AsianFin -- Russia and Vietnam have developed a covert system to fund arms purchases while sidestepping U.S. and Western sanctions, according to internal Vietnamese documents obtained by The Associated Press. The mechanism channels profits from joint oil and gas ventures to pay for defense contracts, avoiding any visible cash transfers through the global banking system.

Under the arrangement, Vietnam has acquired Russian military equipment—including fighter jets, tanks, and ships—on credit from Moscow, then repays that debt using its share of profits from a Vietnam-Russia oil company operating in Siberia. Such transactions are irregular by international financial standards and appear designed to maintain cash flow even if sanctions targeting Russia’s war in Ukraine are intensified.

The revelation comes as the U.S. seeks to deepen ties with Vietnam amid rising Chinese influence in Southeast Asia. Washington is also negotiating trade terms with Hanoi following a 20% tariff imposed earlier this year. Simultaneously, former President Donald Trump has threatened stricter sanctions on Moscow, while the European Union has rolled out additional measures to pressure Russian President Vladimir Putin to end the conflict.

Trump has also issued an executive order doubling tariffs on India to 50%, aiming to curb New Delhi’s purchases of Russian oil and military equipment, which he said indirectly support Russia’s war effort in Ukraine.