South China Sea arbitration ruling brings no closure to regional disputes – Nikkei Asian Review

Nikkei

http://asia.nikkei.com/magazine/20160721-CORPORATE-ASIA-NOWHERE-TO-HIDE/Politics-Economy/South-China-Sea-arbitration-ruling-brings-no-closure-to-regional-disputes

Chinese Premier Li Keqiang and Malaysian Prime Minister Najib Razak heading for the signing ceremony of the ASEAN community on Nov. 22 2015 (Photo: Simon Roughneen)

Chinese Premier Li Keqiang and Malaysian Prime Minister Najib Razak heading for the signing ceremony of the ASEAN community on Nov. 22 2015 (Photo: Simon Roughneen)

JAKARTA — The international tribunal decision against Beijing’s claims to much of the South China Sea has provoked a mixed response in the region, with indications that it may tone down some rivalries while sharpening others.

Most revealingly, after years of acrimony with China over rival claims in the disputed waters, the Philippines initially took a conciliatory tone, inviting China to bilateral talks over the matter. Despite a jubilant reaction from his countrymen following the July 12 ruling, which was overwhelmingly in favor of Manila, the normally strident new President Rodrigo Duterte said he would not “flaunt” the decision. Instead, he reiterated his desire to improve relations with China, his country’s biggest source of imports.

“War is not an option,” Duterte said. “So, what is the other side? Peaceful talk.”

Despite Duterte’s muted response, China has refused to compromise — insisting that any talks must exclude mention of the tribunal’s verdict. The tribunal, convened at the Permanent Court of Arbitration in The Hague, suggested that Chinese naval maneuvers in waters around islands near the Philippines are illegal. Yet Beijing has continued to block Filipino fishermen from working around Scarborough Shoal, 190km off the Philippine coast and 800km from mainland China. Duterte has asked former Philippine President Fidel Ramos to help start bilateral talks with China as a special envoy, using the ruling as a basis. Beijing’s refusal to discuss the ruling could lead to “confrontation,” Philippine Foreign Secretary Perfecto Yasay said on July 19. But, he added, there could be room for backdoor negotiations.

Indeed, China remains keen to engage the Association of Southeast Asian Nations and has recently stepped up offers of economic cooperation.

Four of the 10 ASEAN members have claims to the disputed sea and its islands — Brunei, Malaysia, and Vietnam, alongside the Philippines. This has proven divisive in ASEAN meetings, particularly concerning relations with China. Beijing has said it “does not accept and does not recognize” the tribunal’s decision, and the issue will loom over the September summit of ASEAN leaders in Laos.

Cambodia and Laos have amicable relations with China and have previously acted at Beijing’s behest to block the group from making statements critical of China. ASEAN, which is to hold a foreign ministers meeting in Laos in late July, has not yet made a statement about the ruling.

For the Philippines, the goal now should be “converting a legal and moral victory into a political one,” said Aileen Baviera of the University of the Philippines. “That is, ultimately getting China to respect Philippine maritime rights and interests and step back from its unilateral assertive acts.”

Vietnam, like the Philippines, has reacted cautiously to the ruling. It arrested anti-China protesters in Hanoi on July 17 and seemingly took care not to appear triumphalist. Still, the outcome is likely to stir nationalist sentiment in a country that has long had a fractious relationship with China.

Already Vietnamese immigration officials are refusing to stamp Chinese passports that feature a map of Beijing’s claim to most of the South China Sea, while the Vietnamese government has sought to refute Chinese state media’s claims that Hanoi took Beijing’s side over the ruling in favor of the Philippines.

ENERGY FOR A FIGHT The South China Sea is thought to hold significant oil and gas deposits, raising the stakes in regional rivalries. China and Vietnam have argued in recent years over oil and gas exploration rights in disputed waters. In 2014, Vietnamese rioters vandalized hundreds of Chinese factories after China placed an oil rig in an area claimed by both countries.

Estimated to be Asia’s biggest gas reserve, the fields off Indonesia’s Natuna Islands have not yet been tapped. Indonesia maintains it does not claim any of the South China Sea, but Indonesian waters around those islands appear to overlap with China’s claims — marked by the so-called nine-dash line that forms a rough U-shape over most of the sea.

Chinese fishing boats have been detained in recent months after they were caught in Indonesian waters near the Natunas. China deems the waters part of its “traditional fishing grounds” — a definition not recognized under international maritime law.

The day after the tribunal ruling, Indonesia said it would offer economic incentives for about 400 fishing crews to relocate to the Natunas, part of a plan to create the biggest fish market in Southeast Asia.

The potential for a clash at sea — involving eager fishing crews, or between China’s navy and those of Indonesia, the Philippines and Vietnam — remains high. And increased tensions over the South China Sea will likely only strengthen perceptions of an intensifying arms race around Asia, which is now the world’s biggest spender per capita on military equipment. According to the Stockholm International Peace Research Institute, six of the 10 biggest importers of defense equipment in the past five years were in the Asia-Pacific region.

Ultimately, perhaps, the bigger danger is a standoff between China and the U.S., which has sent “freedom of navigation” patrols into the South China Sea in recent months and is a military ally of the Philippines.

China contends that its claims to the waters go back 2,000 years, putting it at odds with powers such as Japan, India and the U.S., which view most of the sea as an international waterway.

Meeting on July 17, the defense ministers of India and Japan described the waters linking the Indian and Pacific oceans as indispensable to the region’s peace and prosperity — an indirect reference to the South China Sea. The statement was notable in that it came from Asia’s second- and third-largest economies, both of which have territorial disputes of their own with China.

Each year, around $5 trillion worth of trade passes through the 3.5 million-sq.-km South China Sea. The U.S., in particular, argues that China’s construction of militarized, artificial islands on rocks and reefs jeopardizes freedom of navigation.

But China regards the freedom of navigation issue as a red herring and warns against U.S.-led naval patrols in the sea, which could end “in disaster,” Sun Jianguo, deputy chief of the joint staff department of the Central Military Commission, told a forum in Beijing on July 17. He was speaking just before China began three days of naval exercises in the South China Sea.

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