Prime Minister Narendra Modi held a virtual summit with his Vietnamese counterpart Nguyen Xuan Phuc on December 21. Of the entire 10 member ASEAN grouping, Vietnam enjoys a special place so far as bilateral ties are concerned. This was the first such virtual summit of PM Modi with an ASEAN country. Both the leaders resolved to enhance security cooperation by strengthening defence ties amid shared concerns over China’s assertiveness. Both also discussed the issue of securing ‘peace and freedom’ in the South China Sea. While Hanoi has had repeated run-ins with Beijing over the disputed waterway throughout the current year, India and China are locked in a border stand-off.
Both countries share is historical and civilization connects. Both also have similar historical experiences of liberating themselves from colonial domination and therefore sympathise each other. More recently, their antipathy towards China further draws them in the strategic domain.
During the summit, the two leaders exchanged views on wide-ranging bilateral, regional and global issues. These shall provide guidance for the future development of India-Vietnam Comprehensive Strategic Partnership. Before Covid-19 pandemic cut short in-person visits, Vice-President of Vietnam Dang Thi Ngoc Thinh had come to India in February. Both the Prime Ministers had a telephonic conversation on April 13. Earlier, the 17th Joint Commission Meeting (virtual) was co-chaired by the two Foreign Ministers on August 25. Defence Minister Rajnath Singh met his counterpart Ngo Xuan Lich on November 27. President Ram Nath Kovind had visited the country in 2018, Vice President Venkaiah Naidu in 2019 and PM Modi in 2016 during which ties were elevated to ‘comprehensive strategic partnership’. Such high level interactions on a regular basis help in sharing viewpoints on critical bilateral and regional issues and deepen mutual understanding.
Though seven agreements were signed, China’s aggressive actions in the region were the major highlight of the discussion. While India is locked in a military standoff with China in Ladakh sector of the Line of Actual Control (LAC), Vietnam has major differences over Chinese claims within its exclusive economic zone in the South China Sea. Prime Minister Modi described Vietnam as “an important pillar of India’s Act East policy and an important ally of our Indo-Pacific vision”. Modi observed: “We see our relationship with Vietnam from a long-term and strategic view. Peace, stability and prosperity are our common objectives in the Indo-Pacific region. Our partnership can contribute significantly to maintain stability and peace in the region”.
Prime Minister Nyugen Xuan Phuc observed that upgrading bilateral ties to a comprehensive strategic partnership in 2016 during PM Modi’s visit to Vietnam had bolstered trust and understanding of other’s vision and interests on international issues. He said the Vietnamese side had also agreed on India’s proposals for a further defence line of credit.
The seven agreements that were signed included deepening cooperation in areas such as defence, petrochemicals, nuclear power, renewable energy and treatment of cancer. Both sides also unveiled a joint vision for peace and prosperity against the backdrop of concerns in both countries about China’s aggressive actions across the region. Among the new initiatives included development cooperation and cultural conservation.
Both leaders also discussed projects in water resource management in Vietnam’s Mekong Delta region, digital connectivity, PhD fellowships, capacity building assistance through initiatives such as Quick Impact Projects (QIPs), Indian Technical and Economic Cooperation (ITEC) initiatives and e-ITEC initiatives, and heritage conservation. They are already engaging under Mekong–Ganga Cooperation, which is a two-decade-old mechanism involving India and five ASEAN countries including Vietnam. Agreement to explore new opportunities in renewable energy cooperation was also reached.
Both sides are committed to achieve soon a target of $15 billion in two-way trade per year by strengthening trade promotion, minimising technical barriers, and limiting trade defence remedies and policies that are not conducive to imports and exports. Enhancing the connection of production chains, maintaining the stability of regional and global supply chains, and expanding collaboration in the field of energy are other thrust areas that both sides have agreed to focus. Analysts in India see Vietnam as the new powerhouse in Asia and the emerging hub of FTAs in the world. The summit has taken relations to a higher level and bilateral trade could reach $20 billion by 2022. It would be a win-win situation if both countries consider a free-trade agreement facilitating Indian exports to the world with Vietnam being a trade transit country.
A joint vision document and a plan of action for bilateral engagements during 2021-23 was released, sending a strong message to the world about the depth of India-Vietnam relationship. New Delhi has in the past extended defence Lines of Credit worth $ 600 million to strengthen Vietnam’s domestic defence manufacturing. India is currently implementing a $100 million defence line of credit for 12 high speed patrol boats for Vietnam. The boats being built for the Vietnam Border Guard are meant to enhance coastal security and prevent illegal activities. Five vessels are being built at Larsen & Toubro’s shipyard in Chennai, and the rest will be made at Hong Ha shipyard in the Vietnamese port city of Hai Phong under the Indian firm’s supervision. These patrol boats are being built for the Vietnam Border Guard in order to enhance coastal security and prevent illegal activities.
Both have stakes in the Indo-Pacific region and significant maritime interests. The summit enabled them to look at potential cooperation on India’s Indo-Pacific Oceans’ Initiative (IPOI) and Asean’s Outlook on Indo-Pacific (AOIP) outlook that Vietnam subscribes to. India and Vietnam will also concurrently serve as non-permanent members of the UN Security Council from 2021, and this has opened up new opportunities for cooperation and coordination on regional and international issues. Both the countries can use the opportunity for a stronger voice for reforms at the 75-year-old body. The new form of digital diplomacy helps the two nations to take stock of the regional and global situation, besides exploring convergences on new and resilient supply chains.
There is now direct air link between the two countries, between New Delhi and Hanoi, adding to physical connectivity (suspended temporarily owing to Covid-19). There is high expectation that there could be infrastructure connectivity one day connecting various countries crossing Thailand, Cambodia, Laos and finally reach Vietnam.
Vietnam is also looking forward to more investments by Indian companies in its oil and gas sector, in particular to Essar Exploration group ramping up its investment to $11 billion. If that happens, the project will be the single biggest investment by an Indian company in Vietnam. India’s overseas arm of the Oil and Natural Gas Corporation (ONGC), the OVL, is engaged in oil exploration activities in Vietnam’s EEZ of the South China Sea. Essar and ONGC Videsh are the two major two oil companies active in Vietnam at the moment. China objects Vietnam’s invitation to Indian companies for offshore oil exploration, saying that development of bilateral relations should not be used as an excuse to infringe upon China’s ‘legitimate rights and interests’ in the South China Sea.
The South China Sea is a major flashpoint because of competing claims by several countries to the parts of the sea that fall within their respective exclusive economic zones, whereas China has a drawn nine-dash line claiming the South China Sea almost in its entirety. It is desirable that all stakeholders need to affirm the importance of maintaining peace, stability, security, safety and freedom of navigation and aviation, and peaceful settlement of disputes based on international law, especially the 1982 United Nations Convention on the Law o the Sea (UNCLOS 1982). Both Modi and Phuc, therefore emphasised UNCLOS as the legal framework governing all activities at sea and ocean, and urged the parties to fully and effectively implement the Declaration on the Conduct of the Parties in the East Sea (DOC) and soon complete a practical and effective Code of Conduct in the East Sea (COC) in accordance with international law, especially UNCLOS. China should desist from its aggressive intent, lest that shall only push India and Vietnam closer to seek common grounds to cope with the China challenge, besides strengthening the Quad and brightening the prospect of embracing Vietnam into the fold.
The author was formerly Senior Fellow, IDSA, New Delhi.