Energy and Geopolitics in the South China Sea: Implications for ASEAN and Its Dialogue Partners 9789814279352

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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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Contents

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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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Energy and Geopolitics in the South China Sea

MAP 1 Southeast Asia

Philippine .SeJ

.....

-=·

--

lndi.ltl 0 c e :ut

Sc.alc- I:J2.000.000 olC S..ti

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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Energy and Geopolitics in the South China Sea

MAP 2 Competing Claims in the South China Sea

._ ___ __ .... ·----·-·--... ............ ,..........., ... -....-

Oil and Gas Resoutces M itl . . ~ .....

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llt .......... lallllll._ t ............ ..._ ·~..._

South ChiiUI Sea Malltlme Claims

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e..w.. .. ......,..., ................ .....

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Other South China Sea Claims

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South China

Sea

Source: CIA Maps and Publications for the public.

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MAP 3 Competing Claims in the South China Sea

Countries Claiming Ownership •

China

•

VN!tnam

•

Malaysia

•

taiwan

Philippines

0

500

Gas/ Oil fields

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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Energy and Geopolitics in the South China Sea

MAP 4 South China Sea Islands

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t

.._

INDONEStA

..__

=:....":"..:.:-... -

Source: Wikipedia commons.

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MAP 5 Spratly Islands

NOrlheMI CBy Southwest