HANOI (Realist English). Russia and Vietnam have devised a concealed system for settling arms contracts that bypasses Western financial sanctions, according to internal Vietnamese government documents obtained by the Associated Press.
The mechanism relies on profits from Rusvietpetro, a Vietnam-Russia oil joint venture in Siberia. Instead of transferring money through the SWIFT banking network, Vietnam uses its share of profits to repay Russian credit for purchases of tanks, fighter jets and naval vessels. Any surplus funds flow back through Russian state oil firm Zarubezhneft and its subsidiaries in Vietnam, effectively keeping transactions within the two countries and outside international oversight.
“This is not your typical offset or counter-trade provision. It is next-level stuff,” said Evan Laksmana of the International Institute for Strategic Studies.
The system was finalized in mid-2024 ahead of President Vladimir Putin’s visit to Hanoi. Documents show Vietnam’s leadership considered the method “relatively confidential and appropriate” given U.S. and European sanctions.
The revelation comes as Washington seeks closer security ties with Hanoi to counter China. The U.S. is simultaneously tightening sanctions on Moscow and warning partners against defense deals with Russia. A State Department spokesperson declined to comment directly on the documents but warned that “those engaging in certain transactions with sanctioned entities may expose themselves to sanctions risk.”
Russia and Vietnam have a decades-long defense relationship. In 2011, Moscow extended $2 billion in credit for frigates and tanks; in 2023, an $8 billion deal covered Sukhoi jets and naval vessels, though deliveries remain incomplete. Analysts say Hanoi’s reliance on Russian spare parts and training will persist for years despite its growing defense ties with the U.S.
Vietnam’s strategic balancing act is increasingly under scrutiny. While Washington lifted its arms embargo in 2016 and elevated relations to a “comprehensive strategic partnership” in 2023, leaked memos show Hanoi simultaneously worked to shield its Russian defense ties from sanctions.
“The less generous, more transactional U.S. approach under the current administration makes Vietnam’s position even more precarious,” said Huong Le-Thu of the International Crisis Group.
As EU and U.S. officials debate tougher sanctions on Moscow, the documents highlight how creative financial engineering continues to blunt Western efforts to isolate Russia’s military-industrial complex.
