Vietnam abandons Russian arms as payback over oil project: report

Want China Times, Staff Reporter 2014-05-19

Russian AK-47 rifles. (Photo/CFP)

Vietnam has abandoned Russia-made weapons in a new round of defence tenders as payback for Russia's aborting of oil and gas development activities in the South China Sea, reports the Elite Reference, a subsidiary of the party-run China Youth Daily.

According to Russian paper Kommersant, the People's Army of Vietnam made a surprising choice during recent tenders for standard assault rifles, choosing Israel while sidelining Russia as part of government plans to completely phase out Russian AK-47s starting from next year in favor of the Israeli ACE-31 and ACE-32.

From the perspective of Russian arms dealers, its AK-100 should have been the best choice for Vietnam, which has continuously used Russian rifles for decades and holds a large stockpile of compatible ammunition, the Elite Reference said.

The Russian corporation participating in the tender acknowledged the failed bid but insisted that it lost out due to "political reasons" as opposed to inferior weapon quality or price considerations. Vietnam is Russia's fifth largest weapons export destination, acquiring an average of US$1.5 billion in arms every year.

Citing Russian media, the Elite Reference says the cause of the switch can be traced back to February, when Russia's largest private oil firm, Lukoil, withdrew from a joint venture exploration project in Vietnam following unsatisfactory results. Lukoil's subsidiary, Lukoil Overseas Vietnam, had acquired a 50% stake in April 2011 in a project to develop the Hanoi Trough-02 oil field in the South China Sea, which is estimated to hold 180 million metric tonnes of oil equivalent and had been explored since 2007.

Russia has long been a major supplier of arms to Vietnam, but analysts say the loss of business will not have a significant impact given improving relations between Moscow and Beijing.

Reports say Russian jet manufacturer United Aircraft Corporation is currently in negotiations with China's aviation industry to jointly develop a large wide-body aircraft with plans to test the market in 2023-2025. Analysts believe the Sino-Russian wide-body aircraft will take flight in the next eight to 10 years to challenge the American monopoly in this sector.