The Other Claimants: Vietnam and Philippines in the South China Sea

For decades what happened in the Spratly Islands was easy to keep secret. Unless one of the countries occupying the coral specks – or the United States – decided to go public, everything was kept safely “over the horizon.” Commercial satellite imagery has changed all that. These days you can’t move a cement mixer in the Spratlys without someone noticing.

But the claimants don’t need satellites to see what their rivals are up to. Some of the occupied reefs and islands are so close that a pair of binoculars will suffice. China’s garrison on Johnson Reef is just 6 km (3.7 miles) from Vietnamese forces on Collins Reef and Beijing’s base on Subi Reef is only 26 km (16.1 miles) from the Philippine forces on Thitu Island. The Vietnamese and Philippine governments must therefore have been aware of China’s massive island-building operations within days of them starting. Asia’s largest dredging vessel, the German-designed Tian Jing Hao, began operations at Cuarteron Reef on September 9, 2013. Vietnam has a base on East London Reef just 30 km (18.6 miles) away, yet it was not until May 2014, that either Hanoi or Manila made any public reaction. What explains the silence?

Vietnam’s quietude was probably the result of two considerations: firstly its long-standing desire to settle controversial matters with its brother communists privately – and away from the gaze of angry nationalists. A probable second motive was that Vietnam’s criticism would have been blunted by its own record of land creation. According to the Center for Strategic and International Studies’ Asia Maritime Transparency Initiative (AMTI), since 2010 Vietnam had doubled the size of its (natural) island base at Sand Cay and, since August 2012, created 65,000 square meters of artificial land at West London Reef.

The Philippines had other concerns. According to a former security adviser to the Philippines government, Manila’s reluctance to go public derived from an embarrassing incident in early 2013 when the Philippines accused China of building on Scarborough Shoal only to discover that the structures were actually parts of a lighthouse that the Philippine Coast Guard had built in the early 1990s! Rommel Banlaoi from the Center for Intelligence and National Security Studies in the Philippines says the government held several inter-agency coordination meetings and tried to assess how the island building would affect the international legal case it was bringing against China. “It was only in March 2014, after validating intelligence information, that officials decided to allow the Department of Foreign Affairs to make public statements. President Aquino officially raised China's land reclamation at the ASEAN Summit on 4 April 2014 and the DFA officially released its public statements on 14 May 2014,” Banlaoi reports.

ASEAN

When they did break their silence, the first actions by Vietnam and the Philippines were to reach out to ASEAN (the Association of Southeast Asian Nations) for support . However, it took a month after the April leaders’ summit – and also the deployment by China of the massive oil rig HS981 into disputed waters – before ASEAN made a public comment. Although the foreign ministers made no direct reference to island-building in their May 10 statement, the unexpectedly strong wording used – for the first time, ASEAN took a position on the disputed Paracel Islands, a purely bilateral issue between Vietnam and China – must have been informed by this underlying anxiety.

ASEAN has little ability to impose costs on China and certainly no credible means of halting China’s construction activities. The only weapon it wields is the power to say no to Chinese initiatives. In 2014, China proposed making 2015 the “Year of China-ASEAN Maritime Cooperation.” ASEAN declined to take part. China went ahead and laughably launched the Year on its own, on the sidelines of the Boao Forum last March. Since then the silence has been deafening. ASEAN has declined to participate; there is no cooperation.

In the same way, the $500 million China-ASEAN Maritime Cooperation Fund – launched with much fanfare at the 14th China-ASEAN summit in November 2011 – doesn’t appear to have disbursed any significant funds outside China. The China-ASEAN Maritime Partnership was proposed by Premier Wen Jiabao at the 15th China-ASEAN summit the following year. Again, nothing has come of it. So far, the same appears to be true of China’s much vaunted “21st Century Maritime Silk Road Initiative” as well.

China’s Self-Defeating Tactics

China’s actions triggered a backlash across Southeast Asia, most dramatically in Vietnam where those elements of the ruling Communist Party that are closest to Beijing have lost credibility. This has allowed their rivals to open the door to greater engagement with Washington. In the Philippines, Aquino’s initial attempts to build close ties with Beijing (for example by not attending the Nobel Prize ceremony for Liu Xiaobo in December 2010) have been replaced by hostility.

Even Malaysia, which has long relied on its “special relationship” with Beijing to protect its interests in the sea, has become openly critical. Prime Minister Najib Razak personally criticized China’s island building in the run-up to the ASEAN summit in April. Despite early indications that Malaysia would try to steer ASEAN away from confrontation with China, under Kuala Lumpur’s chairmanship, ASEAN was resolute in its opposition to China’s recent actions. While the foreign minister’s May 10, 2014 statement was indirect, the summit’s conclusions were forthright, noting that China’s island-building had “eroded trust and confidence and may undermine peace, security and stability in the South China Sea.”

Sources also suggest that Malaysian officials have been working more closely with their counterparts from Vietnam and the Philippines – both in developing common positions on the sea disputes within ASEAN and as a trio vis-à-vis China.

Not Just the United States

Vietnam’s Communist Party remains fundamentally suspicious of the United States so the two countries are unlikely to make any kind of formal security arrangements in the near future. However, Hanoi understands that gestures such as sending the party’s General-Secretary Nguyen Phu Trong to meet President Barack Obama in the White House are a sure way to attract China’s attention. Trong’s July visit also seems to have reduced some of the party’s opposition to better relations with Washington.

Nonetheless the party is much happier building relations with other powers. It has reconstructed its relations with Russia following years of decline, tightened ties with India, and found a new friend in Japan. Earlier this year, Japan and Vietnam agreed on an “extensive strategic partnership.” The agreement included expanded cooperation between the two countries’ armed forces in “capacity building and visits of military ships.”

In August 2014, Japan agreed to provide Vietnam with six second-hand vessels for its coastguard as part of a $500 million aid package. The first ship arrived in February 2015 with the others expected shortly.

The Philippines has also rapidly ramped up relations with Japan. The two held their first-ever joint naval exercises in the South China Sea in May 2015, following an agreement signed in January. Japan is delivering 10 patrol ships to the Philippine coast guard and committed to upgrading Manila’s surveillance and defense capacities. In June 2015 the two countries formalized their strategic partnership and a Visiting Forces Agreement is under consideration.

The Philippines is also increasing military links with Australia. In both 2014 and 2015 Australia took part in the annual U.S.-Philippines Balikatan exercises. Australia has just transferred two surplus tank landing craft to the Philippines. This is in addition to upgrading Manila’s longstanding security arrangements with the United States. The two signed an Enhanced Defense Cooperation Agreement (EDCA) in April 2014 and discussions are ongoing about U.S. access to Philippine bases – notably a new one under construction at Oyster Bay on Palawan, close to the Spratlys.

All around the region, security arrangements that used to be characterized as hub and spoke – with the U.S. as the hub – are also becoming peer-to-peer networks. Japan, India, Australia, the Philippines, Vietnam, South Korea and others are gradually building new, direct security and diplomatic relations with each other.

Toys for the Boys

Both Vietnam and the Philippines have been upgrading their naval and air forces, although neither has any hope of matching China’s capabilities. The Philippines currently lacks any military jet aircraft and its two largest naval ships are both former U.S. Coast Guard cutters. It has agreed to buy 12 South Korean FA-50 light attack planes but it will be years before the crews are trained and ready to fight. Aquino’s ambition of leaving office next year with a “minimum credible defense” in place seems unlikely to be achieved. Nonetheless he has set the country’s armed forces on a new path – away from internal security and towards international engagement and the maritime arena.

Vietnam’s efforts are more advanced, building on decades of cooperation with Russia. Purchases of Kilo submarines, Tarantul corvettes, Su-30 fighters, and Bastion shore-based anti-ship missiles, among other systems, have already given Hanoi a credible, if asymmetric, deterrent. It's likely that Hanoi will slightly diversify its arms spending to give U.S. and European companies and governments a stake in its future. These new suppliers are unlikely to provide major weapons systems but will fill particular niches – such as maritime patrol aircraft and helicopters.

Confrontation Brewing?

Much of the discussion about Beijing’s island-construction has tended to overlook the fact that China hasn’t actually occupied any new territory. Six of the seven reefs it has built on have been under Chinese control since 1988. The seventh, Mischief Reef, was occupied in 1994. Almost every feature in the Spratlys is now either physically occupied or under the effective control of one of the claimants. If the situation stays that way, it can be managed. But that seems unlikely.

The root cause of China’s actions in the South China Sea is the version of history that has become orthodoxy in Chinese primary schools and Communist Party academies – in which the sea has been under Chinese jurisdiction since ancient times. I would argue that too many analyses of the disputes pay too little attention to the seriousness with which China regards its historical claim. I have argued elsewhere that this version of history is based upon misreadings of evidence, misinterpretations, and even mistranslations. Nonetheless, in combination with the belief in Chinese ruling circles that the sea is rich in oil and gas, this history is a critical motivating factor behind Chinese actions.

It seems likely that China’s next move in the Spratlys will be to try to occupy otherwise “empty” spaces that hold the possibility of hydrocarbons. Three areas are obvious candidates: Reed Bank off the Philippines, Vanguard Bank off Vietnam, and James Shoal and Luconia Shoals off Malaysia. With harbors for ships and runways for aircraft on the new island bases it will be much easier for China’s maritime militia, Coast Guard, and Navy to assert sea control. A confrontation is brewing.

Faced with military weakness, the Philippines has turned to international justice. In July the Permanent Court of Arbitration in The Hague held its first hearings into the case brought by Manila against Beijing’s ambiguous claim to wide areas of the sea within the “U-shaped line” also called the “Nine Dash Line.” It will be some time before the tribunal issues a ruling. However, if it were to find that China has no legitimate claim on the resources of the Reed Bank, then the Philippines would be able to get on with its own exploration there.

Weapons of the Weak

This is an urgent question for the Philippines, which needs to exploit new reserves of natural gas to replace the Malampaya field. Malampaya, operated by Shell in partnership with Chevron and the Philippine National Oil Company (PNOC), currently provides about a third of the electricity used on the main island of Luzon including the capital, Manila. Coverage in the Philippine media suggests the field will run out by 2024.

The answer probably lies under the Reed Bank. Seismic surveys commissioned by Forum Energy projected gas reserves there of 8.8 trillion cubic feet – larger than Malampaya. Given that it took six years to develop the original Malampaya project (from the discovery of commercial-sized gas reserves in 1995 until the inauguration of the project in 2001) the need to begin drilling and pipeline construction is pressing if the Manila is to avoid electricity shortages in less than a decade. However, in March, Forum announced that the Philippines government had denied it permission to drill because of objections from China. Since then Forum has been forced to delist its shares from the London Stock Exchange.

If the court were to rule in the Philippines’ favor, Manila would be able to argue that any gas extraction activity by Forum, or another company operating under a Philippines’ license, is entirely lawful. If China tried to obstruct such lawful activity then it would be easy for its critics to term its actions a violation of international law. This would be the perfect opportunity for the United States – if it so chose – to draw a line in the sea. The 1951 Mutual Defense Treaty allows the U.S. to intervene in case of an attack on Philippine ships “in the Pacific Area.”

This would be a dangerous moment – we could see China and the U.S. (perhaps supported by other states that oppose China’s maritime ambitions) going eyeball to eyeball at Reed Bank. I suggest that – at this point – China would have to blink. It is not likely to come out well from such a confrontation.

It doesn’t have to be like this. All that is required for peace in the South China Sea is for all the claimants to recognize the occupations of the others and to declare unequivocally that they subscribe to the spirit and letter of  the United Nations Convention on the Law of the Sea (UNCLOS.) There will be losses of course – but also gains. Vietnam will lose the Paracel Islands but it will gain legitimacy in the Spratlys and with the end of the U-shaped line it will be able to exploit hydrocarbons and fish without confrontation. China will lose the U-shaped line but it will gain legitimacy in the Paracels, on the features that it occupies in the Spratlys and – more importantly – drastically reduce the potential for confrontation with the United States. The Philippines will lose its claim to the rest of the Kalayaan Island Group but will gain the Reed Bank and an undisputed Exclusive Economic Zone along its coastlines. All of the pieces are in place – it’s really up to China now. Could Xi Jinping bring the world a nice surprise when he visits Washington in September?