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Wednesday, July 11, 2012

China upsets Asia's applecart

Special to The Japan Times

SEOUL — China's national oil company has startled the region by offering oil blocks on Vietnam's claimed continental shelf and within its 200-mile exclusive economic zone (EEZ) for bidding by foreign companies. More significant, it did so on the eve of the ASEAN Regional Forum meeting in Phnom Pen to be attended by U.S. Secretary of State Hillary Clinton.

The offering includes large parts of blocks that Vietnam has already leased to major oil companies — America's Exxon Mobil, Russia's Gazprom and India's ONGC.

These companies are likely to appeal to their governments to support their rights to the concessions from Vietnam. Of course Vietnam is furious and has asked international oil companies not to bid for the Chinese-offered blocks.

Its leadership has vigorously protested China's action and anti-China demonstrations have broken out in Hanoi. Many countries and analysts were hoping that China was claiming only the islands and reefs within this line and perhaps 200 mile EEZs and continental shelves from some islands. But these hopes have now been dashed.

This action appears to confirm that China claims everything within its nine-dashed historic line. Adding an exclamation point, China sent "battle-ready" vessels to defend its claim to Scarborough Shoal, where it has been embroiled in a dispute with the Philippines for more than a month.

Beijing's next mission could well be to bring a Chinese presence to Vietnam's continental shelf. While China may be responding to provocative legal and political actions by Vietnam, its latest move is "over the top."

Perhaps China is saying there is no agreed boundary there and thus the area is in dispute. While China can make arguments regarding "historic waters or historic rights," they would be a reach, and likely to be ridiculed and rejected by politicians and analysts alike. Worse, "historic waters" traditionally equates to internal waters in which there is no "freedom of navigation."

This is of course a prime concern of the United States — that China may one day try to enforce such a regime in the South China Sea. The U.S. has consistently stated that it opposes the use of force to settle the South China Sea disputes and that it recognizes only claims from land and that are authorized by the 1982 U.N. Convention on the Law of the Sea. Politically, this move by China plays right into the U.S. "wheel house" and it is likely to gain considerable advantage with the Association of Southeast Asian Nations because of it.

Absent a plausible "explanation" or modification of its position by China, the situation has reached a new level of concern. Apparently China has chosen not to heed the sensitivities of ASEAN or U.S. admonishments to accept and abide by the existing order and international law. Rather it apparently will proceed unilaterally implementing and enforcing its historic claim and refusing third-party adjudication, arbitration or conciliation. Clinton and her deputy for East Asia, Kurt Campbell, have been publicly building up their coming foray into Southeast Asia.

In Campbell's words, "Washington plans to make its presence known in the region" during the secretary's visit. Given the timing and the general U.S. position on the South China Sea disputes, China's action is a "slap in the face."

Not only have its actions — including establishing a new administrative headquarters for the South China Sea called Sansha — offended Vietnam, they clearly violate the ASEAN-China Declaration on Conduct in the South China Sea. Its provisions include a pledge to refrain from unilateral action that complicates or escalates the disputes. ASEAN, within itself, and with China, has been trying to negotiate a more formal code of conduct.

Obviously this development will make agreement on a binding code with a dispute settlement mechanism much more difficult — if not impossible.

Indeed it would appear to set China on a collision course with Vietnam as well as Western-based customary international law — and thus politically with the U.S. — and much of ASEAN.

It is also likely to precipitate a political and military lurch by some ASEAN members towards the U.S. Given the serious implications, China's action begs several questions:

Why is China doing this at this time?

Does it have something to do with its leadership transition?

Is it a sign that a nationalist military faction has gained more power?

Or has China's leadership decided that the "die is cast" and it might as well "show its hand"?

Whatever the motives, the move has set the region on edge. China, of course, has the right — as many nations including the U.S. before it — not only to rise — but to alter the regional and international order in its favor. This recent action seems to be an indication that this is precisely what it intends to do.

The U.S. "rebalancing" toward Asia in foreign and defense policy had already rattled the region and increased tension between the U.S. and China. China perceives the U.S. move as an attempt to constrain its "rise."

Some ASEAN nations do not want to have to choose between the two — individually or collectively. Indeed, China and the U.S. are now locked in a competition for the hearts and minds of Southeast Asians. While Vietnam and the Philippines welcome the U.S. policy shift, others are less sanguine. Indeed, some are outright worried that U.S.-China rivalry will dominate regional political affairs, increase instability and erode ASEAN political and security centrality.

In a worst scenario from an ASEAN perspective, the China-U.S. rivalry could feed upon and reinforce itself, becoming a serious political conflict dominating the South China Sea issues, splitting ASEAN on the issue and subordinating ASEAN "centrality" in regional security matters.

This would leave the South China Sea disputes to fester, and tension would wax and wane in action/reaction dynamics. International oil companies would shy away and exploration would remain in limbo. This would be truly unfortunate — not only for the people of Southeast Asia but for peace and stability in the region

Indeed it would mean that China and the U.S. are likely headed for a cultural, political and, perhaps ultimately, military confrontation — with Southeast Asia once again in the middle.

Mark J. Valencia is a maritime policy analyst and senior associate at the Nautilus Institute.

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