Thursday, 12 July 2012

Rising tensions over energy resources in the South China Sea

There are few places in the world more contested than the South China Sea. The English name for the waterway subtly belies the territorial disputes that have raged over the archipelago and straits for years. It is a patchwork of maritime claims and a volatile flashpoint for international aggression, and it is flaring up again.

The region’s importance largely stems from the huge amount of cargo shipping that passes through each year on its way from the Indian Ocean to the Pacific. Around a third of the world’s containers transit an area only 3 million square kilometres.

Brunei, China, Malaysia, the Philippines, Vietnam and Taiwan all dispute sole sovereignty over the largely uninhabited island chains of the South China Sea. The Spratly and Paracel archipelago are called many names, in many different languages, but it is not the lexicon that is escalating tensions it is the abundant natural resources found there.

While fishing rights have in the past been the main cause of conflict, there are reportedly large deposits of crude oil and natural gas beneath the islands. Each of the surrounding countries is looking to tap these reserves to bring economic benefits to their nations. However the volatility of the region is keeping any one country from attaining hegemony over the area.

The Association of Southeast Asian Nations (ASEAN) annual conference is meeting this week and the South China Sea disputes seem to be highly important. Given the recent tensions between the Philippines and China over perceived fishing rights violations in the Spratly islands, and Vietnam’s contested intention to organise international energy companies to begin drilling in the South China Sea, intense side-line negotiations at the ASEAN conference are expected.

There is wildly varying estimates of resources in the South China Sea. The higher reported numbers find a ceiling at 213 billion barrels of oil. Such an impressive figure, if correct, could seriously alter the energy landscape in Southeast Asia.

One of China’s top newspapers criticised US Secretary of State Hillary Clinton’s recent comments in which she called for China to accept a code of conduct for resolving territorial disputes. Although Clinton emphasised that the United States does not have territorial claims and does not take sides in the disputes, the U.S. is committed to maintaining freedom of passage and stability in the region.

China’s long term strategy is to gain control over the South China Sea because the waterway brings international shipping, and therefore outside militaries, very close to its core territorial waters. Therefore China is suspicious of the recent U.S. military reorientation towards the Pacific, seeing the strategy as a direct response to China’s increasing naval capability and the continuation of an implicit “containment” policy.

In response to both territorial tensions and perceived U.S. interference, Beijing is increasing its offshore energy exploration efforts as a way to substantiate its claims to the disputed sea. Those efforts are being somewhat half-heartedly portrayed by Beijing as a regional, cooperative action.

Vietnam and the Philippines, two other major players, are being left behind as China increases its grip on those abundant energy resources. Indeed, China’s Foreign Ministry claimed recently that it is unlawful for any country or company to explore oil and gas resources in the Sea and pressed home China’s indisputable sovereignty.

As the prices of energy continue to rise, energy companies are increasing their interest in the South China Sea and exacerbating tensions rather than cooling them. China has in recent times made threatening actions and statements to international energy firms exploring the region for energy reserves.

So while the surrounding countries try to encourage international energy firms, Chinese actions could be driving them off. After all, it is not in the financial interest of companies to get between belligerent nations fighting over territorial waters.

On top of this, the potential for India, Japan or the United States to become involved in the disputes to ensure the waterway remains open for international transit increases if tensions continue to rise. Beijing would like to avoid the potential for the South China Sea disputes to become a multilateral problem.

U.S. Secretary of State Hillary Clinton’s statement does not so much threaten China as remind it that the United States is committed to maintaining free navigation trough the troubled waters regardless of which country threatens its closure.

The increased tensions over the South China Sea can also be viewed as a symptom of regional distrust towards the increasing power of the Chinese navy. The countries surrounding the South China Sea are looking to balance their relationship with both the United States and China.  The Philippines are especially wary and have recently conducted military exercises in the sea alongside U.S. warships.

Ironically, the suspicion of China is perhaps the only factor that aligns the other nations around the region. And should the United States wish to resolve any territorial dispute the smaller ASEAN countries will have to cooperate to counter the Chinese regional heavyweight.

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