The year 2014 marked an eventful time in U.S.-Vietnam bilateral defense relations. In addition to high-level visits to Vietnam by senior U.S. military and congressional leaders, the administration of President Barack Obama last October announced a partial lifting of the ban on lethal weapons sales to Vietnam.

While these developments signaled closer defense ties between the two countries and reflect the common security interests of the two governments, the next phase of the relationship will be more challenging. But getting it right will be important for the U.S. rebalance to Asia and the U.S. posture in Southeast Asia in future years. It will also impact regional stability and Vietnam’s ability to pursue an independent foreign policy.

Naval ties with Vietnam are still nascent compared to other partnerships the U.S. Navy has around maritime Southeast Asia and have focused primarily on confidence-building through noncombat exercises. U.S. Navy ships began calling on the port of Danang on the Vietnamese central coast in 2004. The two countries in 2010 inaugurated an annual series of naval engagement activities.

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Biweekly Update

• Search continues for AirAsia Flight 8501
• Prayuth, defense minister propose shutting down critical media outlets
• Aung San Suu Kyi says NLD not committed to 2015 elections

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Looking Ahead

• Sustainable Development in Thailand
• Burma 2015: The Make or Break Moment for Democratization
• Annual Asia Forecast at CSIS

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Time for Closer Naval Ties between the United States and Vietnam

By Murray Hiebert, (@MurrayHiebert1), Senior Fellow and Deputy Director, and Phuong Nguyen (@PNguyen_DC), Fellow, Sumitro Chair for Southeast Asia Studies (@SoutheastAsiaDC), CSIS

The year 2014 marked an eventful time in U.S.-Vietnam bilateral defense relations. In addition to high-level visits to Vietnam by senior U.S. military and congressional leaders, the administration of President Barack Obama last October announced a partial lifting of the ban on lethal weapons sales to Vietnam.

While these developments signaled closer defense ties between the two countries and reflect the common security interests of the two governments, the next phase of the relationship will be more challenging. But getting it right will be important for the U.S. rebalance to Asia and the U.S. posture in Southeast Asia in future years. It will also impact regional stability and Vietnam’s ability to pursue an independent foreign policy.

Naval ties with Vietnam are still nascent compared to other partnerships the U.S. Navy has around maritime Southeast Asia and have focused primarily on confidence-building through noncombat exercises. U.S. Navy ships began calling on the port of Danang on the Vietnamese central coast in 2004. The two countries in 2010 inaugurated an annual series of naval engagement activities.

Vietnam is prone to sensitivities about its sovereignty and independence, the result of a long history of entanglement with many of the world’s major powers. But two decades after the normalization of ties between the United States and Vietnam, and given mounting security concerns in the South China Sea, stepped-up naval relations between the two countries would be a welcome and constructive step.

The United States has shown interest in more regular port visits to Vietnam and in recent years has sought to boost the complexity of its engagement with Vietnam’s expanding navy. In April 2014, the United States and Vietnam for the first time conducted a search and rescue exercise off the coast of Danang. Yet U.S. Navy ships are currently limited to one port call for up to three ships per year, while U.S. naval warships are prohibited from entering the strategic deep-water port at Cam Ranh Bay further south. Addressing these restrictions in an open and pragmatic manner will not be easy, but is critical to the blossoming partnership between the Unites States and Vietnam.

There are concerns within the Vietnamese leadership that allowing more U.S. ship visits could risk upsetting China unnecessarily. But China’s parking of an oil rig on Vietnam’s continental shelf and weeks-long intimidation tactics toward Vietnamese vessels last year indicate that Beijing will not spare its weaker neighbor during the pursuit of larger regional ambitions, despite the fact that Hanoi decided to keep other powers at bay during the stand-off. The recognition that China could push Vietnam around without drawing in the United States partly drove Beijing’s calculus.

In response, a more active U.S. presence in the eastern part of the South China Sea will be in the interest of Vietnam, the United States, and regional stability writ large. Engagement between the U.S. and Vietnamese navies does not come at the expense of China. Just as the relaxation of the U.S. lethal arms ban facilitates Vietnam’s efforts to boost military modernization and maritime domain awareness, more interaction during refueling stops by U.S. naval ships, for example, could help Vietnam improve its maritime safety procedures.

But following some notable developments in 2014, U.S.-Vietnam military-to-military engagement can be expected to plateau this year as Vietnamese leaders focus on preparations for the next Communist Party congress, scheduled for early 2016. Although U.S. and Vietnamese defense officials conduct annual policy dialogues, decisions on key military matters, especially with regard to the United States, have been reserved for the highest political leadership in Hanoi.

Meanwhile, policymakers in Washington are considering the possibility of a visit by President Obama to Vietnam later this year to mark the 20th anniversary of diplomatic ties between the two countries. The military component will not be in the driver’s seat of the bilateral relationship anytime soon, as reaffirmed by Obama and Vietnamese president Truong Tan Sang when they announced the launch of a comprehensive partnership in 2013. Among other things, U.S. and Vietnamese officials are working together ever more closely to conclude the Trans-Pacific Partnership trade negotiations with 10 other countries in the first half of the year.

But after the administration relaxed the lethal arms ban, and as the emerging bilateral security relationship moves into a new yet more uncertain phase, a gesture by Hanoi that signals it is serious about forging deeper comprehensive ties with the United States—along with concrete improvement on human rights in Vietnam—would be much welcomed in Washington. An element as beneficial to both countries as naval diplomacy should not be overlooked.

Over the next few decades, Washington faces a great opportunity and also some hefty challenges across Southeast Asia: It needs to make the case to Southeast Asian countries that deeper engagement with the United States, on both security and economic cooperation, does not negatively affect the regional balance of power. Instead, this engagement helps improve peace and stability and the rule of law in the region.

U.S. defense relations with Vietnam should be considered in this context. As the United States and Vietnam gradually move toward a new normal in their relationship, finding a new equilibrium for the U.S. and Vietnamese navies seems the next logical step.

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Biweekly Update

Indonesia

Search continues for AirAsia Flight 8501. Dozens of ships and aircraft, including from China, Russia, and the United States, have joined the Indonesia-led search for AirAsia Flight 8501, which crashed into the Java Sea on December 28 en route from Surabaya to Singapore. Searchers have found about 40 bodies out of 162 passengers on board as well as parts of the plane including the tail, but have so far failed to locate the main part of the fuselage due to poor weather. Indonesian authorities on January 6 expanded the 18,000-square-mile search zone to include another 100,000 square miles. It remains unclear what caused the plane to crash.

Indonesia suspends aviation officials, institutes new briefing rules following AirAsia crash. Indonesia’s Transportation Ministry on January 5 ordered authorities at the Surabaya airport to suspend air-traffic controllers and other officials who were on duty when AirAsia Flight 8501 crashed into the Java Sea on December 28. The ministry has also launched a review of all Indonesian carriers’ permits and announced a new requirement that pilots departing Indonesian airports be directly briefed on the weather by a certified flight operations officer. Indonesia’s meteorological agency has said that icing due to bad weather could have been responsible for Flight 8501’s crash.

Jokowi names senior adviser chief of staff. President Joko “Jokowi” Widodo on December 31 officially appointed retired general Luhut Binsar Panjaitan head of a new “presidential working unit.” Luhut, who advised Jokowi during the presidential campaign and after he took office, will play a role akin to a chief of staff—helping the president identify priority issues and communicate with the public. Luhut, who is close to Jokowi, was earlier passed over for a cabinet position in favor of appointments meant to shore up support for Jokowi among his coalition partners.

U.S. Embassy issues security alert for Surabaya. The U.S. Embassy in Indonesia issued a statement on January 3 warning of “a potential threat against U.S.-associated hotels and banks in Surabaya” and urging visitors to such facilities to be vigilant. The embassy did not elaborate on the specific threat, but said it was unrelated to the December 28 crash of AirAsia Flight 8501 en route from Surabaya to Singapore. Australia on January 6 echoed the U.S. warning. Indonesian and foreign authorities have warned of the potential threat of extremism from Indonesian citizens returning to the country after fighting with the Islamic State in Iraq and Syria.

Thailand

Prayuth, defense minister propose shutting down critical media outlets. Defense Minister Gen. Prawit Wongsuwon on December 26 voiced support for a proposal by Prime Minister Prayuth Chan-ocha to shut down media outlets critical of Thailand’s military-led government. Prayuth accused unspecified media outlets of hampering government attempts at national reconciliation by publishing overly critical articles. The prime minister also met with the editors of several newspapers to discuss the government’s policies toward the media.

Deputy prime minister says election will take place in February 2016 at the earliest. Deputy Prime Minister Wisanu Krue-ngam on December 23 told U.S. chargé d'affaires Patrick Murphy that Thailand’s junta will hold elections to return the country to civilian rule in February 2016 at the earliest. Wisanu warned that a possible referendum on a new constitution could delay the process an additional three months to May 2016. A U.S. State Department spokesperson called it “unwise and unjustified” to delay the elections, which the junta had originally said would take place by October 2015.

Constitution Drafting Committee rejects direct election of prime minister. Thailand’s junta-appointed Constitution Drafting Committee (CDC) on December 23 unanimously rejected a proposal by the National Reform Council to require the direct election of the prime minister and cabinet members. CDC vice chairman Suchit Bunbongkarn said the committee agreed to preserve Thailand’s bicameral parliament in which the prime minister is selected by elected lawmakers. Other officials have suggested that the constitution could require that the prime minister not be an elected lawmaker. The CDC is expected to publicly release the first draft of the new constitution on January 12.

Lawmakers to decide whether to impeach Yingluck, other key politicians. Thailand’s appointed National Legislative Assembly will hold hearings on January 8 to decide whether to launch impeachment proceedings against former House speaker Somsak Kiatsuranont and former Senate president Nikom Wairatpanij. On January 9 the assembly will decide whether to launch proceedings against former prime minister Yingluck Shinawatra. The two former parliamentary leaders are facing impeachment for their role in a November 2013 attempt to make all Senate seats elected positions; the move, was struck down by the Constitutional Court. Yingluck is accused of dereliction of duty for her government’s failed rice-pledging scheme.

Myanmar

Aung San Suu Kyi says NLD not committed to 2015 elections. Opposition leader Aung San Suu Kyi on December 30 said it was too early to commit her party, the National League for Democracy (NLD), to parliamentary elections scheduled for late 2015. Aung San Suu Kyi said the NLD is waiting for the government to announce an official election date, as well as rules and regulations, before deciding whether to run. The NLD boycotted Myanmar’s 2010 general elections, but won 43 out of 44 seats in 2012 by-elections.

Cracks in peace talks between military and ethnic armed groups widen. Military representatives and top leaders of ethnic armed groups failed to attend nationwide cease-fire talks on December 22–24 in Yangon, signaling a widening gap between the two after the army shelled a Kachin training facility in November 2014. The National Ceasefire Coordination Team, which represents 16 ethnic groups, has insisted on a formal response from the military before discussing cease-fire issues. Meanwhile, some ethnic groups on January 5 said they would like to sign a nationwide peace accord by mid-February.

UN urges citizenship for Rohingya Muslims. The United Nations General Assembly on December 29 passed a resolution urging the government to grant the 1.3 million Rohingya Muslims living in Myanmar full citizenship and freedom of movement. The General Assembly also urged Myanmar to allow the group to identify as Rohingya, conduct independent investigations into rights abuses against the Muslim minority, and receive equal access to health care and education. The government maintains the Rohingya are illegal immigrants from Bangladesh and labels them Bengalis.

Protesters and police clashed as conflict over Chinese-run copper mine mounts. Villagers around the Letpadaung copper mine in northwestern Myanmar clashed with police on December 22 over land seizures for the project. The clashes, which were triggered when China’s Wanbao mining company began fencing in farmland outside the villages, left one dead and several others injured. The area was leased to the company by the previous government in 2011, but local farmers have protested off and on since late 2013 for the return of the land.

Muslims charged for communal riots in Mandalay. A Mandalay district court on December 30 sentenced 11 Muslims to hard labor and prison sentences ranging between 10 and 13 years for their roles in a violent outbreak between Buddhists and Muslims earlier in 2014. The violence erupted after a Buddhist woman falsely claimed she had been raped by her Muslim employers, leading to the deaths of one Buddhist and one Muslim. Four Buddhists were sentenced in October for being complicit in the killing of the Muslim victim.

Lawyer in Koh Tao murder trial confident of exonerating Myanmar suspects. A lawyer for the two Myanmar migrant workers charged with the November murders of two British tourists in the Thai resort of Koh Tao said on December 28 he was confident of convincing “strong” witnesses currently in Myanmar to testify at the trial. The witnesses had allegedly returned to Myanmar for fear of retribution by Thai police or their former employers. The lawyer said the court would be presented with enough information to exonerate the suspects. A trial date has been set for July 8.

Philippines

Tropical storm leaves at least 53 dead. Philippine disaster officials said December 31 that Tropical Storm Jangmi left at least 53 dead after striking the central and southern Philippines during the previous two days. At least 29 were killed in landslides in the central provinces of Samar and Leyte, while the rest were killed by floodwaters. More than 200,000 people were affected by the storm, including many in communities still recovering from devastating Typhoon Haiyan that struck the central Philippines in late 2013.

MILF open to foreign investment in Bangsamoro. Moro Islamic Liberation Front (MILF) peace panel chair Mohagher Iqbal told BusinessWorld that the group is willing to hold “exploratory talks” with foreign companies interested in investing in the proposed Bangsamoro autonomous territory once it is formally established. But Iqbal said the MILF will not green-light any deals with foreign investors, as the Philippine Congress has not yet passed the law officially establishing the Bangsamoro region in the southern Philippines.

Binay top choice for president in 2016, but Poe closes gap. Vice President Jejomar Binay lost considerable popular support amid corruption allegations in 2014, but remains the top choice to succeed Benigno Aquino as president in 2016, according to a Social Weather Stations survey published December 22. A plurality—37 percent—of 1,600 Filipinos surveyed between November 27 and December 1 supported Binay. Independent freshman senator Grace Poe polled second with 21 percent support, followed by Interior Secretary Mar Roxas at 19 percent. Several members of Aquino’s and Roxas’s Liberal Party greeted the polls with discussion of a potential Poe-Roxas presidential ticket.

Malaysia

Floods in Malaysia claim 23 lives, displace 100,000 people. The worst floods to hit Malaysia in decades have claimed the lives of 23 people and displaced more than 100,000 others since mid-December, Malaysian police said on January 5. Prime Minister Najib Razak was criticized for being on vacation during the floods, but he cut short his trip to oversee the government’s response as the situation worsened. The critical palm oil sector will likely be affected by damage caused by the floods.

Malaysia’s megaproject near Singapore draws criticism. A planned Malaysian-Chinese real estate project directly across from Singapore on the Straits of Johor has faced opposition from the Singapore government, according to a December 30 Financial Times report. The $150 billion project would cover more than 4,400 acres and include residential, commercial, and sporting facilities. Singapore is concerned about the potential impact to water flow caused by the large-scale dredging involved and wants all reclamation work suspended.

Malaysia Airlines Flight 370 disappearance fails to spur changes to track aircraft. Malaysia Airlines Flight 370’s disappearance in March 2014 has not led to changes in practices of commercial flight tracking, according to a December 30 Wall Street Journal report. Regulators, safety experts, and the global airline industry remain at odds over how to respond to the tragedy. Airlines remain reluctant to spend money on upgrades such as universal and simultaneous tracking of flights in response to what some see as a one-off event.

Vietnam

Vietnam’s economic growth accelerates in 2014 thanks to growing exports. Vietnam’s General Statistics Office on December 27 reported that surging exports helped the economy grow by 5.9 percent in 2014, up from 5.4 percent in 2013. Exports by companies with foreign direct investment such as Samsung grew by 15.2 percent in 2014 and accounted for two-thirds of Vietnam’s total exports. Strong exports have made up for weaknesses in the domestic economy, which is weighed down by a struggling banking system and state-owned sector. The government is targeting 6.2 percent growth for 2015.

Vietnam arrests third blogger in a month as crackdown continues. Vietnamese authorities on December 28 arrested blogger Nguyen Dinh Ngoc in Ho Chi Minh City, the third arrest of a government critic within a month. Ngoc, who worked for independent blogs and news sites including Radio Free Asia’s Vietnamese language service, has often criticized the government and its persecution of dissidents. Details on the arrest have not been released, but bloggers are usually charged with being involved in antigovernment activities.

Vietnam’s National Assembly to consider legislation to allow demonstrations. Prime Minister Nguyen Tan Dung on December 31 announced after a cabinet meeting that he wants the Ministry of Public Security to submit a bill to the National Assembly that would allow people the right to demonstrate. Some cabinet members opposed putting the bill on the list of draft laws to be considered by the National Assembly in 2015. Vietnam’s constitution grants people the right to demonstrate, but there is no legislation governing its implementation.

Vietnam raises requirements for Chinese tourist visits. Vietnam on January 1 implemented a new immigration law that requires Chinese tourists to pay $45 for a visa to visit Vietnam. Chinese visitors were granted visas on arrival prior to the new law. China is Vietnam’s most important source of tourists; 1.95 million Chinese nationals visited Vietnam in 2014 alone. Travel between the two countries has taken a hit following rising tensions over disputes in the South China Sea.

Vietnam devalues currency to make exports more competitive. Vietnam’s central bank on January 7 devalued the national currency, the dong, by 1 percent to keep exports competitive against regional rivals. The recently rising U.S. dollar, to which the dong is pegged, has negatively impacted Vietnamese exports. The nation’s economic growth largely relies on exports and foreign investment.

Cambodia

Prince returns as head of royalist party. Prince Norodom Ranarriddh on January 1 announced that he would be returning as president of the royalist FUNCINPEC Party. Ranariddh was ousted as FUNCINPEC leader in 2006 for alleged incompetence and formed his own rival party, only to see both royalist parties suffer humiliating defeats in each subsequent election. FUNCINPEC secretary-general Nhiek Bun Chhay said reuniting the royalist factions is necessary for the party’s survival after it failed to gain a single parliamentary seat in the 2013 national elections.

Tensions rise along Cambodian-Thai border. The Thai and Cambodian militaries on December 31 bolstered their presence near a disputed border crossing, which the Thai side closed after Cambodian authorities moved excavation equipment to the area in preparation for a development project. Thai officials condemned the development as a violation of an agreement on border cooperation signed in September 2014. The two countries have not demarcated an official border in the area in question, and Thai authorities worry that any changes to the landscape could make doing so more difficult.

Hundreds infected with HIV in Battambang Province. A Cambodian court on December 23 filed charges against unlicensed doctor Yem Chroeum after more than 200 of his patients in a village in the northwestern province of Battambang reportedly tested positive for HIV. Prime Minister Hun Sen, who initially dismissed evidence that the outbreak was HIV, called for a “thorough investigation,” and the World Health Organization and UNAIDS have sent teams to the village to help with testing and treatment. Police who searched Chroeum’s house said they found a supply of contaminated needles.

Second group of Montagnards cross into Cambodia. Police in northeast Cambodia’s Ratanakiri Province on January 4 said a group of five Montagnards had crossed into the province from Vietnam. Their arrival came two weeks after a UN delegation helped transfer a group of 13 Montagnards from Ratanakiri to Phnom Penh to apply for refugee status. The most recent group told villagers that they fled Vietnam to escape mistreatment by authorities for being Christians. Cambodia had sought to repatriate the last group at Vietnam’s request, but the United Nations intervened.

Singapore

Singapore exchange uses derivatives to make up for lackluster share trading. Singapore’s stock exchange is increasingly relying on derivative products to drive growth given the slump in its traditional share trading services, according to a December 25 Wall Street Journal report. Global investors have used derivative products to gain exposure to currencies and stocks in fast-growing Asian economies such as India and China. Derivative trading grew by 9 percent in the third quarter of 2014, while daily stock trading slumped 50 percent compared to a year earlier.

Housing prices decrease for fifth consecutive quarter. Singapore’s Urban Redevelopment Authority on January 1 reported that housing prices dropped 4 percent in the last quarter of 2014, making it the fifth consecutive quarter of price decreases. This is the longest period of price drops in Singapore real estate in a decade. The decline follows government measures such as mortgage restrictions to rein in property values and curb demand. The government has faced growing pressure from its citizens to respond to rising costs of living.

South China Sea

Chinese oil rig transits South China Sea on way to Indian Ocean. China’s Haiyang Shiyou 981 deepwater oil rig—which sparked a two-month standoff between Chinese and Vietnamese ships when it was deployed to disputed waters south of the Paracel Islands in May 2014—began transiting the South China Sea on January 1 en route to the Indian Ocean. Vietnamese authorities on January 3 confirmed the rig’s movement through Vietnam’s exclusive economic zone, and the Vietnam Coast Guard and Fishery Administration said they have been tracking its movements. Despite concerns voiced in the Vietnamese press, authorities cautioned that the rig appeared headed for the Indian Ocean, reportedly for a project off the coast of Myanmar.

ASEAN

Vietnam, Myanmar among world's top jailers of journalists. A report by the Committee to Protect Journalists released on December 17 listed the governments of Vietnam and Myanmar among the top 10 worst jailers of journalists worldwide. According to the report, at least 10 journalists are currently behind bars in Myanmar on antistate charges. The report, which identified 221 journalists who were sentenced in 2014, said the number of people imprisoned for doing their jobs has also risen in Thailand.

ASEAN Open Skies to be implemented in 2015. Despite recent aviation tragedies caused by Southeast Asia-based carriers, ASEAN countries are still on track to fully implement the ASEAN Open Skies scheme by the end of 2015. Transport authorities in several ASEAN countries have pledged to better scrutinize safety regulations and revamp local airlines following the loss of AirAsia Flight QZ8501 on December 28, 2014. The scheme will result in a single aviation market in Southeast Asia and is expected to further boost people’s movements across the region.

Loss of AirAsia jet could impact Chinese tourist visits to Southeast Asia. The loss of AirAsia Flight QZ8501 could pose a threat to Chinese tourist arrivals in Southeast Asia according to a December 31 Wall Street Journal report. The tourism sector in Southeast Asia is still recovering after a sharp drop in Chinese tourists following the disappearance of Malaysia Airlines Flight 370 in March 2014. Travel agents said they have seen postponements and cancellations for travel to Indonesia and on AirAsia flights.

Laos

Xayaburi dam set to enter second stage of construction. Deputy Minister of Energy and Mines Viraphonh Viravong announced that the controversial Xayaburi dam project will reach a “major milestone” later in January as construction shifts from one side of the Mekong River to the other, according to a January 5 Vientiane Times article. The new stage of construction will allow the project to begin to shift the river’s water flow for the first time once a coffer dam is put in place.

Japan tops donor list for Laos with $100 million. Deputy Minister of Planning and Investment Bounthavy Sisouphanthong said December 31 that Japan remains Laos’s top source of official development aid, contributing approximately $100 million annually. Bounthavy said Japanese assistance mainly targets infrastructure construction but also extends beyond, into health, education, agriculture, and a variety of other fields.

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Looking Ahead

Sustainable Development in Thailand. The Sumitro Chair for Southeast Asia Studies will host a discussion on January 21 on sustainable development in Thailand. Geoffrey Longfellow, project director of the Thailand Sustainable Development Foundation, will discuss his organization’s work and the Thai government’s development strategy. The event will take place from 2:00 p.m. to 3:00 p.m. at CSIS, , 1616 Rhode Island Ave., NW, Concourse Room 114. Registration is not yet open. More details will follow.

Burma 2015: The Make or Break Moment for Democratization. The International Forum for Democratic Studies at the National Endowment for Democracy (NED) will host a discussion January 22 on Myanmar’s 2015 national elections. Reagan-Fascell Democracy Fellow Zin Mar Aung, a former political prisoner in Myanmar, will give a presentation, followed by comments from NED’s John Knaus. The event will take place from 3:00 p.m. to 4:30 p.m. at 1025 F St., NW, Suite 800. Click here to RSVP or watch the livestream here.

Annual Asia Forecast at CSIS. CSIS will host its annual Asia Forecast event on January 29 looking at the trends that will shape the region in 2015. Speakers will include senior scholars from all of CSIS’s Asia programs. The event will take place from 8:00 a.m. to 12:00 p.m., including a continental breakfast, at CSIS, 1616 Rhode Island Ave., NW. Registration is not yet open. More details will follow.

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