New Vietnam PM says won't pursue military buildup in South China Sea

By Martin Petty and Mai Nguyen

HANOI (Reuters) - Vietnam Prime Minister Nguyen Xuan Phuc said on Wednesday his country was not pursuing a military buildup over the South China Sea and would work with allies to seek peaceful solutions to disputes, with no use of force.

Speaking in a rare interview with some foreign journalists after a visit by U.S. President Barack Obama, Phuc said the South China Sea dynamic had grown in complexity and needed regional friends and strategic partners to ensure harmony and avoid any disruption to maritime trade.

His comments came two days after Obama removed a decades-old lethal arms embargo on Vietnam, allowing the communist country's military to engage closer with its U.S. counterparts and procure American defense technology.

"Vietnam does not pursue military buildup, but Vietnam pursues protecting our sovereignty, firstly with peaceful measures, diplomatic measures and even justice measures," Phuc said.

"Vietnam is a country that loves peace and Vietnam resolves international and regional issues based on international laws ... in the spirit of not using force and not using force to threaten each other."

Phuc made no reference to China during the interview and it was unclear what he meant when he used the word "justice" as a means of preserving Vietnam's sovereignty claims.

He took office last month and is a member of a leadership triumvirate that has the difficult task of maintaining the Communist Party's close ties with its Chinese counterpart, while under pressure f-rom its people to stand up to Beijing's growing maritime assertiveness.

'NO CONFLICT'

The end of the U.S. arms embargo, one of the last vestiges of the Vietnam War, could be a big boost to what experts say is Vietnam's pursuit of a deterrent by modernizing its forces to defend a long coastline and forge stronger security ties.

But Phuc said the priority was bringing Southeast Asian states and partners like Japan, to agree to de-escalate tension peacefully and not by "using force to threaten".

"I repeat this again - no conflict," he said.

"Vietnam does not have a militarization policy but we have necessary measures of working together with other countries ... to ensure peace, freedom of navigation, aviation and commerce."

Phuc hailed as a success Obama's three-day visit, which ended on Wednesday. He said Vietnam's leaders and people had welcomed him with affection and friendship.

"He himself said the welcome of Vietnamese people has touched his heart," he said. "(He was) very moved and very thankful."

Asked about whether Vietnam's political system and conservative values were conducive to realizing its economic ambitions, Phuc said his country's pursuit of trade liberalization showed communism was not an obstacle.

"Our country is a country led by the Communist party, but our country is a country following a market economy," he said.

"We can't say Vietnam is a conservative country. A market economy must be dynamic, it can't be conservative."

He said a key priority for Vietnam was managing its spiraling public debt and keeping the ratio below 65 percent of gross domestic product while maintaining annual growth of 6.5-7 percent for the next five years.

(Editing by Robert Birsel)