January 22, 2011: Vietnam is in the midst of trying to modernize its armed forces, as well as trying to convert its economy from an inefficient communist command model, to a more productive free-market one. To that end, it is increasing its defense spending 70 percent this year, so that it is spending 1.8 percent of GDP on the military. That means next year's spending will be $2.6 billion. That is about half what nearby Thailand spends. Thailand has a population 23 percent smaller and a GDP three times at large. That's because Thailand was never burdened with a communist dictatorship, nor a war of independence from France, then a civil war to unite the country under communist rule.
Worse, Vietnam has some more serious national security problems than Thailand. Namely, Vietnam has China as a neighbor, and several unresolved disputes over who owns some islands. So Vietnam is investing billions of dollars to upgrade its navy with Russian submarines and its air force with Russian fighters. This won't make Vietnam a match for China, but will make it much more expensive for China to attack. This has been the Vietnamese strategy for over a thousand years, and has generally worked. Vietnam also has to be prepared in case China revives its ancient claims on northern Vietnam, which is inhabited by a lot of people who originally fled membership in the Chinese empire.