Thayer Consultancy

ABN # 65 648 097 123

Background Briefing: South China Sea: The Philippines Internationalizes Its Dispute with China Carlyle A. Thayer January 24, 2013

[client name deleted] Regarding developments in the South China Sea, Manila now is taking the dispute to the UN for some kind of adjudication on some of Chinas claims. In early December you suggested that it might instead be prudent to give the new leadership in Beijing some space before rattling the cage again. Would that kind of calculation apply to this sort of move, too? ANSWER: The Philippines has really defied Chinas injunction not to internationalize their territorial disputes. This presents a different order of challenge to China than sending Philippine Coast Guard ships to Scarborough Shoal or trying to hammer out a statement with fellow members of ASEAN. Three factors are at work: Chinas effective occupation of Scarborough Shoal, lack of progress on the Code of Conduct, and Chinese bullying (both the Philippines and Japan). In the latter half of November China sent its deputy foreign minister Fu Ying to Manila to explain what was meant by internationalizing their territorial dispute. She mentioned three actions: taking it to the UN, discussing it with third parties including allies, and high-profile press conferences. At around the same time China announced it would maintain a permanent deployment of surveillance ships at Scarborough Shoal. The Philippines invited China to join it in international arbitration, China turned the invitation down. China has intensified its patrolling in the Spratlys. The Philippines is trying to force Chinas hand to justify it claims to the South China Sea under international law. Sam Bateman argued on Voice of America that the Philippines adopted this as a ploy knowing China would refuse to cooperate. What if China accepted? Or more to the point, if the Arbitral Tribunal does hear the matter and it takes 3-4 years to reach a judgment the Philippines can argue that China should show restraint [under the Declaration on Conduct of Parties in the South China Sea or DOC] until an award (decision) is made. The day of reckoning is well into the future and the possibilities are endless variations on win, lose or draw.

2 Suggested citation: Carlyle A. Thayer, South China Sea: The Philippines Internationalizes Its Dispute with China, Thayer Consultancy Background Brief, January 24, 2013.

Thayer Consultancy
ABN # 65 648 097 123

Background Briefing: South China Sea: Vietnam Evades Supporting Legal Claim by the Philippines Carlyle A. Thayer January 25, 2013

[client name deleted] Vietnams reaction to questions about the Philippines move to take China to arbitration panel under the United Nations Convention on the Law of the Sea and ask it to declare Chinese claims in the area invalid? The response by Vietnams Ministry for Foreign Affairs:
Deputy Chairman of the National Border Committee under Vietnams foreign ministry Nguyen Duy Chien said on Thursday: answering reporters' questions - published on MOFA's website: "Vietnam maintains the consistent policy that all issues relating to the East Sea must be solved by peaceful means on the basis of international law, especially the United Nations treaty on the 1982 Law of the Sea Vietnam holds that all nations have the right to choose peaceful measures to solve disputes in accordance with United Nations' Charter and international law including the UN law on the 1982 Law of the sea" Regarding the expected publication of a U-line map: "Vietnam has the non-disputable sovereignty over Hoang Sa and Truong Sa. Every maps with wrongful information on Vietnam's sovereignty over Hoang Sa and Truong Sa as well as Vietnam's rights to sovereignty in the East Sea are illegal and of no validity."

How significant is this? Is Vietnam supporting the Philippines? What is your assessment? Answer: James Clad, a former US Defense Department official, wrote the following in The Nelson Report (January 23, 2013):
There are many reasons to sit up and take notice of the move which del Rosario is now taking. First, and while Malaysia, Vietnam and Indonesia have been active since 2010 in using to best effect the remaining UNCLOS mandated time for filing maritime claims, none of the South China Sea claimants have so directly confronted Beijing by seeking to use the adjudication procedures set out in the LOS [Law of the Sea] Treaty, which China has signed and ratified, let us remember. Manila's hand would have been strengthened further had the present prevarication in Hanoi, evident since 2009, been replaced by moves, urged on the Vietnamese by its

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neighbors, to find common declaratory cause with the Philippines -- in much the same way as Hanoi and Kuala Lumpur submitted a joint maritime demarcation claim, agreeing to a common maritime border in the area of the so-called 'Nine Dotted Line' which Beijing holds out as the extent (though it won't provide latitude and longitude coordinates) of its claim. As the Chinese foreign ministry realizes full well, China's claims of historical entitlement are worthless in international law. But legalities aside, the Philippine move ratchets up an intense, multisided game along the entirety of the western Pacific, where those playing Japan's high stakes moves over the Senkaku islands (Diaoyu to Beijing, Daioyutai to Taipei) take their cue from displays of resolve further south along the western Pacific littoral. Secondly, the next country to watch is Malaysia, reluctant hitherto to show assertiveness but now contemplating a diplomatic move (possibly an overt challenge to the entirety of the Nine Dotted Lines in the manner of Manila's announcement) - a move made more likely by Beijing's provocations back in August well within Malaysia's EEZ off northern Borneo. The PLA-led assertiveness, endorsed by Xi Jinping, is winning no victories and is harming Chinese statecraft [emphasis added].

THAYER COMMENT: A joint Philippine-Vietnam position would be difficult given that Vietnam occupies features claimed by the Philippines and they still both have overlapping claims that havent been resolved. The Philippines (and China) protested the joint Malaysia-Vietnam submission to the Commission on the Limits of the Continental Shelf in May 2009. [source deleted] Of course there are outstanding differences between Hanoi and Manila over their respective claims, but a lot of pressure was applied to the Vietnamese to come up with an interim declaratory position to, diplomatically, fence off a bit more of the area from the Chinese. It is a question of what to prioritize, and which issues should be subordinated to the bigger Chinese problem. THAYER COMMENT: Vietnam has exhibited a reticence to engage with the Philippines or criticize China on the South China Sea territorial disputes. Vietnam is now reviewing a party resolution, Nghi Quyet 8 (2003) on its tenth anniversary. Thie resolution dealth with cooperation and struggle with the major powers. There appears to be a growing feeling in Vietnam that too much cooperation with the US and too much struggle against China has harmed Vietnam. Vietnam appears to be trying to cut a deal with China to take the pressure off its fishermen and oil/gas industry. THAYER ANSWER: Vietnam is adopting a very low key non-provocative posture on this. It is trying to hedge its bets. The statement by Nguyen Duy Chien only repeats what both China and the Philippines have been saying. Of course they both have gone further. China emphasizes that the disputes must be settled bilaterally by the parties concerned. Vietnam has let the Philippines take the point position on the South China Sea dispute because Manila attracts the flack from China. Vietnam handled that last cable cutting incident in a very low keyed manner.

Suggested citation: Carlyle A. Thayer, South China Sea: Vietnam Evades Supporting Legal Claim by the Philippines, Thayer Consultancy Background Brief, January 25, 2013.

Thayer Consultancy
ABN # 65 648 097 123

Background Briefing: South China Sea: Philippines Legal Action and Implications for Vietnam Carlyle A. Thayer January 29, 2013

[client name deleted] We request your assessment about the Philippines lawsuit against China. 1) What is your assessment of the Philippines recent decision of taking its territorial disputes in the South China Sea with China to the United Nations tribunal? ANSWER: The Philippines is pursuing its territorial dispute with China on three fronts: political, diplomatic and legal. President Aquino stated that the Philippines had virtually exhausted all attempts to negotiate the dispute bilaterally with China. Aquino pointed to seventeen years of discussions with China, initiated after it occupied Mischief Reef in 1995 to July last year when the last meeting was held with no result. The Philippines invited China to join it and seek international arbitration, China declined. If the Philippines took no further action China would have succeeded in permanently annexing the Scarborough Shoal. China has forced the Philippines from Scarborough Shoal and maintains a permanent deployment of China Marine Surveillance ships there along with a barrier across the mouth of the shoal. Chinese fishermen continue to fish but Filipino fishermen are turned back. The Philippines is not seeking to settle the question of sovereignty, UNCLOS does not address this issue. The Philippines is seeking a judgment in international law that maritime zones drawn from its baseline are legal. This includes its territorial sea, contiguous zone, exclusive economic zone and continental shelf. The Philippines is also seeking a judgment in international law that certain features occupied by China are not rocks or islands in international law but low-tide elevations that form part of its continental shelf. The Philippines argues that it is illegal for China to occupy such features and the UNCLOS Arbitral Tribunal should order China to withdraw. Some scholars describe international law as the weapon of the weak. The Philippines lacks the capacity to force China from its waters. It has therefore resorted to attempting to settle this matter peacefully and through legal means. There are risks involved for the Philippines. China may refuse to participate and argue it has exempted itself from the UNCLOS dispute settlement mechanisms. The Arbitral Tribunal may decide it does not have jurisdiction. Or the Tribunal could find in favour of China. The legal proceeding are likely to take up to four years, China could consolidate and expand its presence on features in Philippines waters. When the

2 Arbitral Tribunal does make a decision it is supposed to be binding on all parties. But there no means to enforce its decision. 2) Does the success or failure of the lawsuit have any implications for Vietnam, a country receiving common benefits from the South China Sea? ANSWER: The Philippines has asked the UNCLOS Arbitral Tribunal to rule Chinas nine-dash line unlawful. Vietnam would greatly benefit if the Arbitral Tribunal decided in favour of the Philippines. It would mean that Chinas nine dash line cutting into Vietnams Exclusive Economic Zone (EEZ) was illegal. The Arbitral Tribunal could make any number of other judgments that would have implications for Vietnam. The Tribunal could decide that some of the features occupied by China are in fact islands under international law. This would give China a basis for claiming a 200 nautical mile EEZ and continental shelf. If the Tribunal decided that other Chinese-occupied features were rocks they would be entitled to a 12 nautical mile territorial sea. Vietnam would have to respect this decision. The Tribunals decisions on islands and rocks could legalize Chinas presence and create an overlap in maritime zones between China and Vietnam and the Philippines. This could provide a basis for further conflict or settlement if the parties could agree to delimit the areas in dispute. But if the Arbitral Tribunal declined to hear the case Vietnam would have no other recourse than to settle the matter through bilateral negotiations with China. This would mean China would continue to press its nine-dash line claim. 3) What does Vietnam respond to the lawsuit? ANSWER: Vietnam has been very quiet in its response. Vietnam has merely taken note of the actions by the Philippines without taking sides. Vietnam has disputes with China, for example over the Paracel Islands, that raise different points of international law. 4 ) How have international scholars commented on the lawsuit? ANSWER: International legal specialists have been largely silent. They will comment after they have thoroughly researched the Philippines claim and past cases brought to UNCLOS. Regional security specialists have generally raised concerns and likely difficulties that the Philippines will face. One specialist, for example, expressed concern that the actions by the Philippines may hinder ASEAN efforts to negotiate a Code of Conduct with China. A maritime specialist has argued that the Philippines tabled their case knowing that China would reject it. In other words the Philippines legal action was nothing but a political ploy. Chinese scholars have been dismissive. They claim Chinas is exempt from UNCLOS binding dispute settlement mechanisms and that the Arbitral Tribunal will not hear the case. Follow Up January 31, 2013: Q. How should Vietnam respond to the action by the Philippines in lodging a claim with the United Nations? ANSWER: Vietnam has issued a non-committal response because it has already agreed with China under the 2011 Guidelines on Fundamental Principles for the

3 Settlement of Maritime Disputes to discuss their territorial disputes on a bilateral basis. China has thirty days from receipt of notification by the Philippines to nominate its representative to the Arbitral Tribunal. Vietnam should wait until the thirty days are over to see what China does. If China responds favourably, Vietnam need take no action other than maintain a watching brief on the proceedings of the Tribunal. The Philippines has already suggested the process could take three to four years. If China refuses to nominate and participate in the proceeding of the Arbitral Tribunal there is nothing Vietnam can do to make China change its position. Chinas negative action, however, will be a clear indication that there is little possibility of international law being used to settle its territorial disputes with Vietnam. In the medium term Vietnam should continue to meet and discuss bilateral territorial disputes with China, especially in the waters forming the mouth of the Gulf of Tonkin. The best Vietnam can do is to continue to negotiate with China in order to maintain a peaceful status quo. It is a long way from the present to any final decisions. The Arbitral Tribunal has been asked by the Philippines to rule on many other matters and it is in Vietnams interest to see what decisions are made. If the Arbitral Tribunal rules that Chinas nine dash line is unlawful Vietnam stands to benefit. Vietnam can use this judgment to further its case for sovereign jurisdiction within its 200 nautical mile Exclusive Economic Zone. Q. On January 29, Rep. Ed Royce, Chairman of the US House Foreign Affairs Committee, meeting with Philippine officials said that China should agree to face the Philippines before a U.N. arbitration tribunal to avoid a possible crisis over their longraging territorial disputes in the South China Sea. What is your assessment of the US's viewpoint about the issue and its future actions toward the Philippines and China? ANSWER: The statement by Congressman Ed Royce, Chairman of the US House Foreign Affairs Committee, is just his personal opinion and does not bind the Obama Administration. The United States has always advocated that territorial disputes of this nature be settled peacefully and in accord with international law including UNCLOS. The U.S. is unlikely to directly interfere in this matter because it has not yet ratified UNCLOS. Private American law firms have and will continue to provide advice to the Philippines. The US Government will continue to assist the Philippines build up its capacity for territorial defence including enhancing its maritime domain awareness because the two sides are bound by a Mutual Defense Treaty.

Suggested citation: Carlyle A. Thayer, South China Sea: Philippines Legal Action and Implications for Vietnam, Thayer Consultancy Background Brief, January 29, 2013.

Thayer Consultancy
ABN # 65 648 097 123

Background Briefing: South China Sea: Vietnam and Chinas Policy Under Xi Jinping and Regional Arms Race? Carlyle A. Thayer February 2 , 2013

[client name deleted] Regarding recent legal developments related to territorial disputes in the South China Sea: Q1. What is your assessment of China-Vietnam relations in 2013 and in the future? Do you think Xi Jinping will adopt a hard policy/attitude towards Vietnam relating to the South China Sea, or will China pursue a softer policy towards Vietnam? ANSWER: The structure of China-Vietnam relations was set nearly a decade and a half ago when the two ruling parties adopted a 16-character framework calling for long-term, stable, future-oriented, good-neighborly and all-round cooperative relations. Despite widespread Vietnamese public mistrust towards China, and the misgivings of some government officials, the general tenor of party and government policy is to work pragmatically with China and to minimize the impact of their dispute in the South China Sea. Vietnam was very muted when a cable cutting incident was reported late last year. Conservative elements of Vietnam's political establishment are concerned that "hostile outside forces" will attempt to manipulate anti-China sentiment to undermine one-party rule. Conservatives also fear that getting too close to the United States will result in increased pressures to improve human rights and religious freedom by giving pro-democracy activists the right to speak and protest in public. Conservatives also fear that getting too close to the United States will result in negative pressure on Vietnam by China. Vietnamese foreign policy and security specialists report that the party is reviewing Resolution No. 8 on the tenth anniversary of its adoption. Resolution No. 8 modified Vietnam's relations with "objects of struggle" (doi tuong) and "objects of cooperation" (doi tac). In 2003 Resolution No. 8 led to a step up in Vietnam's defence relations with the United States. Minister for National Defence General Pham Van Tra visited Washington and Vietnam permitted the US Navy to make one annual port visit. Ten years later party conservatives are weighing the pros and cons of cooperation with the United States. Party conservatives reportedly have reached the net assessment that Vietnam should have benefitted more. A review of relations with China reaches the opposition conclusion, Vietnam may have harmed relations by too much struggle.

2 Concerns about Vietnam's handling of relations with the United States and China are magnified by internal party in-fighting. To some party conservatives China, as a socialist country, is a more reliable ally than the United States. Xi Jinping, when he was vice president, visited Vietnam in 2011. He warned each and every Vietnamese leader whom he met not to get too close to the United States. Xi Jinping was part of a small leading group with responsibility for South China Sea issues before becoming party General Secretary. China under Xi will continue to pressure Vietnam not to internationalize the South China Sea issue by criticizing China in public, siding with the Philippines in its legal bid to the UNCLOS Arbitral Tribunal, and to focus first on implementation of the DOC [Declaration on Conduct of Parties] before considering a Code of Conduct. A senior former American government official has revealed that the U.S. put diplomatic pressure on Vietnam to forge a common position with the Philippines but Vietnam prevaricated. China under Xi will insist that Vietnam stick to the script of their 2011 Fundamental Guidelines for the Settlement of Maritime Disputes and negotiate bilaterally. China presently has its hand full on two fronts - the Senkaku confrontation with Japan and the legal battle with the Philippines. China appears more likely to pursue diplomacy with Vietnam rather than confrontation. China will still have difficulty imposing strict control over regional and provincial authorities and what they do in the South China Sea. Q2. What will be the progress in the South China Sea after the Philippines brings the issue to court? ANSWER: China will adopt wedge tactics, that is, try to divide ASEAN members over the Philippines' legal actions. China will try to influence ASEAN members to put pressure on the Philippines to withdraw its claim. China will continue to stress that bilateral negotiations are the best approach. China will also argue that the Philippines is not acting in accord with the DOC. This means that China will hold talks with ASEAN on the Code of Conduct hostage. China will only agree to discuss the COC when the Philippines returns to the letter and spirit of the DOC. Meanwhile China will continue to expand its presence in the South China Sea by adding more marine surveillance vessels and stepping up naval patrols. Q3. Do you think an arms race has started in Asia because the countries like Vietnam, China, Indonesia etc have bought a lot of weapons recently? ANSWER: In the academic literature an arms race occurs between two or more countries that view each other as adversaries. They then compete to acquire weapons to match or exceed those of its adversary(ies). An arms race leads to a straining of economic resources in order to finance arms procurements. This is not happening in Southeast Asia. Arms acquisitions in Southeast Asia can be explained by a number of factors but two are most important. States are acquiring arms to modernize their armed forces in order to replace outdated platforms and to keep up with advances in military technology. Some states are responding to a security dilemma. That is, the action by a neighbouring country to bolster its defence is viewed as potentially threatening, prompting the state concerned to acquire weapons to offset this. This is generally viewed as an action-reaction cycle.

3 These two factors explain arms acquisitions by Vietnam and Indonesia. Both are modernizing their arms forces and both are responding to the security dilemma by modernization in the region, of which China is the main factor. But neither Vietnam nor Indonesia are straining their economic resources to develop their armed forces. And to both Vietnam and Indonesia, China creates a security dilemma but it is not an adversary. Regional specialists argue, however, there are elements of a naval arms race, especially between China and Japan in Northeast Asia. Both see each other as adversaries and both seek to gain dominance in the maritime domain.

Suggested citation: Carlyle A. Thayer, South China Sea: Vietnam and Chinas Policy Under Xi Jinping and Regional Arms Race?, Thayer Consultancy Background Brief, February 2 , 2013.