Fresh Air

The foundations of Israel’s burgeoning relationship with Vietnam began, of all places, in a Paris hotel in the immediate aftermath of World War II.

In 1946, the President of the Democratic Republic of Vietnam, Ho Chi Minh – a revolutionary who played a vital role in leading his country to independence from its former French colonial masters – was in Paris for independence talks with the French Government. Staying at the same hotel in Paris was future Israeli Prime Minister David Ben-Gurion, and the two became friends. Discussing the challenges that Ben-Gurion and his fellow Zionists were going through in trying to establish their own nation, Ho Chi Minh offered Ben-Gurion exile in North Vietnam from where he could proclaim a Jewish Government in Mandatory Palestine.

Ben-Gurion politely declined the offer, saying he was “certain we shall be able to establish a Jewish Government” inside Mandatory Palestine, and indeed, a partition vote by the United Nations General Assembly the following year facilitated the establishment of the State of Israel in May 1948.

Today, 77 years after Ho’s offer to Ben-Gurion, Vietnam is one of Israel’s strongest allies in Asia. The two countries have just celebrated 30 years of formal diplomatic relations, topping it off by signing a free trade agreement. A ceremony was held in Tel Aviv in mid-July to celebrate the anniversary, in which Israeli innovations in virtual reality, water treatment, fashion and irrigation were all on display.

The agreement was signed by Israeli Economy and Industry Minister Nir Barkat and Vietnamese Trade and Industry Minister Nguyen Hong Dien, after seven years of negotiations. It will lead to a reduction of reciprocal customs duties on imported and exported products, plus an easing in trade across several areas that will make it easier for Israeli businesses to access not only the growing Vietnamese market, but also pave the way for wider access to the much larger Association of Southeast Asian Nations (ASEAN) economic zone.

At the signing ceremony, Israeli PM Binyamin Netanyahu said the free trade agreement was an “important turning point”.

“We are formally signing an agreement that will expand our trade, which is robust, to be even more robust. Vietnam is a vibrant, growing economy. Israel is a vibrant, growing economy. And our cooperation I think creates new horizons that will make us more successful together in the future,” he added.

Slow Start to 2011 Breakthrough

Despite the promising start back in 1946, it actually took 45 years after Israel’s creation for diplomatic relations to be formally established in 1993. Vietnam had been firmly in the Soviet bloc, where anti-Zionism was the default position, and shared close relations with “Yasser Arafat and the Fatah movement” dating back to the 1960s. Even after relations were finally established, the first few years were relatively cool.

In 2018, Nadav Eshcar, the then-Israeli Ambassador to Vietnam, said it was the official state visit to Vietnam by then-Israeli President Shimon Peres in 2011 that “really changed the mindset of top Vietnamese leaders towards Israel and the huge potential of maintaining active relations with Israel.”

Since then, relations have developed rapidly and Jerusalem and Hanoi now maintain strong cooperation across defence, biotech, agriculture, information technology, plus tourism. In 2009, Vietnam opened its embassy in Tel Aviv, 16 years after Israel opened its own embassy in Hanoi, and in 2005, an annual political dialogue between the foreign ministries of the two countries was established.

In terms of economic relations, multiple Israeli companies have investments and business interests across the South-East Asian country, including in agriculture, pharmacy, and technology. In just the first three months of 2023, Israel invested US$60.1 million into Vietnam as registered capital, making Israel Vietnam’s 12th biggest investor.

Israel has also taken a leading role in training Vietnamese professionals in science and technology, plus administering local agricultural trainee programmes.

In turn, Vietnamese companies have millions of dollars invested in research and development in Israel. For example, Vietnam dairy producer TH Group is already working with various Israeli technology companies that produce automatic milking systems and animal management systems for its new US$1.2 billion fresh milk production project.

Bilateral trade between Israel and Vietnam has been increasing in recent years, and in 2022, it jumped by 18%, to US$2.2 billion. Israel’s biggest exports are electronics and fertilisers, while Vietnam sells Israel seafood, footwear and smartphones. However, this trade currently flows in Vietnam’s favour. In 2022, Israel had a US$1.1 billion trade deficit with Vietnam.

Despite that trade imbalance, former Israeli Ambassador to Vietnam Eshcar describes their respective economies as complementary.

“Vietnam is a large-scale exporter of food and agricultural products primarily focused on fish, meat, rice, fruit, and spices, and Israel is a natural partner, providing technologies that will improve both the quality and quantity of Vietnamese goods,” he said.

With the Vietnam People’s Army increasingly turning away from Russia as its main supplier of military goods, it has also turned to Israel to fill some of the resultant gaps. It has already purchased Spyder surface-to-air missile systems from Israel’s Rafael Systems, the iSea-25HD surveillance system from the Israeli defence company Controp, and Galil rifles, which Israel produces at a specialty-built factory in Vietnam.

The Vietnamese Government has expressed special interest in further cooperation with Israel in the areas of hi-tech agriculture, AI and environmentally sustainable economic growth.

Israel is one of just 16 countries to have signed an FTA with Vietnam, which is seeking to grow its manufacturing-based economy to be less dependent on China.

Looking to the future, Vietnamese Minister of Foreign Affairs Bui Thanh Son said he wants to push “multifaceted cooperation” between the two countries, including a direct air route between Vietnam and Israel, which could in turn boost tourism. This follows changes announced in July 2023 to Vietnam’s visa system for visiting Israeli citizens, giving them access to Vietnam’s E-visa project, which allows visitors to obtain a visa without visiting the embassy.

Israel’s burgeoning relationship with Vietnam has some similarities to its ties with fellow South-East Asian country, the Philippines. While Israel and the Philippines have growing trade and military cooperation, the Philippines also has a strongly anti-Israel voting record at the United Nations General Assembly. Vietnam is similar.  In the 138 UN votes involving Israel since 2015, Hanoi has a perfect record of voting against Israel’s interests 100% of the time.

Part of Israel’s Asian Agenda

Israel has been aggressively pursuing stronger ties across Asia over the past decade. Back in 2017, PM Netanyahu announced the ‘Pivot to Asia’ policy, which aims to refocus Israel’s trade away from North America and Europe.

While Israel’s government has changed multiple times since then, Jerusalem’s enthusiastic approach to expanding ties and friendships across Asia has not. Israel is well aware that, today, three of the world’s seven largest economies are in Asia, along with many other important and growing potential partners, including Vietnam. As a consequence, demand for Israel’s world-class technology and defence equipment has sharply increased across the region.

In South-East Asia, along with Vietnam and the Philippines, Israel also has diplomatic relations, and varying levels of economic ties, with Singapore, Myanmar, Thailand, Cambodia and Laos. Farther afield in Asia, it has ties with China, India, Japan, Mongolia, Nepal, South Korea, Kazakhstan, Turkmenistan, Sri Lanka and, unofficially, Taiwan.

The three South-East Asia countries that still don’t have diplomatic relations with Israel are also the ones with a Muslim-majority population and a tradition of strong support for the Palestinian cause – Indonesia, Malaysia and Brunei. Israel’s Ambassador to Singapore, Sagi Karni, said in June 2021 that the Jewish state was willing to work towards establishing ties with those states.