July 04, 2014 00:00 By Surakiart Sathirathai Special
Huge waves of misunderstanding threaten regional peace and global trade; they can be tamed by dialogue that turns territory disputes into functional cooperation
The South China Sea is currently the focus of issues that have wide-ranging implications for the peace, security and prosperity of this region and the international community as a whole.
Territory disputes threaten to cast a long shadow over China-Asean relations, and could serve as an excuse for involvement of powers from outside the region, creating a new “international situation” of permanent tension and even strife. This is something to be avoided at all costs.
Despite being a non-claimant state, Myanmar – as the current Chair of Asean – bears a special responsibility to help address the issue and prevent the escalation of tensions. Likewise, as current coordinator of the Asean-China dialogue, non-claimant state Thailand also bears a responsibility to help ensure that South China Sea issues do not disrupt the mutually beneficial relations and understanding that Asean enjoys with China.
Asean, China and friends in and outside the region, too, share a responsibility to ensure that tension or armed conflict will not take place nor impact the implementation of the Asean Economic Community and hinder the free flow of goods, services, capital and investment, and skilled labour. Tension in the South China Sea will certainly affect the business community’s confidence in and outside the Asean region on the emerging Regional Comprehensive Economic Partnership (RCEP), which will create the world’s largest free trade area, encompassing 16 countries: Asean’s 10 members, China, Japan, South Korea, India, Australia and New Zealand.
It is no secret that should the South China Sea disputes be allowed to escalate into further confrontation, we shall risk turning it into a sea of conflict, armed brinkmanship and possible war disrupting global trade and vital lifelines for the Asia-Pacific region.
The danger is that a lack of progress, inadvertent actions, or continued stand-off will stoke nationalistic sentiment on all sides.
It is perhaps time for all sides to take a step back in order to obtain a better view of the larger picture and of the possible ways forward. The situation must first to be depoliticised. A shared vision of shared opportunity has then to be created.
More than half of the world’s annual merchant fleet tonnage – about US$5.3 trillion (Bt171.7 trillion) in value – passes through the Malacca, Sunda, Lombok and Makassar straits linking the Indian Ocean with the South China Sea. Over one-third of the globe’s crude oil and over one-half of its liquid natural gas are transported daily through the South China Sea, making it a vital link in the global supply chain.
Meanwhile, proven oil reserves are about 7.7 billion barrels and estimated reserves range from 28 billion to 130 billion barrels. If the latter estimate is accurate, then South China Sea oil reserves would be second only to those of Saudi Arabia. As for natural gas reserves, the estimates range between 266 trillion and 900 trillion cubic feet.
The South China Sea holds one-third of the world’s marine biodiversity, providing seafood to 1.5 billion people living around it. Given these enormous energy and marine resources, the South China Sea has the potential to be the hub of an economic revolution for its littoral and hinterland states, lifting them up to greater prosperity and well-being.
Economic considerations based on projected natural resources in the area, the vital importance to international shipping lanes – plus political considerations based on new balance-of-power calculations in the region – have added to the complexities, and make it difficult to rely on any single approach towards resolution.
Notwithstanding, mechanisms for conflict avoidance are also actively being sought. On the formal governmental track, discussions on territorial boundary issues take place. Running parallel is a second track whereby the Declaration on the Conduct of Parties in the South China Sea has been concluded and consultations on a follow-up Code of Conduct are being held. These two tracks need to be supplemented and complemented with a third track that focuses on functional cooperation, which will turn potential conflict over territorial claims into potential cooperation.
Chinese statesman Deng Xiaoping once advised that all parties shelve their territorial claims for the time being and concentrate on cooperation for mutual benefits. To shelve the territorial claims is not to relinquish them. Look at Antarctica, where nations have not relinquished their territorial claims but have cooperated in environmental conservation and scientific exploration.
Why can’t the South China Sea’s littoral countries explore similar cooperation, for example on renewing fishery stocks, navigation safety and scientific exploration? An important benefit of this functional cooperation would be to contribute to the positive atmosphere of mutual trust in the two governmental tracks, thereby facilitating the eventual success of those negotiations and avoiding a make-or-break situation.
Pending formal delineation of maritime boundaries, countries are cooperating in the form of joint development areas.
Japan and South Korea agreed in 1974 on joint development of the southern part of the continental shelf of the two countries. An agreement was signed in 1989 between Australia and Indonesia to create a zone of cooperation in the area between East Timor and Northern Australia, and in 2002 the Timor Sea Treaty was signed between East Timor and Australia. In 1992, an MoU was signed between Malaysia and Vietnam for oil exploration and exploitation in the continental shelves of the two countries. China has signed joint development agreements with Japan and Vietnam in overlapping or adjacent maritime areas.
Back in 1979, Thailand and Malaysia agreed on a Joint Development Area for exploration and extraction of oil and gas in overlapping maritime areas in the Gulf of Thailand. It is still functioning amicably to this day even without a formal sea boundary agreement. “Brothers drinking from the same well” is the motto of the Malaysia-Thailand Joint Development Authority.
The multiple overlapping claims in the South China Sea should not present an insurmountable obstacle. Indeed they should be seen as a good test for the ingenuity of international lawyers, as well as an opportunity to spread the risks and burdens among a larger number of stakeholders, to attract more multinational investment, to create economies of scale, and thus to enlarge the potential pie for all concerned. Nowadays there are many business models that could be adapted to suit the situation in the South China Sea. For instance, instead of discussing the area to be delimited as a basis for profit sharing, capital investment, special and differential treatment for certain claimant states, management participation and in kind contribution can altogether form basis for a profit-sharing formula.
To explore and discuss in a concrete manner the possibilities and potentials of such functional, sectoral cooperation, a mechanism for alternative dialogue may need to be established. A Forum on Functional Cooperation could be established to bring together representatives of national and regional stakeholders, corporations, state enterprises, investors, academic institutions and business people, to identify, implement and manage functional cooperation activities.
The South China Sea is a vast region, much of it yet to be fully explored. In many ways it is a new frontier, traversed only in passing. Globalisation, technological advances, economic necessities and geopolitical imperatives have now caught up with it, and are threatening to churn up huge waves of misunderstanding and acrimony. We must act quickly to ensure that these do not gather into a devastating tsunami. We must calm the waters by swamping the area with a network of continuing dialogues on all tracks, of technical exchanges, of functional cooperation, and of informal consultations among all stakeholders that can help to foster trust and confidence. Dialogue on functional cooperation is less confrontational than claims on sovereignty. It will create a comfort level among claimant states allowing them to feel that the South China Sea issue is a discussible agenda. It is a confidence-building process which will complement the atmosphere in the discussions on territorial boundary and on the Code of Conduct in the South China Sea.
After all, I firmly believe that no one, claimant or non-claimant states alike, wishes to see the South China Sea become a crucible of conflict. With goodwill from all around and proper management, the South China Sea must and will become the Sea of Partnership, Peace and Prosperity.
Professor Surakiart Sathirathai is chairman of the Asian Peace and Reconciliation Council and former deputy prime minister and foreign minister of Thailand. This article is based on a speech he gave at the Myanmar Institute of Strategic and International Studies during a July 3 roundtable discussion on “Functional Cooperation in the South China Sea”.