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Medvedev in Vietnam: Free Trade, De-Dollarization, Oil Projects

Moscow and Hanoi are looking to increase trade which currently amounts to 2.5 bn per annum

Russia Prime Minister Dmitry Medvedev is on a 2-day visit to Vietnam. It could be an important one as Medvedev has raised a number of prospects for closer economic ties:

To begin with, a free trade deal between Vietnam and the Eurasian Economic Union is on the horizon and could be signed later this year:

Talks between the Eurasian Economic Union and Vietnam on creating a free trade area have entered the final stage as only industrial processing and services remain to be approved, Russian Prime Minister Dmitry Medvedev told Vietnamese media outlets in the run-up to his visit to that southeastern Asian country.

“I have just discussed the issue with the Economic Development Minister, and he told me that our talks with Vietnam have entered the final stage,” Medvedev said. “We’ve moved forward on many issues and intend to conclude these talks in the near future.”

Medvedev said that the document may become the first agreement the EEU will sign with a third country.

Furthermore, Russia PM will propose conducting more trade in national currencies:

Russia and Vietnam can easily switch to their national currencies - the Russian rouble and the Vietnamese dong - in mutual settlements, Russian Prime Minister Dmitry Medvedev said in an interview with the Vietnamese media ahead of his visit to that country.

"First, there are no obstacles to making settlements in roubles and dongs. None from the legal point of view," he said. "But we need an economic reason for this."

He said the two countries had agreed about possible use of their national currencies in mutual settlements about a decade ago and had even established a special bank for that. "But using national currencies is only suitable when the volume of mutual trade is high and you need to accumulate resources in roubles or dongs," the Russian prime minister noted. "So far, these settlements only account for about 1.5% of trade, with all the other settlements made in US dollars, which is not always advantageous."

"In this sense, it could be more profitable to make mutual settlements in our national currencies, namely in trade and investment," Medvedev said. "I think there is a good opportunity to do this also in relations with Vietnam. I will definitely raise this issue at the upcoming talks with my Vietnamese partners.".

Finally, Medvedev wants to see more Vietnamese investment in Russia oil sector and is offering corresponding incentives:

Moscow has prepared a special proposal for companies from Vietnam to participate in hydrocarbon projects in Russia, Prime Minister Dmitry Medvedev said in an interview with Vietnamese media ahead of his visit to the Southeast Asian country.

“We invite foreign partners to take part in exploration and production in the Russian Federation only rarely. The system is working smoothly as it is. This option has been devised especially for our Vietnamese partners,” the Russian premier said.

Russia’s Zarubezhneft and Vietnam’s PetroVietnam are already implementing joint projects while Rosneft and Gazprom have partners of their own in Vietnam and each has been negotiating cooperation agreements, Medvedev said.

Russia also wants to participate in Vietnam's oil sector:

The two leaders witnessed the signing of several energy cooperation agreements including Russia's Gazprom Neft's intention to buy 49 percent of a 6.5 million-ton oil refinery in central Vietnam which is operational.

Dung said the two leaders agreed on the expansion of cooperation in oil and gas projects in Vietnam's exclusive economic zone and continental shelf in the East Sea, which is the Vietnamese term for the South China Sea.

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