Leaked Rostec Files Expose Vietnam’s Hidden USD 8 Billion (RM 38 Billion) Su-35 Fighter Jet Deal with Russia Amid Rising South China Sea Tensions

(DEFENCE SECURITY ASIA) — In the volatile and fast-shifting theatre of Asia-Pacific defence competition, whispers of clandestine arms deals are once again echoing through military and diplomatic circles.

This time, Vietnam—long considered a cautious but capable middle power—is at the epicentre of a growing storm, following leaked Russian defence documents suggesting Hanoi may have secretly ordered advanced Sukhoi Su-35 multirole fighter jets from Moscow.

The alleged deal, valued at an estimated USD 8 billion (RM 38 billion), could mark one of Southeast Asia’s largest post-sanctions arms transactions with Russia, positioning Vietnam as a decisive player in the evolving South China Sea power balance.

Emerging in a world already reshaped by Russia’s war in Ukraine and the U.S.-led sanctions regime, these reports hint at a sophisticated procurement network designed not only to modernise Vietnam’s air force but also to shield both parties from international financial scrutiny.

While neither Hanoi nor Moscow has officially acknowledged the arrangement, a combination of cyber-leaks, investigative reports, and expert analyses has fuelled mounting speculation that Vietnam’s military is quietly preparing for a generational leap in air combat capability.

Summary 

1. Vietnam’s Covert Su-35 Deal with Russia
   Leaked Russian defence documents suggest Vietnam has secretly agreed to acquire up to 40 Su-35 Flanker-E multirole fighters worth USD 8 billion (RM 38 billion), signalling a bold step in Hanoi’s air power modernisation strategy.

2. Evidence from Rostec Leaks and Sanctions Evasion Network
   Files from Rostec identify Vietnam as “Customer 704,” linked to deliveries of electronic warfare systems and mobile jammers for Su-35 operations, financed through oil-revenue barter schemes with RusVietPetro to bypass U.S. CAATSA sanctions.

3. Strategic Shift in South China Sea Power Balance
   The Su-35’s AL-41F1S engines, Irbis-E radar, and R-37M long-range missiles could transform Vietnam’s deterrence capabilities against Chinese J-16 and J-20 fighters, reshaping the aerial balance in the South China Sea.

4. Bamboo Diplomacy Under U.S. Pressure
   Vietnam’s traditional balancing between the U.S. and Russia faces strain as Washington considers CAATSA penalties, while Hanoi calculates its strategic importance will shield it from punitive action amid shifting Indo-Pacific geopolitics.

5. New Era of Covert Regional Militarisation
   The alleged Su-35 deal underscores Southeast Asia’s emerging non-dollarised defence transactions, where covert alliances and sanctions-evasion networks redefine military modernisation beyond the reach of Western financial systems.

Rostec Leak Exposes “Customer 704”

The speculation surged after a series of high-profile cyber-leaks in October 2025, when pro-Ukrainian hackers breached internal servers belonging to Rostec, Russia’s state-owned defence conglomerate.

Among the trove of stolen files, investigators discovered a spreadsheet listing Vietnam—coded cryptically as “Customer 704”—as the end user of advanced electronic-warfare systems engineered for the Su-35 Flanker-E.

According to the leaked data, Vietnam had already received nine airborne electronic-warfare (EW) units in 2024, with an additional 26 mobile ground-based jamming systems scheduled for delivery in 2025.

The latter tranche was reportedly priced at USD 190 million (RM 902.5 million), underscoring the scale of Vietnam’s investment in enhancing its electromagnetic-warfare infrastructure.

Such equipment is indispensable to the Su-35’s battlefield survivability, enabling it to jam hostile radar and communication systems while protecting friendly assets—a capability central to any nation seeking to contest the increasingly congested and contested skies over the South China Sea.

The appearance of Vietnam’s designation in Rostec’s internal ledgers has ignited intense speculation that the EW package is part of a broader procurement framework tied directly to the Su-35 acquisition.

In essence, analysts believe these deliveries suggest Vietnam is either preparing to integrate the aircraft or has already committed to the purchase in a phased manner.

A Billion-Dollar Mystery and Sanctions-Evasion Blueprint

By mid-2025, murmurs among Vietnamese military-aviation enthusiasts—many active on platforms such as X (formerly Twitter)—hinted at impending multi-billion-dollar contracts with Russia.

One widely shared post described a “massive fighter jets order” allegedly financed through joint oil-and-gas ventures, an observation later linked to investigative reporting on sanctions-evasion schemes.

Subsequent inquiries by major Western outlets estimated the total package at around USD 8 billion (RM 38 billion), encompassing up to 40 Su-35 fighters, anti-submarine warfare (ASW) helicopters, submarine modernisation programmes, and ground-based air-defence assets.

If realised, this would represent the most ambitious Vietnamese-Russian defence transaction since the 2010s, when Hanoi purchased six Project 636 Kilo-class submarines and a squadron of Su-30MK2 fighters.

“The scale of this procurement, if realised, would mark one of the largest arms transfers between Russia and a Southeast Asian nation since the imposition of Western sanctions in 2022,” noted one analysis cited in the leak’s aftermath.

The alleged back-door financing mechanism reveals equal measures of creativity and risk.

Under the arrangement, Vietnam reportedly purchases Russian arms on long-term credit, repaying through its profit shares from joint oil-and-gas ventures such as RusVietPetro—a Siberia-based company co-owned by Petrovietnam (PVN) and Zarubezhneft.

By settling accounts through commodity earnings rather than banking channels, both sides bypass the SWIFT network, from which major Russian banks were expelled in 2022.

This workaround drastically reduces the risk of triggering U.S. secondary sanctions under the Countering America’s Adversaries Through Sanctions Act (CAATSA).

Energy Diplomacy as a Front for Arms Deals

The financial architecture of this barter-like exchange was reportedly outlined in a 2024 memorandum from PVN to Vietnam’s Ministry of Industry and Trade ahead of Russian President Vladimir Putin’s visit to Hanoi in May 2025.

During that summit, Putin and Vietnamese President To Lam publicly signed agreements expanding energy cooperation—a gesture now interpreted by analysts as a diplomatic smokescreen for a covert military transaction.

“This is a classic barter-like arrangement, reminiscent of Russia’s 2017 deal with Indonesia for Su-35s in exchange for palm oil and coffee,” explained Evan Laksmana, a senior fellow at the International Institute for Strategic Studies.

In Vietnam’s case, oil profits—estimated in the hundreds of millions of dollars annually—serve as a discreet conduit, effectively laundering arms payments under the guise of energy revenue.

Such arrangements recall Cold War-era Soviet barter practices, but in the 2020s they highlight Russia’s pivot to non-dollarised trade as Western sanctions deepen its financial isolation.

For Vietnam, the benefit is equally clear: it modernises its armed forces without exposing state-owned banks or enterprises to Western punitive measures.

Vietnam’s Strategic Imperative: From Legacy Fleet to Fifth-Generation Parity

The People’s Army of Vietnam (PAVN) Air Force currently operates an ageing inventory of Su-27 and Su-30MK2 fighters, most delivered between 1995 and 2015.

While reliable, these legacy platforms lack the advanced avionics, radar signature management, and thrust-vectoring agility that characterise modern 4++ generation combat aircraft.

By contrast, the Su-35 Flanker-E—derived from the legendary Su-27 airframe—incorporates twin Saturn AL-41F1S engines, each generating 14.5 tonnes of thrust with three-dimensional vectoring nozzles.

The jet’s Irbis-E AESA-radar can track up to 30 targets simultaneously at ranges exceeding 400 kilometres, while its OLS-35 infrared search-and-track system grants passive detection against stealthier adversaries.

Armed with R-77-1 and R-37M air-to-air missiles—boasting ranges of 110 km and up to 400 km respectively—the Su-35 is capable of challenging even fifth-generation fighters under favourable conditions.

Its combat radius of 1,500 kilometres allows extended patrols over the Spratly and Paracel Islands, giving Hanoi a credible deterrent presence in contested maritime zones.

For Vietnam, acquiring such aircraft would not merely replace obsolete assets; it would fundamentally elevate its air-combat posture.

“Vietnam’s air force modernization is not just about replacing old hardware; it’s about achieving parity in a region dominated by advanced Chinese platforms like the J-20,” observed a defence analyst quoted in reports on the leak.

Indeed, China’s PLA Air Force operates a formidable mix of J-16s and J-20s along its southern flank, posing a significant challenge to Vietnam’s aerial sovereignty.

By fielding Su-35s with high-off-boresight missiles and digital EW suites, Hanoi could re-establish deterrence and retain strategic autonomy amid rising great-power tensions.

Bamboo Diplomacy Under Strain

Vietnam’s famed “bamboo diplomacy”—its effort to bend with geopolitical winds without breaking alignment—faces one of its toughest tests.

Historically, Hanoi has walked a fine line between cultivating defence ties with the U.S. and India while preserving its legacy relationship with Russia.

However, Washington’s unpredictability under the Trump administration and a recent tariff order doubling duties on Indian imports for continuing Russian oil purchases have shaken regional confidence in U.S. commitments.

Against this backdrop, Vietnam appears to be hedging toward Moscow once more, calculating that its strategic value as a balancer against China will dissuade Washington from imposing harsh penalties.

Russia, meanwhile, viewed through the lens of its war-time economy, is eager to secure cash-flow and technology partnerships outside Europe and the Middle East.

For Moscow, Vietnam represents a stable and trusted client in a region flush with rising defence budgets and intensifying air-power rivalries.

“Trump’s executive order doubling tariffs on India to 50 percent for continuing Russian oil purchases serves as a stark warning, yet Vietnam presses on, betting that its strategic value as a counterweight to China will deter outright U.S. penalties,” noted one observer close to the developments.

Washington’s Calculus and CAATSA’s Shadow

In early 2025, U.S. Congressional committees were briefed on classified assessments of Vietnam’s defence procurements, highlighting upgrades to naval facilities and air bases consistent with Su-35 operations.

A senior official told reporters that these activities reflect “growing frustration over stalled U.S. arms sales to Hanoi despite Biden-era overtures.”

Potential responses include targeted CAATSA sanctions on Vietnamese entities involved in transactions with Russia’s defence sector.

However, regional experts warn that such moves could backfire.

“The scheme guards against secondary sanctions, but its exposure could invite them,” observed Huong Le-Thu of the International Crisis Group.

The U.S. faces a strategic dilemma: punish Vietnam and risk pushing it fully into Russia’s orbit—or tolerate the deal as the price for keeping Hanoi aligned within Washington’s Indo-Pacific security architecture.

Given Vietnam’s pivotal role in ASEAN and its growing naval presence in the South China Sea, analysts believe the U.S. may opt for quiet diplomatic pressure rather than punitive action.

Regional Repercussions: Deterrence or Destabilisation?

An Su-35-equipped Vietnamese air force would represent a qualitative shift in regional air-power equilibrium.

The aircraft’s range and superior sensor suite would enable Vietnam to patrol disputed zones around the Spratly and Paracel Islands with greater frequency and persistence.

This enhanced situational awareness could serve as a deterrent against Chinese encroachment or grey-zone tactics such as coast-guard blockades and paramilitary vessel intimidation.

However, it also carries the risk of accelerating a regional arms race.

Neighbouring states like the Philippines and Malaysia are modernising their air forces with Western and Korean fighters such as the FA-50 and the potentially incoming KF-21.

Australia and Singapore, both operating F-35s, may view Russian fighter proliferation in Southeast Asia as undermining interoperability within U.S.-aligned coalitions.

For China, the signal is mixed.

While Beijing’s J-16 shares design heritage with the Su-35, Vietnam’s decision to procure directly from Russia underscores its intent to maintain a measure of strategic independence.

This mirrors the broader ASEAN trend of multi-vector defence relationships in which nations seek capability diversification rather than bloc alignment.

Production Bottlenecks and Alternative Speculation

Sceptics question whether Russia can fulfil such a large order amid its own wartime demands.

Moscow’s aircraft factories are currently prioritising Su-35S deliveries to the Russian Aerospace Forces, with the sixth batch completed in late 2025.

Leaked Rostec correspondence also revealed complaints about delayed payments and component shortages stemming from sanctions on semiconductors and avionics.

These constraints raise doubts about Vietnam’s delivery timeline, potentially stretching beyond 2028.

Meanwhile, alternative rumours circulate.

Some aviation forums speculate that Vietnam has shown interest in U.S. F-16V fighters or even Russia’s fifth-generation Su-57E export variant, though available evidence still points strongly toward the Su-35.

Parallel leaks involving Ethiopian and Iranian contracts highlight Russia’s export push to non-Western markets as a means of offsetting sanctions-induced revenue losses.

What Comes Next: Watch the Airfields

As 2025 draws to a close, analysts are monitoring Vietnamese airbases such as Bien Hoa, Da Nang, and Phan Rang for signs of Su-35-related construction or pilot conversion training.

Any visible modifications to hangars or maintenance facilities would signal preparations for receiving larger airframes and support equipment unique to the Flanker-E series.

Satellite imagery specialists have already noted the arrival of new fuel storage tanks and taxiway extensions, though their direct connection to Su-35 operations remains unverified.

In parallel, Vietnam’s state-controlled media have increasingly emphasised “self-reliant defence modernisation” themes, perhaps laying the narrative groundwork for future announcements.

Even if official confirmation never comes, the pattern of evidence—from financial channels to infrastructure expansion—suggests Hanoi is moving to reshape its air force for a more contested decade ahead.

A New Era of Clandestine Alignment

Vietnam’s alleged Su-35 procurement illuminates how medium-sized powers are navigating a fragmented world order dominated by sanctions and rival security blocs.

If confirmed, 40 Su-35s would vault Vietnam into a new league of regional air combat capability, providing a bridge between its current Su-30s and potential future fifth-generation ambitions.

At the same time, the deal’s covert nature highlights the enduring resilience of Russian defence exports despite Western pressure.

It also underscores Southeast Asia’s growing autonomy in charting its own defence paths, balancing between superpower rivalry and national security imperatives.

As one observer aptly summarised: “Vietnam’s pursuit of the Su-35 reflects a pragmatic response to regional threats and global uncertainties, but it carries risks of international isolation.”

In the shadows of sanctions and diplomacy, the roar of the Su-35—if it comes to Vietnamese skies—will mark not just a new chapter in Hanoi’s defence story, but a signal that in the 21st-century Indo-Pacific, even the quietest deals can echo across oceans. — DEFENCE SECURITY ASIA