Russia and Vietnam have been using profits from joint oil and gas projects to quietly pay for weapons purchases, a method designed to avoid United States and European sanctions, according to internal Vietnamese documents obtained by the Associated Press (AP). How the deal works The documents show that Vietnam bought Russian fighter jets, tanks and ships on credit. Instead of sending money through banks, which could be blocked by sanctions, Vietnam paid Moscow back with profits from Rusvietpetro, a joint oil venture in Siberia. In a June 2024 memo, Petrovietnam’s general director Le Ngoc Son wrote that the system was “relatively confidential and appropriate because money only circulates within the territory of Vietnam and Russia and Vietnam does not have to worry about the risks of being affected by the US embargo.” Military visitors from Vietnam observe the Russian T-90MS tank during the International Military Technical Forum Army-2020 in Alabino, outside Moscow, Russia, on Aug. 23, 2020. (AP Photo) The profits are first used to repay loans. Any extra is transferred to Russia’s state oil firm Zarubezhneft, which then moves an equal amount to its joint venture in Vietnam and passes the money to Petrovietnam. This avoids the international SWIFT banking system. Evan Laksmana, of the International Institute for Strategic Studies, told AP: “It’s not your typical flexible financing. It is next-level stuff.” US reaction The US State Department declined to comment on the documents but said in an email to AP: “Those engaging in certain transactions or activities with sanctioned entities and individuals may expose themselves to sanctions risk or be subject to an enforcement action.” Washington has warned Vietnam in the past about buying Russian weapons under a law known as CAATSA, which allows penalties on countries that deal with Moscow’s defence industry. The AP said it obtained two Vietnamese government documents, one from 2023 and another from 2024. An official opposed to closer ties with Russia leaked them on condition of anonymity, citing fear of reprisals. Western diplomats in Hanoi told AP they had long suspected such a deal existed but had not seen details until now. Ben Swanton, co-director of The 88 Project, an NGO that works with leaked Vietnamese documents, told AP: “Vietnam has learned that Washington will give it a free pass basically.” Vietnam has one of the strongest militaries in Southeast Asia and has relied on Russian weapons for decades. New contracts in recent years included fighter jets, tanks and frigates worth billions of dollars. At the same time, Vietnam has deepened defence ties with Washington, which lifted its arms embargo in 2016 and now sees Hanoi as a key partner against China. During Russian President Vladimir Putin’s June 2024 visit to Hanoi, Zarubezhneft received approval to develop a new gas field off Vietnam’s coast, one of the projects mentioned in the documents. Analyst Huong Le-Thu from the International Crisis Group told AP, “Vietnam needs to navigate in this less conducive diplomatic environment where being too close to Russia will not be well received in European capitals.”
