Thayer Consultancy

ABN # 65 648 097 123

Background Brief: South China Sea: Chinas Trifecta Carlyle A. Thayer December 5, 2012

[client name deleted] What is your assessment of the following: Q1- What are the factors that induced China to cut the cable of the Binh Minh 02? ANSWER: According to Mr. Do Van Hau, Chief Executive Officer of the Vietnam Oil and Gas Group, the November 30th cable cutting incident has now been determined to be an accident caused by Chinese fishing boats. This incident illustrates that local authorities in China are taking the lead in pursuing aggressive action against Vietnam and they encourage Chinese fishermen to disregard Vietnams laws and sovereignty. All Chinese vessels carry modern communications equipment and can easily coordinate their actions. They can also report to nearby Chinese paramilitary ships for assistance. In other words, the Chinese fishing vessels acted in such a brazen manner because they did not fear retaliation. Q2 What has been the regional reaction to Chinas inclusion of the U-shapted line in its new passport? ANSWER: Three countries have been affected by Chinas issuance of a new passport with a map claiming territory under the sovereignty of India, Vietnam and the Philippines. India has issued its own stamp with a map including the territory China claims. Vietnam is issuing an entry visa on a separate page for holders of the new Chinese passport. The Philippines has made the most diplomatic protest by delivering a Note Verbale to Chinese officials in Manila. Chinas map has no standing in international law and cannot be used to advance its claims to indisputable sovereignty over the East Sea. Q3 - Do you think that China now has a big advantage on South China Sea issues, especially after the ASEAN Summit in Cambodia? Will Chinas influence change when Brunei takes the ASEAN Chair in 2013? ANSWER: China is in a position to play the role of spoiler by preventing ASEAN from reaching consensus on South China Sea issues. Chinese officials have privately chided ASEAN about its so-called consensus. Chinas vice foreign minister Fu Ying has strongly indicated that the South China Sea cannot be internationalised. She specifically told ASEAN ministers not to involve outside powers, not to take the matter to the UN or to give high-profile media interviews.

Brunei is wealthy and the Sultan is greater legitimacy in his country than Hun Sen in Cambodia. Brunei cannot be bought. It will adopt a professional and low-key approach and jealously protect ASEANs unity. Brunei will strive for consensus. The year 2013 will be more difficult for Chinese diplomacy with ASEAN because Indonesia will play a stronger role behind the scenes. Brunei has powerful external friends including the United States. Q4 - How do asess China's plan to board foreign ships that illegally enter disputed areas in South China Sea beginning January 1, 2013? And what should Vietnam do to maintain maritime security other than by diplomacy? ANSWER: If China exercises its powers only in the territorial sea surrounding Hainan Island it will be acting in accord with international law. Since China occupies the Paracels, most of the international community will not criticize Chinese actions in territorial waters surrounding these islands. But if China attempts to enforce its regulations in disputed waters in the East Sea, its actions could be viewed as an act of state piracy or if deadly force was used, as act of war. These are special extreme cases. So far the new regulations are the words of Hainan island provincial authorities. It is actions that speak louder than words. It depends on what actions Hainan authorities take, who is involved and where the actions take place. Vietnam needs to monitor Chinese actions carefully and provide appropriate escorts to Vietnamese ships entering into contested waters in the Spratly archipelago. Survey vessels like the Binh Minh 2 should always operate under Vietnam Marine Police escort.

Suggested citation: Carlyle A. Thayer, South China Sea Trifecta: New Passports, Cable Cutting and New Regulations Covering Chinas Territorial Sea, Thayer Consultancy Background Brief, December 5, 2012.

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ABN # 65 648 097 123

Background Brief: South China Sea: Explaining Chinas Recent Actions Carlyle A. Thayer December 5, 2012

[client name deleted] What is your assessment of the recent flare-up in the South China Sea, and how would you explain China's actions? Any relation to timing after the ASEAN East Asia Summit? And is this flare-up any different from the previous ones? ANSWER: In my view three recent developments the new Chinese passports with the map claiming the South China Sea, the regulations passed by Hainan provincial authorities to board vessels illegally operating in Chinas territorial waters, and the cable cutting incident are an illustration of a lack of coherence in Chinese foreign policy. The latter two incidents were the result of local initiatives and not the product of central policy. The latter two incidents arise from a growing culture of assertive nationalism directed against Vietnam and the Philippines. Local authorities feel they can act with relative impunity because China, after all, has indisputable sovereignty over the South China Sea. Local actors often pre-empt diplomatic approaches of the Ministry of Foreign Affairs. In November China clearly signaled that it would play hard ball. China has in effect occupied Scarborough Shoal. Chinese officials have told the Philippines Foreign Secretary that they will maintain civilian paramilitary vessels permanently on station there. China has also played the role of spoiler, not only undermining ASEAN unity but brow beating the Philippines by telling them that China will not move forward on a Code of Conduct until the Philippines stops internationalizing the South China Sea issue. Specifically, the Philippines was told not to involve outside powers including allies, not to take the South China Sea issue to the United Nations, and not to conduct high-profile media interviews. The November 30th cable cutting incident differs from an incident over a year ago involving the same survey vessel, Binh Minh 2, in that in 2011 it was China Maritime Surveillance ships involved. This year it was Chinese fishing vessels. The passage of new regulations by Hainan province is one of the first legal steps taken to provide a legal basis for the enforcement of jurisdiction within the u-shaped 9-dotted line map tabled in May 2009 with the United Nations Commission on the Limits of the Continental Shelf.

Suggested citation: Carlyle A. Thayer, South China Sea: Explaining Chinas Recent Actions, Thayer Consultancy Background Brief, December 5, 2012.

Thayer Consultancy
ABN # 65 648 097 123

Background Brief: South China Sea: How Should the Philippines and Vietnam Respond? Carlyle A. Thayer December 5, 2012

[client name deleted] The intentions of Chinas news leadership are now clear. What do you think countries like Vietnam and the Philippines should do to cope with China's new assertiveness in the South China Sea? ANSWER: Two recent incidents the decision by Hainan province authorities to board vessels engaged in illegal activities in Chinese waters and the November 30 th cable cutting incident indicate that local Chinese authorities continue to set the agenda for the central government in Beijing. Local authorities are actively promoting aggressive actions against the Philippines and Vietnam under the banner of nationalism. What is not clear is whether the newly elected government of Xi Jinping approves or endorses these actions. Xi Jinping will officially take office in March. According to Wu Shicun, the head of Hainan province foreign affairs office, the new law applies to the 12 nautical mile territorial sea surrounding islands that China claims. Wu was quoted as stating that the new regulations applied to all of the hundreds of islands scattered across the [East] sea, and their surrounding waters. This would include islands presently under the sovereignty of the Philippines, Malaysia and Vietnam. If the Hainan authorities attempt to enforce the new regulations in areas in dispute they run a high risk of provoking confrontation and possibly even armed conflict. If Chinese actions involved the use of deadly force their actions could be viewed as an act of state piracy if not war. Both the Philippines and Vietnam have announced that they will sent patrol ships to disputed areas to protect national sovereignty. This is a prudent decision. This will be a demanding task if China acts aggressively. In the meantime both Hanoi and Manila need to mobilize the international community to oppose Chinese actions. Already India, the United States and Singapore have either criticized Chinese actions or called for clarification from the central government. Suggested citation: Carlyle A. Thayer, South China Sea: How Should the Philippines and Vietnam Respond, Thayer Consultancy Background Brief, December 5, 2012.

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ABN # 65 648 097 123

Background Brief: South China Sea: Illegal Fishing and Cutting Cables What Next? Carlyle A. Thayer December 5, 2012

[client name deleted] China has undertaken some new actions, such as controlling all fishing boats in the South China Sea and several days ago, they cut cable of Vietnam's Binh Minh 02 ship. We request your assessment. And what's next? ANSWER: The decision of Hainan provincial authorities in passing a law permitting the boarding of foreign vessels for illegal activities in Chinas territorial waters, and the 30th November cable cutting incident, are the latest manifestations of aggressive assertiveness by local authorities. These actions demand that the central government, now headed by Xi Jinping, take action to control these activities and honour the June 2011 Guidelines on Fundamental Principles to Resolve Maritime Disputes and the November 2002 Declaration on Conduct of Parties in the South China Sea. Under international law all nations have sovereignty over their territorial waters. These are the waters located 12 nautical miles from a countrys baseline facing the sea. Littoral states have the right to prevent illegal activity, but they must also respect innocent passage by foreign vessels. International law is clear in this matter. But what is not clear is how China will act in areas that it claims but which are under the sovereignty of other littoral states such as the Philippines, Malaysia and Vietnam. The decision by the Hainan provincial authorities is especially worrying because of clarification made by Wu Shicun, the head of Hainan provinces foreign relations department, that the law covers all islands and their territorial sea in the East Sea, including islands occupied by Vietnam, the Philippines and Malaysia. If Chinese authorities attempt to board and arrest ships and vessels operating in the Spratly island archipelago they run a high risk of creating a violent confrontation that could escalate. Hainan provincial authorities must clarify their intentions. Vietnam and the Philippines are now put on notice that they must take steps to protect their ships and vessels in their territorial waters, including islands in the East Sea. The action by Hainan provincial authorities is potentially a grave risk to peace and security in the East Sea. The cable cutting incident has now been described as an accident by Do Van Hau, the Chief Executive Officer of the Vietnam Oil and Gas Group. It is clear that Chinese

2 provincial authorities are playing a dangerous game of risk in failing to curb the aggressive action of their fishing fleets. If the cable cutting incident was an accident, then Vietnam is entitled to an apology and compensation for the damage caused. The Chinese central government should respect this position and take appropriate action. But in my opinion this is doubtful because Chinese officials will argue that the incident took place in Chinese waters and put the blame on the Binh Minh 2. Vietnamese authorities must answer why, in light of previous incidents, the Binh Minh 2 was not given a proper escort. Vietnam has now taken the correct step in announcing that patrols by the Marine Police and Border Guard will commence in January. Now is the time for quiet but firm diplomacy. The new government of Xi Jinping needs time to settle into office. This will take place in March. President Xi should not be forced into hasty action. But this does not mean that Vietnam cannot defend its sovereignty in the meantime. Suggested citation: Carlyle A. Thayer, South China Sea: Illegal Fishing and Cutting Cables What Next?, Thayer Consultancy Background Brief, December 5, 2012.

Thayer Consultancy
ABN # 65 648 097 123

Background Brief: South China Sea: Vietnam and Chinas New Passports, Strategic Partnership with the United States? Carlyle A. Thayer December 5, 2012

[client name deleted] What is your assessment of the following: Q1. How do you think about the recent China's escalation in the disputed East Sea by printing the map with U-shaped line in the Chinese passport, while ASEAN and China are making efforts upon COC? Was there any links with some possible division of ASEAN claimants and non-claimants, especially Cambodia? What are the possible implications behind that? Were you serious suggesting that Vietnam immigration authorities must stamp a strong condemnation, or rejection of the validity of the map, on the Chinese passports? ANSWER: Chinas issuance of new passports containing a map including the Paracel and Spratly islands is another attempt to bolster Chinas claim to indisputable sovereignty over the East Sea. The maps in the passports have no legal validity in international law. Passports are designed to identify the citizenship of the holder and facilitate international travel. Chinas actions has only complicated matters. The new passports raise tensions between China and the other claimant countries. Further, it is a unilateral action that is not in accord with the spirit of the DOC [Declaration on Conduct of Parties in the South China Sea]. Concerns that stamping the Chinese passports constitutes an endorsement of Chinese claims is unfounded legally, but not politically. I proposed that Vietnam issue a stamp granting the bearer of the new Chinese passports conditional entry into Vietnam and contain a statement to the effect that granting entry does not prejudice Vietnams claims to sovereignty over the Paracel and Spratly Islands. India has produced a stamp with a map of India containing disputed land areas along its border with China as a counter to the map in the new Chinese passports. Vietnam has adopted a better means of dealing with the new Chinese passports than my original suggestion. I endorse Vietnams decision to issue a visa on a separate page not attached to the passport. This is Vietnams sovereign right and it is a passive measure. If Vietnam rejected Chinas new passport it would open itself to retaliation by China. Q2. How do you think about the main obstacles for US and Vietnam to establish a strategic partnerships? Do you agree with your former student, Dr. Nguyen Nam

2 Duong, that the US should be more flexible with the so called comprehensive partnership, like Australia? In late '70 Vietnam missed a golden opportunity to normalize relations with US, and, as consequences, Vietnam faced two border wars and more than a decade of isolation. Do you think the history might be repeated, more or less? ANSWER: Bilateral relations between Vietnam and the United States have already developed into a strategic partnership in all but official name. The key issue, as I understand it, is the United States would like to see a separate chapter on human rights. Vietnam would like to include human rights in a chapter on general political relations. The Obama Administration was unlikely to give ground during the run up to the November election because of a possible domestic backlash in a tight election. It is now possible that the U.S., especially under a new Secretary of State, may be more pragmatic. Both Vietnam and the United States need to weigh the benefits of a closer strategic relationship against the costs of compromise on deeply held values. The U.S. values human rights, Vietnam values national sovereignty, equality and mutual respect. The current impasse does not prevent the development of even closer bilateral relations, including international defence and security relations. Secretary Panetta suggested an Office of Defence Cooperation be set up in the U.S. Embassy to facilitate defence cooperation. Both countries share a convergence of strategic interests in resolving tensions in the East Sea. In my opinion the ball is now in Vietnams court.

Suggested citation: Carlyle A. Thayer, South China Sea: Vietnam and Chinas New Passports, Strategic Partnership with the United States?, Thayer Consultancy Background Brief, December 5, 2012.

Thayer Consultancy
ABN # 65 648 097 123

Background Brief: South China Sea: Vietnam Responds to Cable Cutting Carlyle A. Thayer December 5, 2012

[client name deleted] Again, China cuts cables of the Binh Minh 02, and India has said it is ready for deploying its naval forces to protect its assets in the South China Sea. Q 1) Could you provide your assessment of these latest developments regarding the action of the Chinese boats and the announcements of the Indian Navy? ANSWER: The November 30th cable cutting incident and the new regulations issued by Hainan province are initiatives undertaken by local authorities. They may reflect the inability of the central government to exercise firm control over the many bureaucracies involved in South China Sea affairs. The CEO of the Vietnam Oil and Gas Group has described the cable cutting incident as an accident. The action by Hainan Province authorities is more serious if China backs up its words with aggressive deeds. Any country can exercise control over illegal activities in its territorial waters in accordance with its own domestic laws. Littoral states must also grant innocent passage to civilian and military vessels who make an expeditious passage through the territorial sea. Wu Shicun, the head of the foreign affairs department of Hainan province has declared that the new regulations apply to all the islands and waters that China claims in the South China Sea. If Hainan authorities attempt to exercise the same kind of jurisdiction in the territorial sea of other countries then their actions would be state piracy or if deadly force were used, an act of war. The actions by Hainan province authorities are provocative, make a solution to territorial disputes in the East Sea more complex, and violate the spirit of the 2002 DOC [Declaration on Conduct of Parties in the South China Sea]. Q2) Can you predict why the Vietnamese government and state-run PetroVietnam do not officially raise their voice like they did in 2011? ANSWER: The Vietnam government has lodged a Note Verbale or formal diplomatic protest with Chinese embassy officials about the action of Hainan province authorities. Petro-Vietnam has made its protest in an announcement on its website. The Vietnamese Ministry of Foreign Affairs has officially stated that Chinese actions seriously violate Vietnams sovereignty. This is the first action. Now it is up to the central authorities in China to respond and clarify the meaning of Hainan provinces new regulations. It is incumbent on China to investigate the cable cutting incident

2 and if it was an accident, to make those responsible apologize and pay compensation. But past practice indicates that China will brazen it out and put the blame on Vietnam for illegally operating in Chinese waters.

Suggested citation: Carlyle A. Thayer, South China Sea: Vietnam Responds to Cable Cutting, Thayer Consultancy Background Brief, December 5, 2012.