"The Importance of the Spratly Islands"

28 November 2006

he Spratly Islands, located at the southern end of the South China Sea, remain crucial to the region's geostrategic setting. In late October and early November this year, Beijing and the Association of Southeast Asian Nations (A.S.E.A.N.) tried to re-launch friendly talks related to the territorial disputes of the islands. They discussed broad Southeast Asian security issues and opened the way for possibly fruitful, structured diplomatic dialogue. The context, however, remains extremely complicated.

Claimed in their entirety by China, Taiwan and Vietnam, and partially by the Philippines, Malaysia and Brunei, the contested isles and reefs are a potential catalyst for major inter-state conflict in the coming years. In fact, all traditional geopolitical issues are at work in the Spratlys controversy: sovereignty, control of the vital hydrocarbons, control of the Sea Lines of Communication (S.L.O.C.s), and the capability to project power and influence across a broad region.

At a time when China is emerging as a political and military -- and not only economic -- power, whose strategic reach expands and involves new maritime ambitions, the South China Sea issue poses a huge challenge to Washington and its Asian allies. Beijing is adopting a complex policy, predicated upon diplomatic openness to enhanced cooperation with A.S.E.A.N. and, at the same time, upon a self-confident, assertive stance on the South China Sea.

Washington believes that Beijing's real goal is to reach strategic dominance over the South China Sea, which could make China the hegemonic power in Southeast Asia and multiply its influence on the global stage.

Energy, Trade and Power
Recent media coverage on the Spratlys issue has typically concentrated on the quest for fossil energy resources since natural gas and oil play an increasingly important role in power politics. The reasons for sovereignty claims on the archipelago, however, are in no way limited to the hydrocarbons extraction issue alone. Control of the S.L.O.C.s, with its effect on energy transport and strategic military advantage, is at least as important as the much wanted oil and gas reserves.

In Asian maritime geopolitics, the South China Sea functions as a vital gateway that links the Gulf's oil to East Asia via the Indian Ocean and Southeast Asia. Although during the recent decades of the Cold War the sometimes aggressive Chinese policy toward Southeast Asian states was tolerated by Washington because of China's role as a counterweight to the U.S.S.R., after 1991 this state of affairs changed.

Certain figures display the importance of the Spratly Islands as a transport route: the South China Sea is the world's second busiest international sea lane and conveys roughly one-fourth of the globe's crude oil and oil products.

Tokyo's tankers carry around 70 percent of Japan's oil on these sea lanes, while 90 percent of the oil needed by Washington's northeast Asian allies reaches its destination through the Strait of Malacca and the South China Sea. Liquefied natural gas, coal, and iron ore are conveyed through the above mentioned route. The waters are also the site of a massive fishing industry. A country that would have the capability to interrupt the free navigation of the sea lines would pose a significant threat to the other powers' energy security.

As for hydrocarbons in the Spratlys, the exact amount of available resources is not easy to determine, since China's analyses are significantly different and more optimistic than U.S. and European ones. A September 2003 brief issued by the U.S. Department of Energy suggests that oil production levels for the Spratly Islands would not exceed 183,000 barrels per day, while Chinese estimates claim that a level of 1.9 million barrels per day could be attained. According to other Chinese reports, the Spratly Islands should have around 225 billion barrels of hydrocarbons -- 70 percent of which would be natural gas. No Western analysis, however, confirms such data at the moment.

Regardless, it is without a doubt that further exploration of the Spratly Islands is considered to be a major stake by all regional claimants and that control over hydrocarbons will remain a crucial goal for all powers involved.

Multilateralism and its Interpretations
One of the most interesting developments in the Spratly Islands debate is undoubtedly the different use and perception of multilateralism. As a matter of fact, all players are calling for multilateral engagement and cooperation to prevent the conflicting interests from leading to a clash. On October 29, before the start of the China-A.S.E.A.N. meeting in Nanning, Philippine President Gloria Macapagal-Arroyo said that "regional security issues, aside from trade," would take center stage in A.S.E.A.N.'s political-strategic dialogue with China.

Mentioning the Spratlys, Arroyo added that "instead of concentrating on conflicting claims," regional powers should "concentrate on what we can do together." Speaking at the Nanchang University the same day, she launched the proposal of a "joint exploration of the Spratly Islands," and expressed the view that the current "code of conduct" on the contested territories is "very weak."

For Manila, just like for Hanoi and Kuala Lumpur, multilateralism and a regional security approach is the best possible strategy to contain China's rising military power. Since Beijing is aiming at enhancing its deep blue navy, other regional players (among which Taiwan is the one that fears Beijing the most) wager on continued U.S. involvement in the region and A.S.E.A.N.'s enhancement.

On the contrary, China's approach to A.S.E.A.N. and regional multilateralism appears that of a rising hegemonic power. Beijing's interests lie in avoiding major confrontations and, above all, direct confrontation with Washington in order to continue its relatively flawless pursuit of power. China's openness to strategic dialogue with A.S.E.A.N. has the goal of lowering the risk of military conflict while gaining time to calmly, but steadily, develop its new military power.

In other words, China's waiting game is consistent with hegemonic ambitions, but it uses the tactics of progressively achieving strategic dominance and thus enhancing its negotiating capability and effectiveness. [See: "China's Geostrategy: Playing a Waiting Game"]

Multilateralism could enable Washington to remain a decisive player in the Southeast Asian theater while avoiding the perils of automatic defense engagement via bilateral agreements. The United States, however, will consistently work to prevent China's domination of the South China Sea and Beijing's potential capability to choke freedom of navigation.

As expected, when U.S. President George W. Bush met with A.S.E.A.N. leaders in Hanoi this month, he insisted -- consistently with the American tradition -- on the importance of free trade and economic liberty in Southeast Asia.

Conclusion
Clearly, China's persisting claim to sovereignty over most of the South China Sea, coupled with Beijing's ambitious military improvement, will hardly be seen as reassuring by A.S.E.A.N. members and by Washington. On the other hand, the Sino-U.S. competition is not deterministically bound to lead to a showdown in the region, as it could instead end up in a new balance of power in which regional multilateral agreements may help Washington and Beijing solve or freeze the Spratlys issue and similar controversies.

A.S.E.A.N.'s role in the future of diplomatic attempts to resolve the Spratly Islands question appears to be increasing. The organization, however, will probably function as a tool in the hands of the great powers rather than as an autonomous power center.

China's rise as Southeast Asia's main regional power will continue in the coming years. Since Washington needs to protect U.S. vital interests, such as the liberty of navigation and regional stability, the United States will likely be called to a new and comprehensive engagement policy toward Beijing, which can be implemented if the reality of a new multipolar power configuration in Asia is acknowledged.

Report Drafted By:
Dr. Federico Bordonaro

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