A Vietnamese delegation is set to visit Israel next month to advance the $500 million purchase, following an estimated $1.5 billion worth of defence-equipment deals between the two countries over the past decade

Vietnam’s interest in IAI’s Barak system is troubling news for another Israeli defence company, Rafael Advanced Defence Systems. In 2015, Vietnam purchased Rafael’s Spyder air-defence system for $600 million, making for the largest-ever military deal between the two countries.

Rafael has recently been in talks with the Vietnamese air force in an effort to convince Hanoi to buy three more Spyder systems, but according to Vietnamese industry sources, Hanoi has been unhappy with Rafael and decided to give priority to IAI.

In recent years, the Israeli Defence Ministry has tried to coordinate overseas sales by Israeli defence contractors so that they don’t compete with one another in the same countries, but attempts to share development and production activity have not always been successful.

Both Rafael and IAI develop missile technology and compete against one another, and Elbit Systems, IAI – and recently, Rafael as well – compete in the field of drone technology. In the past, one Israeli company conducted a smear campaign in another country against a domestic competitor. Neither of them landed the contract.

IAI’s Barak-8 system is designed to protect against a range of threats, including airplanes, helicopters, drones, cruise missiles and anti-ship missiles. It can be deployed on land or at sea and was developed jointly by IAI and India, paving the way for the 2017 signing of a $1.6 billion contract – the largest of its kind between Jerusalem and New Delhi – to supply the system to the latter.

During the Vietnamese delegation’s trip to Israel next month, the visitors are set to meet with the head of the Israel Air Force, the commander responsible for the country’s air defences and senior Defence Ministry officials.

Vietnam, a country with a population of 100 million, has in the past decade and a half become one of most important markets for Israel’s defence industries. The Defence Ministry refuses to provide figures regarding sales to specific countries (supplying them only by continent), but industry sources believe that Israel has sealed deals worth $1.5 billion with Vietnam, notably including the following:

■ Elbit Systems sold command-and-control systems to the Vietnamese navy worth $60 million, and cyber and communications equipment worth another $30 million. IAI has sold three Heron drone systems for about $140 million to Vietnam. Its Elta subsidiary has sold $150 million in radar equipment, while its Ramta subsidiary has sold 60 armoured vehicles for $20 million.

■ Businessman Samy Katsav, who owns Israel Weapon Industries, which was formerly the Magen division of Israel Military Industries, established a $100 million plant in Vietnam for the assembly of Tavor assault rifles. IMI Systems, formerly Israel Military Industries, has sold techniques for upgrading tanks as well as EXTRA artillery rockets with a range of 150 kilometers (93 miles) in a transaction worth about $70 million.

■ The Israeli firm Cellebrite sold cellphone hacking tools to Vietnam’s Public Security Ministry, which is known to persecute bloggers, journalists and ethnic and religious minorities in the country. The company Verint has been supplying surveillance and intelligence systems for more than 20 years to Vietnam’s security forces, in sales worth about $30 million.

Another indication of Vietnam’s importance to Israel is this week’s visit by former Prime Minister Ehud Barak to Hanoi, where he delivered a speech at its opera house and met with the country’s leaders.

“I was invited at their request to share my thoughts with them about how to prepare for the era of artificial intelligence and deep learning and how to encourage high tech, creativity and innovation,” the former prime minister told Haaretz. On Wednesday, Barak met with Vietnam’s president, Nguyen Xuan Phuc. “They very much appreciate and respect Israel.”

In 2011, Israel and Vietnam signed a secret agreement that boosted security ties between the countries. The military and Defence Ministry sent military attaches and sales representatives to work out of the embassy in Hanoi, while Vietnamese cabinet ministers and senior Communist Party members and generals visited Israel to discuss possible purchases. In 2018, a high-level Israel delegation headed by the Defence Ministry director general at the time, Udi Adam, visited Vietnam.

The Vietnamese interest in ties with Israel and the purchase of Israeli military wares come against the backdrop of Hanoi’s concern over the strategic threat posed by its neighbour to the north – China. During the period when French colonists and American troops were in Vietnam, China was an ally of Vietnamese forces fighting those Western powers.

But since the unification of Vietnam under Communist rule after the fall of the South Vietnamese regime, Hanoi began opening up to the West, embracing a market economy and befriending the United States. Fear of China has only further intensified recently amid China’s threats against Taiwan.

Israel Aerospace Industries is also very interested in completing a huge sale of spy satellites to Vietnam, and recently, the head of IAI’s space division led a delegation from the company to Vietnam. The deal is currently stalled, however, over its price tag. IAI is asking more than half a billion dollars and is also facing stiff competition from the French firm Thales.