China Proposes Joint Exploration of Spratly Islands

31 August 2011 FDI Team

Background

China’s ambassador in Manila says his country is willing to negotiate partnerships with the Philippines and other claimants in disputed parts of the South China Sea. The announcement, made on the eve of Philippine President Benigno Aquino’s first state visit to China, could remove a significant regional flashpoint, promote good order along major strategic lines of communication and ensure future energy security. 

Comment

Since the end of the Cold War, a strategic power vacuum has existed in the South China Sea, as the Soviet Union withdrew from Cam Ranh Bay in Vietnam and the United States closed its installations in the Philippines. In this context, several East Asian littoral governments have sought to enhance their strategic and security positions by staking sovereignty claims to the Spratly Islands that lie in the centre of the South China Sea.  The continued urbanisation and industrialisation of regional states in the aftermath of the Asian financial crisis, coupled with the rise of China, has resulted in increased military capability and intent. This, in turn, has contributed to tensions over conflicting maritime boundaries.

According to Joshua Ho of the Institute of Defence and Strategic Studies in Singapore, the militarisation of the seemingly innocuous islands has created ‘a mosaic of small, isolated, more or less fortified outposts, and multiple overlapping claims to maritime jurisdiction scattered across the South China Sea’. Aside from the Philippines and China, Vietnam, Taiwan, Brunei and Malaysia each claim partial or complete ownership of the islands. Geological surveys have magnified the geopolitical stakes, by suggesting the islands and surrounding sea floor hold significant hydrocarbon reserves.

China’s joint exploration initiative could well serve all the claimants’ interests. If the seismic surveys are accurate, the hydrocarbon reserves could guarantee future Asian energy security and prosperity for the coming decades. A co-operative development regime for the islands would remove the prohibitive costs involved in unilateral exploration, divert resources from military purposes and stabilise the region. Australia could be positioned to significantly benefit from greater guarantees to Asian energy security. Hydrocarbon exploitation would provide sureties to current high-growth economies and potentially an economic catalyst for low growth states, such as the Philippines.

The removal of tangled jurisdictional claims and associated rivalries will promote freedom of navigation through the South China Sea and ensure that Australia can continue to capitalise on its “proximity premium” to Asia. The historical “tyranny of distance” has become a blessing, as the geopolitical pivot of the world changes with the rise of Asian economies. The seemingly insatiable demand of regional economies for minerals and energy, ostensibly guarantees Australia’s future prosperity.

A regional conflict, or even a low intensity skirmish, would threaten the sector. Stakeholders could expect heavy losses and risk defaults to contractual obligations, as ships could be forced to divert from traditional shipping lanes. In such a situation, consumers and investors could lose confidence in Australian projects as external costs rise. The removal of one of the most contested flashpoints will ensure not only vital access to Australia’s sea lines of communication, but also Australia’s continued benefit from the rising economies of Asia and the resultant demand for minerals and energy.

Liam McHugh

Strategic Analyst

Northern Australia and Energy Security Research Programmes

[email protected]

 

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