Snug with Vietnam, step back from China

Snug with Vietnam, step back from China

New Delhi: Prime Minister Narendra Modi pledged deeper ties with Vietnam but quietly pulled India back from a brewing diplomatic confrontation with China on a dispute between Hanoi and Beijing over a patch of sea both claim.




India and Vietnam agreed to ratchet up economic cooperation and trade at Modi’s meeting with visiting Vietnam Prime Minister Nguyen Tan Dung, and signalled intent to collaborate in defence more closely than before.


Trade and defence ties between the nations are already spiralling faster than either country had expected, fuelled by Hanoi’s tensions with Beijing over disputed islands and reefs in a swathe of the South China Sea.


“Our defence cooperation with Vietnam is among our most important ones,” Modi said after the meeting. “India remains committed to the modernisation of Vietnam’s defence and security forces.”


But Modi and Dung also oversaw the signing of an agreement under which India silently halved its stake in the exploration of an oil block in territory claimed by both China and Vietnam, senior officials have confirmed to The Telegraph.


China had in 2011 officially protested to India through a demarche — a formal diplomatic communication — about exploration by the Oil and Natural Gas Corporation (ONGC) at oil block number 128 in a part of the South China Sea currently controlled by Vietnam, but which Beijing claims.


By selling 50 per cent of its stake in that block to PetroVietnam — Hanoi’s state-owned hydrocarbon firm — India has reduced its presence in Vietnamese waters contested by China.


India did ink another pact to explore two other oil blocks offered by Hanoi — a key economic takeaway from Modi’s meeting with Dung.


But these blocks lie comfortably outside territory claimed by China, a fact that drew a subtle nod from Beijing within hours. “We have no problem with oilfield cooperation conducted by relevant countries in uncontested waters if such cooperation is legitimate and lawful,” Chinese foreign ministry spokesperson Hong Lei said in Beijing this afternoon.


Vietnam’s tensions with China have propelled desperate efforts by Hanoi to foster bilateral investment and trade with India over the past three years. Those efforts have allowed the nations to cross a bilateral trade target of $7.5 billion they had set for 2015 a year in advance. The trade stands at over $8 billion a year.


Modi and Dung agreed to set a new target — $15 billion in bilateral trade by 2020.


Hanoi’s maritime dispute with Beijing has also left it searching for assistance in military hardware, and in September, during President Pranab Mukherjee’s visit to Vietnam, India promised a $100m line of credit for the purchase of defence equipment.


But India has studiously refrained from committing to Vietnam’s request for its BrahMos missiles, which could be used to target maritime vessels. Instead, the line of credit will be used to sell Vietnam offshore patrol vessels that Hanoi can use to monitor its waters but that can’t be put to lethal use.


When the ONGC’s contract for the controversial block 128 was about to expire in 2013, Vietnam promised it additional blocks in non-contested waters if India agreed to continue holding on to the contentious block. In 2013, the contract for block 128 was extended by a year, and in September, by a further two years. “By halving its stake in block 128 today, India is in our opinion sending the right message,” a Chinese official said.


- The Telegraph, Calcutta

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