Arms embargo on Vietnam in the balance as Obama visits old foe

By Matt Spetalnick HANOI (Reuters) - U.S. President Barack Obama began his first visit to Vietnam on Monday, a trip aimed at sealing a partnership with America's former enemy and part of his strategic "rebalance" toward Asia to counter China's growing strength in the region. Four decades after a war that deeply divided opinion in America, Obama will press for stronger defense and economic ties with the country's communist rulers but prod them too on human rights, aides say. The president's three-day stay is unusually long for one country, underscoring the importance he places on expanding relations with Hanoi. Ahead of the visit, pressure mounted on him to roll back an arms embargo, one of the last vestiges of wartime animosity. Such a step would anger Beijing, which resents U.S. efforts to forge stronger military bonds with its neighbors amid rising tensions in the disputed South China Sea. U.S. officials were finalizing a decision on the issue as Obama landed in Hanoi late on Sunday. Most top aides favor at least easing the ban, arguing that Washington needs to demonstrate tangible support for Hanoi's efforts to build its deterrent against China, people familiar with the discussions said. Obama's visit follows what the Pentagon called an "unsafe" intercept last week by Chinese fighter jets of a U.S. military reconnaissance plane over the South China Sea. "Nobody has any illusions," said Evan Medeiros, Obama's former top Asia adviser. "This trip sends important signals to China about U.S. activism in the region and growing U.S. concern about Chinese behavior." But Vietnam's human rights record is a sticking point. Officials are mindful of misgivings back in Washington about losing leverage for securing political reforms from a government that rights advocates say is among the world's most repressive. Any move to revoke the ban – something Vietnam has long sought - would make clear that every weapons sale would be on a case-by-case basis, contingent on human rights considerations, officials said. Obama, who has proven himself a pragmatist in balancing security and human rights, appeared to be trying to keep the pressure on Hanoi for concessions up to the last minute. He plans to meet dissidents during his trip. But officials are looking not only for signs that the Vietnamese are taking rights concerns seriously. They want a clear commitment to expanded military cooperation, including more U.S. access to ports such as the strategic Cam Ranh Bay and participation in joint and regional naval exercises. Obama, the third U.S. president to visit Vietnam since diplomatic relations were restored in 1995, has made closer diplomatic and military cooperation with countries across the Asia-Pacific a centerpiece of his foreign policy. REMINDERS OF THE PAST There has been much excitement about Obama's visit in a country with a young population firmly behind closer U.S. ties and resentful of their economic dependence on neighbor China. State media has detailed the scale of the task of hosting Obama along with his delegation, security detail and culinary needs. As a sign of the capitalism that now thrives in Vietnam, some opportunistic businesses used pictures of a smiling Obama to sell their products. Ngo Minh Kien's tailor shop in the Old Quarter of Hanoi displayed an image of the U.S. president in a crisp suit. "I want the U.S. to lift the arms embargo on Vietnam and that would help us to strengthen our security," said Kien. Bilateral trade has swelled 10-fold over the past two decades to around $45 billion, and Vietnam is now Southeast Asia's biggest exporter to the United States. Vietnam's manufacturing-led economy is growing at one of Asia's fastest rates, prompting U.S. firms such as Intel, Microsoft, Ford Motors and General Electric to expand their operations here. But even as the two sides look forward, there will be reminders of the past. Obama will be accompanied by Secretary of State John Kerry, who after a tour in Vietnam as a young Navy officer became a protester against the war, which killed hundreds of thousands of Vietnamese and 58,000 U.S. troops. In Hanoi, Obama will meet Vietnam's triumvirate of leaders, President Tran Dai Quang, Prime Minister Nguyen Xuan Phuc and Communist Party chief Nguyen Phu Trong. In the commercial hub, Ho Chi Minh City, formerly Saigon, Obama will meet entrepreneurs and tout a Trans-Pacific Partnership trade deal he has championed, in which Vietnam would be the biggest beneficiary of the 12 members. But the name of the city, the capital of the now-defunct South Vietnam, evokes searing images for many Americans of a final frantic U.S. airlift in 1975. And for some among the Vietnam old guard, there are still suspicions that the U.S. endgame is to undermine their one-party rule. Obama arrived hours after voting ended in the country's five-yearly parliamentary election, in which nearly all the candidates were Communist Party members. (Additional reporting by Mai Nguyen and Minh Nguyen; Editing by John Chalmers and Ros Russell)