Tackling the challenges in the South China Sea

The recent events in the South China Sea involving China, the Philippines and Vietnam once again bring this region to the front pages of newspapers in China and around the world. This sea has great economic and strategic significance for East Asia and for the rest of the world, not least because it provides passage for some 30% of world seaborne trade. This trade includes ever growing quantities of oil, gas, coal and other raw materials going to China, as well as to its neighbours, Japan and South Korea. Goods manufactured in these countries flow in the opposite direction. The South China Sea harbours substantial fish stocks and is believed to host significant hydrocarbon resources. It is these resources which have provided the triggers for the recent escalation of tensions.


Chinese authorities have published estimates which put the total resource of the South China Sea at 30-60 trillion cubic metres of natural gas and more than 200 billion barrels of oil. Even though only some of this would be recoverable, this is a very large potential energy resource for a region heavily dependent on imported energy. In contrast, the United States Geological Survey has estimated that recoverable reserves amount to just 1-2 trillion cubic metres of natural gas and 2-6 billion barrels of oil. This is equivalent to between one and two years of China’s present oil consumption and 10-20 years of gas consumption.


The South China Sea is host to several territorial and maritime disputes which date back to the end of World War II and the end of the Cold War. These disputes are of two types and involve China, the Philippines, Malaysia, Brunei, Indonesia and Vietnam. The first relates to sovereignty over groups of islands such as the Nansha, Xisha and Zhongsha islands. The second relates to the extent of the continental shelf which may be claimed by each of the coastal states.


The importance of sovereignty over the island groups arises from the United Nations Convention on the Law of the Sea (UNCLOS). The underlying principle of UNCLOS is that the right to maritime territory derives from sovereignty over adjacent land, and this principle provides the basis for delineating a number of zones with different rights. One of these zones is the continental shelf over which a nation has the sovereign rights to energy and mineral resources. In simple terms, a country’s continental shelf extends 200 nautical miles (370 kilometres) from its coast line, though it can be wider in certain circumstances. Following this logic, if a nation’s sovereignty over a group of islands in the South China Sea is recognised, that country can claim rights over energy and mineral resources across an area extending 200 nautical miles from these islands.


The second type of dispute arises when the continental shelves claimed by two nations overlap. Such overlaps occur in the South China Sea, even when the extent of the continental shelves is based on the mainland coastlines. If continental shelves are drawn based on the island groups, then the situation becomes even more complex.


Similar maritime disputes have arisen in other parts of the world and a number of different approaches are available to resolve them. If bilateral negotiation fails, disputes over islands can be taken to the International Court of Justice, to arbitration or to mediation. The same options are available for resolving disputes over continental shelves, with the added option of the International Tribunal of the Law of the Sea.


Little progress is likely to be made in resolving the many disputes in the South China Sea until sovereignty over each of the island groups is agreed. But sovereignty is not the only decision to be made. Judgements must also be made over the effect of these islands on the delimitation of the continental shelf. Recent judicial decisions have limited the effect of this sovereignty. That is to say, sovereignty over an isolated group of islands may not necessarily generate a continental shelf 200 nautical miles wide. The courts and tribunals have been taken this approach in order to avoid creating situations in which islands have a disproportionate effect over the delimitation of the continental shelf. The significance for the South China Sea is that decisions or agreements concerning sovereignty over islands may have little consequence for the extent of continental shelves and for rights over energy and mineral resources.


A number of bilateral disputes over islands involving Malaysia, Indonesia, Vietnam and Singapore have been settled through the International Court of Justice.  In the nearby Gulf of Thailand, the coastal states have made considerable progress through negotiation in resolving their disputes over maritime delimitation. The states around the Gulf of Thailand have also taken steps to manage their disputes in the absence of resolution by establishing joint development arrangements.


Such joint development arrangements are commonly established in other parts of the world in order to allow for the exploitation of energy and natural resources in a disputed maritime region.  They provide the legal framework for the joint exploitation of natural resources by the nations involved, and prevent unilateral exploitation by a single nation. Such arrangements are pursued independently of discussions over sovereignty. Given the complexity of the disputes in the South China Sea and the rising demand for energy supplies in the region, the first priority of the coastal states should be to establish joint development arrangements whilst negotiations over sovereignty are pursued separately over a longer time period.


China, Philippines and Vietnam reached a tripartite agreement in 2005 to carry out seismic exploration, but this was never implemented. The time has come to resurrect such initiatives, but China does not seem to be in the mood to take this approach. In June it announced a licencing round for oil and gas exploration blocks which lie within Vietnam’s 200 nautical mile Exclusive Economic Zone. At the same time China’s Defence Ministry declared that it was carrying out ‘combat-ready’ patrols in the South China Sea. A month later the government established the formal city of Sansha on one of the Spratly Islands. The governments of the Philippines and Vietnam are not blameless, for they too have been acting provocatively and have successfully mobilised nationalist public opinion against China.


One organisation which might be able to play a role in diffusing the tensions is ASEAN, as all of the coastal states around the South China Sea are members, with the exception of China. But even within ASEAN there is little agreement on how to proceed, as was illustrated by the recent meeting of the ASEAN Regional Forum. One critical obstacle is the reluctance of China and some ASEAN member states to agree to a regional framework in which such disputes are submitted to international arbitration. The only external hard power in the region is the USA. Whilst it can play an old fashioned balancing role and try to prevent armed conflict, there is no evidence that the US has the ability to bring all parties together.


In the meantime we can but hope that no minor incident involving fishing vessels, seismic ships or drilling rigs escalates into a military engagement.

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