Thayer Consultancy

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Background Briefing: South China Sea: An Assessment of Current Trends Carlyle A. Thayer March 8, 2012

[clientnamedeleted] WerequestyourassessmentofthecurrentVietnamChinarelationshipintheSouth ChinaSeainlightofthefollowing:VietnamandChinaactivatedahotlinebetween the two foreign ministries earlier this month to help settle disputes in the South China Sea. The two claimants also agreed on February 2728 to set up working groupsatdepartmentleveltoworkondisputedissuesintheSouthChinaSea. These latest developments, combined with the sixpoint agreement on basic principles they negotiated last year, seem to indicate that the disputes between ChinaandVietnamwillbesettledsoon.ButmostVietnameseanalysts,includingDr. Nguyen Nha, do not agree. They do not believe that China will do what they have promised to. Thus, situation in the region will still remain unpredictable despite recentprogressintherelationshipbetweenVietnamandChina. ASSESSMENT ASEANCHINA It is my assessment that two important trends are underway that will affect the stabilityoftheSouthChinaSea.ThefirsttrendisdiplomacybetweenChinaandthe ASEANstatesonhowtoimplementtheGuidelinesontheDeclarationonConductof Parties in the South China Sea (DOC). Allied with this are ongoing discussions by ASEAN members on a Code of Conduct for the South China Sea that they hope to presenttoChinathisyear. Thesecondtrendisdeeperandmorelongterm.Itisthemodernizationofregional navies including civilian paramilitarytype organizations, to enhance national capabilitiestoexercisesovereigntyandjurisdictionovermaritimeclaims. Whatfactorshaveshapedthefirsttrend?TopChineseleaderscametorealizelast year that their aggressive assertiveness was counterproductive and had set back thepoliticalgainsChinahasmadeinitsrelationswithSoutheastAsianstatessince 1997whenitadoptedanewsecurityconcept.Chinasactionsraisedthespecterofa new China threat, caused the Philippines to reinvigorate its alliance with the United States and Vietnam to take largely symbolic actions to upgrade its defence tieswithWashington,andresultedinmajorexpressionsofconcernsbytheregional major powers and the United States. This latter development was evidence by the numberofforeignministerswhosupportedSecretaryofStateHillaryClintonin2010

2 attheASEANRegionalForummeeting;thenumberofdefenceministerswhoraised concerns over maritime security at the inaugural meeting of the ASEAN Defence Ministers Meeting Plus, and the number of heads of state/government who raised maritimesecurityissuesatthe2011EastAsiaSummitinformalleadersmeeting. ChinasuddenlyagreedtotheDOCGuidelinestoplacateASEANstates.ASEANcaved in.WhenthefinalGuidelinesarecomparedtothefirstdraft(sometwentytwoorso drafts had been exchanged) only point two was altered. All the other points remainedthesame.TheconcessionmadebyASEANwastodropthewordingthat ASEANcouldmeetfirstasagroupbeforenegotiatingwithChina.Anadditionalpoint was made to the final Guidelines. The new point mentioned that the outcome of discussionsontheGuidelineswouldbereportedtotheirrespectiveseniorofficials. ChinawasalsomotivatedtoenterintodiscussionswithASEANstatesasagambitto cut out any U.S. involvement in resolving South China Sea issues. In short, Hillary Clintonsoffertofacilitatearesolutionwasfinessed. AflyintheointmentofthispositiveassessmentisthemovebythePhilippinestoput out for tender two blocks to foreign oil companies. The area is contested and claimedbyboththePhilippinesandChina.WhatwillChinadooncethecontractsare awarded and exploration activities actually begin? This is not a pressing matter at themomentbutwillbeinthefuture. ThesecondtrendofforcemodernizationpredatesdiplomaticagreementontheDOC Guidelines. China keeps constructing more modern maritime surveillance vessels (equipped with deck guns and a helicopter). Chinas naval modernization also includes expanding it submarine force to include nuclear submarines (both SSBNs andSSNs)tobebasedatthenavalbasenearSanyaonHainanIsland.Otherregional states recently have acquired submarines or announced plans to do so: Singapore andMalaysiaandVietnam,IndonesiaandAustralia,respectively. The South China Sea is already contested; it will become more congested and the riskofanarmedencounterbetweenwarshipsand/orparamilitarycivilianvesselsis rising. NETASSESSMENT The current round of negotiations on DOC Guidelines and a COC will not resolve sovereigntydisputes;at besttheywillmoderateChinasbehavior.Mediareporting on the sorts of confidence building measures (CBMs) that have been discussed clearly indicate that they do not address the core issues. Further, it has yet to be convincingly demonstrated that CBMs per se will lead to progress on resolving territorialandmaritimedisputesbyresourcetointernationallaw.Thecurrentdraft ASEAN Code of Conduct, drawn up by the Philippines, contains the proposal for a Zone of Peace, Freedom, Friendship and Cooperation. This was first proposed by ManilaanddidnotgettractionamongfellowASEANmembers. Current diplomaticeffortsappeartiedto ASEANannualcycleofmeetings.Chinais likely to keep a low profile in the run up to the ASEAN and related summits to be heldinmidyear.Afterthat,ChinaandASEANarelikelytoadoptalargelytoothless buthighlysymbolicCodeofConducttobeannouncedinPhnomPenhinNovember.

3 TheoriginalDOC,isshouldbenotedwasadoptedadecadeearlierinPhnomPenh. BothChinaandASEANwillmilkthetenthanniversaryoftheDOCforallitisworth. The adoption of an ASEANChina South China Sea Code of Conduct will undercut expressions of concern over maritime security and the South China Sea that were voicedattheEASin2011. CHINAVIETNAM Despite agreement between China and Vietnam on the fundamental principles guiding the settlement of maritime disputes, the two sides will not resolve their conflicting sovereignty disputes. Vietnam claims sovereignty over the Paracels and China will not discuss this issue point blank. China has, to a certain extent, moderated its harsh treatment of Vietnamese fishermen who encroach in waters aroundtheParacels. China and Vietnam are presently focused on other maritime issue closer to home. They have sensibly agreed to start with the easy issues before tackling the more complex issues. The key here is selfrestraint by both parties in the Spratly archipelagoandSouthChinaSea. The trajectory of SinoVietnamese bilateral relations has been clearly signaled by Vietnams dispatch of two special envoys to Beijing prior to the visit by the party SecretaryGeneral,NguyenPhuTrong.StatepresidentTruongTanSangisscheduled tovisitVietnamlaterthisyear.Inthepasthighlevelmeetingsbetweenleadersfrom China and Vietnam have set deadline for the resolution of the land border and demarcationoftheGulfofTonkin.Itremainstobeseenwhatcanbeaccomplished aboutoverlappingsovereigntyclaims. It appears that China and Vietnam have agreed basically to keep South China Sea issuessegregatedfromtheirlargerbilateralrelationship.Sothereisscopefortheir bilateralrelationstodevelopfurther. TherearestrawsinthewindthatChinaisgraduallyclarifyingitsclaimstotheSouth ChinaSea.ItsforeignministerstatedthatnocountryclaimstheentireSouthChina Sea.Further,Chinahasfocusedonitsclaimstoislandsandsurroundingwaters.This may be viewed as a preliminary step forward but China needs to be more precise aboutwhatislandsandrocksitclaims. Thecurrentsituationispregnantwithpossibilitiesforalesseningoftensions.Butthe underlying trend of force modernization will result in the buildup of naval capabilitiesbyVietnamandtoalesserextentthePhilippines.Thesecapabilitieswill increase their capacity to exercise jurisdiction in their Exclusive Economic Zones. United States assistance in improving maritime domain awareness will result in greaterknowledgeofwhereChinesewarshipsandciviliansurveillancevesselsareat any given time. This increase in intelligence could fuel efforts by littoral states to defend national sovereignty. This raises the possibility of an inadvertent clash as shipsfromtwocountriestrytoexercisejurisdictionincontestedwaters.