Recently published research from Business Monitor International, "Vietnam Defence & Security Report Q2 2014", is now available at Fast Market Research

Boston, MA -- (ReleaseWire) -- 05/02/2014 --Given China's recent declaration of an Air Defence Identification Zone (ADIZ) in the East China Sea and increased territorial assertiveness in the South China Sea, Vietnam is increasingly finding itself squeezed between the US and China.

Vietnam is involved in territorial disputes with China in the South China Sea, most notably over the Spratly and Parcel Islands. Although Beijing denies that is planning to declare an ADIZ in the South China Sea, a recent announcement by foreign minister Wang Yi that China would 'defend every inch' of its territory has no doubt left Hanoi worried.

Beijing's increasing assertiveness n has had a pronounced effect on Vietnam's defence policy over the past decade. Indeed, between 2005 and 2012 Vietnam's defence spending doubled. As with most other neighbouring countries, regional tensions have ensured that defence sales have remained buoyant despite various economic challenges. Over the past few months, Vietnam has taken delivery of two six Kilo-class diesel-electric submarines ordered from Russia, as well as a Ukraine-made 3D search radar ST68UM for the S-300 missile system.

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Given its increasing appetite for new defence equipment, as a result of rising tensions with China in the South China Sea, Vietnam has become a key market for a range of countries. While Moscow has always been Hanoi's primary defence partner, due to the latter's reliance on Soviet-era equipment, a number of European defence companies are also expanding ties with the country. Airbus Helicopter, French naval company DCNS and European missile-maker MBDA are all reportedly looking to win contracts in Hanoi.

Defence ties with the US have continued to strengthen since the ADIZ declaration in November 2013. Following US Secretary of State John Kerry's visit to Vietnam in December 2013 a range of deals have been announced between the two countries. This includes US$32.5mn in assistance for maritime law enforcement in South East Asia, US$18mn of which is earmarked for Vietnam. In March 2014 Wendy Sherman, the under-secretary of state for political affairs, followed Kerry's visit to Vietnam with a short visit to Hanoi. During the under-secretary's meetings with Nguyan Chi Vinh, the Vietnamese deputy minister of national defence, the two countries agreed to promote exchanges aimed at better coordination in strategic consultations on defence and security, clearing bombs and mines, as well as enhancing maritime security.

With the US' strategy of rebalancing to Asia and China antagonising traditional allies, it will be interesting to see how the Vietnam-China-US dynamic develops. Unlike other neighbouring countries, notably Japan and South Korea, Vietnam has maintained a cautious reaction following Beijing's announcement of an ADIZ in November. However, the warm reception proffered to Kerry during his recent, may imply a reorientation of Vietnam's web of alliances.

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