. Although Reuters has seen documents describing discussions for a credit facility from Russia to purchase heavy weaponry, these documents remain unauthenticated. They suggest that Vietnam is considering acquiring anti-ship missiles, antisubmarine aircraft and helicopters, antiaircraft missile systems, and fighter jets through this arrangement.

Vietnam's foreign ministry spokesperson has not responded to inquiries about these documents, but they indicate that Moscow has been persistently pursuing a loan deal to circumvent Western sanctions, and Vietnam has expressed interest.

Hanoi has also been engaged in discussions with various arms suppliers, including the US, reflecting its efforts to diversify its sources of military equipment. Jon Finer, the US principal deputy national security adviser, has indicated that the diplomatic upgrade will include a security dimension. While no arms deals have been announced, the US and its allies have offered assistance to help Vietnam reduce its reliance on Russian military supplies.

Semiconductors and critical minerals will feature prominently in Biden's visit, with an action plan being adopted during his stay. US executives from tech companies like Google, Intel, Amkor, Marvell, GlobalFoundries, and Boeing are set to meet with their Vietnamese counterparts and Secretary of State Antony Blinken. Semiconductors are expected to be a centerpiece of this action plan, adding tangible outcomes to the diplomatic upgrade. However, it's worth noting that the US administration's contribution to the sector may be limited, with only $100 million a year for five years available under the CHIPS Act to support global semiconductor supply chains.

The strengthening of supply chains for critical minerals, particularly rare earth, will also be discussed. Vietnam holds one of the world's largest deposits of rare earths after China, making it a crucial partner for the US in securing these minerals.

Trade and human rights issues may also be on the agenda. Vietnam boasts a significant trade surplus with the US, trailing only China and Mexico in this regard. However, human rights concerns remain a contentious topic, with US officials frequently criticizing Vietnam for its treatment of activists and restrictions on freedom of expression. There are suggestions that Vietnam might demonstrate goodwill by releasing activists as part of its diplomatic engagement with the US.


 

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