2 | Wednesday, April 2, 2014

AM IM UK SW FR IT SP TK BR PL IS AE GR
THE WALL STREET JOURNAL.
PAGE TWO
i i i
Business & Finance
nBouygues extended its sweet-
ened offer for French mobile
firm SFR as it pushes parent
company Vivendi to consider its
bid despite it being in exclusive
talks with rival Altice. 17
nThe U.K.s Treasury chief said
he was profoundly concerned
by the irregular release of mar-
ket-sensitive information by the
markets regulator, and called for
a thorough review. 26
n Chinas central bank or-
dered the countrys commercial
banks and payment companies
to close bitcoin trading ac-
counts in two weeks. 18
n Weir of Scotland approached
Finnish rival Metso to propose
a multibillion-dollar marriage
of the two global engineering
firms amid a recent rise in Eu-
ropean deal activity. 18
nBHP Billiton signaled it may
pursue a new wave of asset sales
as it puts more focus on com-
modities that already account
for the bulk of its earnings. 17
n Lachlan Murdochs ascen-
sion in his fathers media em-
pire was propelled in part by a
good investment call two years
ago in Australia. 20
n The founder and CEO of
Russias most popular social
network, Vkontakte, is leaving
the company just months after
selling his stake amid a feud
with another shareholder. 20
i i i
World-Wide
n The euro zones economic
recovery has been too weak to
significantly reduce the number
of people without jobs, with
the unemployment rate un-
changed since October. 4
n One of the first economic
tasks facing Frances new prime
minister will be to lead a re-
newed offensive against the
EUs prescription of austerity. 6
n Cameron ordered a review
of the Muslim Brotherhood in
an effort to improve the British
governments understanding of
the pan-Arab group. 6
nThe Australian former mili-
tary chief leading the hunt for
Malaysia Airlines Flight 370
moved to damp expectations
that searchers would find any
wreckage in the coming days,
saying it wasnt certain that they
were looking in the right place. 3
n Japans Riken institute said
research that seemed to offer a
way of making stem cells easily
contained errors and wasnt
backed up by lab notes. 11
n At least one protester was
killed and four others hurt af-
ter unidentified gunmen fired
on an antigovernment convoy
in Thailands capital. 10
nPrices are finally rising in Ja-
pan after years of deflation, but
for those whose wages arent go-
ing up, the higher prices are a
bane rather than a boon. 10
Whats News
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Whats Online
The Tangled Web of the Chinese Internet
See the links among Chinas three Internet giants and their recent
investments and acquisitions. on.wsj.com/1eYYCWH
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Behind the Mystery of
Chinas 9-Dash Line
the first-ever legal challenge to
the line as part of a 4,000-page
submission to a U.N. arbitration
tribunal in The Hague. It wants
the line declared as without legal
weight so that it can exploit the
offshore energy and fishery
resources within its U.N.-declared
exclusive economic zone. China
has so far abstained from the
proceedings.
The landmark case risks a
Chinese backlash. Already, Beijing
has all but frozen political ties
with Manila. In recent days,
Chinese ships have been playing
cat-and-mouse games with
Philippine vessels trying to
reprovision marines stuck on a
lonely outpost called the Second
Thomas Shoal. But whats given
the case even greater
significanceand a potential for
escalation to a strategic levelis
that the U.S. has joined in attacks
of the nine-dash line, dropping its
previous diplomatic caution.
In congressional testimony in
February, Daniel Russell, the U.S.
assistant secretary of state for
East Asian and Pacific Affairs, said
that while Washington doesnt
take a position on sovereignty
issues, the way that China pursues
its territorial claims by reference
to the nine-dash line creates
uncertainty, insecurity and
instability. He added that the U.S.
would welcome China to clarify
or adjust its nine-dash-line claim
to bring it in accordance with the
international law of the sea.
A Chinese Foreign Ministry
spokesman retorted that Chinas
rights and interests in the South
China Sea are formed in history
and protected by international
law. He didnt elaborate.
What prompted the American
shift in rhetoric, says Paul Haenle,
a former director for China,
Taiwan, and Mongolian Affairs on
the U.S. National Security Council,
was Chinas decision in November
to declare an Air Defense
Identification Zone over the East
China Sea, including disputed
islands administered by Japan.
Washington has since explicitly
warned Beijing not to do the same
over the South China Sea. It fears,
says Mr. Haenle that well wake
up one morning and discover the
whole region has changed.
But altering the nine-dash line,
as the U.S. suggests, may be
politically impossible for Beijing.
China regards the Philippines
action as a gross insolence. Its a
slap at President Xi Jinpings
much trumpeted China Dream, a
notion that implies the restoration
of the countrys imperial splendor,
including its control over a sea
that it regards more or less as its
internal lake.
Where is all this headed?
If Manila prevails at The
Hagueand it isnt clear that the
U.N. tribunal will accept
jurisdiction over the caseChina
could simply ignore the verdict
and carry on as before. The
simplest solution would be for all
countries concerned to shelve
their territorial disputes and focus
on joint development of the areas
natural resources.
But thats not the way the
Chinese empire has traditionally
worked things out. In past days,
small countries like the
Philippines knew their placeat
the bottom of a regional hierarchy
dominated by China. It isnt likely
to quietly allow Manila to upset
that order.
BEIJINGWhen the Manchus
ruled China, it was given the name
South Seaa maritime domain
dotted with islets, atolls and
lagoons that provided storm
shelter for
fishermen.
What todays
atlases call the
South China Sea
received its
English-language
appellation, and its
coordinates, under a 1953
document titled Limits of Oceans
and Seas published by the
Monaco-based International
Hydrographic Organization,
whose patron is Prince Albert. And
its critical to the global economy.
It carries more than half of the
worlds seaborne trade; connects
the fast-growing economies of the
Asian Pacific with markets in
Europe, the Middle East and
Africa, and is reckoned to cover
vast oil reserves.
Yet, in a push thats creating
alarm among Chinas neighbors
and the U.S.the inheritors of the
Manchu empire who now run
China are making increasingly
assertive claims to almost all of it
as part of an ancient imperium
that they are proudly reviving.
The boundaries of their
historical claim are marked by a
nine-dash linemade up of nine
dashes, or strokes, that protrudes
from Chinas southern Hainan
Island as far as the northern coast
of Indonesia, looping down like a
giant lolling tongue.
This line has always been
something of a mystery. It was
drawn up by cartographers of the
former Kuomintang regime in
1946 in the chaotic final years of
the Chinese civil war before the
Kuomintang fled to Taiwan.
And, in fact, the line started
not with nine dashes but 11: Two
were scrubbed out in 1953 after
the victorious communists
adopted the line. Scale and
precision are prized by
mapmakers, but the nine-dash line
lacks any geographical
coordinates. It looks as though it
was added with a thick black
marker pen.
Whats more, Beijing has never
properly explained what it
represents. Does Chinas claim to
indisputable sovereignty over
the scattered territorial features
inside the line derive from the line
itself? Or is it the other way
round, with the line deriving from
those territorial features and the
waters that surround them?
Chinas neighbors who dispute
its territorial assertionsamong
them the Philippines, Vietnam,
Brunei and Malaysiaare left to
guess.
For these reasons, the
prevailing view among Western
legal scholars has long been that
the nine-dash line wouldnt stand
much chance if it were ever
challenged under international
law.
We may be about to find out.
On Sunday, the Philippines filed
CHINAS WORLD | By AndrewBrowne
A China Coast Guard ship (top) and a Philippine supply boat in a standoff in
the South China Sea near a reef claimed by both countries, on March 29, 2014.
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THE WALL STREET JOURNAL. Wednesday, April 2, 2014 | 31
OFF THE WALL
Nordic Tracks:
How Bjrndalen
Got Broadband
his fellow townsfolk punched
through the hard ground with
shovels to excavate the few inches
of trench needed to lay the cable.
Hes not the only one enjoying
the connectivity. Mr. Stdal, the
Telenor executive, said Svalbard is
now at least 10 years ahead of
mainland Norway. The telecom
company, meanwhile, has seen its
costs for maintenance plummet
and is now planning to rid the ar-
chipelago of traditional phone
lines.
Terje Aunevik, an executive at
Longyearbyens Pole Position Lo-
gistics A/S, said higher-speed
broadband puts Svalbard more
firmly on the map at a time when
Arctic shipping activity is growing
and champagne tourists pass by
on high-cost expeditions to the
North Pole. His company, one of
about 100 here, is increasingly de-
pendent on the Web to survive.
Before we got fiber we strug-
gled a bit, he said. Capacity
used to be unreliable during peak
season, but now it is as stable as
it gets.
Mr. Stensen, working at the
Svalbar, doesnt expect life to
change dramatically though. With
several months of darkness and
average winter temperatures fall-
ing to minus 16 Celsius, he ex-
pects the Klondike atmosphere
to endure.
These days, however, there is a
silver lining. We never have any
trouble streaming or downloading
movies.
BY CHRISTINA ZANDER
Svalbard, Norway
Cabin of Svein Nordahl in Bjrndalen, Svalbard, Norway. One area where Svalbardians have it made is online.
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boring cabins were to be left in
the cold on this project. Still, the
former schoolbook translator
marched up to the local Telenor
office and made a blunt demand:
I want to have fiber in my
cabin.
Mr. Nordahls apparent sense
of entitlement toward better In-
ternet partially stems from the
fact he is Norwegian. Although he
came to Svalbard almost three de-
cades ago, lured by stories of ad-
venture on top of the world, he
didnt leave behind the egalitarian
ethos that defines his people.
One of the staunchest and
wealthiest welfare states in the
world, Norway bends over back-
ward to extend generous services
to its five million people, regard-
less of where they live. The na-
tions mainland is composed of
428 local municipalities, some
with sparse populations tucked in
remote corners of the Nordicsall
have access to expensive doctors
and good quality schools, funded
by taxpayers and the profits of a
booming oil and gas industry.
Extending these rights to
Svalbard is tricky. While Nor-
way is technically sovereign
over the archipelago, the
Svalbard Treaty of 1920
gave 42 nations the
right to conduct com-
mercial activities
there, and Norwe-
gians can collect
only enough taxes
to fund local serv-
ices for a diverse clutch of inhab-
itants, including Russians, Ukrai-
nians, Swedes and Thais.
A few years ago, state-con-
trolled Telenor decided to up-
grade Longyearbyens infrastruc-
ture with fiber optics and a 4G
mobile network in an attempt to
scrap older technologies like cop-
per, coaxial cable and older gener-
ation mobile networks. Seeing
Svalbard as a miniature version
of mainland Norway, Telenor
Chief Technology Officer Frode
Stdal reckoned that the small
community would be a good place
to try out this technical overhaul
before exporting it to the main-
land.
We quickly get feedback on
what works and what doesnt,
Mr. Stdal said during a recent
visit to the archipelago.
Being left out of this project
wasnt welcome news for Mr. Nor-
dahl, a tech enthusiast whose in-
terest in computers goes back to
his pre-Svalbard days.
So he got to work, drawing up
a plan to get miles of fiber ex-
tended to his little village of
Bjrndalen, named for the polar
bears that often stroll by. In 2011,
he struck a deal with Telenor, of-
fering to drag the cables to the
village himself. The operator said
if he could get about 15 people to
sign a petition, they would act on
his plan.
Working over the brief sum-
mer, when temperatures can rise
to as high as 5 degrees Celsius, he
collected 43 signatures from cabin
owners in Bjrndalen.
The following summer, he and
O
n a cold shore in the icy
archipelago of Svalbard, a
relative stones throw from
the North Pole, a small cabin be-
longing to Svein Nordahl is a hive
of activity.
He has no running water and
not one of Svalbards 31 miles of
roads stretches as far as Bjrn-
dalen, the small community of
scattered shacks where he has
made his home. But the isolated
outpost has been fitted with some
of the highest quality Internet
available, allowing Mr. Nordahl
and his neighbors lightning-quick
access to the World Wide Web.
High-speed broadband is a rare
luxury for the 2,600 or so brave
souls living here. In the land
many consider the northernmost
human dwelling in the world, in-
habitants cope with inconvenience
as a way of life.
There are more polar bears
than people, for instance, so resi-
dents are urged not to roam be-
yond village limits without a
gun. And the ground is eter-
nally frozen, making it more
convenient to thaw a glass
of snow in the micro-
wave than it would be
to try to install run-
ning water.
Planning for
birth? Or death? The
rule of thumb is to
travel south in
search of better care than whats
available at the local hospital.
Theres no safety net, Kre
Stensen, a Dane working at the lo-
cal watering hole, the Svalbar,
said while serving coffee and wip-
ing down tables. Youre on your
own.
A quarter of the people living
here leave every year, making
room for a fresh batch of adven-
turers unlikely to linger very long.
One area where Svalbardians
have it made, however, is online.
While most of this high Arctic ter-
ritory lacks high-speed Internet,
Svalbard enjoys speeds estimated
to be 10 to 20 times as fast as any
in the rest of Norway.
That means the 64-year-old
Mr. Nordahl spends hours luxuri-
ating in a kingdom of iPads, PCs
and a flight simulator connected
to a 10-foot-long screen that low-
ers from the ceiling. His entire
household being powered by die-
sel generator, his computers have
43 terabytes of capacity, or
enough to store at least 60,000
full-length HD movies.
Mr. Nordahl lives in a 750-
square-foot cabin built on the tip
of a rock that juts out into a body
of water known as Ice Fjord.
When he got wind of plans by
Telenor ASA to bring fiber-optic
broadband to every household in
Longyearbyen, Svalbards main
hub of 2,000 people located 5
miles to the southwest, he began
hatching a moonshot plan to get
in on the action.
But there was a problem. Given
his distance from Longyearbyen,
Mr. Nordahl and those in neigh-
Polar bear warning
scarlett johansson on
family and fame with
the wall street journal
this friday.
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