China and the Mosquitoes

Why are the Spratly and Paracel islands so important to China that it would interpret international law to its own satisfaction? The simple answer is, oil.
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In our recent article "China's Imperial Overstretch", we argued that the Spratly island question is ultimately a litmus test for if and when China will cease to act as an unwieldy 800-pound gorilla that does as it pleases and instead act as a responsible member of the international community, willing to engage other contestants in a rules-based regime in accordance with established norms of diplomacy and consistent with a nation of its importance and stature.

On July 8, nationwide demonstrations are slated to be held by Filipinos before key Chinese consulates. Led by U.S. Pinoys for Good Governance -- a national organization of Filipino-American business, political and community leaders and lawyers -- Filipino-Americans will be picketing the consular offices of the People's Republic of China across the United States to protest Beijing's imminent oil drilling activities in the Spratly Islands, and to expose China's unilateral abrogation of the 2002 Code of Conduct of parties in the South China Sea. In this 2002 pact, China and the 10-member Association of South East Asian Nations (ASEAN) agreed to undertake a more collaborative diplomatic process in resolving territorial and maritime disputes in the South China Sea, to demilitarize the Paracel and Spratly islands, maintain the status quo, and pave the way for joint deep sea oil exploration in these island groups.

The nationwide demonstrations will be held outside Chinese consulates in Chicago, Los Angeles, New York, San Francisco and Washington, D.C. The precursors to this action had been similar street demonstrations in Viet Nam last month following Chinese military activity along Vietnam's maritime border. As we indicated previously in China's Imperial Overstretch, the kind of popular backlash we are now seeing across the United States can easily be replicated elsewhere in Asia in due course. And, like Viet Nam, last month protestors held rallies before the Chinese embassy in Manila over the same Spratly question. Participants urged the Chinese Ambassador, and Beijing, to exercise restraint in military activity in contested areas of the Spratlys.

Since 2002 the China-ASEAN pact has been observed most of the time by all parties, but beginning February this year, Philippine authorities expressed their alarm at what they perceived to be increasingly aggressive intrusions - at last count nine of them (up from six last month) - by Chinese fighter aircraft, military vessels and troops, into the exclusive economic zones and territorial waters of the entire South China in the name of "exercising jurisdiction" and "sovereignty". For archipelagic states like the Philippines, these are inland waters, forming part of their exclusive economic zones. In March 2010 China announced that it considers the entire South China Sea as a "non-negotiable" "core national interest", akin to the categories of Tibet and Taiwan.

Liu Jianchao, the Chinese Ambassador in Manila, has acknowledged that China was and will continue to exercise Beijing's "sovereign rights" and "[will] do whatever is appropriate for us to do to exercise our jurisdiction." Last March, one of these "exercises of "jurisdiction" involved a Chinese vessel reportedly "harassing" a Philippine oil exploration and research vessel in the Reed (or Recto) Bank. The Reed Bank is indisputably part of the Philippine province of Zambales -- not Palawan, which is closer to the Spratlys - and should in no way form part of the stickier Spratlys dispute. But according to U.S. intelligence reports, the Reed Bank island group had been thrown into the Spratly fray. In trivializing or downplaying accusations of aggressive intrusions by Chinese military forces, Mr. Liu and his colleagues in Beijing, again fail the litmus test.

You may wonder why the Spratly and Paracel islands are so important to China that it would interpret international law to its own satisfaction. The simple answer is, oil. Located in the south eastern portion of the South China Sea, the Spratly Islands have long been a source of conflict between Brunei, China, Malaysia, the Philippines, Taiwan, and Vietnam. Depending on the season and weather conditions, the Spratlys comprise 21 islands and atolls, 50 submerged land atolls and 28 partly submerged reefs, all covering an area of 340,000 square miles. The Paracel Islands are a smaller group of islands closer to Vietnam, and, unlike the Spratlys, are relatively farther away from Palawan, the major province in the far west of the Philippines. The Spratlys lie at the heart of one of the world's busiest sea lanes and are known to hold rich oil and natural gas reserves.

In a May 24, 2011 news release by the Xinhua News, it was announced that the China National Offshore Oil Corporation (CNOOC) will be deploying a 200-billion Yuan (approximately US$30 billion) oil rig to the region as early as this month. Philippine officials immediately protested. Christened as "Marine Oil 981," CNOOC's oil drilling platform has state-of-the-art technology, and will reportedly operate approximately 125 miles west of Palawan. Under the criteria set forth in the United Nations Convention on the Law of the Sea, which came into force in 1994 and which China signed, Marine Oil 981 will operate well within the 200-nautical-mile exclusive economic zone of the Philippines. Xinhua reports that the rig is designed to drill 800 wells, out of which at least 500 million barrels of oil are expected to be generated by 2020. That equals about $50B annually (depending on the exchange rate used) in today's dollars.

On June 23, Secretary of State Hillary Clinton and Philippine Foreign Minister Albert Del Rosario held a joint press conference affirming the 1951 PH-U.S. Mutual Defense Treaty. Secretary Clinton was clear that the United States "stands ready to support its ally, the Philippines," amidst escalating tensions over the Spratlys. Both proposed a "rules-based regime" under the parameters of the UN Convention on Law of the Sea (UNCLOS). Clinton added that Washington was keen in "finding ways of providing affordable material and equipment that will assist the Philippine military to take the steps necessary to defend itself." Ambassador Del Rosario was quick provide a list of desired military hardware, ranging from long-range maritime surveillance aircraft, to anti-aircraft radar, to Hamilton-class all-weather cutters currently deployed by the US Coast Guard.

On June 27th, the U.S. Senate unanimously approved a resolution deploring China's actions against the Philippines and Viet Nam (the full text may be found here). Entitled "Calling for a peaceful and multilateral resolution to maritime territorial disputes in Southeast Asia", Resolution 217 itemized key flashpoints relating to disputed maritime territories of the South China Sea. It listed instances of what the Senate deemed unlawful or illegitimate use of force by the Chinese, such as the disabling of cables of Vietnamese exploration ships, attempts to ram Philippine ships, collisions between a Chinese fighter jet and a U.S. surveillance plane in 2001, and even a collision between a Chinese submarine with the sonar cable of the USS John McCain in June 2009. The Senate likewise expressed support for the 2002 ASEAN-China Code of Conduct in the South China Sea, among a host of international legal norms, in the name of "freedom of navigation" in the "maritime commons of Asia." The text also affirms Washington's commitment to multilateral processes, even as it recognizes that the United States is "not a party to these disputes."

There is no question that Washington knows the nature of the stakes in the Spratlys and Paracels, but also that Chinese overstretch needs to be nipped in the bud. These are two points of regional conflict which show that it is not just a question of military escalation, nor 'just' a diplomatic contest, but that the South China Sea disputes are correlated with the escalation of global economic interests. Since June 28, the U.S. Navy has been holding joint naval exercises with its Philippine counterparts as part of their annual exercises. War games have commenced and the ships will be positioning themselves within easy firing distance of the Spratlys, off the coast of Palawan. Deterrence is the objective.

When China fired missiles into the Taiwan Straits in the 1990s, the U.S. did the same, sending its ships to patrol the Straits. China balked. Today, Vice-Admiral Van Buskirk, commander of the U.S. Navy's 7th Fleet, announced that the U.S. will ensure the Philippines' security, stating "Our alliance is the strongest commitment between countries." He was in lock step with Harry Thomas, the U.S. Ambassador to the Philippines, who said "The US stands by its commitment under the [1951] Mutual Defense Treaty."

Beijing insists that it is committed to resolving the Spratlys issue "peacefully". China's lone aircraft carrier, formerly the Varyag, whose construction and deployment had been delayed due to the collapse of the Soviet Union in 1991, was sold to China by Ukraine, was recently refurbished and is reportedly undergoing a series of sea trials amid the escalation of tensions between China, the Philippines, and Viet Nam (otherwise referred to as "The Big 3"). Beijing also insists that the deployment of its upgraded carrier is part of its overall "defensive military strategy." One might be inclined to ask, defense from what? As the de facto economic and military goliath in Asia, it has no natural enemies, and it knows that. Taiwan is its 'long lost brother' who isn't dumb enough to, nor has any inclination to, pick a fight with its elder brother. More than 50 years of history has proven that simply isn't going to happen. Who else might threaten China, we wonder? The U.S.? Current fighting three wars, stretched financially and militarily to the limit, and trying to claw its way out of a deep economic hole?

China is clearly attempting to follow through with its warning to the U.S. to stay out of this "regional" conflict. Time and again Beijing and its ambassador in Manila insist that the Spratly dispute should be resolved through bilateral negotiations. Otherwise, as China's Vice Foreign Minister Cui Tiankai put it, the U.S. may be "playing with fire." Is this how China engages in bilateral negotiations? By sending its only aircraft carrier and its most advanced drilling rig to the disputed region?

We are once again reminded of the benefits of playing by the rules, adhering to the rule of law, and taking a long-term perspective on regional and bilateral conflicts. It is surely not in anyone's interest -- least of all China, which has the most to lose in the end -- to simply do as it pleases and resort to Cold War era rhetoric in this case. That era already seems a century old, and out of lock step with China, a country that is moving swiftly into what is clearly its century. China has made great strides in a host of areas - politically, economically, and socially -- which is evident for all to see. We see no reason why it cannot embrace diplomacy as a means of resolving international disputes, rather than simply swat at countries it views as a nuisance. Daniel Wagner is CEO of Country Risk Solutions, a political risk consulting firm based in Connecticut (USA), and senior advisor to the PRS Group. Edsel Tupaz is a professor of international and comparative law, based in Manila.

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