Visit of Vietnamese President Truong Tan Sang to India

India and Vietnam inked 6 agreements during the visit of Vietnamese President Truong Tan Sang to India. The agreements are as following:

• India and Vietnam signed an extradition treaty
• Oil exploration agreement in South China Sea: Under this, ONGC signed an agreement with Vietnam’s national oil company PetroVietnam to hunt for oil in that nation as well as in third countries.
• Friendship pact to celebrate the 40th anniversary of the diplomatic relations in 2012
• Agreement in the field of agriculture and fisheries
• Cooperation in sports and tourism
• Agreement on Cultural Exchanges

They also decided to grow their trade target to $ 7 billion by 2015 from the present $ 2.7 billion. They decided to work towards early finalization of the India-Asean Free Trade Agreement in Services and Investment. They also talked about the state of affairs in the Vietnamese Eastern Sea (South China Sea).

Significance of Vietnam for India:

This was the first trip by the Vietnamese President exterior to the Asean region, significance attached by both sides to the relationship. Increasing close relations with Vietnam is a vital component of India’s Look East Policy. The Chinese claim on the South China Sea was rejected by both India and Vietnam, saying as per the UN, the blocks belong to Vietnam.

Reaction of China:

Within days of Prime Minister Manmohan Singh hosting Vietnamese president Truong Tan Sang, Chinese leaders started leaning on Vietnam to cancel the country’s oil exploration deal with India in the South China Sea. It was said by Xinhua, China’s official news agency that leaders of both China and Vietnam (represented by Communist Party chief Nguyen Phu Trong) have agreed that they will not “allow any hostile force to destroy their relations”. They also promised to hold “frequent communication and dialogue on maritime issues”.

Both sides will seek steady progress in negotiations regarding the maritime demarcation of the bay mouth of Beibu Gulf (Gulf of Tonkin) and discuss the joint development of the sea area. The newspaper also said that India was risking its own energy security. It said that challenging the core interests of a large, rising country for unknown oil at the bottom of the sea will not only lead to a crushing defeat for the Indian oil company, but will also most likely seriously harm India’s whole energy security and interrupt its economic development. It further stated ominously that Indian companies “must not enter the disputed waters of the South China Sea”.

Problem of Vietnam

Vietnam is now caught in a bind. Cancelling an exploration contract with India can have repercussions on its oil deals with companies from other countries, sources said. But resisting pressures from China, which is a major trade partner, is not going to be easy. Besides, Beijing is expected to come up with some economic sweeteners as well.

Problem with South China Sea

China sovereignty over all of the South China Sea, which resulted in an overlap with claims of Vietnam, the Philippines, Taiwan, Brunei and Malaysia.

Month: Current Affairs - December, 2011