Tensions Escalate in the South China Sea

Guild Investment Management  |

Just as Russia seems to have signaled a tactical step back from its provocative actions and attitudes in the eastern Ukrainian crisis, major events are unfolding between China and its neighbors in the South China Sea.

We’ve noted several times that the South China Sea is a particular flash-point for China’s rising ambitions as a regional hegemon. Besides the significance of these waters for commerce, they also have rich and coveted natural resources, both in fishing and in hydrocarbon reserves.

The U.S. has taken pains to emphasize the region in the past few years, with a strategic “turn to Asia” and a recent visit by President Obama that reiterated U.S. commitments to allies’ security. But those efforts seem to pale compared to China’s continued determination to dominate its regional neighbors and assert its status as a new global superpower.

Vietnam Challenges China’s Oil Claims

Last week, Chinese provocations led to high tensions with Vietnam and the Philippines.

The China National Offshore Oil Company (CNOOC) moved a giant oil rig into Vietnamese waters near the disputed Paracel Islands, leading to a chaotic clash of Chinese commercial and naval vessels with Vietnamese coast guard ships. 80 Chinese vessels were involved in an attempt to deploy the rig, and were met by seven Vietnamese ships with air support. The Vietnamese claim their vessels were rammed, and several officers were said to have been injured in the standoff.

Unfortunately, there are no crisis-management protocols in place between the disputants. This raises the chances of an accident leading to an unintended hot conflict.

Analysts note that the hydrocarbon-related nature of the conflict bodes ill, given the strategic significance of these resources and China’s wide-ranging efforts to secure energy sources to fuel its continued growth.

While China’s regional stance has become more aggressive, in Vietnam it faces an adversary who is unlikely to back down. Although China’s military is far superior, the last time the countries sparred -- a border conflict in 1979 -- the Vietnamese held their own. And nationalist sentiment is running high in Vietnam as well as China, making a Vietnamese capitulation politically untenable.

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Of course, Vietnam does have strong economic and cultural ties to China -- and these will work to mitigate the conflict, if cooler heads prevail among the countries’ leaders. But the trouble illustrates the instability that can accompany the rise of a power with new ambitions -- when there hasn’t been time yet to hammer out a modus vivendi.

It is disturbing to see potential military confrontations in one of the arteries of global commerce.

The Philippines

The situation in the Philippines is less immediately alarming. Philippine authorities interdicted a Chinese fishing vessel and arrested its crew, confiscating an illegal harvest of endangered sea turtles bound for the Chinese market.

Not such a big deal -- except that China is also pressing claims to the Philippines’ territorial waters. And the Philippines don’t have the same economic and cultural ties that might cool off a conflict between China and Vietnam.

For one thing, the Philippine economy has taken a more service-oriented direction, and its exposure to mainland China is less. And it doesn’t share the heritage of classical Confucian civilization, being predominantly Roman Catholic. While Vietnam doesn’t seem to still hold much of a grudge against the U.S. for the Vietnam War (which many Vietnamese proudly note that they won as underdogs), it is still cautious of military cooperation with the U.S.

The Philippines, on the other hand, are a longtime U.S. ally. They’ve been willing to challenge Chinese territorial expansion more aggressively, launching a challenge in international court in the Hague. China has ignored that case, and Vietnam has not joined in the challenge.

So a boatload of contraband turtles may not in itself seem very politically significant -- but the Philippines again show the disruptive and destabilizing effects of China’s actions as a new order emerges where American dominance is no longer the final word.

The Philippines kicked out the U.S. during a wave of nationalism while China was busy at home, shutting down the giant Subic Bay naval base in 1991. Now the U.S. is again in favor, and during his recent visit, President Obama secured a renewed U.S. presence at Subic Bay and as many as four other locations.


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