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The BBC's Owen Bennett-Jones
"Hanoi's Soviet era debt to Moscow has long been a contentious issue"
 real 28k

Thursday, 1 March, 2001, 22:28 GMT
Russia eases Vietnam debt
President Putin and President Tran Duc Luong
Both sides are keen to increase bilateral trade
Russia says that Vietnam's Soviet-era debt to Moscow - a contentious issue between the countries for many years - has been restructured.

Russian President Vladimir Putin - the first Russian or Soviet leader ever to visit Vietnam - joined President Tran Duc Luong in signing a new strategic partnership that promises closer co-operation between the two countries.

The problem of Vietnamese debt to Russia is completely solved.

Victor Khristenko
Russian Deputy Prime Minister
In the past the issue of Vietnam's Soviet era debt to Russia has hampered the development of their political and economic relations.

But speaking in Hanoi Russia's Deputy Prime Minister, Victor Khristenko, has said that the issue is now completely solved.

Debt restructure

Vietnam and Russia agreed last September to cut the Soviet-era debt, previously estimated at $11bn (7.6bn), by 85% and to allow for repayment of the rest over 23 years.

According to Mr Khristenko under the restructuring deal Vietnam would have to pay $100m (69m) a year.

He said that the two countries were discussing using the payments for three purposes - reinvestment in Vietnam, training Vietnamese specialists in Russia or covering the debt with goods.

"Concerning the goods, they are supplies of rice and coffee to Russia and third countries," he said.

Seeking more trade

Both Hanoi and Moscow have expressed regret that their bilateral trade is currently worth only $400m (276m), considerably less than the value of Hanoi's trade with it's former enemy the United States.

They are keen to increase trade, especially in Vietnam's oil and gas sector, in which Russia already has a large stake.

Speaking at a joint press conference with his Vietnamese counterpart President Putin said that it would be unforgivable and foolish, to lose the high level of inter-governmental relations which Vietnam and Russia have enjoyed in the past.

Hanoi and Moscow had particularly close relations during the Vietnam War, when the Soviet Union backed Vietnamese Communist forces against the Americans.

Difficult negotiations

But during the 1990s, the political and economic turmoil in Russia meant that Vietnam became less reliant on Moscow.

Statue of Lenin in Hanoi
Statue of Lenin: testimony to close relationship

Serious talks are expected over the future of the military base at Cam Ranh Bay.

During the war, the Americans used Cam Ranh Bay. After the US defeat, Moscow established a huge naval base there.

But Russia's lease runs out in 2004 and it is not clear whether they can afford the sums of money that Hanoi is now looking for.

Russian officials have said that they expect long difficult negotiations on the issue.

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See also:

10 Sep 00 | Asia-Pacific
Vietnamese PM visits Russia
02 Jul 99 | Asia-Pacific
Vietnam and Rusisa sign military agreement
14 Sep 00 | Europe
Russia cancels most Vietnam debt
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