HANOI/WASHINGTON, Sept 10 (Reuters) – U.S. President Joe Biden confirmed deals on semiconductors and minerals with Vietnam on Sunday as Washington elevated the strategic Southeast Asian nation to the highest diplomatic status of Hanoi, joining China and Russia.
The U.S. has been pushing for months to upgrade as it views the manufacturing dynamo as a key country in its strategy to protect global supply chains from China-related risks.
Half a century after a long and brutal Cold War-era conflict, Biden arrived in Hanoi to a ceremony organized by the ruling Communist Party that featured school children waving American flags and honor guards carrying bayonets.
Biden noted strides being made toward improved relations.
“We can trace 50 years of progress between our countries, from conflict to normalization, to this new high,” he said.
The partnership with Vietnam is part of the Biden administration’s push to “prove to our Indo-Pacific partners and to the world that America is a Pacific country, and we’re not going anywhere,” Biden told reporters after the Hanoi meeting. .
Vietnam is navigating frosty relations between Washington and Beijing as the technology and textile exporter seeks its own footing in international competition as a low-cost manufacturing hub.
Top Chinese officials, including President Xi Jinping, are expected to visit Vietnam in the coming days or weeks as Hanoi seeks to maintain good relations with all major powers.
Biden said he spoke with Xi’s counterpart at the G20 in Hanoi and the two talked about stability.
Communist Party General Secretary Nguyen Phu Trong, 79, remarked of the 80-year-old US president’s appearance inside party headquarters, saying, “You’ve aged a day, and I’d say you’re better than before.”
Russian arms talks
Vietnam’s long-standing relationship with Russia is facing tests over the war in Ukraine, including talks with Moscow over a new arms supply deal that could trigger US sanctions.
Reuters has seen documents detailing Russia’s talks on a loan facility to Vietnam to buy heavy weapons, including anti-ship missiles, anti-submarine aircraft and helicopters, anti-aircraft missile systems and fighter jets.
One of them was a letter sent to the Russian government by Vietnam’s Prime Minister Bam Minh in May, expressing interest in a possible new deal.
A Vietnamese military official confirmed the authenticity of the letter and confirmed negotiations for a new $8 billion credit facility to buy heavy weapons.
[1/5]U.S. President Joe Biden speaks with General Secretary of the Communist Party of Vietnam Nguyen Phu Trong at the headquarters of the Communist Party of Vietnam in Hanoi, Vietnam on September 10, 2023. REUTERS/Evelyn Hockstein Get license rights
A spokesman for Vietnam’s foreign ministry did not respond to multiple requests for comment on the documents, which show Moscow has been pushing for months for a loan deal that avoids Western sanctions on Moscow.
Hanoi is engaged in similar negotiations with several arms suppliers, including the United States. In recent weeks, Vietnam has held several high-level security meetings with top Russian officials.
The US-Vietnam upgrade will include a security dimension, US Principal Deputy National Security Adviser John Feiner told reporters on Sunday, while on a flight with Biden to Vietnam from a 20-member summit in India.
He said he had no arms deals to announce at this stage, but insisted the US and its partners could help Vietnam move away from Russian military supplies, an offer he said Vietnam would welcome.
This would help Vietnam reduce its military reliance on Moscow, a relationship “we think they are increasingly uncomfortable with,” Feiner said.
Chips, rare earths
Biden’s visit comes as bilateral trade and investment ties grow and a long-running territorial dispute between Vietnam and China heats up in the South China Sea.
Vietnam Airlines ( HVN.HM ) is expected to sign an initial deal to buy about 50 Boeing ( BA.N ) 737 Max jets, a deal worth $10 billion.
Executives from Google ( GOOGL.O ), Intel ( INTC.O ), Amkor ( AMKR.O ), Marvell ( MRVL.O ) and GlobalFoundries ( GFS.O ) highlighted Vietnam’s growing importance as a “friends” destination for U.S. tech companies. ) and Boeing ( BA.N ) are expected to meet Vietnamese technology executives and State Secretary Antony Blinken in Hanoi on Monday.
However, those are the core elements of the plan of action adopted during Biden’s visit, US officials said.
It’s not clear what the partnership could mean other than possible announcements by US companies. The US government has $100 million a year under the CHIPS Act to support semiconductor supply chains worldwide. A large part of it may go to Vietnam, officials said.
As Vietnam faces a major shortage of engineers in the chips industry, additional support to train skilled workers is also part of the agreement.
Another key issue is strengthening supply chains of critical minerals, especially rare earths, of which Vietnam has the world’s largest deposits after China, according to U.S. estimates, officials said.
Two people familiar with the plans said a deal on rare earths is expected during Biden’s visit, which ends when he returns to the US on Monday.
However, details are scarce. Past attempts by American companies to partner with Vietnamese rare earth companies have been unsuccessful, says a person involved in a recent project.
Human rights remain a contentious issue, with US officials regularly criticizing Hanoi for imprisoning activists and restricting freedom of expression. Vietnam may show goodwill and diplomats suggest the activists may be released.
Reporting by Nandita Bose, Francesco Curacio, Trevor Hunnicutt, Khan Wu; Editing by Heather Timmons, Chisu Nomiyama, William Mallard, Christina Fincher, and Cynthia Osterman
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