Vietnam has been engaged in several skirmishes over the years concerning the Spratly Islands in the South China sea. Possession of one or most of the islands has deep strategic and economic value. The islands themselves have little value, but the fishing and potential of oil reserves below them have great value. The islands are legal lodgements from which undersea zones and exploitation rights flow.
However, as Vietnam has no submarine tradition outside of owning two old midget Yugo Class submarines it will take years of expensive Russian training and control of at least the first three submarines to make Vietnam's submarine flotilla efficient and independent. Russia will regain some of the naval intelligence and military power it lost when it withdrew from Cam Ranh Bay.
Submarines are, after all are intelligence collection devices in peacetime. Essential Russian crew members and a sigint relay feed via the Vietnamese submarines to the Russian naval base at Vladivostok will be an importance asset to Russia's military presence in the western Pacific. For Vietnam submarines are an asymmetric way to counter Chinese and Taiwanese power projection into the Spratly islands. Vietnamese submarines will also provide parity with Malaysia's claims and exceed the naval power of the Filipino and Bruneian competitors.
Furthermore the asymmetric power of Vietnam's submarines will also provide limited defence of Vietnam from the risk of Chinese sea-based invasion.
DefenceStudies, December 17, 2009 reports:
MOSCOW - Vietnam and Russia signed a major arms deal and a nuclear energy agreement Dec. 15, a sign of reviving ties between Moscow and its former Soviet-era ally in Southeast Asia.
Hanoi agreed to buy Russian-made submarines and aircraft in the arms deal, which was signed in the presence of Russian Prime Minister Vladimir Putin and his visiting Vietnamese counterpart, Nguyen Tan Dung.
"Vietnam signed a contract for the purchase of submarines, planes and military equipment with the corresponding cooperation of the Russian side," Dung said in remarks translated into Russian.
Details were not released on the deal between Russian state-owned arms exporter Rosoboronexport and Vietnam's defense ministry.However the Interfax news agency, citing an unnamed defense industry source, reported that Vietnam had agreed to buy six Russian-made submarines for a total price tag of about $2 billion (1.37 billion euros).
The six Kilo-class diesel-electric subs would be built for the Vietnamese navy at a rate of one per year, Interfax reported. [While Russia is supposed to have replaced new build Kilo's with the new Lada Class it appears that the "Lada Class" are now merely termed "improved Kilos".]Moscow and Hanoi also inked a deal on the construction of Vietnam's first atomic power plant.
Last month, the Vietnamese parliament approved building the country's first nuclear power station, a lucrative project that has been keenly watched by potential foreign partners.
The agreement signed in Moscow was described as a memorandum on cooperation between Vietnamese electricity company EVN and Russia's state-owned atomic energy firm Rosatom, which had been interested in the project.
"Vietnam officially invites the Russian side to cooperate in the building of the first atomic energy plant in Vietnam under adherence to the necessary conditions," Dung said.
[The Russian built reactor may be one of two 1,000 MW reactors Vietnam has planned at Phuoc Dinh in the southern Ninh Thuan province to be constructed from 2014 and come into operation from about 2020, followed by another 2000 MWe at Vinh Hai in the Ninh Hai district. These plants would be followed by a further 6000 MWe by 2030, subsequently increased to having a total of 15,000 MWe by 2030. The anticipated cost of the first two plants is about $11 billion, and some 85% of this would need to be found from overseas loans.]