SOUTH CHINA SEA DISPUTES

WHAT IS ABOUT ?

The South China Sea, one of the world’s busiest waterways, is subject to several overlapping
territorial disputes involving China, Vietnam, Philippines, Taiwan, Malaysia, and Brunei. The
Philippines, Vietnam, China, Brunei, Taiwan and Malaysia hold different, sometimes
overlapping, territorial claims over the sea, based on various accounts of history and
geography. China claims more than 80 percent, while Vietnam claims sovereignty over the
Paracel Islands and the Spratly Islands.The Philippines asserts ownership of the Spratly
archipelago and the Scarborough Shoal, while Brunei and Malaysia have claimed sovereignty
over southern parts of the sea and some of Spratly Islands.

South China Seas, an area that is rich hydrocarbons and natural gas and through which
trillions of dollars of global trade flow. The South China Sea is akey commercial
thoroughfare connecting Asia with Europe and Africa, and its seabed is rich with natural
resources. One third of global shipping, or a total of US$3.37 trillion of international trade,
passes through the South China Sea. About 80 per cent of China’s oil imports arrive via the
Strait of Malacca, in Indonesia, and then sail across the South China Sea to reach China. The
South China Sea also accounts for 10 per cent of the world’s fisheries, making it a key source
of food for hundreds of millions of people.

As China expands its maritime presence and constructs military outposts on artificial island,
it has been met by growing assertiveness from other regional claimants, including Japan,
Philippies, and Vietnam. China‘s "nine-dash line” is a geographical marker used to assert its
claim. It stretches as far as 2,000 km from the Chinese mainland, reaching waters close to
Indonesia and Malaysia.
TIMELINE : SOUTH CHINA SEA DISPUTE

A. China Marks South China Sea Claims (1974)

China, under the rule of the nationalist Kuomintang party, demarcates its territorial
claims in the South China Sea with an eleven-dash line on a map. The claim covers
the majority of the area, including the Pratas Islands, the Macclesfield Bank, and the
Paracel and Spratly Islands, which China regained from Japan after World War II. To
this day, China invokes the nine-dash line as the historical basis for its territorial
claims in the South China Sea.

B. UN Report Finds High Probability of Oil in East China Sea

After extensive geological surveys in 1968 and 1969, a report published by the UN
Economic Commission for Asia and the Far East finds “substantial energy deposits”
in the seabed between Taiwan and Japan the waters off the Diaoyu/Senkaku Islands.
The paper marks one of the first credible findings of hydrocarbon resources there,
reigniting interest in the region. Although China has not previously disputed Japanese
claims to the islands, it asserts its own sovereignty over them in May 1970, after
Japan, South Korea, and Taiwan hold talks on joint energy exploration in the East
China Sea.

C. Septemer 29, 1972 Japan And China Normalize Relations

China and Japan formally reestablish diplomatic relationsafter gradually rebuilding
economic ties. In China, the failure of Mao’s Great Leap Forward (1958–1962)
preceding the Cultural Revolution resulted in mass starvation that forced Beijing to
reevaluate its domestic policies and look to Japan for aid. The Sino-Japanese
reconciliation dovetails the rapprochement between the United States and China a
change in official political allegiance from Taipei to Beijing that is a crucial factor in
the establishment of diplomatic ties between Japan and China. Nixon, whose
administration has made normalizing relations with the PRC a diplomatic priority,
visits Beijing the same year, establishing de facto relations with the country after U.S.
Secretary of State Henry Kissinger’s visit in July 1971. Trade between Japan and
China surges in the period after normalization, deescalating the first round of the
Diaoyu/Senkaku Islands disputes.
D. January 19, 1974 , China Claims Paracel Islands
A year after the Paris Peace Accords, which end U.S. involvement in the Vietnam
War, Chinese forces occupy the western portion of the Paracel Islands, planting flags
on several islands and seizing a South Vietnamese garrison. Vietnamese troops flee
south and establish the first permanent Vietnamese occupation of the Spratly Islands.
Meanwhile, Beijing builds a military installation, including an airfield and artificial
harbor, on Woody Island, the largest of the Paracels. After the fall of Saigon and the
reunification of Vietnam, the newly formed Socialist Republic of Vietnam upholds
the South's former claims to the Spratlys and Paracels. To this day, China maintains
around one thousand troops in the Paracels.

E. December 10, 1982 Unclos Is Established

After three decades of negotiations, the third and final United Nations Conference on
the Law of the Sea, or UNCLOS, culminates in a resolution that defines the rights and
responsibilities of nations in their use of surrounding waters based on exclusive
economic zones and continental shelves. The measure comes into force on November
14, 1994, a year after Guyana becomes the sixtieth nation to sign the treaty. UNCLOS
does not address sovereignty issues related to the South and East China Seas, and its
vague wording has prevented it from serving as a credible body of law in resolving
territorial disputes. Although the United States recognizes UNCLOS as customary
international law, it has yet to ratify the treaty a move that would give Washington a
greater platform from which it could advance its economic and strategic interests.

F. November, 2002 ASEAN And China Code Of Conduct

China and the ten ASEAN states reach an agreement in Phnom Penh on the ASEAN-
China Declaration on the Conduct of Parties in the South China Sea, a code of
conduct that seeks to ease tensions and creates guidelines for conflict resolution. The
agreement comes after six years of negotiations. Beijing had previously insisted on
bilateral negotiations with claimants; China’s signing marks the first time it accepts a
multilateral approach to the issue. Though the declaration falls short of a binding code
of conduct, as the Philippines had sought, it signals China’s recognition that such an
agreement could work in its favor by limiting the risk of conflict in the area, which
could involve the United States in the dispute.
G. May 2009, Malaysia, Vietnam Submit Un Claims
Malaysia and Vietnam file a joint submission to the UN Commission on the Limits of
the Continental Shelf to extend their continental shelves beyond the standard two
hundred nautical miles from their coastlines, renewing friction over maritime
sovereignty in the South China Sea. China views this as a challenge to its territorial
claims and objects to the submission, saying it “has seriously infringed” on China's
“indisputable sovereignty” over the islands in the South China Sea. Vietnam’s claims
are viewed as part of a campaign to bring the South China Sea issue to an
international forum, beginning with a conference held in November 2009 in Hanoi.

H. July 2010, China Becomes Most World’s Biggest Energy Consumer

The International Energy Agency reports that China has surpassed the United States
as the largest consumer of energy worldwide, consuming roughly 2.3 billion tons of
total energy in 2009, approximately 4 percent more than the United States. China also
becomes the second-largest consumer and net importer of oil, heightening the
strategic importance of trade routes in the East and South China Seas for tanker
shipments. The United States had been the world’s largest energy consumer since the
early 1990.
I. United States Affirms Interest in South China Sea
U.S. Secretary of State Hillary Clinton reiterates Washington’s neutrality on
sovereignty in the South China Sea in a speech at an Asian regional security meeting
in Hanoi, but affirms American interests in the “open access to Asia’s maritime
commons.” The speech represents a rebuketo China, which had insisted on its rights
to the islands and a bilateral approach to resolving disputes. It also comes at a time
when military-to-military talks between Beijing and Washington are suspended and
diplomatic relations are at a nadir, with China rescinding an invitation to host former
US. Secretary of Defense Robert Gates in June and Chinese officials announcing in
March that they would not tolerate outside interference. Clinton’s comments are
viewed as an expansion of U.S. involvement in the disputes and a boon to Vietnam,
which had been attempting to internationalize the conflict in hopes of a resolution.
J. June 1, 2011 Philippines Summons Chinese Envoy
The Philippines summons a Chinese envoy to express its mounting concern about
naval incursions in its claimed territory after recording at least five incursions by
Chinese ships in the past year near the Spratly Islands and the Amy Douglas Bank, off
the coast of Palawan Island. These incursions begin in early March, when Chinese
surveillance ships force a Philippine vessel conducting surveys in the Reed Bank to
leave the area. Both parties declare the incident as violations of the 2002 ASEAN-
China Declaration on the Conduct of Parties in the South China Sea, and the event
sets off a series of skirmishes in the region between the two countries. The diplomatic
standoff in June comes days after Vietnam protests China’s alleged harassment of its
oil exploration ships; Vietnam had been working with multinational corporations,
including ExxonMobil and Chevron, to develop hydrocarbon assets.

K. Oktober 2011 Philippines Renames South China Sea

In response to a spate of skirmishes with Chinese vessels, the Philippine government
begins referring to the South China Sea as the West Philippine Sea in all official
communications and in October 2012 signs an administrative order asserting its
“inherent power and right to designate its maritime areas.” U.S. Secretary of State
Hillary Clinton also begins referring to the South China Sea as the West Philippine
Sea, affirming in a November 2011 joint press conference with her Philippine
counterpart the “vigor” of the two countries’ alliance, particularly “at a time when the
Philippines is facing challenges to its territorial integrity” in the oceanic region.

L. June 2012, Vietnam Passes Maritime Law

Vietnam passes a maritime law asserting its jurisdiction over the disputed Spratly and
Paracel Islands, demanding notification from any foreign naval ships passing through
the area. China issues a strong response, announcing the establishment of a city,
Sansha, on the Paracels that would administer the Paracels, Spratlys, and Macclesfield
Bank. Relations between Hanoi and Beijing had been fluctuating; in May–June 2011,
Chinese surveillance ships cut the cables of oil and gas survey vessels operated by
Vietnam’s state-owned energy firm, PetroVietnam, but tensions eased the following
October after a high-level visit by Vietnam’s general party secretary to Beijing
produced a bilateral agreement outlining measures for handling maritime disputes.
 Hanoi had also been stepping up its defense budget, reportedly increasing it by 70
percent to $2.6 billion in 2011.
M. July 13, 2012 ASEAN Fails to Issue Communique
For the first time in its forty-five-year history, ASEAN fails to issue a communiqué at
the conclusion of its annual meeting in Cambodia. Its ten members reach an impasse
over China’s claims in the South China Sea, and member countries disagree over
whether to include the territorial issue in the joint statement. This diplomatic freeze
follows a maritime standoff between China and the Philippines in the Scarborough
Shoal three months prior, and is widely seen as a failure for the regional body. Some
observers view China’s influence on Cambodia, the 2012 rotating chair of the
conference, as having caused the exclusion of the Scarborough Shoal and EEZ
issues from the text, resulting in the deadlock.
N. China Claims Territorial Sea Baselines
In response to Japan’s nationalization of the Diaoyu/Senkaku Islands, Beijing declares
territorial sea baselines around the land, announcing Chinese administration of the
disputed islands and directly challenging Tokyo’s control. The move ends what
analysts consider the status quo of Japanese administration of the area. As a result,
two of China’s maritime agencies gain increased power over the waters and begin to
increase their patrol in areas previously dominated by the Japan Coast Guard. In
December, China submits to the UN an explanation of its claims to the disputed area
in the East China Sea, arguing that “geological characteristics” show a natural
prolongation of China’s land territory. U.S. Secretary of State Hillary Clinton urges
both sides to let “cool heads” prevail amid the flare-up.
POLICIY OPTIONS

Thousands of vessels, from fishing boat to coastal patrols and naval ship, ply the East and
South China Sea Waters. Increased used of contested waters by China and its neighbors
heighten the risk that miscalculation by sea captains or political leaders could trigger an armed
conflict, which the United States could be drwan into through it military commitments to allies
Japan and the Philippines. Policy experts believe that a crisis management system to the region
is crucial.

1. Resource Sharing
Claimants in both the South China Sea and East China Sea could cooperate on
the development of resources, including fisheries, petroleum, and gas. A resource-
sharing agreement could include bilateral patrolling mechanisms, which would deter
potential sources of conflict like illegal fishing and skirmishes arising from oil and
gas exploration. More collaborations in the mold of joint fishery deals like those
between China and Vietnam and Japan and Taiwan could mitigate risk by sharing
economic benefits.
2. Military to Military Communication
Increased dialogue between military forces has the potential to reduce the risk
of conflict escalation. Communication mechanisms like military hotlines to manage
maritime emergencies, similar to the ones set up by China and Japan, China and
Vietnam, and China and ASEAN, could be established among all claimants. These
hotline systems would connect leaders in the event of a crisis that could arise from
mishaps, such as naval maneuvers misinterpreted by captains of merchant vessels or
fishermen. Lastly, joint naval exercises, such as those proposed by Beijing in October
2015, could support greater military transparency and help develop shared rules of the
road.
3. Building a Multilateral Framework
The development of a multilateral, binding code of conduct between China and
ASEAN countries is often cited as a way of easing territorial disputes in the South
China Sea. The parties have already agreed on multilateral risk reduction and
confidence-building measures in the nonbinding Declaration on the Conduct of
 Parties in the South China Sea, and discussions on establishing a more robust code of
conduct have gained momentum. While China has historically preferred to handle all
disputes bilaterally, ongoing consultations between Beijing and ASEAN still hold
some promise for reinvigorating a multilateral framework toward greater cooperation
and conflict resolution. However, given differences among ASEAN members vis-à-
vis China and China’s preference to settle matters bilaterally, it is uncertain whether
progress can be made.

4. International Arbitration
Bringing territorial disputes to an international legal body presents another means of
conflict mitigation. The International Court of Justice and the International Tribunal
for the Law of the Sea are two forums where claimants can file submissions for
settlement. In July 2013, a UN tribunal was convened at The Hague to discuss
an arbitration case filed by the Philippine government contesting the legality of
China’s territorial claims in the South China Sea. The court ruled in favor of the
Philippines in July 2016. The tribunal found that China’s “nine-dash line” had no
legal basis for its claims to historic rights to resources in the South China Sea and that
none of the land features met the requirements of an exclusive economic zone for
China. The Chinese foreign ministry dismissed the court’s award, saying it had no
binding force. Alternatively, an outside organization or mediator could also be called
upon to resolve the disagreement, yet the prospect for success in these cases is slim
given China’s likely continued opposition.

5. Diplomatic
Escalatory actions would likely trigger ramped up diplomacy. The United States could
initially serve in a mediation role in the event of crisis erupting in either sea. In the
South China Sea, mediation could also come from ASEAN or a trusted, neutral actor
within the region like Singapore. Parties could also call for an emergency session of
the UN Security Council to negotiate a cease-fire, although China’s permanent seat on
the Council could limit the effectiveness of this option. In the East China Sea,
bilateral management of the dispute is the likely first option, with Beijing and Tokyo
sitting down to negotiate a common guideline for handling the conflict and preventing
its escalation. Chinese and Japanese officials made a breakthrough to ease tension in
November 2014, issuing a joint four-point outline to improve Beijing-Tokyo relations.
6. Economic
Despite extensive trade ties, the parties to the dispute could respond to a rise in
tensions by imposing economic sanctions. In response to a Chinese action, for
instance, the United States could sanction financial transactions, the movement of
some goods and services, and even travel between the two countries. In retaliation,
Beijing could bar U.S. exports and cut back on its extensive holdings of U.S.
Treasuries. Claimants could also manipulate exports and relaunch boycotts of goods.
Signals of such a response have already been seen: in 2012 Chinese protesters
launched a wave of boycotts of Japanese-made products. Japan also accused China
of halting exports of rare earth minerals after a territorial spat in 2010 a charge
Beijing denied—causing a commodities crisis for resource-dependent Japan.

7. Military
If confrontation were to involve Japan in the East China Sea or the Philippines in the
South China Sea, the United States would be obligated to consider military action
under defense treaties. Experts note that Washington's defense commitments to Tokyo
are stronger than those to Manila. Under its treaty obligations, the United States
would have to defend Japan in the case of an armed attack; the U.S.-Philippine treaty
holds both nations accountable for mutual support in the event of an “armed attack in
the Pacific Area on either of the Parties.” Military action would represent a last resort,
and would depend on the scale and circumstances of the escalation. In the event of
armed conflict breaking out between China and Japan, the United States could also
use crisis communication mechanisms outlined in the U.S.-China Military Maritime
Consultative Agreement , to encourage a stand-down of forces and facilitate
communication between Tokyo and Beijing. Verbal declarations that communicate
the seriousness of the dispute and convey support for an ally, as well as offers of
military assistance, can also serve as essential “coercive de-escalation” measures
during a crisis. In the South China Sea, Washington has protested against Beijing’s
extensive land reclamation efforts, warning that island development and a military
buildup could lead to regional conflict. The U.S. military
deployed surveillance aircraft over the Chinese-built artificial islands in 2015 and
sent warships to sail within 12 nautical miles of disputed features in the Paracel and
Spratly island chains to emphasize the importance of freedom of navigation in the
 contested waters. These operations, intended to challenge China’s maritime claims,
are expected to expand in scope and have received support from U.S. regional allies.

Conflict With Natuna Island

China is expected to eventually strengthen application of its domestic law in claiming several
of those areas, thus more disputes may arise between China and other claimant states. The
Chinese aggressive response to the international tribunal’s ruling might also result in further
legal implications for less affected states like Indonesia. While the SCS dispute does not
presently directly affect Indonesia, this scenario might not be the same in future years. As an
archipelagic state, Indonesia is entitled to draw baselines connecting the outermost point of
its outermost islands. Although Indonesia does not formally claim any of the disputed islands
located in the SCS, Indonesia has sovereignty over the Natuna Islands, which are adjacent to
the SCS.

These islands are vital in establishing Indonesia as the world’s largest archipelagic state. As
Natuna islands are in the middle of the SCS, Indonesia inevitably shares its maritime borders
with Vietnam and Malaysia. The Natuna islenf are between Peninsula Malaysia and the
Malaysian Borneo states of Sabah and Sarawak.

While agreements have been reached over delineating the continental shelf between states,
exclusive economic zone (EEZ) delimitations remain unresolved. If China strengthens its
claims and keeps asserting its military power within the area, China and Indonesia may be
involved in future disagreements on maritime delimitations around Natuna Islands. If a
straight line is drawn from the coast of the Malaysian state of Terengganu towards Sarawak,
obviously it would cross the Natunas. Apart from geographical connections, the Natuna
Islands have always been historically influenced by the Malay states of Peninsula Malaysia.

The first ruling government in Natuna was established in 1597 by royalties from the Malay
sultanates of Pattani and Johor-Riau. This proved the existence of close relationship between
the rulers of Natuna with the Malay sultanates of Peninsula Malaysia. Due to these historical
links and geographical proximities, questions may arise as to why these islands are not with
Malaysia.
Would these historical ties possessed by Malaysia and China affect Indonesia’s sovereignty
over these islands? Based on history, Malaysia may have rights to claim sovereignty over the
Natunas. Nevertheless, claims were never made and until now, Malaysia acknowledges
Indonesia’s sovereignty over the Natuna Islands. International law dictates that a state may
acquire territory by way of an actual exercise of sovereignty on a particular territory without
clear objections from other countries. Thus Malaysia’s claim, if any, over the Natuna Islands
may be rebutted on the fact that it has remained silent over Indonesia’s administration on
those islands throughout almost 60 years.

Indeed some areas of Indonesia’s EEZ in the Natunas do overlap with the Chinese “nine-
dash” line. With Beijing’s non-acknowledgment of the above ruling, Indonesia should
proactively formulate a legal and policy framework in exercising its sovereign rights over its
EEZ in the Natuna Islands against any possible future Chinese claim.