Toward the end of March it was announced that Russia and Vietnam had signed a cooperation agreement to develop Vietnam’s first commercial nuclear reactor. But sanctions raise financing, payments, logistics, timeline and political-risk questions that as yet remain unanswered.
On a visit to Russia in March, then Prime Minister of Vietnam, Pham Minh Chinh, witnessed the signing of an agreement with respect to Russia developing Vietnam’s Ninh Thuan 1 Nuclear Power Plant.
This was another in a long line of announcements, reasserting the two countries’ intent to cooperate on the project, yet failing to detail exactly just what form that might take.
In particular, what has been largely absent from public discourse is how the project might be financed.
This is notable because the Russian economy is struggling under the weight of Western sanctions.
The UK government estimates these have denied the Russian state at least US$154 billion in oil revenues, and cut off access to about US$285 billion of its foreign reserves, which have been frozen.
This has led to a slow deterioration in Russia’s public finances, with a budget deficit recorded, in the first quarter of 2026 alone, of US$58.8 billion.
With its own finances in peril, forking out for Vietnam’s nuclear ambitions may not be in its short-term interests, despite the potential long-term upside.
Russia has also been largely excised from the global financial system, with its access to the Society for Worldwide Interbank Financial Telecommunications (SWIFT) payments system significantly restricted, making processing repayments on any financing arrangement difficult.
This is not only theoretical, either.
Bangladesh was forced to withhold payments for the Russia-financed Rooppur Nuclear Power Plant currently being built in the country due to sanctions, though a special exemption was granted by the United States to make a one-off payment last year.
Russia has since agreed to accept payments from Bangladesh in roubles or yuan for the project. But these are much more volatile currencies than US dollars or Euros, with the heightened risk pushing up risk premiums. That’s not to mention the cost of exchanging Bangladeshi taka for Chinese yuan for Russian roubles.
There are non-financial costs, too.
The optics of generating power using Russian resources and know-how to manufacture goods to be shipped to Europe and the United States arguably defeats the purpose of Western sanctions.
(Notably, several Vietnamese firms were sanctioned for working with Russian firms last year.)
Sanctions are also likely to increase project timelines.
For example, the Bangladesh plant was set back when project parts were set to be delivered on a sanctioned Russian ship. At risk of financial penalties should it allow the ship to berth, the Government of Bangladesh made the decision to turn the ship away.
This is all the more pertinent in that a 2035 operational deadline for the project has been central to the Government of Vietnam’s decision-making.
Codified in the revised Power Development Plan VIII last year, this has, at least, appeared to be a hard enough deadline that it has deterred other potential investors — Japan, the other nuclear power plant development front-runner, announced in December it could not move forward on the Ninh Thuan 2 Nuclear Power Plant, citing said too-short timeline.
Other potential partners, China, South Korea, and the United States, while they have expressed an interest in getting involved, still seem to be well behind in project development, and it seems unlikely would be able the meet a 2035 timeframe either — for reference, it’s estimated that a country’s first nuclear power plant, from inception to operation, generally takes 10 to 15 years.
Notably, any one of these alternatives would also come with significantly less risk relative to Russia, which, timeline aside, should make them more attractive options.
Of course, if the war were to end, that might change, though there are few signs that will happen any time soon.
Moreover, what Russia’s reentry into the global economy might look like is a significant unknown, as is how its economy might rearrange itself as it moves off its war footing.
Neither is it, for that matter, clear that if the war were to end, those sanctions would necessarily be lifted.
All of that said, this might not in the end be an economic decision, but rather a geopolitical calculation.
Russia and Vietnam are old Cold War allies, with a long, shared ideological history that, despite the collapse of the USSR, has remained strong.
They also both have complex relationships with China, with whom they both share borders. Vietnam, in particular, has several territorial disputes in the South China Sea — it makes sense to work to maintain that bond with Russia.
Will this be enough to outweigh the extra cost?
That remains to be seen. It is, however, likely to be a much more complicated path forward with Russia than it might otherwise be with other partners.