Is Vietnam Waiting for Israel?

A small arms deal and negotiations that may lead to additional deals have positioned Vietnam as a key objective of many Israeli industries. "Vietnam has tremendous potential," says Lior Kunitzki, Deputy CEO of the Israel Export & International Cooperation Institute.

The parade of senior executives from Israeli defense industries and the Israel defense establishment, who visited Vietnam in the summer of 2012, leaves no room for doubt: this South-East Asian country has been marked as a primary objective for trade and sales activities.

However, will Vietnam actually become a major client of the Israeli defense industries? The potential is deemed to be high. Vietnam has a number of on-going border disputes with its neighbors, which motivate it to acquire modern weapon systems. 

Additionally, the central government wishes to secure numerous strategic installations, so as to ensure its own survival. One of these border disputes, considered to be relatively minor, is currently under way between Vietnam and Laos, over territories in the rain forests. Several on-going disputes involve islands and territorial waters. 

One of them pertains to the Spratly islands – a group of more than 700 tiny islands and reefs located half way between the estuary of the Mekong River and the southern Philippines. The issue of ownership of these islands is almost as complex as the Middle East problem: China, Taiwan, the Philippines, Malaysia, Brunei and Vietnam all present ownership claims. Each one of these countries began airing the yellowing documents it possesses the moment it was established that there are major oil and gas deposits on the continental shelf. In 2011, Chinese forces attacked Vietnamese vessels engaged in preliminary surveys in preparation for oil exploration in two different incidents.

Another on-going border dispute involves the Paracel islands and sections of the border with Cambodia. To this date, these disputes have not amounted to anything more serious than occasional exchanges of fire, but they might definitely escalate.

Such Good Friends
The US currently regards Vietnam as a very friendly country. This fact makes it possible for US companies to supply various types of armament to Vietnam.

The relationship between Israel and Vietnam has warmed up considerably over the course of 2011. Following months of behind-the-scenes contacts, this warm-up was reflected in a state visit by Israeli President Shimon Peres, who was accompanied by dozens of Israeli business people, notably senior executives from the defense industries. Sources in Israel explain that Vietnam needs several types of weapon systems, according to the characteristics of the border disputes in different areas.

Another substantial market in Vietnam involves Homeland Security – HLS. Here the range of relevant products extends from monitoring and surveillance systems to riot control gear. In Vietnam, there was always tension between the north and the south, and the central government is fully aware of this and wants to ensure that the situation is under control.

Experts say that Vietnam regards Israel as a source for knowledge and equipment the government seeks, mainly for the Vietnam People's Army (VPA) – the name for all of the country's armed forces. The organizational structure of the VPA was inspired by the Chinese People's Liberation Army. It consists of the land forces (which include strategic rear-area forces and a border guard), the navy, the air force and the coast guard.

According to current estimates, some 500,000 officers and other ranks serve in Vietnam's military. The government also organizes local militia in the provinces as well as local police forces. The involvement of the armed forces in the country's social life has gradually decreased since the 1980s.

A senior defense establishment source told Israel Defense that Vietnam is a growing country that currently possesses outdated Russian and Chinese military equipment. The country faces a number of significant military threats, and therefore requires western capabilities and advanced technologies.

According to this source, Israel is a classic ally – a country possessing proven military technology, free of any political premium and other constraints, and with the willingness to transfer capabilities and know-how.

The same source estimates that in the coming years, Vietnam will evolve into a major client of the Israeli defense industries as well as into an ally, in many respects. He added that the level of cooperation will not be as high as with India, but will definitely be substantial.

As far as the defense field is concerned, the Vietnamese are interested in several major items: upgrading of outdated equipment, such as aircraft and helicopters; advanced artillery systems; fast patrol boats; aerial radar systems and state-of-the-art communication systems.

Some 'serious' negotiations are already in progress between several Israeli defense industries and the Vietnamese Ministry of Defense. Last year, a major deal was signed between Vietnam and Israeli arms manufacturer IWI, in the context of which the Israeli company will establish an arms manufacturing plant on Vietnamese soil. Project scope is estimated at more than $100 million. This year, most of the negotiations currently under way between Israeli and Vietnamese parties are yet to mature into deals of any substance.

"The government is highly centralized, but the situation is promising," said sources in Israel. Procurement processes, so it seems, are relatively short.

The government of Vietnam is concerned about its own survival and wishes to be aware of all on-going developments in order to avoid surprises. This creates a demand for various surveillance systems in the fields of communication and optics.

"In the field of HLS," says Lior Kunitzki, Deputy CEO of the Israel Export & International Cooperation Institute, "Vietnam is a good potential market. The Ministry of Public Security has shown interest in several projects based on equipment developed by Israel to high levels of performance. Vietnam has several major integrators in the field of Homeland Security, and negotiations are under way mainly with them."

One of the major Vietnamese corporations is the government-owned GTEL. According to a number of sources, this company is already negotiating with Israeli industries for state-of-the-art internal security equipment.

The Israel Export & International Cooperation Institute is supported by the Economic & Trade office at the Israeli Embassy in Hanoi. According to information available to the institute, representatives of some of the Vietnamese integrators will attend the HLS conference the Institute is holding in Israel in November 2012.

Lior Kunitzki states further that thus far, the dialogs have indicated that in the field of HLS, airport and strategic installation security equipment is expected to be in high demand as well.

He estimates that the first contracts involving HLS equipment will be signed in the next two years. "Vietnam has tremendous potential, and they know exactly what Israel can give them in this field," concludes Kunitzki.