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Background Briefing: South China Sea: The Drivers Behind Current Tensions Carlyle A. Thayer May 18, 2013

[client name deleted] - Why are these various territorial disputes happening now and getting noisier? Some have cited factors such as China's rise, the competition for resources, the United States' Asia pivot. Do you agree and what are the key/real factors in your opinion? What other factors are at play? ANSWER: I think the starting point to answer your question 1992 when China passed a domestic Law on the Territorial Sea and the Contiguous Zone in anticipation of the coming into effect of the United Nations Convention on Law of the Sea. UNCLOS changed the maritime ballgame by providing for specific maritime zones and varying levels of sovereign jurisdiction. In the 1990s there was a notable scramble for the Spratlys in which Vietnam and China occupied as many features (islets and rocks) above high tide as they could. This then resulted in exaggerated claims to sovereignty over islands, rocks and features in the South China Sea by most of the littoral states. These claims resulted in overlapping zones of maritime jurisdiction. The first ASEAN statement on the South China Sea was issued in 1992 in response to tensions arising between China and Vietnam over oil exploration in the South China Sea. China granted the US-based Crestone Energy Corporation a concession in an area overlapping Vietnams Exclusive Economic Zone. I would same the next turning point came in 2009 in response to the May 13 th deadline by the United Commission on the Limits of the Continental Shelf. States wishing to claim an extended continental shelf beyond their 200 nautical mile EEZ were invited to make a submission. Vietnam and Malaysia lodged a joint submission for the area around the Spratly Islands and Vietnam issues a separate submission covering the area near the Paracels. Both the Philippines and China objected. Chinas objection was accompanied by the tabling of a nine-dash line u-shaped map. In 1947 the Republic of China issued a map with eleven dash lines including approximately 80 per cent of the South China Sea. This map was adopted by the Peoples Republic of China after 1949; but it was only in May 2009 that it was officially tabled with the UN. China then began to assertively pursue its claims to sovereign jurisdiction by twice cutting the cable of seismic research ships operating in Vietnams EEZ, and threatening to ram an oil exploration in Filipino waters.

2 Todays tensions are a culmination of over two decades of minor confrontations and skirmishes over sovereign jurisdiction over resources in overlapping maritime claims. In the late 1990s, for example, the Philippines took very heavy handed action against Chinese fishermen in its waters. It rammed and sunk fishing craft; this resulted in fatalities. Domestic nationalism allied to sovereignty claims is a driver. To answer your question: todays tensions are more serious because of the growth of Chinese civilian maritime enforcement capabilities (China Marine Surveillance and Fishery Law Enforcement Command), rising domestic nationalism in China, and bureaucratic completion by at leave five Chinese national agencies and their local authorities. China needs energy and issues estimates of the oil and gas reserves that are of an order of magnitude seven times greater than US estimates. No real exploration work has been carried out to confirm these guess estimates. China views the South China Sea as energy rich and charges Vietnam and the Philippines with plundering of its resources when they engage foreigners to exploit hydrocarbon resources. So resource nationalism is one driver. China also needs fish for human consumption. The fish stock in the South China Sea is being depleted by over fishing and marine pollution. Chinese fishermen are forced to move south. They sail in larger vessels accompanied by mother ships and paramilitary escorts. This leads to clashes. Every year since the late 1990s China has issues a unilateral fishing ban in waters south of the Paracels from May to August. This was initially aimed at Chinese fishermen to preserve the fish stock during the spawning season. Around 2006-97 China began to take increasingly aggressive action against Vietnamese fishing craft that intruded into waters around the Paracels. Food security is a second driver. The United States only features in this analysis when the Obama Administration came into office. First it objected to Chinese political pressure on American oil companies designed to coerce them from assisting Vietnam in the development of its offshore oil resources. The US made it clear it could resist such pressures. Second, the Obama Administration continued past US policy of conducting naval and air surveillance in Chinas EEZ. This is perfectly legal in international law. In May 2009 China challenged the USNS Impeccable operating in it EEZ south of Hainan. July 2012 marks a major turning point for the US. Secretary of State Hillary Clinton intervened at the ASEAN Regional Forum declaring that the US had a national interest in the South China Sea and would protect freedom of navigation and unimpeded lawful commerce. The later US policy of rebalancing (pivot a term no longer used by US officialdom) only added oil to the fire from Chinas point of view. The impact of the Global Financial Crisis on the US reportedly has emboldened some Chinese to assert that now is the time to press a declining United States. China seeks to undermine US alliances and assurances to Southeast Asia. Finally, China has continually if gradually encroached on the Philippines. It occupied Mischief Reef in 2005 and annexed Scarborough Shoal last year. China now maintains a permanent paramilitary naval presence at the shoal. It has declared an exclusion zone to prohibit Filipino fishermen from using their traditional grounds.

3 Chinas assertiveness has led the Aquino Administration to revive its alliance with the US in a 1952 Mutual Defence Treaty. China has made a propaganda meal out of this charging the US with containing China and emboldening regional states to stand up to China. In summary, there are long term drivers behind current tensions. These tensions are exacerbated by an action-reaction cycle that has slowly escalated. - What impact have these disputes had for the region? How bad could it get for the region if the disputes get nasty? ANSWER: The region is divided into three sets of states each with differing interests: the littoral claimant states (sub-divided into the front line states Vietnam and the Philippines, and the second tier states Malaysia and Brunei), the maritime states (Singapore and Indonesia) and the mainland states (Myanmar, Cambodia, Laos and Thailand). The littoral claimant states have attempted to forge a unified policy within ASEAN to deal with China. The differing national interests of each aSEAN member have made unity difficult. This has led to fissures in ASEAN that have made more difficult its objective of becoming a Political and Security Community by 2015. ASEAN differences provide China with an opportunity to play off one country against another. In response the majority of Southeast Asian states have adopted hedging strategies to encourage the US to remain engage and balance China. The result is to draw in major power rivalry into the heart of Southeast Asia and undermine to a certain extent ASEANs centrality in regional security affairs. South China Sea tensions have led to an arms build-up but not arms race. Regional states are acquiring submarines, surface combatants and long-range strike capabilities (air-to-surface and anti-ship cruise missiles). As the US has stepped up its naval engagement activities, China has stepped up its program of naval exercises. If conflict broke out it would affect shipping and cause insurance rates to sky rocket. This would impact negatively on Southeast Asias economies. Tensions over the South China Sea could spill over and impact on economic and commercial linkages between China and Southeast Asian states. China has used mild economic sanctions against the Philippines (halting the import of bananas and suspending tourist flights). Taiwan has taken even more assertive action in imposing restriction of Filipino workers. Taiwans actions, including naval exercises, will be viewed in Beijing as a vindication of its past assertiveness in defence of sovereign jurisdiction. The worst scenario is a minor skirmish that escalates and produces a period of prolonger political tensions.

Suggested citation: Carlyle A. Thayer, South China Sea: The Drivers Behind Current Tensions, Thayer Consultancy Background Brief, May 18, 2013.