Energy and geopolitics in the South China sea : implication for ASEAN and its dialogue partners. 9789814279239, 9814279234, 9789814279352, 9814279358

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ENERGY AND GEOPOLITICS IN THE SOUTH CHINA SEA

The Institute of Southeast Asian Studies (ISEAS) was established as an autonomous organization in 1968. It is a regional centre dedicated to the study of socio-political, security and economic trends and developments in Southeast Asia and its wider geostrategic and economic environment. The Institute’s research programmes are the Regional Economic Studies (RES, including ASEAN and APEC), Regional Strategic and Political Studies (RSPS), and Regional Social and Cultural Studies (RSCS). ISEAS Publishing, an established academic press, has issued almost 2,000 books and journals. It is the largest scholarly publisher of research about Southeast Asia from within the region. ISEAS Publishing works with many other academic and trade publishers and distributors to disseminate important research and analyses from and about Southeast Asia to the rest of the world.

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Report No. 8

ENERGY AND GEOPOLITICS IN THE SOUTH CHINA SEA

Implications for ASEAN and its Dialogue Partners

INSTITUTE OF SOUTHEAST ASIAN STUDIES Singapore

First published in Singapore in 2009 by ISEAS Publishing Institute of Southeast Asian Studies 30 Heng Mui Keng Terrace Pasir Panjang Singapore 119614 E-mail: [email protected] Website: bookshop.iseas.edu.sg All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior permission of the Institute of Southeast Asian Studies. © 2009 Institute of Southeast Asian Studies, Singapore The responsibility for facts and opinions in this publication rests exclusively with the contributors and their interpretations do not necessarily reflect the views or the policy of the publisher or its supporters. ISEAS Library Cataloguing-in-Publication Data Energy and geopolitics in the South China Sea : implications for ASEAN and its dialogue partners. (Report / ASEAN Studies Centre ; no. 8). 1. ASEAN. 2. Territorial waters—South China Sea. 3. South China Sea. I. Institute of Southeast Asian Studies. ASEAN Studies Centre. II. Series. JZ5333.5 A9A85 no. 8 2009 ISBN 978-981-230-989-1 (soft cover) ISBN 978-981-230-992-1 (E-book PDF) Typeset by Superskill Graphics Pte Ltd Printed in Singapore by Seng Lee Press Pte Ltd

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CONTENTS

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Preface Lead Article • Energy and Geopolitics in the South China Sea: Implications for ASEAN and Its Dialogue Partners • Michael Richardson Visiting Senior Research Fellow Institute of Southeast Asian Studies (ISEAS), Singapore Commentaries • Sam Bateman Senior Fellow S. Rajaratnam School of International Studies (RSIS), Nanyang Technological University, Singapore •

B.A. Hamzah Senior Research Fellow Institute of Ocean and Earth Sciences (IOES), University of Malaya, Kuala Lumpur, Malaysia

Articles • Flashpoint: South China Sea • K. Kesavapany Director Institute of Southeast Asian Studies (ISEAS), Singapore

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Whither the South China Sea Disputes? • Mark J. Valencia Visiting Senior Fellow Maritime Institute of Malaysia

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Clarifying the New Philippine Baselines Law • Rodolfo C. Severino Head, ASEAN Studies Centre (ASC) Institute of Southeast Asian Studies (ISEAS), Singapore

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About the Contributors

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PREFACE

The South China Sea is generally considered as one of the flashpoints for conflict in East Asia. With its vast expanse, the South China Sea’s many small land features and indeterminate maritime regimes are the subject of conflicting claims among China and Taiwan and four member-countries of the Association of Southeast Asian Nations. These multiple claims vary in nature and extent, making the situation most complex and extremely difficult, if not impossible, to adjudicate. Yet, this maritime body is vital not only to the claimantstates, not only to the littoral lands, but globally as well. Through the South China Sea pass ships carrying more than half of the world’s trade. The presence in and passage through it of American and other naval vessels enable the United States and other powers to project their military weight in that part of the world. According to the Energy Information Administration of the United States Government, a 1993–94 estimate by the U.S. Geological Survey placed the total of discovered oil reserves and undiscovered oil resources in the offshore basin of the South China Sea at 28 billion barrels, while a Chinese estimate had it as high as 213 billion barrels. Another Chinese estimate calculated the natural gas reserves in the South China Sea region at two quadrillion cubic feet. These estimates are of considerable importance in an era of high energy prices. It was in the light of the importance, volatility and complexity of the situation in the South China Sea that the ASEAN Studies

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Centre of the Institute of Southeast Asian Studies (ISEAS) chose that situation as the subject of its first online forum. The forum is led off by an article by Michael Richardson, former Asia editor of the International Herald Tribune and now Visiting Senior Research Fellow at ISEAS. Valuably illustrated by maps, the Richardson article focuses on the South China Sea’s potential as a source of energy, the rise of China’s military power, and related issues. Sam Bateman, a Senior Fellow with the S. Rajaratnam School of International Studies (RSIS), Nanyang Technological University, Singapore, where he serves on the Maritime Security Programme, contributes a commentary on the Richardson paper. A former Australian naval officer with a special interest in the political and strategic aspects of the international law of the sea, Bateman has co-edited with Ralf Emmers, Associate Professor at RSIS, Security and International Politics in the South China Sea: Towards a Cooperative Management Regime (Routledge 2009). B.A. Hamzah, Senior Research Fellow, Institute of Ocean and Earth Sciences (IOES) and the Faculty of Arts and Social Sciences, University of Malaya, Kuala Lumpur, also contributes a commentary. Previously with the Maritime Institute of Malaysia and the Institute of Strategic and International Studies of Malaysia, Hamzah can be reached at [email protected] and 601-2366-9913. An op-ed piece by K. Kesavapany, Director of ISEAS and a former senior diplomat of Singapore, in the Straits Times of Singapore, entitled “Flashpoint: South China Sea”, forms part of the online forum. So does an article by Mark Valencia, a Visiting Senior Fellow at the Maritime Institute of Malaysia and a Senior Associate at the Nautilus Institute. Rodolfo C. Severino, Head of the ASEAN Studies Centre at ISEAS, contributes a clarification of the new Philippine baselines law. Needless to say, all of them

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express their personal views and not necessarily those of their institutions. The contributions to the online forum are printed in this booklet, which is part of the Report Series of the ASEAN Studies Centre. Rodolfo C. Severino Head, ASEAN Studies Centre Institute of Southeast Asian Studies Singapore

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ENERGY AND GEOPOLITICS IN THE SOUTH CHINA SEA: IMPLICATIONS FOR ASEAN AND ITS DIALOGUE PARTNERS Michael Richardson Visiting Senior Research Fellow Institute of Southeast Asian Studies (ISEAS), Singapore April 2009

The Setting China says it wants close, cordial and cooperative relations with its neighbours in Southeast Asia, the ten member states of ASEAN.1 Progress in this direction has gained impressive momentum since the end of the Cold War and Chinese support for communist-led insurgencies seeking to overthrow established governments in the region. However, China’s military power is growing steadily and it claims ownership of a network of widely-scattered islands and their surrounding waters and resources in the South China Sea, one of the world’s largest semi-enclosed bodies of water. (See Map 1.) These claims overlap in a substantial way with those of at least three ASEAN countries, Vietnam, the Philippines and Malaysia. The three million square kilometre South China Sea is the maritime heart of Southeast Asia. It is two-thirds the size of the combined land territory of all the ASEAN states. Most Southeast

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MAP 1 Southeast Asia

Source: U.S. Central Intelligence Agency, The World Factbook 2008 online.

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Asian countries have coastlines overlooking or close to the South China Sea. Some would be wary about having to share a common maritime boundary with such a big and increasingly powerful nation as China, or even having it as a very close neighbour. Meanwhile, oil and gas reserves under the seabed of the South China Sea are being discovered and exploited further and further from shore, as advances in drilling and production technology enable coastal states and the energy companies working for them to tap hydrocarbons in ever deeper waters. (See Map 2.) If China does not yet have the military capability to enforce its claims in the South China Sea, it is expected to gain this strength in the next few years. This puts a dark shadow of uncertainty over the future of China’s relations not just with ASEAN members, but also with their main dialogue partners, including the United States, Japan, India, South Korea and Australia. All of these countries have important links with China. They also have significant strategic and commercial interests in the South China Sea and in ASEAN.2

Maritime Disputes Among Southeast Asian states, Beijing’s claims to the Spratly Islands in the South China Sea are disputed by Vietnam, the Philippines and Malaysia. (See Map 3.) Brunei in 1984 established an exclusive fishing zone that encompasses Louisa Reef in the southern Spratly Islands but has not publicly claimed the reef. About forty-five of the islands are occupied by relatively small numbers of military personnel from China, Vietnam, the Philippines, Malaysia and Taiwan. The Spratlys form a widely-scattered archipelago of more than 100 small islands, coral cays and reefs that lie to the east of

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MAP 2 Competing Claims in the South China Sea

Source: CIA Maps and Publications for the public.

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MAP 3 Competing Claims in the South China Sea

Source: .

busy international sealanes in the South China Sea. (See Maps 4 and 5.) The sealanes running through it connect the Straits of Malacca and Singapore in Southeast Asia with China, Japan and South Korea, the main oil-importing industrial economies in Northeast Asia. These sealanes carry a large part of the world’s maritime trade and are frequently used by leading navies, especially the United States and increasingly by China. Located about two-

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MAP 4 South China Sea Islands

Source: Wikipedia commons.

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MAP 5 Spratly Islands

Source: CIA World Factbook 2008 online.

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thirds of the way between southern Vietnam and the southern Philippines, the Spratly archipelago covers an area of nearly 410,000 square kilometres of the central South China Sea.3 Although the total land area of the Spratlys is less than five square kilometres, control of this remote but potentially important real estate might be used to establish naval patrol and surveillance bases. It could also be used to bolster claims to fisheries and offshore oil and gas resources in a vast area of the South China Sea. China, Taiwan and Vietnam claim all of the Spratlys, surrounding waters and any resources they may contain. The Philippines and Malaysia assert sovereignty over smaller portions of the Spratlys closest to their shores. (See Map 3.) The South China Sea claims of China, Taiwan and Vietnam are far wider than those of other claimants. Vietnam asserts sovereignty over the Paracel Islands (see Map 4) as well as the Spratlys. The Paracels were seized by China from South Vietnamese forces in 1974 in the closing stages of the Vietnam War, when Hanoi and Beijing were supposed to be allies. Chinese forces have since reinforced their garrison on the Paracels and extended an airport runway there, strengthening their grip on what is seen in Beijing as a strategic outpost southeast of China’s Hainan Island and roughly one-third of the way between Vietnam and the Philippines. There are 130 islands and rock outcrops in the Paracels group.4 Vietnam asserts that both the Spratlys and the Paracels are part of its national territory and have historically belonged to Vietnam. In the 1930s, France annexed the Spratlys and Paracels on behalf of its then-colony Vietnam. Hanoi treats the Spratlys as an offshore district of the province of Khanh Hoa. Vietnam’s claims beyond the Spratlys and Paracels cover an extensive area of the South China Sea, although they are not clearly defined.

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Both China and Vietnam protested in February 2009 after the Philippines passed new legislation spelling out its claims to some of the Spratly Islands and Scarborough Shoal.

China’s U-shaped Claim However, China’s claim appears to be far wider, encompassing much of the South China Sea. The precise limits are not clear from the broken U-shaped line drawn on official Chinese maps. (See Map 4 for the approximate location of this line.) Still, this claim, if acknowledged by ASEAN countries or enforced by Beijing, would bring China into the maritime heart of Southeast Asia. It would make China a next-door neighbour not just of Vietnam, but also of the Philippines, Malaysia, Brunei and Indonesia (through its Natuna Island in the southern section of the South China Sea). Moreover, this U-shaped line seems to coincide with the extension into the South China Sea of the so-called “first island chain” extending from the southern tip of Japan through Okinawa and the ocean east of Taiwan to the Northern Philippines and around the perimeter of the South China Sea. (See Map 6.) Chinese military theorists say the first island chain forms a geographic basis for China’s maritime defensive perimeter. It is the inner of two such barriers, the second and outermost of which extends southeast from Japan to and beyond the U.S. island territory of Guam in the western Pacific Ocean.5

China’s Growing Military Power Taiwan maintains a claim in the South China Sea similar to Beijing’s U-shaped line. But neither Vietnam nor Taiwan has the military might to enforce its claims and evict other claimants. Only China has, or will have, that power if its military modernization programme continues at, or close to, its pace of recent years.

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MAP 6 The First and Second Island Chains

Source: U.S. Department of Defence, Annual Report to Congress: Military Power of the People’s Republic of China, 2007.

China’s annual military spending has grown four-fold or more over the last decade, rising from 0.9 per cent of GDP to at least 1.5 per cent, or US$58 billion. By some assessments, China’s real military spending may be several times the published figure when off-budget items relating to defence are included. Even without

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allowing for this, China’s declared spending on military modernization overtook India’s in 2002 and Japan’s in 2008. While Chinese land forces are being upgraded, maritime and air forces (and thus power projection) are modernizing faster. Meanwhile, defence budgets in Southeast Asia, including those of the region’s Spratly claimants, are small by comparison with those of China and elsewhere in Asia.6 China’s navy has around 860 vessels. Some are old, small and able to operate only in “brown water” close to the coast. But the navy has “blue water” ambitions. It is extending its reach and capability to protect China’s offshore interests, including those in the South China Sea and beyond. Since 2000, China has built at least 60 warships. According to the U.S. Defence Department, China already has the largest force of principal combatants, submarines and amphibious warfare ships in Asia. Its navy has 29 destroyers, 45 frigates, 26 tank landing ships, 28 medium landing ships, 54 diesel attack submarines, five nuclear attack submarines and 45 missile-armed coastal patrol craft. Of these 232 vessels, 168 are in China’s East and South Sea Fleets.7 In November 2008, a senior Chinese military spokesperson indicated that the next major addition to the navy will be several aircraft carriers built in China, although analysts doubt that the first will be in service before 2015.8 China’s ability and readiness to use naval power to protect trade and other interests far from its shores were underscored by Beijing’s decision in December 2008 to send two of its most advanced warships and a supply vessel from its naval base near Sanya, on Hainan Island, through the South China Sea and the Straits of Malacca and Singapore into the Indian Ocean to protect Chinese ships from pirate attack in the Red Sea off lawless Somalia. The flotilla was ordered to guard convoys and deter piracy for at least three months, before possible replacement by another squadron of Chinese navy ships.

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China’s Milplex China’s military-industrial complex, the biggest in Asia, is also improving both the quantity and quality of production. China is one of the few countries in the world to produce a full range of military equipment, from small arms to surface ships, submarines, and jet fighters as well as ballistic and cruise missiles and nuclear weapons. Since 2000, China has been producing several new types of weapons that are highly competitive in terms of quality and capability, among them the Song-class diesel-electric submarines and the Type-052C destroyer equipped with an indigenous Aegistype radar and air-defence system. One consequence of this growing self-sufficiency in arms acquisition could be the rise of a more technologically-advanced China that would be increasingly prone to challenge the United States for regional, even global, predominance. Another consequence of a militarily self-confident China could be a more assertive policy in a number of areas — in the Taiwan Strait, in the South China Sea and in the “blue waters”, of the Pacific and Indian oceans — that would upset regional security.9 Still, the U.S. intelligence community estimates that China will take until the end of this decade or longer to produce a modern force capable of defeating a moderate-size adversary, and that it will not be able to project and sustain even small military units far beyond China before 2015.10 If this assessment is correct, there is still time to enmesh China more fully into a regional relations system based on international law, non-use of force and negotiated settlement of disputes. Indeed since 1998, China has settled at least eleven territorial disputes with six of its neighbours, among them Russia, Vietnam and Japan. The most recent was the completion of the land border delimitation treaty with Vietnam in December 2008.11

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China’s policy since 1975 has been to “shelve” the conflicting sovereignty claims to the land features and waters of the South China Sea and, in the meantime, undertake cooperative activities in the area.12 ASEAN formalized a similar approach to resolving these maritime disputes peacefully when it issued a Declaration on the South China Sea in 1992.13 However, many of the disputes in the South China Sea involve more than two countries and sometimes as many as five contestants. The plurilateral nature of the claims and the sensitive national interests that are at stake make solutions complex and difficult to reach. Moreover, China calls for joint development only in the areas in which Beijing has overlapping claims with Southeast Asian countries, and where they assert legal jurisdiction and have established authority, such as in the Spratlys or zones on the continental shelf southeast of Vietnam. China refuses to countenance joint development in the Paracels, which are already under Chinese control. Some Vietnamese scholars refer to this as the “yours is ours, ours is mine” principle.

What do China’s Maritime Claims Portend? China’s U-shaped claim in the South China Sea is the source of considerable controversy, even among Chinese analysts. The “ninedotted line”, so called since it is composed of nine dashes, has been on official Chinese maps dating back to 1947, when the Kuomintang (KMT) ruled China. After the KMT was defeated in 1949 by communist forces and its remnants fled to Taiwan, the new government of the People’s Republic of China (PRC) adopted the same U-shaped claim in the South China Sea and Chinese maps published since 1953 have displayed the nine-dotted line.14 The dotted line encloses the main islands, atolls and rock outcrops of the South China Sea: the Pratas Islands in the far

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north, the Macclesfield Bank roughly mid-way between Vietnam and the northern Philippines, and also the Paracels and Spratlys. (See Map 4.) At its full extent, the Chinese claim covers about 80 per cent of the South China Sea. China asserts sovereignty over all the islands and their adjacent waters, based on prior discovery, occupation and use stretching back through centuries of history. But does the contemporary Chinese claim mean that Beijing is asserting sovereignty over all the waters within the dotted line? Does it mean that Beijing regards them as internal waters or territorial sea, and that the line is viewed as China’s maritime boundary in the area, even though it is not defined by any coordinates? The PRC’s 1998 law on its Exclusive Economic Zone and Continental Shelf states that the legislation will not affect the state’s “claim of historic rights”. This suggests that China may maintain its claim to historic rights and waters within the dotted line of the South China Sea. However, it may also indicate that China no longer regards the waters within the line as historic waters, because historic waters can only be treated as internal waters or territorial seas. They cannot be included in exclusive economic zones and continental shelves, as defined by the 1982 United Nations Convention on the Law of the Sea (UNCLOS), which China ratified in 1996.15 Hasjim Djalal, who has served as President of the International Seabed Authority and as Indonesia’s Ambassador-at-Large for the Law of the Sea and Maritime Affairs, says it is presumed that what China claimed, at least originally, was limited to the islands, rocks, and perhaps the reefs, but not the whole sea area enclosed by the nine-dotted line, which has no coordinates. He argues that it is inconceivable that in 1947, when general international law still recognized only a three-mile territorial sea limit, that China would

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claim the entire South China Sea. He says that a careful reading of recent Chinese law strengthens this assumption, despite the fact that some Chinese writing seems to imply that Beijing also claims the “adjacent sea” of the islands and rocks within the dotted line. However, “adjacent sea” is not clearly defined and the concept does not occur in UNCLOS, which China has ratified. UNCLOS deals only with internal waters, archipelagic waters, territorial seas, contiguous zones, exclusive economic zones, continental shelves and high seas. Moreover, UNCLOS stipulates that the measurements of those waters or zones should start from base points on land, or appropriate baselines connecting legitimate points, and not by arbitrarily drawing them on the sea.16

Tug-of-war at Sea Why does the Chinese Government not clarify the situation? If Beijing abandoned its U-shaped dotted line claim to a vast area of the South China Sea, its Exclusive Economic Zone (EEZ) would extend to a maximum 200 nautical miles from southern points of Hainan Island. If China’s jurisdiction over the Paracels were recognized, its EEZ would stretch further south. UNCLOS allows pieces of land at sea to be defined as islands on two conditions. First, if they are “a naturally formed area of land … which is above water at high tide”. And second, if they are capable of sustaining human habitation or economic life. Under international law, only natural islands can generate a legitimate EEZ and continental shelf claim. Of the Spratly Islands, perhaps only Itu Aba (Taiping Dao) would meet the definition of being a natural island. Itu Aba is occupied by Taiwan. It is the largest and one of the most northerly islands in the Spratly archipelago. This would significantly reduce the extent of China’s territorial and maritime claims in the South China Sea.

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Retaining the U-shaped claim may also be intended by Beijing to keep a negotiating card in hand and rival claimants in a state of uncertainty. There have been several armed clashes and numerous standoffs among contending claimants to the Spratlys in the past couple of decades. The main encounters have embroiled China and Vietnam. In 1988, they fought a brief naval battle near one of the Spratly reefs. More than seventy Vietnamese sailors were killed and several of their vessels sunk. There have been repeated incidents since then, raising nationalist sentiment on both sides. In December 2007, China announced the elevation of Hainan Province’s Xisha (Paracel) Islands department to a level officially named “Sansha City”, which would have administrative jurisdiction over the Paracel and Spratly Island groups and the submerged reefs of the Macclesfield Bank. (See Map 4.) A PRC spokesperson said that China had “indisputable sovereignty” and effective jurisdiction over the islands of the South China Sea “and the adjacent waterways”. In reaction to China’s declaration, hundreds of Vietnamese protesters demonstrated outside the Chinese Embassy in Hanoi.17 A Vietnamese Foreign Ministry spokesman said that Hanoi objected to China’s move to administer the three island groups, including Vietnam’s Hoang Sa and Truong Sa archipelagos. “This action is a violation of Vietnam’s sovereignty, (and is) not in line with the common perception of high-ranking leaders of the two countries or beneficial to the bilateral negotiation process of seeking fundamental and long-term solutions to sea-related issues”, the spokesman added.18 In the Spratlys, the armed garrisons that all the claimants, except Brunei, have stationed on the tiny dots of land they say are theirs are still in place. In some cases, they have been reinforced. Vietnam reportedly occupies 21 of the Spratlys, the Philippines 8, China 7, Malaysia 3 and Taiwan 1.19

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A code of conduct for the South China Sea, signed by Beijing and ASEAN in 2002, is voluntary. The Declaration on the Conduct of Parties in the South China Sea was signed by ASEAN member states and China on 4 November 2002.20 Meanwhile, a joint seismic survey of hydrocarbon resources, agreed by the national oil companies of China, Vietnam and the Philippines in 2005, lapsed in July 2008 and may not be renewed. Even when it was operational, the tripartite seismic survey did not include other Spratly Island claimants. Moreover, it covered only a small part of the contested sea area.

Sino-Vietnamese Rapprochement? In October 2008, China and Vietnam outlined new steps to resolve their long-running territorial disputes in the South China Sea in an effort to avert further conflict and put their relations on a steadier footing for the future. Although both countries are ruled by communist parties and share extensive land and sea borders, they have had a tense relationship. But they now face political challenges at home as their export-oriented economies and investment slow under the impact of global financial turmoil and deepening recession. They have evidently decided to give primacy to strengthening bilateral party, trade and investment ties to offset the wider economic downturn. The latest measures to improve relations emerged during the visit to China of Vietnam’s Prime Minister, Nguyen Tan Dung, from 20–25 October 2008. It was his first official visit as prime minister and came ahead of the Asia-Europe summit in Beijing. Mr Dung held talks with his Chinese counterpart, Wen Jiabao, and Chinese President Hu Jintao. A joint statement issued at the end of the visit said the two sides believed that “to deepen the bilateral all-round strategic cooperation partnership under the current complicated international situation conforms to the

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fundamental interests of both countries, ruling parties and peoples”.21 Under the plan, Chinese and Vietnamese companies will be encouraged to form joint ventures and engage in large-scale projects in infrastructure construction, chemicals, transport, electricity supply and home building. The aim of these projects, and the new road, rail and shipping connections, is to bond the neighbouring provinces of southern China and northern Vietnam. This would be part of a growing network of highways linking China with Southeast Asia. In an attempt to boost bilateral trade to a targeted US$25 billion by 2010 from US$16 billion in 2007, there will be a joint crackdown on cross-border smuggling, counterfeiting and swindling. The two sides also agreed to promote investment in two international economic corridors. One links their land border towns while the other involves China’s Guangxi, Guangdong and Hainan Island provinces as well as Hong Kong and Macau, and ten coastal areas of Vietnam.22 Whether this promised increase in two-way trade and investment materializes remains to be seen. But the proposed expansion of economic ties will also depend on progress in managing and eventually settling festering territorial disputes between China and Vietnam. Both sides reaffirmed that they would complete demarcation of their 1,350-kilometre land border by the end of 2008, a deadline that was set in 1999. As agreed, they finished the work on time. What was new in the joint statement was an agreement to start joint surveys in disputed waters outside the mouth of Beibu Bay (the Gulf of Tonkin) at an early date and a promise jointly to exploit the demarcated zones for their fisheries and oil and gas potential. 23 Vietnamese analysts say that the disputed waters referred to are a small area that immediately

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connects to the mouth of the Gulf of Tonkin and that it is not a reference to the wider South China Sea dispute. They add that resolving disagreements in this area is perhaps among the easiest of the territorial disputes that Vietnam faces in the South China Sea.

South China Sea Stakes The most contentious and difficult territorial issues in the relationship between China and Vietnam are their conflicting claims to the Paracel and Spratly Islands. In their 25 October joint statement, China and Vietnam agreed to find a “basic and lasting” solution to the South China Sea issue that would be mutually acceptable. No detail was offered on how such a resolution might be reached. But, significantly, they said it would be in accordance with UNCLOS, the law of the sea treaty. Meanwhile, they would observe the ASEAN-China code of conduct in the South China Sea and refrain from any action that would complicate or escalate disputes. They would also consult on finding a proper area and way for joint petroleum exploration. On the principle of starting with the easier steps, they agreed to collaborate on oceanic research, environmental protection, weather forecasting, and information exchanges between the two armed forces.24 A strategic cooperation pact between state-run China National Offshore Oil Corporation (CNOOC) and its Vietnamese counterpart, PetroVietnam, is also reported to have been signed during Dung’s visit to China. Together, these accords would be important mutual-restraint and confidence-building measures, provided their terms are strictly and consistently observed by both sides — something that has not been a feature of past agreements between China and Vietnam on the South China Sea.

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Changed Circumstances However, several things may be different this time, apart from the desire to build bilateral economic ties to cushion both countries from global trouble. Beijing may want to defuse widespread concern in Asia over its growing military power and the fear that military muscle will be used to enforce territorial and maritime boundary claims that China has in dispute with many of its neighbours, stretching from Japan through Southeast Asia to India. In this context, the South China Sea is a sensitive touchstone. In October 2008, not long before the Vietnamese prime minister arrived in Beijing, China banned its fishing fleet, one of the biggest in the world, from operating in waters contested with neighbouring countries. Fishing disputes in recent years have not only pitted China against Vietnam. They have also become an irritant in relations with North and South Korea, Japan, the Philippines and Indonesia. In the South China Sea, Chinese fishermen have been detained by the Philippines, allegedly for illegal fishing in waters claimed by Manila close to the Spratly Islands. Similar incidents have been reported in Vietnam. China’s cabinet, the State Council, issued a directive for the coast guard and fishery authorities to stop Chinese fishing vessels from entering “key sensitive maritime areas”.25 Another new factor is the recent steep fall in the price of oil and natural gas. This has removed some of the incentive for petroleum companies to explore in ever deeper waters, further and further from shore in the South China Sea. Deepsea drilling is very expensive. But when the oil price surged past US$100 a barrel for the first time at the start of 2008 and peaked at just over US$147 a barrel in July, the expense seemed fully warranted. Around that time, China told the U.S.-based oil giant ExxonMobil to cancel planned oil exploration ventures off the

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coast of Vietnam with PetroVietnam, implying that if it did not do so it could be barred from operating in China. A Chinese Foreign Ministry spokesman said China opposed any act “violating China’s territorial sovereignty, sovereignty rights or administrative rights in the South China Sea”.26 Following a similar warning from Beijing, BP halted plans in 2007 to carry out exploration work with PetroVietnam off southern Vietnam, citing territorial tensions. This was also in an exploration block approved by Vietnam, but contested by China, about 370 kilometres offshore, at the outer edge of Vietnam’s Exclusive Economic Zone between Vietnam and the Spratly Islands. With the oil price falling below US$40 a barrel by February 2009 as slowing global growth crimped demand, the race for offshore hydrocarbon resources in the South China Sea had lost some of its impetus. This has provided a political respite, allowing China and Vietnam to pursue more conciliatory measures.

Energy Resources Cockpit What could upset the fragile equilibrium in the South China Sea and resurrect emotive issues of national sovereignty, prestige and pride? The biggest risk is that economic recovery, rapid growth and a resurgence of strong demand for energy in Asia will again push China and its Southeast Asian neighbours into contention. China’s oil and gas production has been failing to keep pace with surging consumption and it is worried that existing reserves will not last much longer. These concerns are shared by other petroleum producers in the South China Sea, among them Vietnam, Malaysia and Indonesia. They are currently net exporters of oil or gas or both, but can see the time approaching when their energy reserves will be insufficient to meet domestic demand. They want to extend the life of their reserves by finding more oil and gas. As

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in China, this is an energy security imperative and an economic growth imperative, because oil and gas are vital for transport and industry. Meanwhile, the Philippines, a net importer of both oil and gas, urgently needs to find more fossil fuel and regards its offshore zones in the South China Sea as a key to greater selfsufficiency in future.27 For the Chinese Government, energy policy has become an arm of foreign policy. From being a net exporter of oil in 1993, China today relies on foreign supplies for about half the oil it uses. It is also becoming a major gas importer. For reasons of energy security, China has placed a high priority on getting as much of its future oil and gas as it can from within its land territory, from offshore zones, or as close to home as possible, including Russia and Central Asia. At present, around 75 per cent of China’s oil imports come from politically volatile areas of the Middle East and Africa.28 They have to be shipped to China through distant sealanes, which the Chinese armed forces do not yet have the means to protect. These maritime arteries of energy supply could be cut in a crisis.

NOCs Versus IOCs It is not only countries that are under pressure to increase their oil and gas reserves at a time of perceived looming scarcity and high prices. So are major energy companies, whether they are state-controlled or majority owned by private sector interests. In the past few decades, national oil companies (NOCs) have emerged to challenge the dominance of international oil companies (IOCs). The NOCs are partially or wholly state-owned firms, through which governments control access to reserves of oil and gas and retain profits from production.29 Today, these national champions in Asia, the Middle East, Africa and Russia control much of the world’s oil and gas. Thirty

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years ago, the big international oil companies lorded over 75 per cent of global reserves and 80 per cent of output. Now they control about 6 per cent of oil reserves and 25 per cent of production.30 Western energy giants, including ExxonMobil and BP, are struggling to secure shares of new finds of oil and gas to boost their reserves. ExxonMobil’s reserves-to-production ratio is just over fourteen years and falling, while BP’s is twelve years and flat. The IOCs need access to reserves they can “book” with the Securities and Exchange Commission, the U.S. stock market regulator. Only then can investors measure the health and attractiveness of integrated energy companies that explore for, produce, process and market oil, gas and related products.31 Meanwhile, leading international petroleum service firms are helping national oil companies break their dependence on Western energy majors by providing seismic survey, drilling, training and a wide range of other skills and technology to both NOCs and smaller listed firms, the so-called independents, as they move to tap onshore and offshore resources.32

Deepwater Drilling Advances in know-how and equipment are enabling NOCs, IOCs and independents to explore and exploit what they find further and further from land in ever deeper waters, although it remains a very high-risk, high-cost business. Dozens of new drill ships and rigs are being built to explore for oil and gas in the deepwaters of places like the Gulf of Mexico, West Africa, Brazil, Australia, New Zealand, India and the South China Sea. In the next three years, ODS Petrodata, which tracks drilling rigs and other industry equipment, expects 160 new offshore rigs to enter service. Seventy-five of these rigs will be for ultradeepwater drilling. They can operate in waters up to 4,000 metres

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deep and have a total drilling depth of as much as 13,000 metres. Assuming enough engineers and drill crews can be found to operate them successfully and safely, their arrival may reduce sky-high charter rates for ultra-deepwater rigs. At the height of the oil price boom in the first half of 2008, owners of these rigs were able to charge as much as US$600,000 per day.33 The global credit crisis and recession will crimp deepwater drilling for a while. But as the world economy recovers, demand for oil and gas will revive and, when it does so, the rush to explore for and produce hydrocarbons from beneath the seabed in ever deeper waters will resume. Among hydrocarbon explorers, deepwater drilling is usually considered to mean working in depths of 800 metres or more. Ultra-deep drilling starts at around 2,500 metres. Oceans and seas cover just over 70 per cent of the surface of the Earth, and nearly half of the world’s marine waters are over 3,000 metres deep. This is a new frontier for the discovery and exploitation of oil, gas, minerals and other valuable resources. The drill ships and rigs being built in South Korea, Singapore, China and other parts of the world that are capable of tapping into oil and gas reserves at such depths are helping to reshape the global petroleum business. The amount of oil pumped from deepwater fields will nearly double between 2005 and 2010 to about 11 million barrels a day, or about one eighth of estimated daily consumption in 2008, according to the U.S. Energy Information Administration. The consulting firm, Cambridge Energy Research Associates, offers a slightly different but still bullish forecast. It says that deepwater wells produced about 2 million barrels of oil a day in 2000, but are expected to yield over 10 million barrels a day by 2015. Another consulting firm, Douglas-Westwood, says capital spending on deepwater oil and gas will rise US$25 billion annually by 2012, nearly double the figure for 2003.

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Enter CNOOC, Husky and Other Explorers In December 2008, the Chinese Government approved a programme by the state-owned China National Offshore Oil Corporation (CNOOC) to spend 200 billion yuan (US$29.2 billion) with partners to expand oil and gas exploration in the South China Sea over the next ten to twenty years, starting in 2009. Of course, the programme could be slowed or scaled back by the recession and low oil and gas prices. CNOOC, the country’s thirdlargest oil producer, said in November 2008 that it aimed to increase hydrocarbon output in the South China Sea to 50 million tonnes per year (1 million barrels per day), equivalent to the current production of China’s biggest onshore oil field at Daqing.34 CNOOC said it would focus on deepwater and ultra-deepwater oil-gas exploration in water depths of between 1,500 and 3,000 metres.35 CNOOC says it already has 3.1 billion tonnes of oil equivalent in proven reserves in its deepwater zone in the South China Sea.36 CNOOC announced in July 2008 that it was buying a Norwegian oil exploration contractor, Awilco Offshore ASA, for US$2.52 billion, so that it could reach depths of up to 1,500 metres. Awilco owns and operates deepwater drilling platforms and equipment. At present, CNOOC itself is unable to drill in depths of over 300 metres.37 CNOOC has also placed an order for deepsea drilling rigs with a Norwegian supplier. One of the independent oil companies that work with CNOOC, Canada’s Husky Energy Inc., moved a new deepwater drilling rig built in South Korea into the South China Sea in November 2008 on a three-year contract. It is delineating and evaluating a giant gas field which Husky and CNOOC Ltd, the listed arm of the stateowned parent company, announced they had found in June 2006 in the northern sector of the South China Sea.38 Husky, controlled by Hong Kong tycoon Li Ka-shing, who has close ties to China, said the Liwan field could contain up to

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6 trillion cubic feet of recoverable resources, adding around 7 per cent to China’s total gas reserves. Significantly, it was China’s first deepwater petroleum discovery. The exploration well was drilled 250 kilometres south of Hong Kong at a depth of 1,500 metres. Husky announced in late February 2009 that it would soon begin developing the Liwan field, 350 kilometres southeast of Hong Kong, after the first of two appraisal wells confirmed a major gas discovery. The flow rate from the 55-square kilometre reservoir indicated that it could produce gas at a rate of over 150 million cubic metres per day. Under its production-sharing agreement with Husky, CNOOC has the right to participate in development of the field by taking a stake of up to 51 per cent. Apart from Liwan, Husky has five other exploration blocks in the South China Sea. The gas discovery in mid-2006 sparked a burst of interest in the surrounding deepwater zone of the South China Sea, with other independent energy companies including BG Group, Devon Energy Group and Anadarko Petroleum Corp., preparing to drill in adjacent blocks.

South China Sea Bathymetry The seabed area of the South China Sea consists of about one million square kilometres of continental shelf that is less than 200 metres below the sea surface, and about two million square kilometres of continental shelf deeper than 200 metres. The shallower part of the seabed, known as the Sunda Shelf, is mainly located in the western and southern zones of the South China Sea. The deeper part, known as the South China Sea Basin, is in the eastern and northeastern zones. In some areas, the water depth is over 5,000 metres. This deeper basin is punctured by the outcrops of the Spratly Islands. Much of this zone is now within reach of deepwater and ultra-deepwater drilling vessels.

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Methane Hydrates It is not just the search for conventional oil and gas that is driving energy companies further and further offshore into deeper and deeper waters. China announced in 2007 that it had for the first time managed to tap into seabed sediment containing gas hydrates in the northern part of the South China Sea. Zhang Hongtao, Deputy Director-General of the China Geological Survey, a government agency, said that by collecting the gas hydrate samples in May 2007, China had become the fourth country after the United States, Japan and India to achieve this technological breakthrough. Some scientists have said that the huge quantities of methanerich hydrates kept stable by low temperature and high pressure on the seafloor or below the Arctic could become an important fuel for the future. Methane is the main component of natural gas. Every cubic metre of gas hydrate, which is a solid crystalline structure in its natural state, releases as much as 160 cubic metres of gas. Zhang was quoted as saying that initial estimates indicated that the potential volume of gas hydrates on the continental shelf in the area of the South China Sea tapped by China was equivalent to more than 100 million metric tonnes of oil (2 million barrels of oil per day) — about one quarter of China’s oil consumption of 7.8 million bpd in 2007. However, he added that because it was difficult to produce a continuous gas flow from hydrates, China might not be in position to develop the resource for many more years. However, China is clearly in a race with Japan, the United States, South Korea, India and perhaps other countries to try to master the technology needed to exploit a potentially important offshore energy source for the future.

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Asia’s Rising Gas Demand Meanwhile, China, the world’s second-largest energy consumer after the United States, wants to increase its gas consumption to reduce heavy reliance on coal, which causes serious air pollution. Southeast Asian countries are also turning to cleaner-burning gas in a big way to generate electricity, and for industrial and home use. Natural gas use among Asian countries is forecast to rise by about 4.5 per cent annually on average until 2025 — faster than any other fuel — with almost half of the increase coming from China. If this growth rate is maintained, Asian demand will exceed 21 trillion cubic feet, nearly triple current consumption, by 2025. The South China Sea is considered to have greater gas than oil potential. Most of the hydrocarbon fields explored in the South China Sea areas of Brunei, Indonesia, Malaysia, the Philippines and Vietnam, as well as China, contain gas, not oil. Estimates by the U.S. Geological Survey indicate that between 60 per cent and 70 per cent of the region’s hydrocarbon resources is gas. Even so, a significant proportion of the more than 6 million barrels of oil per day produced by China and Southeast Asian countries comes from the South China Sea region. A bigger proportion of the region’s gas output of over 8 billion cubic feet per day comes from the South China Sea basin, although no precise figures are available. Chinese estimates of the overall oil and gas potential of the South China Sea tend to be much higher than those of nonChinese analysts.39 The most bullish of the Chinese estimates suggest potential oil resources as high as 213 billion barrels of oil, nearly fourteen times China’s proven oil reserves of 15.5 billion barrels at the end of 2007. For gas, the potential production level is put by the most optimistic Chinese estimates at over 2,000 trillion cubic feet, although only about half of this might be recoverable, even if

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fields on this scale were found. China’s proven gas reserves at the end of 2007 were 67 trillion cubic feet.40

China’s Southward Thrust China’s emergence as an increasingly big gas consumer and the emphasis it puts on getting as much of its future oil and gas from as close to home as possible, may help explain why China rates the energy potential of the South China Sea so highly. Such estimates buttress its sweeping claims to sovereignty in the area. Of course, these estimates have yet to be tested. Much of the area, particularly in deepwaters, is unexplored because it is remote and contested. However, China seems intent on expanding its offshore energy search. Until a few years ago, the state-owned Chinese energy giants were discouraged from competing and CNOOC had a virtual monopoly on offshore work. This has changed and now all of the Chinese oil and gas majors can bid for onshore and offshore projects, both local and foreign. PetroChina — an arm of China’s biggest oil producer, China National Petroleum Corporation — announced in March 2006 that it would be turning its attention to the southern sector of the South China Sea in the next few years. As Southeast Asian governments and the energy companies working for them push deeper into the South China Sea in their hunt for more gas and oil, they can only hope that China’s southward push will lead to better cooperation, not confrontation. China has handed out exploration contracts or production licences over most of its deepwater oil and gas blocks in the South China Sea south of Hong Kong. These are contested only by Taiwan. However, future Chinese permits seem set to overlap with those from its Southeast Asian neighbours.41 Unlike in the 1980s

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or 1990s, China may soon have the military power to enforce its territorial claims against rivals in the region, should it decide to do so. But at what cost to its international reputation, to stability in the maritime heart of Southeast Asia and to its relations with ASEAN? China seems to be confronting ExxonMobil, the world’s largest publicly traded oil company by market capitalization, and BP, the third biggest oil firm by sales, with the choice of pursuing their offshore plans in Vietnam or jeopardizing their already substantial investments in China, potentially the world’s biggest energy market. China, of course, would argue that it is Vietnam which should exercise restraint. How will Vietnam react if Chinese pressure again stops Western oil and gas majors from going ahead with planned projects off the South China Sea coast of southern Vietnam?

The United States and Japan More important, how will the United States and its main Asian ally, Japan, react when they see hard evidence of Beijing’s southward extension of its offshore power projection into areas of the South China Sea over which it claims sovereignty, a claim that it has so far been unable to enforce? About a quarter of the world’s trade and around 20 per cent of its daily oil consumption are shipped through Southeast Asian straits and the South China Sea. Japan, which is entirely dependent on imported oil and gas, gets over 80 per cent of its supplies via the South China Sea. South Korea, another Northeast Asian ally of the United States and a major energy importer, is also heavily reliant on shipments through the South China Sea. Taiwan, too, depends on South China Sea shipping routes for most of its energy imports.

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The United States puts a high strategic priority on support for its Asia-Pacific allies and also on maintaining freedom of navigation around the world. America regularly sends warships, including aircraft carriers, from its Pacific fleet through the South China Sea, and the Malacca and Singapore Straits, to reinforce its military presence in the Arabian Sea and Persian Gulf. This naval “surge” capacity from the Pacific to the Indian Ocean is especially important to Washington at times of crisis in the Gulf or Indian Ocean region. If the world economy recovers and an era of perceived petroleum scarcity and high prices returns, the United States and Western nations will be under pressure to protect the interests of their leading energy companies in any confrontation with China in the South China Sea.

What Next from China Beijing is likely to keep restating its sovereignty claims in the South China Sea whenever it feels they are under challenge. However, although China is building its own deepwater drilling rigs, the first is not due to be delivered before 2010. Chinese NOCs have limited experience in deepsea oil and gas exploration, let alone production from such a challenging environment. They will continue for quite a few more years to depend on the small group of energy companies that have the necessary know-how and equipment to work in deep waters in remote and stormy locations. CNOOC says it can hire service companies to do the work. But first China must persuade more energy firms that the South China Sea is an attractive alternative to the world’s hottest deepsea frontiers, among them the Gulf of Mexico and the Atlantic Ocean off Brazil and West Africa, which account for nearly 75 per cent of global deepwater expenditure by energy companies.42 Energy firms are unlikely to go to the expense of

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working in deepwater areas of the South China Sea unless they are assured of a peaceful environment. Meanwhile, Beijing has held out an olive branch to its neighbours by publicly declaring on many occasions its preference for joint development of energy resources in contested offshore zones. In June 2008, it reached such a deal with Japan in the East China Sea. But reaching a workable arrangement in an area like the South China Sea, where there are multiple claimants, would be much more difficult. Meanwhile, pressure within oil-short China to tap oil and gas in the offshore areas it claims is intensifying as its onshore production fails to keep pace with demand.

China-Southeast Asia Ties As noted earlier, relations between China and Southeast Asia have taken a great leap forward in the past couple of decades. Mistrust from the Cold War and the days when Beijing supported communist-led insurgencies in the region has largely been dispelled. Two-way trade, investment and tourism are booming. Security ties, though moving far more slowly, are also taking shape. There is closer collaboration between China and ASEAN countries in maritime security, search and rescue, disaster relief, counter-terrorism and curbing transnational crime. China has said it is ready to sign the protocol to the treaty that bans the development, possession or storage of nuclear weapons in Southeast Asia. But ASEAN is still negotiating the protocol with the other four recognized nuclear-weapon states, Britain, France, Russia and the United States. So these are easy, cost-free steps for Beijing. To cement its ties with ASEAN for the long-term, China could go further. Indeed, it may already have signalled a willingness to do so.

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China-Malaysia Deal In October 2006, China and Malaysia announced a deal worth around US$25 billion in which the Malaysian national petroleum company, Petronas, will supply liquefied natural gas to Shanghai for twenty-five years starting in 2009. The gas is to come from Malaysian offshore fields in the South China Sea. Some of these fields fall within, or straddle, China’s broken-line claim. The deal with Petronas indicates Beijing now accepts that Malaysia, not China, owns the fields. Beijing would not buy gas from another country if it maintained a claim to ownership of the field from which the gas was drawn.

Further Steps China could pre-empt a potential future conflict over energy, fisheries and sealane control in the South China Sea by formally and finally abandoning its broken-line maritime boundary claim in the area. This claim may not now be active. But it could always be revived if China believed it had the military might to enforce the claim. Dropping it would make it clear that Beijing bases its claims in the South China Sea on UNCLOS and current international law, not pre-modern law. Alternatively, China and the Southeast Asian contestants could agree to put their rival sovereignty claims to arbitration or adjudication before the International Tribunal on the Law of the Sea or the International Court of Justice, as some Southeast Asian countries have done with their bilateral island and maritime boundary disputes. As an interim measure, China and the Southeast Asian claimants to the Spratly Islands could move beyond their 2002 non-binding joint declaration on conduct in the South China Sea

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and sign a mandatory code of conduct that would freeze unilateral activities and permit no further occupation of atolls and reefs, or new construction on inhabited parts of the widely scattered archipelago. Southeast Asian countries with significant navies or coast guards could develop a more intensive programme of training exercises with China that includes a search-and-rescue, counterterrorism and anti-piracy component, similar to programmes they now have with the United States and Japan. For its part, China could accept the standing invitation from the United States and Southeast Asian countries to take part in regional military cooperation exercises, such as Cobra Gold held annually in or off Thailand, which has developed close ties with China. The main focus of these exercises is no longer on defence from external attack, but on peacekeeping, disaster relief, and combating terrorism, piracy and other potential threats to safety and freedom of navigation. However, possibly the most effective action ASEAN countries can take to pacify the South China Sea is to engage the commercial interests of China and as many other countries and foreign companies as possible in the search for offshore energy in the area. This is already happening. However, it could be accelerated by making contract terms more attractive to investors, especially in costly, high-risk deepwater work. In addition to an array of Western energy companies, firms from Russia, India, South Korea, Japan, Australia and other ASEAN dialogue partners are exploring for, or producing, oil and gas in the zone claimed by Vietnam and in other parts of the South China Sea that other Southeast Asian states say fall within their sovereignty. China has close ties with many of these countries and would not want to upset relations with them, particularly if it

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felt it had substantial access to the resources of the region through commercial ties. For example, Indonesia has said it may offer the China National Petroleum Corp an equity stake in its Natuna D-Alpha block, near the Indonesian island of Natuna in the southern section of the South China Sea. The block is estimated to hold 46 trillion cubic feet of gas, making it one of the biggest reserves in Asia, although it has a high carbon dioxide content, which will make it expensive to exploit.43 On a visit to Indonesia in December 2008, Chinese Vice-Premier Li Keqiang suggested that the two countries combine to explore for energy in third countries and “jointly tap oil and gas in the South China Sea”.44

Conclusion Some analysts believe that China is biding its time until it has the military muscle to enforce its claims to sovereignty and resource control in the South China Sea. Then it would be able to negotiate with other claimants from a position of strength. But this approach would not enhance mutual trust and security cooperation between China and Southeast Asia, or between China and other important players in the region.

Notes 1.

2.

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The ten ASEAN countries are Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam. ASEAN’s Dialogue Partners are Australia, Canada, China, the European Union, India, Japan, New Zealand, Russia, South Korea, the United States and the United Nations Development Program. ASEAN also promotes cooperation in some areas of mutual interest with Pakistan, although it is not a Dialogue Partner. .

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3.

. . U.S. Defence Department, “Military Power of the People’s Republic of China 2008”, pp. 23 and 25. Richard C. Smith, “Asian Military Modernisation”, Lowy Institute for International Policy, October 2008, pp. 2–4. U.S. Defence Department, “Military Power of the People’s Republic of China 2008”, p. 54. “China Hint at Aircraft Carrier Project”, and “Chinese Army Turns on Charm”, Financial Times, both 17 November 2008. Richard A. Bitzinger, “China’s Military-Industrial Complex: Is It (Finally) Turning a Corner?”, RSIS Commentaries, 21 November 2008. U.S. Defence Department, “Military Power of the People’s Republic of China 2008”, p. 22. . Rodolfo C. Severino, “Deng Legacy after 30 Years”, Japan Times, 29 December 2008. ASEAN Declaration on the South China Sea, Manila, Philippines, 22 July 1992. . Li Jinmeng and Li Dexia, “The Dotted Line on the Chinese Map of the South China Sea”, Ocean Development & International Law, 34 (2003): 287–90. Ibid., p. 293. H. Djalal, “South China Sea Disputes”, The Raffles Bulletin of Zoology, Supplement No. 8 (2000): 2 and 3. . .

4. 5. 6. 7. 8. 9.

10. 11. 12. 13. 14.

15. 16. 17. 18.

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19. 20. 21. 22. 23. 24. 25. 26. 27. 28. 29. 30. 31. 32. 33. 34. 35. 36.

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. . . . . . . . Asia’s Energy Future, East-West Center, 2007, p. 126. World Energy Outlook 2007, International Energy Agency, p. 325. The Economist, Special Report on national oil companies, 12 August 2006. “To BP or not to BP”, Lex column, Financial Times, 30 July 2008. Ivo J.H. Bozon, Stephen J.D. Hall, and Svein Harald Oygard, “What’s Next for Big Oil?”, The McKinsey Quarterly, May 2005. Carola Hoyos, “Nationals’ Champion: How the Energy-rich Rely on Schlumberger”, Financial Times, 30 July 2008. Jad Mouawad and Martin Fackler, “Dearth of Ships Delays Drilling of Offshore Oil”, New York Times, 19 June 2008. . . .

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37.

. . U.S. Energy Information Administration, Country Analysis Briefs, South China Sea, March 2008, pp. 4 and 6. BP Statistical Review of World Energy June 2008, pp. 6 and 23. Reuters, “China’s Deepsea no Easy Waters for CNOOC”, 2 November 2007. “Deepwater: A Robust Market in a Climate of Uncertainty?”, Douglas-Westwood news release, 5 February 2009. “Uncertainty over Natuna as ExxonMobil Fights Back”, Jakarta Post, 9 January 2009. .

38. 39. 40. 41. 42. 43. 44.

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COMMENTARIES In Response to lead article, “Energy and Geopolitics in the South China Sea: Implications for ASEAN and Its Dialogue Partners”, by Michael Richardson

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Commentary by Sam Bateman, Senior Fellow at the S. Rajaratnam School of International Studies (RSIS), Nanyang Technological University, Singapore. The South China Sea continues to generate considerable interest and debate. Michael Richardson’s article is a timely contribution to this debate, particularly with its review of China’s claims in the region, its identification of the energy security factor as a major cause of potential tension, and its summary of developments with the exploration and exploitation of oil and gas. I agree substantially with what Richardson says although with some qualifications as to his views on what China’s maritime claims portend. Recent events will be seen by some to reinforce his views, but basically, I have a more relaxed view than Richardson regarding China’s ability to play a positive role in the South China Sea in the future.

Recent Events March 2009 has seen two major developments that stirred up controversy in the South China Sea all over again, and highlighted the difficulties of achieving stability in the region. One was the clash on 8 March between Chinese vessels and a U.S. ocean surveillance ship off Hainan,1 and the second was approval of the 2009 Philippines Baselines Bill by the Philippines Congress and President Arroyo.2 China sternly protested the Philippines bill because it encloses Huangyan Island (Scarborough Shoal) and some islands of the Nansha group (the Spratly Islands) as part of Philippine territory. These features are claimed by China, as well as by Vietnam, which also protested the bill warning that the Philippine action threatened peace and stability in the region.3

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Because China is a major player in both developments, they have led to a new round of criticisms of China by Western commentators. This increased when China announced it would strengthen its marine surveillance force in the South China Sea, albeit with civil patrol vessels rather than warships.4 The situation was further aggravated with the release of the U.S. Department of Defence annual report on the military power of China. This was highly critical of Chinese military expansion. It produced a strong response from China condemning the American analysis and the provocative message that China thought it sent.5 While the strengthening of Chinese surveillance forces in the South China Sea has been interpreted by some observers as a response to both developments, the causes of the two events are very different. They are almost certainly unrelated. The clash between Chinese ships and the U.S. vessel is just another act in a long-running law of the sea dispute between China and the United States,6 while the Philippines Baseline Bill is another manifestation of the intractable sovereignty disputes over islands and reefs in the South China Sea.

Optimism or Pessimism? Ralf Emmers and I have edited a recent book on the South China Sea.7 My conclusion in that work noted that the chapters in the book reflected a range of opinions from the pessimistic to the optimistic about the prospects for an effective cooperative management regime in the South China Sea. However, my conclusion leant more towards the pessimistic. While the risks of conflict may have fallen, there are no effective regimes in the area for providing key elements of cooperative marine management: the safety and security of shipping; the preservation, protection and conservation of the marine environment; agreed arrangements

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for the exploration and exploitation of marine resources; the prevention of illegal activity at sea; and the conduct of marine scientific research. Recent events, particularly the Philippines Baselines Bill and the reactions to it by other claimant countries, strengthen the pessimistic view. Despite some progress over the years with cooperative arrangements, mainly on a bilateral basis, we are still well short of good order at sea in the South China Sea. There is no effective environmental management regime for the area, and a relatively high level of illegal activity, with illegal, unregulated and unreported (IUU) fishing, arms and drug trafficking, and some incidents of piracy and armed robbery against ships, as well as anecdotal reports of ship-sourced marine pollution. This illegal activity can flourish, and maritime safety can fall short of what is required, because there are few agreed limits to national jurisdiction in the South China Sea. Effective management of maritime areas normally flows from having agreed limits to national jurisdiction. However, maritime boundary-making in the South China Sea is problematic. Straightline maritime boundaries, as one normally expects to see between two countries, are unlikely in the area. This is a consequence of its geography. The sea is sandwiched between the Asian mainland and off-lying archipelagos with several different littoral countries, and numerous islands “in the stream” subject to conflicting sovereignty claims. Many boundaries, or at least their end points or turning points, require the agreement of three, or even more, countries.8 Past experience in Asia and in other parts of the world shows that this agreement can be very hard to achieve. In the absence of agreed boundaries, and with little likelihood of achieving them, it is necessary to find some other means of managing the area in dispute, which is not based on unilateral

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jurisdiction and sole ownership of the resources. This invariably leads to a functional approach where separate regimes are established for each purpose within an agreed geographical area. The geographical limits for each function need not coincide. Unfortunately support for a functional approach in the South China Sea has been largely rhetorical so far with no good practical examples of it having effect. The littoral countries still want “their fences in the sea” and exclusive jurisdiction to maritime zones. They remain committed to a nationalistic approach to their claimed waters and are reluctant to embark on initiatives that may appear to compromise their sovereignty. As Mark Valencia observed some years ago, “Indeed, when countries in Asia think maritime, they think first and foremost about boundary disputes, not protection of the deteriorating marine environment or management of dwindling fisheries. It is these perceptions that must change.”9 Michael Richardson notes that the biggest risk to the current fragile equilibrium in the South China Sea is economic recovery, rapid growth and a resurgence of strong demand for energy in Asia. I support his view. Resources competition, with the levels of energy self-sufficiency in East Asia falling and the pressures of energy security, may lead claimant countries to become more assertive about their claims in the South China Sea. This situation will be aggravated further should commercially significant reserves of oil and gas be found in disputed areas. This may not occur in the short term as the international oil companies (IOCs) tend to keep clear of exploration in disputed areas unless an agreed arrangement for joint development and exploration provides a firm legal basis for their investment. Mak Joon Num has pointed out that the littoral countries to the South China Sea still see ownership of potentially rich maritime zones in “zero-sum terms”.10 If one country gains access to

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resources, then another loses. A particularly serious issue associated with this “zero-sum” approach is the lack of agreement on some fundamental legal principles relating to boundary delimitation, the regime of islands,11 and maritime jurisdiction in the South China Sea. And the obligations under the 1982 UN Convention on the Law of the Sea (UNCLOS) Part IX on enclosed and semi-enclosed seas, such as the South China Sea, are largely being ignored.

“Stumbling Blocks” There are major “stumbling blocks” that inhibit progress with functional cooperation and joint development in the South China Sea. Richardson notes most of these, especially the strong element of nationalism that pervades the disputes. Nationalism can become a strong “stumbling block” to the resolution of disputes, and even functional cooperation. Public expressions of nationalism destroy political will and militate against cooperation and dialogue that might be perceived as compromising national sovereignty. Geoffrey Till has observed previously that “claims to the sovereignty of islands can be important symbolically, perhaps especially in times of national difficulty”.12 The unrest in the Philippines over the Joint Maritime Seismic Undertaking (JMSU), because it appeared to weaken Philippine sovereignty claims, is a clear manifestation of nationalism at work.13 The popular demonstrations of support in the Philippines for the Baselines Bill are another example.14 The most intractable “stumbling blocks” are the ambit claims to all features in the sea by China, Taiwan and Vietnam. These mean that there are few prospects for resolving sovereignty in the foreseeable future but even more seriously, they make functional cooperation more difficult. Admittedly under the “one China” approach, China sees Taiwan’s claims as an extension of its own

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claims. Although other ASEAN members claim features in the South China Sea that fall within Vietnam’s ambit claim, Vietnam has expectations that ASEAN collectively might support its claims to other features against those of China. However, some of the features claimed by Vietnam are also claimed by Malaysia and/or the Philippines. Divisions within ASEAN can also inhibit progress towards cooperation. Its membership in ASEAN and exploiting ASEAN solidarity has been part of Vietnam’s attempts to internationalize the disputes.15 Philippine agreement to participate in the now defunct JMSU was perceived by other ASEAN members, particularly by Malaysia, as a breach of ASEAN solidarity.16

China’s Claims Michael Richardson accurately appreciates China’s approach to the South China Sea, and its apparent preparedness to “shelve” the conflicting sovereignty claims to land and water. China’s claims are very important to China strategically, although the South China Sea islands are not a “barrier”, as claimed by Richardson. Shipping generally does not pass through the islands, which do not obstruct China’s access to the Pacific Ocean in the same way as the major Japanese and Philippine archipelagos do. China’s first island chain is comprised of the Japanese, Philippine and Indonesian archipelagos, while the second island chain runs down through the northern Marianas, Guam and Palau. Richardson notes that some countries might be wary of having to share a common boundary with China. But that is inevitable, just as indeed is the rise of Chinese maritime power in the region. China will not walk away from all its maritime claims, although it could yield sovereignty over particular features to other claimants. That would be the outcome of a long process of bargaining and

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negotiation that is still some time away in the future. Although there may be areas where no maritime boundaries are possible, some new boundaries will be required between China and ASEAN countries. China is showing no inclination to enforce its claims in the South China Sea by the use of force and, in fact, continues to use civil patrol or coast guard equivalent vessels for that purpose.17 It is making use of soft maritime power with capacity-building assistance for regional countries and active participation in a range of marine and environmental initiatives, such as Partnerships in Environmental Management for the Seas of East Asia (PEMSEA), the UNEP/GEF South China Sea project,18 and the Cooperative Mechanism for Navigational Safety and Environmental Protection in the Malacca and Singapore Straits.19 It has withdrawn its fishing boats from disputed areas and shown active interest in joint development. These are all evidence of China’s preparedness to be, in Richardson’s words, “enmeshed more fully into a regional relations system based on international law, non-use of force and negotiated settlement of disputes”. On the whole, Southeast Asian countries may feel less threatened by the expansion of China’s military power than many Western commentators allege. This was demonstrated during the recent visit by senior ASEAN military officers to China.20 Southeast Asians recognize the inevitability of the rise of China while continuing to seek the involvement of the United States as a balancing force. Richardson speculates on the nature of China’s U-shaped line in the South China Sea. This continually pops up in Western commentaries, where it is often misunderstood. The claim is frequently made that it somehow constitutes a boundary claim or a claim by China to territorial sea, or even internal waters.

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This is not so. The line is comprised of nine segments and cannot be regarded as a line delimiting historic waters.21 China has never promulgated geographical coordinates for the segments of the line, which cuts across several maritime boundaries that have been agreed previously by other countries in the South China Sea. More logically, the line is a short-hand way of describing the extent of its sovereignty claims over islands and reefs. Once sovereignty has been established, maritime zones in adjacent waters will then be claimed in accordance with international law.22

The Way Ahead The expansion of economic, financial and trade links between ASEAN and China has created a more favourable atmosphere for cooperation and dialogue in the South China Sea. Most regional analysts agree that conflict between the parties is most unlikely. However, there is a need to acknowledge that sovereignty claims, and hence maritime boundaries, will not be resolved in the foreseeable future. We must get away from the notion that the South China Sea can be managed effectively on the basis of unilateral jurisdiction and sole ownership of the resources. A cooperative management regime is the only solution. The only acceptable framework for such a regime would appear to be a web of provisional arrangements covering cooperation for different functions and perhaps even with different geographical areas for each function. The functions to be considered might include development of oil and gas resources, fisheries management, marine safety, law and order at sea, marine scientific research, and preservation and protection of the marine environment. However, such an approach requires a lot of talking, bargaining and some “give and take”. This is not occurring at present.

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With this web of functional cooperation, bilateral arrangements should be avoided except in areas where there is clear acceptance that only two parties are involved. For the same reason that maritime boundaries are unlikely in the South China Sea, joint development between two parties can cause problems in areas with multiple claims. A bilateral agreement between two parties can frequently disadvantage a third party, but then negotiating a joint arrangement among three or more parties can prove extremely difficult. All the parties to the recent developments feel justified in taking the actions they have. China and the United States both believe their positions on the conduct of military activities in an EEZ are supportable under international law. The claimants to islands and reefs in the South China Sea all contend their own claims are the best. In the meantime, we have doubt and uncertainty, and large areas of sea with no effective resource management, marine environmental protection, or effective countering of illegal activity, such as piracy and armed robbery at sea. The disputes are not going to be resolved in the foreseeable future. They are not amenable to resolution by international arbitration. No party is likely to see arbitration as in its best interests. International courts have a bad habit of coming up with decisions that please nobody. In any case, under the dispute settlement regime established by UNCLOS, countries can opt out of compulsory arbitration for disputes related to maritime boundaries or military operations. There is a pressing need for more dialogue to address these difficult problems. Confidence-building measures might be possible, such as a common understanding of rights and duties in an EEZ, a more comprehensive code of conduct for the South China Sea, and an incident at sea agreement to ensure that

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incidents at sea do not escalate. The risks of these incidents increases as regional navies, not just China’s, expand their capabilities. The new Inter-Sessional Meeting (ISM) on Maritime Security established by the ASEAN Regional Forum (ARF) is a possible forum for the required dialogue. However, statements by U.S. officials and commentators critical of the Chinese response to the recent developments do not assist in establishing the right atmosphere for dialogue.

Notes 1.

2.

3.

4.

5.

6. 7.

8.

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Mark J. Valencia, “Tempting the Dragon”, Far Eastern Economic Review, 11 March 2009 (accessed 16 March 2009). “Arroyo to Sign Baseline Bill despite Protest from China”, Manila Standard Today, 20 February 2009 (accessed 24 February 2009). Joel D. Adriano, “China, Philippines Stoke Island Tensions”, Asia Times online, 27 March 2009 (accessed 27 March 2009). Li Xiaokun, “Patrol Ship’s Trip ‘Shows Restraint’ ”, China Daily, 21 March 2009 (accessed 21 March 2009). “China Voices Strong Dissatisfaction over U.S. Military Report”, China View, English.chinamil.com.cn. (accessed 27 March 2009). Mark J. Valencia, “Tempting the Dragon”. Bateman, Sam and Ralf Emmers, eds., Security and International Politics in the South China Sea: Towards a Cooperative Management Regime (Abingdon: Routledge, 2009). When several countries are opposite and/or adjacent to each other,

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9.

10.

11.

12. 13. 14.

15.

16. 17.

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a bilateral boundary between any two of them will inevitably reach a point where it intersects with the claim of another country (or countries) (the “tripoint”). Mark J. Valencia, “Northeast Asia: Navigating Neptune’s Neighborhood”, in Confidence-Building Measures and Security Issues in Northeast Asia, Report No. 33 (Washington, D.C.: Stimson Centre, 2000), p. 2. Mak Joon Num, “Sovereignty in ASEAN and the Problem of Maritime Cooperation in the South China Sea”, in Security and International Politics in the South China Sea, edited by Bateman and Emmers (Abingdon: Routledge, 2009), p. 121. The determination of which features qualify as “islands” under the regime of islands in Part VIII of UNCLOS, and thus generate a full suite of maritime zones, remains a major issue. Clive Schofield, “Dangerous Ground: A Geopolitical Overview of the South China Sea”, in Bateman and Emmers, ibid., p. 20. Geoffrey Till, “The South China Sea Dispute: An International History”, in Bateman and Emmers, eds., ibid., p. 38. Mak Joon Num, “Sovereignty in ASEAN”, p. 121. T.J. Burgonia and Joel Quinto, “Arroyo Signs Controversial Baselines Bill”, Philippine Daily Inquirer, 12 March 2009 (accessed 13 March 2009). Li Minjiang, “China’s South China Sea Dilemma: Balancing Sovereignty, Development and Security”, in Bateman and Emmers, eds., op. cit., p. 144. Mak Joon Num, op. cit., p. 121. Glenn D. Tiffert, “China Rises Again — Part II — By Provocatively Engaging the US Navy, Beijing may be Trying to Change the International Rules”, YaleGlobal online, 27 March 2009 (accessed 29 March 2009).

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18.

David Rosenberg, “Fisheries Management in the South China Sea”, in Bateman and Emmers, eds., op. cit., p. 71. International Maritime Organization (IMO), “Milestone Agreement Reached on Co-operation over the Straits of Malacca and Singapore”, IMO Briefing 29/2007, 18 September 2007. Christopher Bodeen, “Southeast Asia Military Delegates Tour China Base”, Seattle Post-Intelligencer, 31 March 2009 (accessed 1 April 2009). Zou Keyuan, “The Chinese Traditional Maritime Boundary Line in the South China Sea and Its Legal Consequences for the Resolution of the Dispute over the Spratly Islands”, The International Journal of Marine and Coastal Law 14, no. 1 (1999): 50. Ibid., p. 53.

19.

20.

21.

22.

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Commentary by B.A. Hamzah, Senior Research Fellow at the Institute of Ocean and Earth Sciences (IOES), University Malaya, Kuala Lumpur, Malaysia.

Pax Sinica and Regional Maritime Order in the Spratlys Michael Richardson’s article on the geopolitics of energy in the South China makes interesting reading. His major thesis is that China now has the military means to enforce claims in the hydrocarbon-rich South China Sea. This could spell trouble for the region because Beijing could pose a security threat to the region and other ASEAN dialogue partners. His assertion is premised on China’s military build-up in the South China Sea. The development of the naval base at Sanya in Hainan (reportedly able to house forty submarines), the large military expenditure and the willingness of the People’s Liberation Army (PLA) to openly challenge unauthorized U.S. military presence in its Exclusive Economic Zone (EEZ) have been cited by many as reasons to fear China. As a long-time critic of China’s military policy in the South China Sea, I am no longer convinced by the usual stereotype of viewing China as a threat to regional maritime security. Over the years China’s interest in Southeast Asia has changed. It is no longer interested in subverting the region. On the contrary, China counts on Southeast Asian states as regional allies, an important market for its manufactured products and a source of capital and primary commodities like rubber and palm oil. While many in Southeast Asia may still be suspicious of China’s political motives, the younger generation has little memory of China’s hostile past and most would embrace China as a friendly economic powerhouse.

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The failure to recognize changes in China’s geopolitical outlook, its economic prowess and its desire to be involved in the mainstream of international politics and participate in bigger issues in international relations like its role in the current economic downturn has blinded many. Many are stuck with the old-China mentality. It is time to embrace a new China that is fast becoming an economic superpower whose financial resources can make a difference in the current economic downturn. China may take many more years before it can supplant the United States as a military superpower. While the future remains uncertain, a strong China is not likely to be a “Yellow Peril”. China has always considered the South China Sea as its strategic soft underbelly that requires more than military presence. During the height of the Cold War, China relied on the Soviet Union to keep the United States forces at bay in the region, away from its shores. With the United States and the Soviet Union out of the region, there was little resistance to China’s policy to convert the South China Sea into a “Chinese Lake”. Of course along the way, China has had to use force to make its military presence felt: the seizure of the Paracels in 1974 and the naval skirmish in 1988 with Vietnam in the Spratlys are just two examples. At the more strategic level, China took bold steps to modernize its economy and legal system. With a more predictable legal system, China was able to impress foreign investors who came in droves. Over the years, as it repairs its economy, it also expands its archaic military institutions (by comparison with the United States and Japan). In my view, China’s military expansion is still not complete; more money will be needed to improve its military capability (both conventional and nuclear) in the future. China needs a strong military to become a superpower. It will take years before the PLA can match the U.S. military arsenal; the PLA navy

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and air force are inferior even to their counterparts in the Japanese self-defence forces! While motives and intentions are difficult to determine, examining the conduct can explain certain behaviour traits. With regard to the South China Sea, there is a tendency to ignore an important aspect of China’s relations with the claimant states. China does not lump the claimants as a group with a common identity or interest. Like any other power, China does not treat bilateral relationships the same or on equal footing. China’s relations with Vietnam have been quite hostile until the latter made some peaceful overtures in 2007 onwards. With Malaysia, it maintains a stable relationship despite occasional demarches or protest notes from Beijing on the occupation of some features in the Spratlys. Manila-Beijing relations have been on a roller-coaster, more difficult during President Ramos than under Arroyo. However, the decision by Arroyo to promulgate the new baselines law in April 2009 has caused some uneasiness. Future relations depend on Manila’s next move. Manila would invite trouble if it were to station permanent troops on Scarborough Reef. China treats other powers in the South China Sea differently. It uses different sets of rules of engagement for different parties. The unfortunate incidents involving the Impeccable and the Bowditch in China’s EEZ in April 2009 are viewed by many in the West as a reminder of a more assertive China. Western media do not report China’s claim that the U.S. vessels had violated its EEZ legislation. Imagine if Chinese vessels were caught mapping the ocean floor 125 kilometres from San Francisco. Hell would have broken loose at Foggy Bottom! China has been accused of subverting customary international law by hampering freedom of navigation on the high seas when it asked the USNS Impeccable to leave its EEZ on 9 April 2009 for

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violating its domestic legislation. This is not a case of selective harassment. I think China will not hesitate to harass any foreign vessel engaging in non-authorized activities in its EEZ. Evidently, because of their proximity to the mainland, China views the Pratas, the Paracels and the Macclesfield Bank in the South China Sea more important than the Spratlys. The occupation of these areas (the Pratas, the Paracels and the Macclesfield Bank) by outside forces could a trigger military response. Of course, China would continue to tolerate Taiwan’s presence on the Pratas and Itu Aba (Taiping Dao) for obvious reasons. By the same token, China will not tolerate unauthorized military activities within the area by any foreign power. On the other hand, China has only sent protest notes to the claimants for occupying some features at sea in the Spratlys. I first noted the importance of the Paracels during the discussion on managing potential conflicts in the South China Sea, which began in1990 at Bali (China boycotted this meeting). The workshop series was organized by the Indonesian Ministry of Foreign Affairs with financial support from the Canadian International Development Agency (CIDA). At the second meeting in Bandung (July 1991), China’s representatives (mainly staff from its embassy in Jakarta) made two demands: that the Paracels be removed from the workshop agenda and no discussion on jurisdictional issues be permitted. Although there were protests from other participants, especially Vietnam, the Indonesian hosts caved in. It was only after Jakarta had agreed not to discuss the jurisdictional issues and to remove the Paracels from the workshop agenda that China decided to formally participate in the discussions. After the 1991 Bandung Meeting, China dispatched some senior officials from the Ministry of Foreign Affairs in Beijing to the workshop.

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This distinction (that is, treating the Spratlys differently from the Paracels) is often overlooked by China watchers. China has tolerated the occupation of features which are within the nine-dash boundary line in the Spratlys following the occupation of Mischief Reef in 1995. However, this may change in the future. The most recent decision (March 2009) by the Philippines to promulgate the new baselines for its offshore islands has angered China. Manila’s indiscretion over the inclusion of Scarborough Reef (shoal) in its offshore islands territory could be the tipping point. Elsewhere, I have argued that China will not tolerate the militarization of the reef which it considers vital to its influence in the Spratlys. Stationing military troops on the reef will certainly invite a military response from Beijing. China also views any new occupation as violating the 2002 Declaration on the Conduct Parties in the South China Sea. To add salt to injury, the Scarborough Reef is outside the 1898 Philippine’s treaty limits. Beijing’s policy towards the South China Sea region and in the Spratlys proper has evolved over the years. China has drawn an “off-limits line” around the Pratas, the Paracels and the Macclesfield Bank north of the Spratlys (north of 10 degrees latitude). By “off-limits line” I mean China will not tolerate any unauthorized activities on the sea that violate its domestic legislation and those which are not consistent with customary international law. The decision in 2007 to establish Sasha City is an endorsement of the strategic significance of the region. The rationale for choosing Woody Island as the new headquarters for the administrative enclave is quite obvious. One, it has to do with accessibility and its proximity to Hainan and the mainland. Two, sending a clear message to the powers navigating the area that

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their activities in the region, military and otherwise, are being closely monitored. Three, the reorganization of the administration of the area was intended to give Hainan more control over the entire South China Sea. The Institute of South China Sea at Haikou, Hainan, organized an international conference in December 2008 on regional economic cooperation under the pretext of the China-ASEAN Free Trade Area agreement. Hainan and Guangdong have also organized other programmes to promote economic cooperation. Before this, China resisted many attempts to internationalize the South China Sea. Michael Richardson suggests that “some would be wary to share a common maritime boundary with … an increasingly powerful nation as China, or even having it as a very close neighbour”. Agreed. But states do not have the luxury to change the geographical attribute and choose neigbours. What they can do and should do, in a situation like this, is to manage their relationships. While size and strength matter in forging stable relationships between states, the tie that binds relationships has always been a strongly shared interest. The reality of international relations is such that it demands that states give meaning to Lord Palmerston’s advice that there are no permanent friends or enemies, only permanent interests in international relations. The challenge to both China and its neighbours in Southeast Asia is to establish stable mechanisms that could promote friendly relations based on respect for each other’s national interest and, where such interests do not coincide, to take steps to prevent an adversarial relationship. China is keen to strengthen stable relations with the ASEAN states, including the claimant states. Beijing will not harm the

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claimant states so long as they, either separately or in concert with each other, do not conspire to undermine China’s interest. This brings me to another point. In my view, in accepting the present political status quo in the Spratlys, China expects the claimants to play by certain rules. The first rule is not to ally with powers hostile towards China. Any attempt to collude with the United States in the Spratlys, for example, will spell trouble. This is because Beijing considers the United States a military threat. Since 2000, considerable goodwill has emerged from both sides of the fence (ASEAN and China) as evident in China’s decision to accede to the Treaty of Amity and Cooperation in Southeast Asia, as well as the 2002 ASEAN-sponsored Declaration on the Conduct of Parties in the South China Sea. There are also separate moves from Beijing and from the other claimants to desecuritize the region, especially in the Spratlys. As one example, the decision by China to expand economic relations with Vietnam could set the stage for Sino-Vietnamese rapprochement that Michael Richardson has alluded to in his article. Another example is the decision by Malaysia and Brunei to resolve their overlapping claimed maritime regimes in March 2009. China has used force twice — in 1974 and 1988. On both occasions, it was against Vietnam, with which China had an uneasy relationship. In my view, the Vietnam incident cannot be used as an indicator of what lies ahead in the Spratlys. The political landscape has changed, and China has larger global interests to pursue. Getting bogged down in the Spratlys may be the last thing on its mind. Although the correlation of forces is currently in China’s favour, it has refrained from using force against the other claimant states because, in Beijing’s view, they do not pose any military

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threat to China. None of the other claimant states has the military strength to prevail over the PLA navy in the South China Sea, specifically in the Spratlys. Here, I am not suggesting for a moment that in the event of a conflict the other claimant states should just surrender because China is much stronger militarily. On the contrary, the thrust of my argument implies that the other claimant states do not need to fear China in the Spratlys except in situations described earlier. By the same token, the other claimant states should continue with their economic activities (including exploiting hydrocarbon and fishery resources) in the Spratlys as they have always done before. They should also refrain from occupying new features. I do not expect China to interfere with oil exploration by national oil companies in the Spratlys. No outside power has interfered with the development of hydrocarbon resources off Brunei or Malaysia in the Spratlys since Brunei drilled its offshore oilfield in 1953. Michael Richardson has recommended that China should remove the 1947 nine-dotted line which some have described as an illegal maritime boundary in the South China Sea. Perhaps it will be easier for China to make the line more consistent with the 1982 Law of the Sea Convention that China has ratified. But Beijing may not do it on various grounds. First, the line preceded the coming into force of the UNCLOS. Second, there is little incentive for China to remove the line until all other claimants in the Spratlys have rationalized theirs. In his commentary on Richardson’s article, Sam Bateman has pointed to the difficulty of establishing maritime boundaries in the South China Sea, especially with regard to the rampant use of straight baselines by the claimant parties, including China, off the Paracels. Third, no political leaders in China will be willing to drop the line for fear that they may be accused of dropping their

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historical claim to the South China Sea. Fourth, China knows that without the coordinates the line is not legal; it only shows its dominion or suzerainty in the South China Sea. It is a political line that may come in handy in crisis times, a point that Richardson has alluded to. Nonetheless, it will indeed be a gesture of goodwill to take steps to make the line consistent with UNCLOS. I would like to support remarks by Sam Bateman on conflict resolution. Like him, I do not think the disputing parties are keen to submit their disputes to the International Court of Justice (ICJ) or International Tribunal on the Law of the Sea (ITLOS) for judicial settlement. It is easier to seek judicial resolution in disputes that involve two parties, for example between Indonesia and Malaysia over Ligitan and Sipadan. Thus far, no multilateral territorial disputes have appeared before the ICJ or ITLOS. I am very supportive of functional cooperation mechanisms in managing disputes in the Spratlys. Many years ago, while at Maritime Institute Malaysia (MIMA) we started a programme on building confidence at the commanders’ level. Since most lowlevel military incidents in the Spratlys were caused mainly by overzealous military commanders (naval and air), restraining the trigger-happy commanders via Incident-At-Sea Agreements (INSEA), in our view, could prevent further escalation of conflicts. A group of Malaysian scientists are toying with an idea. They want to initiate a Large Marine Ecosystem (LME) project in the Spratlys. The purpose of the LME is to conduct research on the ecosystem that will provide the baseline data for use by policy planners. The LME has been tried elsewhere with some success but rarely in disputed areas. Other colleagues are keen to emulate the research activities in Antarctica, where science has triumphed over politics, and apply them to the Spratlys.

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I am also encouraged by what I saw during a recent visit to Pulau Layang-Layang (Swallow Reef) in April 2009. The presence of foreign tourists in the Malaysian resort gave me hope. These tourists went about their underwater activities without any concern for overlapping claims; they seemed to be oblivious of the foreign naval vessels in the area. The existence of such resorts in the Spratlys which are open to tourists can help bring about greater transparency. I hope the proposal by Vietnam to convert one of the disputed islands (Spratly/Storm) into a resort will materialize soon. Incidentally, Taiwan has opened the Pratas to tourists. By the way, Malaysia has occupied five features (Richardson says three) in the South China Sea. They are Layang-Layang, Ubin, Perahu, Mantunani and Peninjau. No one doubts that Pax Sinica will need to oil its engine. The hydrocarbon resources from the Spratly region will not be enough to feed the proverbial awakened giant. Its hydrocarbon resources will continue to come from the Middle East, Latin America, Africa, Canada, Russia, Europe and Central Asia. China’s oil policy will be scrutinized by the entire world; any slip-up will be perilous to its credibility. As Richardson has noted, a large portion of China’s oil supply will be transported by sea. Hence it needs to secure the sealanes of communication (SLOCs) like the Straits of Malacca and Singapore. In my view, China’s reliance on SLOCs is expected to decline once the alternative overland routes through Pakistan and Myanmar are ready. China knows that it needs friends and good diplomacy to guarantee safe passage for its imports (and exports) through SLOCs and by overland routes. Because of the increasing interdependence, no country is today an island. China understands the limits of military power in international relations. Yet without a strong military Pax Sinica will remain a

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paper tiger. With this in mind, China will not engage in any activities that could draw the wrath of its friends in Southeast Asia and elsewhere. Beijing’s overall relations with Washington under the new Obama administration will hopefully be less testy and less confrontational. Notwithstanding the above, China will continue to harass foreign vessels conducting unauthorized activities (for example, military) in its EEZ, especially around the Pratas, the Paracels and the Macclesfield Bank, as its recent skirmish with the Impeccable and the Bowditch has demonstrated. However, as a signatory to UNCLOS, China must guarantee the world that freedom of navigation in the high seas is always upheld. Efforts to demonize China will not stop the emergence of Pax Sinica. Territorial claims are by definition difficult to resolve. The challenge is to manage the disputes and prevent them from escalating into military conflicts. The current status quo in the Spratlys is far from ideal. Yet in spite of rising nationalist tendencies, the likelihood of a military conflict is remote. The one power that can make the difference in the Spratlys is China. In my view, China does not pose a military threat to the ASEAN region. Beijing’s preoccupation with other, more important geostrategic considerations, like solving the global economic downturn, may result in the Spratlys being downgraded to a sideshow. The current global economic downturn has exposed the vulnerability in many world economies, including China’s, which in the opinion of many experts, is likely to escape the worst and to recover faster than many. Its recovery will put China on firmer ground and its emergence as a superpower-in-waiting is almost assured.

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China is not likely to shift from its soft-power approach in the Spratlys, which has given it handsome dividends. As it takes two to tango, the claimants must also know the limits of tolerance. The Scarborough Reef can be the tipping point should Manila station troops there. I have noted in a paper on the geopolitics of overlapping maritime boundaries in Southeast Asia (2008) that China has been slowly exerting influence in the South China Sea, for a long time its weakest military flank. While I share Richardson’s contention that China may use its military to secure its energy supply lines, including its greater desire to have some control over access to SLOCs like the Straits of Malacca, Hormuz and Singapore, I am not convinced that China will use force to secure its hydrocarbon resources in the South China Sea. In conclusion, the pessimists cannot be faulted for thinking that Pax Sinica will destabilize the region and the entire world without the benefit of historical precedents for guidance. In the past, large power transitions even among those with shared political values (for example, from Pax Britannica to Pax Americana) have been marked by instability and conflict. It is natural to expect the changeover to be less than stable, although history never travels in a straight line. Imbued with a different cultural tradition, the rise of China that will involve changing the global power equation is viewed by many with cynicism. The challenge is to get beyond the past and look forward more positively.

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This article was published in the Straits Times on 15 April 2009.

FLASHPOINT: SOUTH CHINA SEA K. Kesavapany

A couple of moves in the past few weeks by claimants to parts of the South China Sea have brought that contentious maritime area to the front pages once again. The South China Sea has been generally considered a potential “flashpoint” for armed conflict for some time. Although the potential for such conflict is perceived to have diminished in recent years — partly because of commitments the parties have made to the peaceful settlement of disputes and non-use of force — it still exists. Conflicting claims to the area have not been resolved or reconciled. To be sure, countries in Southeast Asia and, of late, China have pursued their conflicting territorial claims peacefully, as they are committed to do so under the Treaty of Amity and Cooperation in Southeast Asia (TAC), the United Nations Charter and the UN Convention on the Law of the Sea. These commitments were also embodied in the 1992 ASEAN Declaration on the South China Sea and the 2002 Declaration on the Conduct of Parties in the South China Sea (DOC). What makes the South China Sea question so vexing — and thus dangerous — is the fact that it is subject to multiple, not just bilateral, claims. Brunei, Malaysia, the Philippines and Vietnam — not to mention mainland China and Taiwan — have all made overlapping claims. The involvement of a big, strong and rapidly rising power — China — and what others perceive to be Beijing’s extravagant, if ambiguous, claims are additional complications.

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The importance of the South China Sea to international navigation is also a factor. In 1974, practically on the eve of Vietnam’s reunification, Chinese armed forces dislodged the South Vietnamese from the Paracels. In 1988, a brief naval battle between China and Vietnam in the Spratlys area sank a number of Vietnamese vessels and killed around seventy Vietnamese. The Philippines has, on a number of occasions, arrested mainland Chinese and Taiwanese fishing in the disputed area and confiscated their vessels. Because of the continuing tensions in the area, the ASEAN Regional Forum (ARF) specified in its early years the South China Sea as one of the regional “flashpoints” that had to be addressed. Soon, however, the item was quietly dropped from the ARF’s agenda. Several measures have calmed things down. One has been Beijing’s repeated assurance of its readiness to “shelve” the sovereignty disputes. Another has been the gradual shift of the Chinese position from an insistence on dealing bilaterally with each individual Southeast Asian claimant to a willingness to discuss the issue with ASEAN as a whole. ASEAN and Chinese officials have been holding annual political consultations since 1995. China’s relations with ASEAN as a whole and with its individual members have improved substantially in recent years. China has acceded to TAC, which commits it to resolve disputes peacefully and not to resort to the use or threat of force in interstate relations. Since 1990, Indonesia has been convening a series of informal workshops on “Managing potential conflicts in the South China Sea”. Representatives of mainland China and Taiwan, as well as of all ASEAN countries, participate in their “private capacity”. China and ASEAN concluded the DOC in 2002.

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Notwithstanding these positive developments, last month alone witnessed two moves by claimants that provoked protests from others. One was the visit by then-Malaysian Prime Minister Abdullah Badawi to Terumbu Layang-Layang, or Swallow Reef, long developed by Malaysia in an area claimed by China, Taiwan, Vietnam and the Philippines. The other was the passage of legislation in the Philippines redefining the country’s archipelagic baselines. These actions — and the reactions to them — remind us of the fragility of the situation in the South China Sea. In February 2007, Chen Shui-bian, then President of Taiwan, visited Taiping Dao, or Itu Aba, in the Spratlys. More assertive was the Chinese construction, discovered in early 1995, of obviously military facilities, disguised as “fishermen’s shelter”, on the appropriately named Mischief Reef, about 200 kilometres from the Philippine island of Palawan. In the meantime, the Straits Times has quoted China’s Major-General Qian Lihua as saying that Beijing “might” build an aircraft carrier by 2010, in addition to deploying five nuclearpowered, missile-carrying submarines. “According to some projections”, the Straits Times reported, “China would have a blue-water navy by 2020. The total displacement of Chinese navy destroyers and frigates will have more than doubled to 350,000 tonnes by then.” East Asia cannot afford to be distracted by rising tensions in a body of water vital to international trade and security. All concerned would do well to abide by their commitments to the peaceful settlement of disputes and the non-use of force. Every claimant needs to refrain from undertaking provocative acts in the area. China, in particular, needs to reassure its rival claimants that it does not intend to use force again in asserting its claims.

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WHITHER THE SOUTH CHINA SEA DISPUTES? Mark J. Valencia

Several recent international incidents in quick succession have rekindled the sovereignty disputes over the Spratly islets and reefs in the South China Sea and recast a spotlight on the issues. These incidents include the early March visit by Malaysian Prime Minister Abdullah Badawi to disputed Swallow Reef, the signing by President Gloria Arroyo of the Philippines Baselines Bill, which included the Spratlys in a “regime of islands”, and the unrelated confrontation between a U.S. military survey vessel — the Impeccable — and Chinese vessels. Earlier, in February 2007, then Taiwan President Chen Shui-bian’s visit to Taiping Dao drew protests from China, Malaysia, the Philippines, and Vietnam. Nevertheless, the general political environment in the South China Sea seems to have come a long way from the 1980s and 1990s when it was a locus of confrontation and armed conflict. But these latest incidents raise the question of whether these gains are fundamental and durable — or fragile and temporary. From an optimistic perspective, the China-Vietnam clash of 1988 in which about seventy Vietnamese died, and China’s brazen 1995 occupation and building of structures on the Philippinesclaimed Mischief Reef, seem like relics of a previous era. Conflict has given way to cooperation in which China, Vietnam and the Philippines are undertaking cooperative seismic surveys in an agreed area of their overlapping claims. In 2002, ASEAN and China signed a Declaration on Conduct in which they promised “to resolve their territorial and

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jurisdictional disputes by peaceful means without resorting to the threat or use of force” and “to exercise self-restraint in the conduct of activities that would complicate or escalate disputes and affect peace and stability”. And China, Vietnam and the Philippines agreed on a web of bilateral codes of conduct. All have also agreed to move towards a more formal and legally-binding multilateral Code of Conduct — although it remains out of reach. Overall the region — at least at sea — has moved to a lower level of securitization. According to Ralf Emmers of Singapore’s Rajaratnam School of International Studies, the reasons include China’s “charm offensive”, the lack of discovery of significant petroleum deposits, and self-restraint on nationalist tendencies. Perhaps most important has been the distraction of the United States in the Middle East and the “war on terror”, and thus a damping of China-U.S. competition in Southeast Asia and the South China Sea. To this eclectic mix one should add the expansion and strengthening of ASEAN and its growing unity and confidence in its approach to China. But these factors are neither fundamental nor durable and the apparent stability is fragile. Indeed, the recent wave of incidents may indicate that it was just a lull before a storm. Fear is still racing hope. One trend is toward a post-modern world moving away from the Westphalian national state system. This construct would downplay sovereignty and focus on common security and common prosperity and be evidenced by codes of conduct, sharing of resources and cooperation to protect the environment. This is the hope. But the fundamental conflicts over islands, maritime space and resources have not been resolved. The fear is that increasing competition for energy and fish will exacerbate these conflicts and refuel nationalism and sovereignty issues in the South China

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Sea. Indeed in China, Taiwan, the Philippines and Vietnam, domestic laws have incorporated the islands into the nation’s territory and the national psyche, and they have thus become symbolic of the nation and the legitimacy of the government. For these governments, the islands must be defended at “all costs”. For example, China has formed a Sansha administrative unit based on Hainan to govern the Paracels Islands (also claimed by Vietnam), the submerged Macclesfield Bank and the Spratly Islands. This prompted a formal protest from Vietnam and rare anti-Chinese street demonstrations in Hanoi and Ho Chi Minh City. This trend toward conflict is also fuelled by fear of the unknown — that some unknown resource will be foregone or lost through compromise or relinquishment of claims — the “Alaska syndrome”. So as Geoffrey Till of the War Studies Group at King’s College London puts it, there is a “collision of assumptions” and resultant actions that support each trend. This makes the situation ambiguous, difficult to resolve, and unpredictable. To some analysts, China is striving for domination of the South China Sea. They point to its web of electronic and physical infrastructure extending into the Spratlys and its acquisition of naval and air assets that would satisfy this goal. Others argue that China is simply trying to defend itself and obtain some “breathing room” by protecting vital sealanes against a U.S.-Japan-India encirclement and containment. China’s intent (and claims) remains uncertain. It has recently growled at Vietnam regarding Vietnam’s plan to build a pipeline from British Petroleum gas discoveries 230 miles offshore on its claimed extended continental shelf. The new fields to be connected are near fields that already produce gas which is shipped onshore through an existing pipeline. In its rant, China slipped back into its legally dubious historic claim to most of the South China Sea

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and the nationalist rhetoric that accompanies it. China’s Foreign Ministry spokesperson Qin Gang said “any unilateral action taken by any other country in these waters constitutes infringement into China’s sovereignty, territorial rights and jurisdiction”. Moreover, according to Qin, Vietnam’s action “goes against the important consensus reached by the leaders of the two countries on the maritime issue”. When the price of oil and gas skyrocketed, interest in harvesting hydrocarbons from the area grew dramatically, especially in China, which has the capability to harvest the deepwater resources. The Philippines, China and Vietnam have carried out a joint seismic survey of part of the Spratly area and considered trilateral hydrocarbon exploration including drilling. However, the agreement has not been extended due to domestic political controversy in the Philippines. The Philippines and China also agreed to set up a common fishing area in the Spratly area and to consider asking other claimant countries like Vietnam to participate in cooperative fishing activities. However, the joint surveys between China, Vietnam and the Philippines were only made possible by what some would say was a “sell-out” on the part of the Philippines. The Philippines presumably agreed to these joint surveys on parts of its legal continental shelf that China and Vietnam do not even claim for higher political purposes. But in so doing it gave legitimacy to China and Vietnam’s legally dubious claims to that part of the South China Sea, and rewarded China’s persistence in its extreme claim. According to Taiwan’s then President Chen, these activities have “seriously invaded Taiwan’s rights”. Indeed a pesky problem that cannot be ignored indefinitely is Taiwan’s claims in the area and its occupation of Taiping Dao, at 0.5 kilometres the largest of

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the Spratly Islands. Indeed, its recent construction of a military airfield there is bound to increase tension. Although Chen’s visit to the feature contributed to this tension, his declaration of a Spratly Initiative which calls on all claimants to put environmental protection ahead of development was potentially an important step in the right direction. So where does this leave the imbroglio? As Malaysia’s late Noordin Sopiee — one of Asia’s leading intellectuals — used to say: “Make peace while there is peace.” What this means for the South China Sea is that while tension is reduced — for whatever reasons — a gossamer web of cooperative commitments and functional arrangements should be negotiated and cemented. This would not only be in the claimants’ interests vis-a-vis China but in China’s interest as well. It would be a logical extension of its accession to the Treaty on Amity and Cooperation in Southeast Asia and firm up the legitimacy of its presence in the South China Sea. In the wake of the recent incidents, the Philippines has called for talks among all the claimants. There are several concrete objectives that could be attained. The claimants could formalize a code of conduct for the South China Sea and adhere to it. They could dispense with nationalist rhetoric and legally unsupportable claims. They could build a web of functional cooperative arrangements in marine environmental protection, marine scientific research, navigational safety and search and rescue. Although located outside the Spratlys proper, the Pratas Island Reef National Marine Park recently declared by Taiwan could serve as a model. And they could negotiate a set of specific voluntary guidelines regarding military activities in the disputed area. None of these arrangements would threaten existing positions and they could all contain a clause that affirms that

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such arrangements are non-prejudicial to sovereignty and jurisdictional claims. The basic lesson is clear — “slow and steady wins the race”. Patience and perseverance are necessary ingredients. The process must be a step-by-step building of functional cooperative arrangements that will eventually result in a web too politically costly to undo. As for a grand solution to the South China Sea disputes, this will be a long time in coming — if ever. But the alternative — a festering sore covered by a scab that can be picked every time relations deteriorate or extra-regional powers wish to do so — should be a nightmare no regional state wants to repeat. As Noordin said, “The time to make peace is when there is peace.” That time is now.

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CLARIFYING THE NEW PHILIPPINE BASELINES LAW Rodolfo C. Severino

On 10 March 2009, President Gloria Macapagal-Arroyo signed a new law adjusting the Philippines’ archipelagic baselines. Baselines are lines on a map, identified by coordinates, from which is measured the twelve-mile territorial sea, where, according to the United Nations Convention on the Law of the Sea (UNCLOS), a coastal state or an archipelagic state like the Philippines has sovereignty. The UNCLOS provides for a “contiguous zone”, with a maximum breadth of twenty-four miles from the baselines, where the coastal or archipelagic state enforces “its customs, fiscal, immigration or sanitary laws and regulations”. States also have an exclusive economic zone, measured up to 200 miles from the baselines, where they have “sovereign rights” to explore, exploit, conserve and manage the natural resources in the waters and on and beneath the seabed. Significantly, the new Philippine law, in its title, indicates its purpose as mainly to amend the existing baselines act and “to define the archipelagic baselines of the Philippines”. It does not extend the baselines to the Spratlys or to Scarborough Shoal, both of which China and Vietnam claim in their entirety, while the Philippines claims a part of what are called the Spratlys and all of Scarborough Shoal. Unfortunately, some observers and commentators think that the new law extends the baselines to encompass both the claimed

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area of the Spratlys and Scarborough Shoal. It does not. The contrary impression may have arisen from the fact that the first bill that would adjust the baselines, which Representative Antonio Cuenco filed in the House of Representatives in November 2007, would extend those baselines to parts of the Spratlys and Scarborough Shoal. The basepoints that the Cuenco-proposed baselines would connect would include twelve in the Spratlys area and six in Scarborough Shoal. However, the Department of Foreign Affairs opposed this provision in the Cuenco bill. Instead, it backed, and President Arroyo endorsed, a Senate version that would limit the baselines to the main Philippine archipelago and declare a “regime of islands” for the land features in the areas of the Spratlys and Scarborough Shoal that Manila claims. According to Article 121 of the UNCLOS, an island, “a naturally formed area of land, surrounded by water, which is above water at high tide”, can generate its own territorial sea, contiguous zone, exclusive economic zone, and continental shelf. On the other hand, rocks, “which cannot sustain human habitation or economic life of their own”, cannot. In the Senate-House committee that reconciled the differences between the Senate and House bills, the Senate version basically prevailed. It was this reconciled version, substantially the Senate text, that the Philippine Congress eventually passed and the President signed into law on 10 March. Thus, the new law keeps the Philippine baselines around the main archipelago and, invoking Article 121 of the UNCLOS, declares a “regime of islands” within the areas that the Philippines claims in the South China Sea. Although it does not indicate which land features are islands in the UNCLOS sense and which ones are mere rocks, the new legislation brings the Philippine

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claim closer to consistency with the law of the sea, as far as maritime regimes are concerned. While Beijing and Hanoi may feel obliged to voice protests, which they did promptly upon the Philippine law’s enactment, this is something that they should take into account in considering the Philippine claim and in adjusting their own in the light of the UNCLOS provisions on maritime regimes.

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About the Contributors

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ABOUT THE CONTRIBUTORS

Michael Richardson (lead article author) is a Visiting Senior Research Fellow at the Institute of Southeast Asian Studies (ISEAS), Singapore and former Asia editor of the International Herald Tribune. His current research focuses on maritime, energy and sealane security. He has completed a book, A Time Bomb for Global Trade: Maritime-related Terrorism in an Age of Weapons of Mass Destruction (Institute of Southeast Asian Studies 2004). Sam Bateman (commentator) is a Senior Fellow at the S. Rajaratnam School of International Studies (RSIS), Nanyang Technological University, Singapore. He is a former Australian naval officer with a special interest in political and strategic aspects of the international law of the sea. He completed his doctorate at the University of New South Wales in 2001. He has written extensively on defence and maritime issues in Australia, the Asia Pacific and Indian Ocean. B.A. Hamzah (commentator) is a Senior Research Fellow at the Institute of Ocean and Earth Sciences (IOES) and Faculty of Arts and Social Sciences, University of Malaya, Kuala Lumpur. He was a Visiting Fellow at the European Commission and at the Institute of Southeast Asian Studies, Singapore before serving as Director-General of the Maritime Institute Malaysia (MIMA). He helped found, and is appointed Fellow and Assistant DirectorGeneral, of the Institute of Strategic and International Studies of Malaysia (ISIS).

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K. Kesavapany has been the Director of the Institute of Southeast Asian Studies (ISEAS) since 1 November 2002. Prior to his appointment, he was Singapore’s High Commissioner to Malaysia. In his thirty-year career in the Foreign Service, he served as Permanent Representative to the United Nations in Geneva (December 1991–March 1997) and held key staff appointments in the Ministry of Foreign Affairs of Singapore. He was an active participant in the final phase of the Uruguay Round negotiations and was the first Chairman of the WTO’s General Council in 1995. Mark J. Valencia is a Visiting Senior Fellow at the Maritime Institute of Malaysia. He has a M.A. in Marine Affairs from the University of Rhode Island and a Ph.D. in Oceanography from the University of Hawaii. Before joining the East-West Center, he was a Lecturer at the Universiti Sains Malaysia and a Technical Expert with the UNDP Regional Project on Offshore Prospecting based in Bangkok. He has been a Fulbright Fellow and a Visiting Fellow at the International Institute for Asian Studies, Leiden University. Rodolfo C. Severino is Head of the ASEAN Studies Centre at the Institute of Southeast Asian Studies (ISEAS), Singapore, and former ASEAN Secretary-General. He has completed a book, Southeast Asia in Search of an ASEAN Community (Institute of Southeast Asian Studies 2006). Before assuming the position of ASEAN Secretary-General, he was Undersecretary of Foreign Affairs of the Philippines. He was Ambassador to Malaysia from 1989 to 1992. He twice served as ASEAN Senior Official for the Philippines.

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