VZCZCXRO7612
RR RUEHCHI RUEHDT RUEHFK RUEHHM RUEHKSO RUEHNAG RUEHNH RUEHPB
DE RUEHHI #0968/01 2600455
ZNR UUUUU ZZH
R 170454Z SEP 09
FM AMEMBASSY HANOI
TO RUEHC/SECSTATE WASHDC 0144
INFO ASEAN MEMBER COLLECTIVE
ASIAN PACIFIC ECONOMIC COOPERATION
RHMCSUU/CDR USPACOM HONOLULU HI
RUEATRS/DEPT OF TREASURY WASHINGTON DC
RUEKJCS/SECDEF WASHINGTON DC
UNCLAS SECTION 01 OF 02 HANOI 000968
SENSITIVE
SIPDIS
STATE FOR MARC FORINO EAP/MLS
STATE FOR PM/RSAT, PM/DTC
DEPT PLS PASS USTR FOR DBISBEE
DOD FOR OSD, DCSA
E.O. 12958: N/A
TAGS: BEXP ECON EINT ETRD MARR PARM
SUBJECT: BUILDING FOUNDATION FOR A NEW BEGINNING IN DEFENSE TRADE
BETWEEN U.S. AND VIETNAM
1. (SBU) SUMMARY: Since Prime Minister Nguyen Tan Dung's visit to
the U.S. in June 2008, which included an unprecedented meeting at
the Pentagon, both the Vietnamese Ministry of Defense (MOD) and
Ministry of Public Security (MPS) have demonstrated previously
unseen interest in buying non-lethal products from U.S. defense and
information technology (IT) firms. At the request of the
Vietnamese a number of U.S. companies have visited MOD, MPS and the
SOEs they control over the last eight months to explore potential
non-lethal areas of cooperation. Vietnamese interest at this point
appears focused on building up search and rescue, disaster relief,
infrastructure and coastal monitoring capabilities. End Summary.
2. (SBU) Prime Minister Dung's June 2008 visit to the U.S. and the
Pentagon opened the door to increased U.S. - Vietnam defense
cooperation. During the visit, MOD officials met with various U.S.
defense manufacturers for the first time to view product lines
available for sale to Vietnam. DOD officials reiterated the 2006
decision allowing the sale of only non-lethal equipment to Vietnam.
A People's Army of Vietnam (PAVN) Deputy Chief of General Staff
visit to the Pentagon and a number of U.S. defense contractors
followed in May 2009. Other examples of increased cooperation
within the same period are the first U.S. Navy ship visit to a
Vietnamese port in 30 years where the Deputy Minister of MOD
visited the ship, the first flyout to a U.S. aircraft carrier, the
first invitation to the U.S. Defense Attach???? to observe a search
and rescue exercise, and the first commercial venture for a
Vietnamese firm to conduct maintenance on a USN logistics ship.
3. (SBU) In June 2008, U.S. firms iDirect, ASC Signal and Cisco
were part of a group of companies awarded a USD 12.6 million
contract with MOD to build a satellite communication backbone.
Three different U.S. defense contractors (Raytheon, Lockheed
Martin, and Northrup Grumman/Sperry Marine) met in July and August
of this year with the Vietnamese Navy, Marine Police, and MOD
officials to discuss the possibility of selling coastal
surveillance command and control and radars to Vietnam to help
monitor their coastal waters. This equipment would not only help
the Vietnamese monitor weather and shipping traffic and combat
illegal activity, but also keep an eye on the situation in the
South China Sea. U.S. firms such as ITT Defense, Raytheon,
Northrup Grumman, and General Dynamics have pitched MOD and the
Ministries of Transportation and Industry and Trade on technology
and equipment to help build and improve toll roads, airports, and
search and rescue capabilities.
5. (SBU) In the last two months representatives of MOD and MPS met
with Enstrom, Bell Textron, and Sikorsky helicopter companies to
discuss buying new helicopters and refurbishing their old Bell
UH-1s to assist in upgrading Vietnam's search and rescue, disaster
relief, and coastal surveillance capabilities. In the case of new
helicopters, Vietnamese officials asked if the U.S. firms could
sell aircraft equipped with Forward Looking Infrared Radar (FLIR)
observation systems. The Vietnamese government and military
wanted to know if FLIR systems are restricted for sale, similar to
night vision equipment, for use in humanitarian missions like
search and rescue and disaster relief. The Vietnamese Southwest
Service Flight Company (SSFC) signed a memorandum of agreement in
August 2009 with Sikorsky Australia to sell helicopters to SSFC for
transportation to and from off-shore oil platforms in the South
China Sea.
6. (SBU) COMMENT: No major deals have been concluded and
discussions are in early stages, but this Vietnamese interest is
new. Concern about China's reaction will serve as a brake on
developments and any purchases from U.S. firms will likely move in
concert with overall progress in U.S.-Vietnamese diplomatic and
military ties. The GVN appears more willing to do business with
U.S. companies if they are part of a consortium or have
foreign-based subsidiaries which could conduct the transaction.
The GVN also appears willing to purchase U.S. equipment for
non-sensitive purposes - communications, safety, and navigation.
HANOI 00000968 002 OF 002
Vietnam's low total defense budget of around USD 4 billion would
likely limit the size of purchases. Although there have been
recent indications of progress, GVN failure to accept Foreign
Military Sales (FMS) also inhibits sales in the short term. END
COMMENT.
Michalak