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Thayer Consultancy

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Background Briefing: South China Sea: The Drivers of Conflict and U.SChina Strategic Rivalry Carlyle A. Thayer June 6, 2012

[client name deleted] * What is your assessment of the main factors behind growing tensions in the South China Sea? In an earlier assessment your argued that petroleum reserves were not a hugely significant factor, so what factors are driving current tensions? ANSWER: The main factor driving tensions in the South China Sea are competing sovereignty claims over islands and rocks and the sovereign rights to the waters around these waters and rocks. The precipitating event was the May 2009 deadline for states to submit claims for extended continental shelves to the UN Commission on Limits of the Continental Shelf. China officially tabled for the first time its 9 dash line U-shaped map. China believes that there are huge oil and gas reserves in the South China Sea and that these reserves are being illegally plundered by the Philippines and Vietnam. So the driving motivation is for China to exercise jurisdiction over the areas it claims. * Despite US policy asserting that the US does not back any side's claim, do you think the dispute in the South China Sea has evolved into a struggle for influence or dominance between the US and China? ANSWER: It should be recalled that China put pressure on American oil companies not to assist Vietnam in developing its offshore oil and gas resources. One of the first steps the new Obama Administration took was to make it clear to China that the US would resist these pressures. That is why the US adds unimpeded commerce alongside freedom of navigation and overflight as among its national interests in the South China Sea. There are two separate issues. In 2009 China challenged the US assertion of right to conduct military activities in its Exclusive Economic Zone. There were a number of incidents in which US ships and military aircraft were accosted by China. At the same time, Chinas assertiveness in the South China Sea in the period 2008-2010 produced a blowback by some regional states. Vietnam in particular lobbied the US to get involved. The US has sided with ASEAN and its members not to resolve territorial disputes in their favour but to uphold international law concerning freedom of navigation and overflight and safety of navigation. * What is at stake -- as far as the balance of power in Asia is concerned -- in the South China Sea?

2 ANSWER: The balance of power in the South China Sea is over who can control the sea lines of communications that pass through these waters. China has fears of what it calls the Malacca Dilemma. That means in a time of crisis the US could block this choke point and disrupt the Chinese economy. China also fears that the US will deploy through the South China Sea to come to the aid of Taiwan in a contingency. China seeks to dominate the southern approaches to Taiwan with a major naval base on Hainan Island. * Do you think that China has in some ways been testing US resolve? Or have they inadvertently provoked a backlash here? In other words, is this a case of China deliberately trying to be top dog in in the region? Or is it the case that China is simply getting bigger -- as both an economic and military power -- and this is inadvertently creating friction? ANSWER: In 2009 China was particularly aggressive in challenging US military aircraft and US Navy surveillance ships operating in its Exclusive Economic Zone. This was a definite test of US resolve. China has also suspended military relation with the US each time the US Administration announces arms sales to Taiwan. Chinese assertiveness in the South China Sea definitely produced a backlash among regional states and the US took advantage of this to leverage its return to the region. Recall Hillary Clintons expression, were back!. The US responded to the USNS Impeccable incident by dispatching a guided missile destroyer to escort the Impeccable back into Chinas EEZ. China has not directly challenged the US since. When we speak of China we are speaking of multiple actors with a stake in maritime affairs. It is clear that some of the civilian paramilitary maritime agencies have been deliberately provocative against Vietnam and the Philippines. The central Chinese leadership has been taken aback by negative regional reactions. In sum, Chinas policies have proved counter-productive. * Your earlier assessment argued that China had suffered a bit of a setback recently with the backlash from countries like Vietnam and the Philippines. What does this mean for China? What does this mean for the US? Where is this all going? ANSWER: Since 1997, when China enunciated a new security concept, it has been able to play the multilateral game with ASEAN to good effect. The US was largely absent. Now the Obama Administration has overturned the multilateral tables on China. The US acceded to the Treaty of Amity and Cooperation, it appointed a resident ambassador to the ASEAN Secretariat, the US Secretary of State has not missed a single meeting of the ASEAN Regional Forum, the US president has attended all ASEAN-US Leaders Meetings, the US was a foundation member of the ASEAN Defence Ministers Meeting Plus, and the US joined the East Asia Summit. The US also launched the Lower Mekong Initiative. All this means is that the US is a serious player in Southeast Asia and is challenging China for influence. This provides both a challenge and an opportunity to ASEAN. ASEAN is challenges to prevent SinoAmerican rivalry from spilling over and negatively affecting regional security. The opportunity is for ASEAN to stake out a central position between China and the US. * Given the fact that China's economy is still rapidly growing (as is military spending), where do you see the South China Sea dispute being in the next 10 years? The next 20? Do you expect tensions to get worse? Is there a chance or war? Or is it a slower-

3 paced power struggle? Or is it neither -- just a series of disjointed events with no clear direction? ANSWER: China is likely to bring its claims to the South China Sea more in line with international law than at present. ASEAN littoral states and China are likely to pursue joint development of the regions energy and marine resources. The South China Sea will also become more congested with every increasing navies and civilian coast guard type agencies from all states plying its waters. There will always be the danger of a armed incident through accident or miscalculation. China and the US, like the US and the USSR, are likely to reach a series of agreements and understandings about the operations of their military air and naval forces to prevent incidents. The economies of South China Sea states will be more integrated in 20 years and regional multilateral institutions, like the East Asia Summit, will be more robust. No nation, including China will go to war. But the next decade or so will witness both cooperation and occasional friction among the regions navies. * Your earlier assessment aruged that prior to this latest flare up on the Scarborough shoal, all trends were for greater diplomacy from China in the South China Sea. What then does this tell us about the nature of China's rise? ANSWER: No country planned the standoff that emerged at Scarborough Shoal. This incident tells us that nationalism is a driver of policy in both the Philippines and China. The Scarborough Shoal standoff reveals the clash of competing civilian maritime agencies in China for a piece of the action resources and revenue in the South China Sea. The central government will continue to herd its domestic cats or nine dragons and presented a unified national policy.

Suggested citation: Carlyle A. Thayer, South China Sea: The Drivers of Conflict and U.S-China Strategic Rivalry, Thayer Consultancy Background Brief, June 6, 2012.

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