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. Last Updated: 07/27/2016

Putin Aims to Boost Vietnam Arms Supplies-Envoy

HANOI, Vietnam - Russia and communist Vietnam aim to expand cooperation in various fields, including weapon supplies, through a visit to Hanoi by President Vladimir Putin starting Wednesday, Russia's ambassador to Vietnam was quoted as saying.

Victor Ivanov told the official Quan Doi Nhan Dan (People's Army) newspaper that other potential fields for cooperation included oil and gas, telecommunications and atomic energy.

"As I know, Vietnam still considers Russian weapons as the best in the world," he said. "We will expand cooperation with Vietnam in these fields."

Putin, expected to arrive in Hanoi on Wednesday evening for a two-day visit, will be the most senior Kremlin leader ever to visit a country that was one of Moscow's staunchest ideological allies during the darkest days of the Cold War.

Moscow's Itar-Tass news agency said Putin had told Vietnam's Communist Party newspaper Nhan Dan (People) bilateral cooperation had reached the level of a "strategic partnership".

He also said the current reforms in Russia had much in common with the process under way in Vietnam.

"The current process is Russia associated with the strengthening of the state resemble in many aspects the Vietnamese model of reforms," he said. "Your experience is very interesting and we are going to use it."

Putin said the two countries had managed to preserve and develop cooperation in all key directions, primarily in the economy, despite difficulties of recent years.

Ivanov said the key obstacle to trade expansion was lack of an efficient payment system, limited financial capabilities, high transportation costs and high tariff barriers. He said an agreement last September on Hanoi's Soviet-era debt to Moscow and Putin's visit would bring new impetus for trade.

SOVIET-ERA DEBT

This agreement cut Hanoi's debt to Moscow by 85 percent and allowed for repayment of the remaining sum over 23 years. Before the deal, Moscow had estimated the debt at $11 billion.

Analysts do not expect Vietnamese repayment in hard currency but through business and other concessions.

Putin is to meet Vietnamese leaders including President Tran Duc Luong and Prime Minister Phan Van Khai on Thursday and Communist Party General Secretary Le Kha Phieu on Friday.

Among topics expected to be discussed are Moscow's lease on the former U.S. naval base at Cam Ranh Bay in southern Vietnam, which expires in 2004.

Hanoi does not object to the Russian presence there, but wants Moscow to increase lease payments. Moscow's access to the strategic facility, which was also used by the Japanese during World War Two is eyed enviously by the United States and China.

Russian Deputy Foreign Minster Alexander Losyukov told Tass last week the base would be maintained but Hanoi wanted more rent.

"We shall try to find a mutually acceptable solution, although it will require long and difficult talks on the problem," he said.

Analysts do not expect the issue to be resolved during Putin's visit but say they could be some progress.

While bilateral economic ties faltered after the collapse of the Soviet Union in the early 1990s, Russia still has a significant stake in Vietnam's key oil and gas industry.

Earlier this month, the two countries signed financial agreements on raising the registered capital of their oil refinery venture, Vietnam's first, to $1 billion from $800 million and on a loan for a hydropower project in Vietnam's central highlands.

Last week Russian central bank deputy governor Viktor Melnikov and Vietnam's central bank agreed to expand banking cooperation to boost bilateral trade currently totalling about $450 million.