U.S. Assistant Secretary of State for East Asian and Pacific Affairs Daniel Russel speaks at a news conference, as part of his visit to Vietnam, ahead of a visit by U.S. President Barack Obama later this month, in Hanoi May 10, 2016. REUTERS/Kham

By David Brunnstrom, Lesley Wroughton and Matt Spetalnick

WASHINGTON (Reuters) - U.S. President Barack Obama is considering whether to lift a three-decade-old arms embargo on Vietnam, U.S. officials say, as he weighs calls to forge closer military ties with Hanoi against concerns over its poor human rights record.

The debate within the U.S. administration is coming to a head amid preparations for Obama's trip to Vietnam this month to bolster ties between Washington and Hanoi, former wartime enemies who are increasingly partners against China's growing territorial assertiveness in the South China Sea.

The full removal of the embargo – something Vietnam has long sought - would sweep away one of the last major vestiges of the Vietnam War era and advance the normalization of relations begun 21 years ago. It would also likely anger Beijing, which condemned Obama's partial lifting of the arms ban in 2014 as an interference in the region's balance of power.

On one side of the internal debate, some White House and State Department aides say it would be premature to completely end restrictions on lethal military assistance before Vietnam's communist government has made more progress on human rights.

They are at odds with other officials, including many at the Pentagon, who argue bolstering Vietnam's ability to counter a rising China should take priority, according to people with knowledge of the discussions.

Boosting the security of allies and partners has been a major thrust of Obama's strategic "pivot" toward the Asia-Pacific region, a centrepiece of his foreign policy.

Even as Vietnam seeks warmer relations with the United States, though, U.S. officials are mindful that suspicions linger among Communist Party conservatives that Washington wants to undermine their country's one-party system.

One major factor in Obama's decision will be whether Vietnam will move forward on major U.S. defence deals, a potential boon for American jobs that could soften congressional opposition to lifting the weapons ban, according to one source close to White House policymaking.

There have been questions about whether Vietnam, which has relied mostly on Russian weapons suppliers since the Cold War, is ready to start buying U.S.-made systems. Diplomats have seen increasing signs that Hanoi is seeking ties with U.S. defence contractors but Washington wants tangible commitments, according to the source.

Vietnam is big buyer of weapons from Russia, its Cold War-era patron, including Kilo-class submarines and corvettes. It could look to the United States for items such as P-3 surveillance planes and missiles to beef up its naval forces and coastal defences.

At the Pentagon, the prevailing view appears to be more in line with Defense Secretary Ash Carter's congressional testimony late last month that he would support lifting restrictions on the sale of U.S. weapons to Vietnam.

That comment raised eyebrows at the White House, where officials said Obama had yet to rule on the issue.

Obama's final decision could hinge on whatever recommendations come from ongoing visits to Vietnam by Tom Malinowski, the administration's top human rights envoy, and Daniel Russel, the Assistant Secretary of State for East Asia and the Pacific.

Speaking in Hanoi on Tuesday, Russel said the embargo lifting was still "under periodic review" and would be looked at seriously, although he made it clear Vietnam's commitment to human rights would be central to any decision.

"One of the important factors that would make a lift of the ban possible would be to continue forward momentum in meeting universal human rights standards and progress in important legal reform," Russel told reporters.

Malinowski is not scheduled to speak to media during his trip.

It was not clear whether Obama was leaning for or against ending the embargo ahead of his trip, which will make him the third consecutive U.S. president to visit Vietnam.

Obama eased the ban on lethal arms sales to Vietnam in October 2014, allowing shipments of defensive maritime equipment to help Hanoi build up its deterrent to China's pursuit of its claims in the South China Sea, which conflict with those of its neighbours such as Vietnam and U.S. ally the Philippines.

"UNDESERVED AT THIS TIME"

John Sifton, Asia advocacy director for Human Rights Watch, said lifting the arms ban would be "undeserved at this time." The group, in an April 27 letter sent to Obama, described the Vietnamese government as "among the most repressive in the world."

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