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India offers to Vietnam $500 million credit line to help it strengthen its defence

Even as Vietnam continues to be at odds with neighbour China over the South China Sea issue, Prime Minister Narendra Modi said on Saturday that New Delhi will give Hanoi a line of credit of $500 million to help shore up its defences.

“We recognized the need to cooperate in responding to emerging regional challenges. As two important countries in this region, we also feel it necessary to further our ties on regional and international issues of common concern,” PM Modi said.

The line of credit is just one of a dozen agreements India and Vietnam signed in Hanoi during Modi’s state visit. Most of the agreements are to do with deepening the two countries’ defence and security engagement, both economically and geopolitically.

Vietnam is in the midst of a major military buildup that analysts say is a deterrent, as neighboring China grows more assertive in staking its rival claims in the South China Sea.

Although Modi didn’t mention the South China Sea issue, his statement’s focus on regional challenges signalled a recognition of the regional fallout of the dispute at a time when both India and China are competing for maritime supremacy.

A recalcitrant Beijing has thus far refused to accept the July judgment by an international arbitration tribunal in Hague, which ruled that China has no claim to economic rights across large swathes of the South China Sea.

After the Hague judgment, China called the countries involved in the dispute – Vietnam, the Philippines, Brunei and Malaysia- “eunuch” and “paper tiger” and termed The Hague’s tribunal “illegal and ridiculous”.

On Friday, a day before PM Modi and Vietnamese counterpart Nguyen Xuan Phuc signed the dozen agreements, India’s ambassador to Beijing also referenced the South China Sea dispute.

“We believe that UNCLOS (United Nations Convention on the Law of the Sea) represents the foundational aspect of international law on seas and oceans, and we call on all parties to respect UNCLOS,” said P Harish, India’s ambassador to Vietnam.


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