Tensions Rise between the Philippines and China in the South China Sea: What’s in a Name?

Map of the Spratly Islands illustrating territorial claims

 

 

It seems that tensions are continuing to rise in the South China Sea.  Increasing Chinese assertiveness in the region has prompted complaints from Vietnam and the Philippines.  Vietnam has recently announced that it will carry out a live fire naval exercise in the region, a move widely seen as a response to China’s increasingly assertive posture, while there is a move in the Philippines to re-name the South China Sea.

A Filipino lawmaker, Walden Bello, has filed House Resolution 1350 calling upon the Filipino Congress to investigate the possibility of changing the name of the South China Sea to the Western Philippine Sea in an attempt to bolster Manila’s territorial claims in the region.  Such passions have been aroused by a number of clashes which have seen Chinese naval vessels harass Filipino ships around the disputed Spratly Islands.  In one of the most serious incidents, a Chinese naval vessel fire shots at Filipino fishing boats near the Jackson (Quirino) Atoll.

In addition, Manila has also claimed that China has constructed a military post near the Amy Douglas Bank, an act which could constitute a breach of the 2002 Declaration of the Code of Conduct of Parties in the South China Sea (DOC).  The DOC is a non-binding agreement between China and ASEAN which calls for restraint and the avoidance of occupation of uninhabited land.  Manila argues that this latter provision in particular has been “aggressively violated” by China.

China, for its part, argues that its sovereignty has been breached by Filipino vessels, though it is generally agreed that the clashes have taken place in waters within the Phillipines’ 200 kilometre Exclusive Economic Zone.

The problem is, of course, is how to determine ownership.  The United Nations Convention on the Law of the Sea (UNCLOS) gives a country sovereignty over seas up to 12 nautical miles (22.2 km/13.8 miles) from its coast, including of islands.  In addition, there is also a recognised 200 nautical mile Exclusive Economic Zone (EEZ).  This grants jurisdiction over natural resources found in the region, the right to conduct scientific research and to building structures. Recent incidents have been inside the EEZs of Vietnam and the Philippines.

China, however, argues that its historical sovereignty can be traced back to the 7th century and supersedes any contemporary claims to the sea, but says it is ready to cooperate with others on joint exploration.

In light of such disagreements, Manila has tried to internationalise the situation.  It has stated it intent to file an official protest over Chinese actions at the U.N. and has recently suggested that the Mutual Defence Treaty it signed with the U.S. in 1951 would be activated should any dispute with China escalate.

The U.S., however, seems less certain of this.  Its embassy in Manila stated that the “US does not take sides in regional territorial disputes”.  It outlined Washington’s concerns about recent incidents in the South China Sea and acknowledged that it shares a number of interests with the international community in the region, but refrained from mentioning the Philippines specifically, nor did it note the defence ties it shares with Manila.

This hesitation on the part of Washington has not, however, dissuaded Manila from pursuing its claims.  The Filipino military has confirmed that it refers to the South China Sea as the Western Philippine Sea, though Armed Forces spokesman Commodore Miguel Jose Rodriguez was also keen to add that other nations in the region also have their own names for the disputed waters.  Not to be outdone, the Filipino weather Bureau, Pagasa (the Philippine Atmospheric, Geophysical and Astronomical Services Administration) has announced that it, too, will henceforth refer to the region as the Western Philippine Sea.

It remains to be seen how China, and indeed other states which hold territorial claims in the South China Sea, will react to this latest move by Manila.

 

The 2011 Shangri-La Dialogue

Shangri-La Dialogue member countries

 

June 5th saw the conclusion of the 2011 Shangri-La Dialogue.  Hosted by the International Institute for Strategic Studies in Singapore, the three day event brought together Defence Ministers and military figures from the Asia Pacific region.  What, then, were the main talking points of the weekend?

Perhaps predictably, the situation in the South China Sea dominated discussion.  Many countries, particularly Vietnam and the Philippines, are increasingly concerned by what they consider to be China’s belligerent behaviour in the region.  Vietnam points to cases of its fishing fleet being harassed by Chinese naval vessels.  More recently, May 26th saw a confrontation which allegedly ended with a Vietnamese survey ship’s seismic cables being cut by a Chinese vessel as it conducted an oil and gas exploration mission.

This dispute provoked protests in Hanoi and Ho Chi Minh City as Vietnamese expressed their anger, though it is unclear whether the protests were encouraged by the government.  While the Vietnamese government claims the survey ship was operating deep in its territorial waters and called the incident a “serious violation of Vietnam’s sovereignty”, the Chinese deflected criticism by arguing that Vietnamese oil and gas operations “undermined China’s interests and jurisdictional rights”.

This incident illustrates the potential for discord in the South China Sea, a situation exacerbated by the multitude of competing territorial claims held by such nations as China,Vietnam, the Philippines, Malaysia, Brunei and Taiwan.  The Spratly Islands, for example, are contested by all of the countries named above and are thought to be resource rich.  Ownership of the Paracel Islands, held by China, is also a matter of contention as Vietnam, which was evicted from the Islands by China in 1974, still claims ownership.

China, for its part, struck a more conciliatory note at the conference than it has been want to do when facing criticism from its maritime neighbours.  General Liang Guanglie, China’s Minister for National Defence, strongly reiterated China’s desire for a peaceful rise, stating that Beijing does “not intend to threaten any country with the modernization of our military force”. China, argued Liang, has no desire to seek hegemony in the region.  He painted China’s military budget, which is set to rise by an official 12.7% this year, as a natural improvement of its military equipment which, he highlighted, consists of “mainly second-generation weapons”.

Other countries in the region, however, remain unconvinced and continue to hedge against China’s military development, particularly its naval modernisation.  At the Dialogue, for example, the Vietnamese confirmed that their government has purchased six Russian Kilo class submarines at a cost of US$3.2 billion, Thailand is thought to be considering the purchase of second-hand submarines from Germany and even the Filipino navy, which can ill-afford such expensive platforms, is thought to be considering the pursuit of a submarine capability.

It is in the context of this burgeoning Asian arms race that Washington has been seeking to re-establish its presence in the region after years of neglect due to its adventures in the Middle East.  Robert Gates, the U.S. Secretary of Defence, spoke of his concerns regarding the possibility of a clash in the South China Sea unless all parties with an interest in the disputed waters agree on a mechanism with which to settle disputes.  Such clashes, he stated, would not serve anyone’s interests.

Reaffirming the United States’ role as the Asia Pacific’s security guarantor, he promised that the fiscal situation his country finds itself in will not affect its commitments in Asia.  Indeed, he wagered that over the next ten years the “U.S.influence in the region will be as strong or stronger”.  Assuring allies of America’s intentions, he highlighted that Washington continues to invest in stealth aircraft, drones, warships and cyber weapons.  Such capabilities, he argued, are the “most relevant to preserving the security, sovereignty, and freedom of our allies and partners in the region”.

Emphasising U.S.policy in the Asia Pacfic, he noted four “enduring principles” that should provide a framework for co-operation in the region: free commerce, the rule of law, open access to the global commons of sea, air, space “and now, cyberspace”, and peaceful conflict resolution.  The reference to cyberspace seemed particularly pointed given Google’s recent allegations about hacking attacks emanating from China.

Of the U.S.–China relationship, Gates, keen to downplay the notion that China’s rise poses a threat to the region, stated that the relationship currently enjoys “a more positive trajectory”, but remains “underdeveloped”.

In an apparent hedge against China’s increasing assertiveness, however, Gates also announced that the U.S. Navy will establish a new base in Singapore.  While Washington has maintained a facility there, the U.S.plans to permanently station one or two of its new Littoral Combat Ships in Singaporean waters, according to the Singaporean Defence Ministry.  This move is part of “a number of steps toward establishing a defence posture across the Asia-Pacific that is more geographically distributed, operationally resilient and politically sustainable,” outlined Gates.

U.S.military planners are keen to spread their forces more widely across the region in order to make it harder for an adversary to strike a knock-out blow in event of a conflict.  In addition, ongoing political troubles surrounding existing U.S.bases, such as Okinawa, makes spreading its assets around the region particularly attractive to Washington.  Indeed, noting this, some analysts in Australia, most prominently Ross Babbage, have called for U.S.troops to be based in Australia.

It would however, be a mistake to think that the situation in the South China Sea was the only issued considered at the conference.  The Japanese Minister of Defence, for example, spoke about the ongoing earthquake crisis in Japan, while Sergei Ivanov, the Russian Deputy Prime Minister, outlined the important of building strategic confidence in the region.  The Malaysian Prime Minister, Najib Razak, echoed this sentiment, highlighting the global trend toward integration and interdependence.  He also framed China’s rise as a cause for optimism rather than trepidation.

North Korea’s nuclear weapons program also merited discussion at the launch of a new book by Jonathan D. Pollack who has concluded that North Korea’s third nuclear test will probably be of a highly enriched uranium (HEU) bomb.  Depressingly, he also believes that neither China nor the United States can stop or reverse the North’s nuclear weapons program.

In conclusion, the primary focus of the Dialogue was on the possibility of future quarrels – and how to deal with them – as Asian powers with rising military budgets continue to contest often potentially resource-rich territory.  All parties agree that confidence building and co-operation is desirable.  What remains to be seen, however, is to what extent such sentiments are reflected in behaviour.  Will China continue to press its claims aggressively?  Will this drive other Asian powers toward America and will an arms race develop in the Asia Pacific as countries attempt to balance China’s rise?

Other issues also continue to exercise analysts.  The aftermath of the Japanese tsunami has crippled Tokyo.  As Prime Minister Kan attempts to bring the situation under control and begin reconstruction, he faces an uphill struggle in the wake of the recent no-confidence motion. North Korea, too, is a continuing cause for concern.  We certainly live in interesting times.

 

 

Labour Disputes and the State of the Vietnamese Economy

Vietnam has seen a marked increase in labour disputes in 2011 as the communist state attempts to cope with a high rate of inflation.

By the end of March,Vietnam had suffered 220 work stoppages.   This compares with 216 throughout all of 2010.  Official statistics testify to the severity of the problem.  Consumer prices rose by 17.5% from April 2010 to 2011.   Only Ethiopia and Venezuela saw a higher increase.  Such dismal figures have seen the dong devalued against the dollar six times since 2008.

As prices rise and the value of their wages decline, it is unsurprising that frustrated Vietnamese workers resort to wildcat strikes.  However, the abuse of workers’ rights has also played a role in creating discontent.  A recent survey conducted by the Institute of Workers and Trade Unions found that only 60% of contracts at foreign direct investment firms were compatible with Vietnamese labour laws.  Indeed, even the government recognises that poor enforcement of employment legislation has been a major source of grievances.  Pham Minh Huan, the Deputy Labour Minister, has agreed that the government needs to simplify labour regulations and enforce workers’ rights.

The government is also attempting to tackle inflation.  It is pursuing a package of measures knows as Resolution 11, which, in the words of the State Bank of Vietnam, require it “to implement several monetary and banking solutions to carry out such tasks in 2011 as pursuing a tight and prudent monetary policy, keeping credit growth below 20% and total liquidity of about 15%-16%, and interest and exchange rates at reasonable levels.”
The Resolution demands that private credit is curbed from its current 120% of GDP (up from under 40% in 2001).  In fact, the dong is at risk of becoming the third currency in Vietnam as Vietnamese flock to change their cash to dollars or gold.  Amazingly, in Ho Chi Minh City, DongA bank has unveiled an ATM that dispenses gold bars!

In order to make the dollar less attractive, the government has limited the rate of interest on dollar deposits to a mere 3%.  This compares unfavourably to rates as high as 14% on accounts in the Vietnamese dong.

In addition, the government is attempting to address the problem of waste in public spending.  Resolution 11 requires it to cut back on public investment which ran to 17% of GDP in 2009.  It has also raised energy prices.

Such policies, however, while promising to return a balance to government finances, also have negative side-effects.  For example, a considerable amount of growth has been create by state owned enterprises (SOEs) and real-estate investment (land in Hanoi has been recorded as selling for an astonishing US$60,000 per square metre – higher even than New York or London).  If growth slows as it is expected to there will likely be calls to kick-start credit growth which would in turn encourage inflation.

In short, the immediate future of the Vietnamese economy seems uncertain.  Nevertheless, growth that would be the envy of the developed world is still assured. The Asian Development Bank has recently reduced its forecast for Vietnam’s GDP growth in 2011 from the 7% it predicted in 2010 to 6.1%. Vietnam is also likely to benefit from further investment as the Chinese renminbi appreciates and Chinese wages rise.