End of Vietnam arms embargo may open doors.

• Author: Machi, Vivienne
• Position: Global Defense

President Barack Obama's recent announcement to overturn a decades-long arms embargo with Vietnam has opened speculation about potential business opportunities between U.S. defense contractors and the Asian country.

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However, Vietnam may not be rushing to place many American orders despite a burgeoning defense budget, said Ben Moores, a defense analyst with IHS Jane's.

Vietnam's defense expenditures have been steadily on the rise over the past five years, he said.

"Their budget was about $2.4 billion in 2010, and if we look at this year, it's $5.8 billion, and it's going to be increasing," he said. By 2020, the budget will rise to $7.5 billion and by 2026, it will be $9.6 billion, he said.

While that's not all going toward procurement, Moores estimated that Vietnam has about $13 billion of un-awarded contracts to spend over the next decade. Items that the Vietnamese have committed to purchasing over that timeframe include tanks, fighter jets, long-range radars and early warning aircraft.

"Based upon historic precedent, about $10 billion of that will be awarded to foreign companies," but it's unlikely that they would turn to the United States to supply many of those needs, he said.

For example, the United States doesn't have a tank or new fighter jet program that would meet Vietnam's requirements, he said. "But if you look at attack helicopters, long-range radars or maritime patrol aircraft, those could all be good fits for the States."

Vietnam could purchase a refurbished P-3 Orion, Moores speculated. "But they might go European," with a Spanish CN-235 Persuader. Additionally, it could opt for Lockheed Martin's FPS-117 radar system or choose an Italian model.

Tactical helicopters are an area where Vietnam would not be able to afford a new model, but might be interested in refurbished Black Hawks. The country could also...