Vietnam Eyes Purchase of Israeli Air-defense System

A Vietnamese delegation is set to visit Israel next month to advance the $500 million purchase, following an estimated $1.5 billion worth of defense-equipment deals between the two countries over the past decade

Yossi Melman head
Yossi Melman
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A Barak 8 missile being fired from a navy ship.
A Barak 8 missile being fired from a navy ship.Credit: IDF Spokesman's Office
Yossi Melman head
Yossi Melman

A high-ranking delegation from Vietnam’s Defense Ministry is due to visit Israel in September as guests of Israel Aerospace Industries to advance the half-billion-dollar purchase of three of the defense firm’s Barak 8 missile defense systems. The delegation is to be headed by the deputy commander of Vietnam’s air force as well as the head of the country’s air defenses.

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Vietnam’s interest in IAI’s Barak system is troubling news for another Israeli defense company, Rafael Advanced Defense Systems. In 2015, Vietnam purchased Rafael’s Spyder air-defense system for $600 million, making for the largest-ever military deal between the two countries.

Rafael has recently been in talks with the Vietnamese air force in an effort to convince Hanoi to buy three more Spyder systems, but according to Vietnamese industry sources, Hanoi has been unhappy with Rafael and decided to give priority to IAI.

In recent years, the Israeli Defense Ministry has tried to coordinate overseas sales by Israeli defense contractors so that they don’t compete with one another in the same countries, but attempts to share development and production activity have not always been successful.

Both Rafael and IAI develop missile technology and compete against one another, and Elbit Systems, IAI – and recently, Rafael as well – compete in the field of drone technology. In the past, one Israeli company conducted a smear campaign in another country against a domestic competitor. Neither of them landed the contract.

IAI’s Barak 8 system is designed to protect against a range of threats, including airplanes, helicopters, drones, cruise missiles and anti-ship missiles. It can be deployed on land or at sea and was developed jointly by IAI and India, paving the way for the 2017 signing of a $1.6 billion contract – the largest of its kind between Jerusalem and New Delhi – to supply the system to the latter.

During the Vietnamese delegation’s trip to Israel next month, the visitors are set to meet with the head of the Israel Air Force, the commander responsible for the country’s air defenses and senior Defense Ministry officials.

China as a threat

Vietnam, a country with a population of 100 million, has in the past decade and a half become one of most important markets for Israel’s defense industries. The Defense Ministry refuses to provide figures regarding sales to specific countries (supplying them only by continent), but industry sources believe that Israel has sealed deals worth $1.5 billion with Vietnam, notably including the following:

■ Elbit Systems sold command-and-control systems to the Vietnamese navy worth $60 million, and cyber and communications equipment worth another $30 million. IAI has sold three Heron drone systems for about $140 million to Vietnam. Its Elta subsidiary has sold $150 million in radar equipment, while its Ramta subsidiary has sold 60 armored vehicles for $20 million.

■ Businessman Samy Katsav, who owns Israel Weapon Industries, which was formerly the Magen division of Israel Military Industries, established a $100 million plant in Vietnam for the assembly of Tavor assault rifles. IMI Systems, formerly Israel Military Industries, has sold techniques for upgrading tanks as well as EXTRA artillery rockets with a range of 150 kilometers (93 miles) in a transaction worth about $70 million.

■ The Israeli firm Cellebrite sold cellphone hacking tools to Vietnam’s Public Security Ministry, which is known to persecute bloggers, journalists and ethnic and religious minorities in the country. The company Verint has been supplying surveillance and intelligence systems for more than 20 years to Vietnam’s security forces, in sales worth about $30 million.

Another indication of Vietnam’s importance to Israel is this week’s visit by former Prime Minister Ehud Barak to Hanoi, where he delivered a speech at its opera house and met with the country’s leaders.

“I was invited at their request to share my thoughts with them about how to prepare for the era of artificial intelligence and deep learning and how to encourage high tech, creativity and innovation,” the former prime minister told Haaretz. On Wednesday, Barak met with Vietnam’s president, Nguyen Xuan Phuc. “They very much appreciate and respect Israel.”

In 2011, Israel and Vietnam signed a secret agreement that boosted security ties between the countries. The military and Defense Ministry sent military attaches and sales representatives to work out of the embassy in Hanoi, while Vietnamese cabinet ministers and senior Communist Party members and generals visited Israel to discuss possible purchases. In 2018, a high-level Israel delegation headed by the Defense Ministry director general at the time, Udi Adam, visited Vietnam.

The Vietnamese interest in ties with Israel and the purchase of Israeli military wares come against the backdrop of Hanoi’s concern over the strategic threat posed by its neighbor to the north – China. During the period when French colonists and American troops were in Vietnam, China was an ally of Vietnamese forces fighting those Western powers.

But since the unification of Vietnam under Communist rule after the fall of the South Vietnamese regime, Hanoi began opening up to the West, embracing a market economy and befriending the United States. Fear of China has only further intensified recently amid China’s threats against Taiwan.

Israel Aerospace Industries is also very interested in completing a huge sale of spy satellites to Vietnam, and recently, the head of IAI’s space division led a delegation from the company to Vietnam. The deal is currently stalled, however, over its price tag. IAI is asking more than half a billion dollars and is also facing stiff competition from the French firm Thales.

A report in Vietnam on the arrest of Nguyễn Thị Thanh Nhàn.

Another problem is the arrest warrant issued against Nguyen Thi Thanh Nhan, who has served as a contact person and intermediary for Israeli defense firms. The Vietnamese government issued the warrant four months ago on suspicions of corruption and fraud against Nhan. She had had major influence with the powers that be in Hanoi for many years, in part thanks to her close ties with the country’s president and defense minister, but the government has recently launched an anti-corruption campaign against senior officials.

According to reports from Western organizations and Vietnamese political exiles, a large number of deals, particularly involving military hardware, are only being completed through payments to intermediaries that end up in the pockets of senior bureaucrats and cabinet ministers. When the authorities raided Nguyen Thi Thanh Nhan’s home in Hanoi, she was in the United Kingdom.

According to rumors, she recently returned to Vietnam and was placed under house arrest of sorts, but an Israeli source who knows her well has said that she is still abroad and has no intention of returning to Vietnam as long as the arrest warrant and suspicions against her are outstanding.

A spokeswoman for Israel Aerospace Industries refused to provide a comment for this article. A spokesman for Rafael did not respond to Haaretz’s request.

* Read this story in Hebrew:

יחסים עכורים עם רפא"ל: משלחת מווייטנאם באה לרכוש ברק 8 מתעשייה אווירית

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