Thayer Consultancy Background Brief

ABN # 65 648 097 123

Vietnam on the Horns of a
Dilemma as it Halts Red
Emperor Operations
March 26, 2018

We request your assessment of reports that Vietnam has cancelled another major oil
project in the South China Sea due to pressure from China. The oil and gas project,
known as the Red Emperor (in Vietnamese as Ca Rong Do) has been underway since
2009.
Specifically, will foreign powers such as United States assist Vietnam in this matter?
Also, does the fact that the Vietnamese Navy operates a number of submarines and
Gepard frigates make any difference?
ANSWER: Vietnam’s decision to stand down oil exploration in the waters around
Vanguard Bank is an illustration of how futile it is for claimant states to oppose China’s
ambit claims to all the land features and adjacent waters encompassed within its nine-
dash line. China is able to bring a combination of fishing boats with armed militia, coast
guard vessels and navy warships to overwhelm whatever maritime force Vietnam can
muster.
China has claimed that it reached an understanding with Vietnam’s leaders some time
ago to maintain the status quo in the Vanguard Bank area to the south of the Spratly
islands. Vietnam has been mum about any such agreement.
Vietnam’s stepdown risks provoking a public outcry that the Communist Party of
Vietnam is not protecting Vietnam’s sovereignty and territoriality.
Bill Hayton of the BBC has speculated that the recent visit of the USS Carl Vinson to Da
Nang was a ploy by Vietnam to deter China from exerting pressure to stop oil
exploration in the Red Emperor block. Hayton argues that the ploy failed and China is
not afraid of the United States Navy.
There is no discernible reason why the United States would collaborate with Vietnam
to undertake the heavy lifting to oppose Chinese assertiveness. While defence
relations have advanced recently Vietnam and the United States are not yet strategic
partners in the practical sense. The U.S. maintains a naval presence in the South China
Sea to prevent the Chinese navy from exerting de facto control over vital shipping
lanes.
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Because China’s challenge falls short of the use of military force, Vietnam does not
dare escalate matters by deploying its Gepard-class frigates or Varshavyanka (Kilo)
class submarines.
So far China has only used diplomatic pressure to get Vietnam to back down. Both
sides recently conducted their fifth friendly border defence exchanges. Last year China
abruptly cancelled the fourth friendly border exchanges in protest at Vietnam’s
resumption of oil exploration in the same area. Once Vietnam ceased operations the
border exchanges were resumed.
Vietnam is caught on the horns of a dilemma. If it makes the recent incident public
through diplomatic protests it risks a backlash from the population and a pushback by
China. If Vietnam remains silent, it will mortgage future development of oil and gas
resources to China.

Suggested citation: Carlyle A. Thayer, “Vietnam on the Horns of a Dilemma as it Halts

Red Emperor Operations,” Thayer Consultancy Background Brief, March 26, 2018. All
background briefs are posted on Scribd.com (search for Thayer). To remove yourself
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Thayer Consultancy provides political analysis of current regional security issues and
other research support to selected clients. Thayer Consultancy was officially
registered as a small business in Australia in 2002.