Vietnam has had last-minute doubts about okaying a $ 5-billion integrated Tata Steel plant in their country, even though India sees it as a litmus test of their burgeoning relationship. The uncertain fate of the plant, Indian corporate and diplomatic sources say, is seen to reflect the strength of a pro-China lobby in Hanoi.
Vietnamese President Truong Tan Sang, who began a five-day state visit on Monday, was expected to give India the go ahead. But Hanoi has given no indication that this will be forthcoming, leaving the project's fate in the balance .
The steel plant, first agreed upon in 2007, continues to be denied land by Vietnam. The reason, say sources, is opposition from Formosa Plastics. This is Taiwanese firm whose head, Winston Wong, is a close associate of the family of the last Chinese ruler, Jiang Zemin.
Wong is a close personal friend of Jiang Mianheng, son of Jiang Zemin, and Jiang's daughter has a financial stake in the firm. “At this level of political connections,” say Indian officials, “Beijing must be involved.” Other sources say that given the political impasse at the highest levels, “this is no longer commercial rivalry but geopolitics.”
Vietnam has given repeated assurances to New Delhi over the past year, including to Finance Minister Pranab Mukherjee, Foreign Minister SM Krishna and Prime Minister Manmohan Singh, that the plant would get its land.
The degree to the India-China equation divides Hanoi can be seen in its decision to send General Secretary Nguyen Phu Trong to visit Beijing the same day that President Truong Tan Sang began his state visit to India.
Beijing has publicly taken exception to joint oil and gas exploration by India and Vietnam in the South China Sea, territory that China claims as its territorial waters. India and Vietnam have also expanded military ties recently, with Indian warships regularly docking at Vietnamese ports.