Center for a New American Security

Yesterday, CNAS published a new Flashpoints Bulletin that examines the influence global energy trends have in shaping oil and gas development in the South China Sea, and, consequently, the dynamic between countries in and around the region: Finding Common Ground: Energy, Security and Cooperation in the South China Sea (PDF).

In the piece, I highlight two important trends that are worth following that could add an additional layer of complexity to the South China Sea imbroglio: energy development as an element of India’s eastward engagement (i.e., Look East Policy); and China’s advances in deepwater drilling technology.

India’s interest in the South China Sea is getting more attention. Last year, The Times of India reported that India’s offshore Oil and Natural Gas Corporation (ONGC) Videsh would work with Vietnam to jointly explore for oil and natural gas resources in the South China Sea. Despite warnings from China – which has made sovereign claims to the entire South China Sea and its energy resources – India and Vietnam have pressed ahead with joint development, leading to increased tensions between China, India and Vietnam.

Last Friday, Vietnam lodged a complaint with China when two Chinese fishing boats reportedly blocked a Vietnamese seismic survey vessel that caused the ship’s cables to snap. The latest episode is just another in a string of incidents where Chinese fishing boats have blocked attempts by Vietnam and other countries to survey for natural gas and oil deposits. (Track these incidents using the CNAS Flashpoint timeline feature here.) The latest incident also comes on the heels of an announcement from China’s Hainan Province last week warning that provincial police would be permitted to board and search vessels violating China’s territorial waters, including in contested areas.

In response to the most recent attempt by Chinese fishermen to block Vietnam’s seismic surveying, Vietnamese officials said that the government would step up defensive patrols, including deploying marine police, to protect against future Chinese encroachment. India seemed to respond in kind, according to a New York Times report, saying “it would consider sending navy vessels to protect its interests in the South China Sea.”

Territorial claims over the South China Sea took an interesting turn last week.  

According to a report from Reuters, China’s new passports have raised the eyebrows of several South China Sea claimants: the country’s microchip-equipped passports contain a map of China’s claim over the South China Sea – represented by the country’s disputed nine-dash line.

The Philippines and Vietnam have condemned the Chinese passports, worrying that accepting the documents could legitimize China’s diplomatic claim over the sea. According to Reuters, “The map means countries disputing the Chinese claims will have to stamp microchip-equipped passports of countless visitors, in effect acquiescing to the Chinese point of view.”                              

"The Philippines strongly protests the inclusion of the nine-dash lines in the e-passport as such image covers an area that is clearly part of the Philippines' territory and maritime domain," Philippine Foreign Secretary Albert del Rosario said last week, according to Reuters.

China’s Foreign Ministry responded to questions about the passports, stating, "The passports' maps with their outlines of China are not targeting a specific country. China is willing to actively communicate with the relevant countries and promote the healthy development of Sino-foreign personnel exchanges.”

Note: This post originally appeared on the Choke Points blog at ConsumerEnergyReport.com on July 2, 2012.

Beijing is flexing some more muscle to protect its energy interests in the South China Sea.

Last week, China began combat-ready patrols in the waters around the potentially resource rich Spratly Islands that both China and Vietnam have disputed claims to. And on Friday, China Daily reported that Beijing may develop a military presence in Sansha – a newly incorporated city located on one of the disputed Paracel Islands that was stood up to administer Chinese authority over the country’s South China Sea territories. (The city was established in response to a recent Vietnamese law that claimed sovereignty over the Paracel and Spratly Islands.)

The deployment of combat-ready patrols and discussions of developing forces at Sansha comes on the heels of an announcement from the China National Offshore Oil Company (CNOOC) that it will accept bits from foreign energy companies to explore and develop nine new blocs of the South China Sea that fall within Vietnam’s 200-nautcial mile Exclusive Economic Zone. (See the map here.) It is unlikely, though, that foreign energy companies will cooperate with CNOOC in these disputed blocs given the amount of risk the companies would have to assume in operating there. Regardless, Beijing is putting itself in a better position to protect its energy interests: “the announcement of these blocks reflects another step in China’s effort to strengthen its jurisdiction over these waters,” according to MIT Professor M. Taylor Fravel.

Making a Play for Resources

This recent activity joins a string of other incidents by China to protect its claims to the region’s potential hydrocarbon resources. Estimates of oil and natural gas in the South China Sea vary widely, from U.S. estimates of 28 billion barrels of oil to Chinese estimates of 213 billion barrels of oil. Yet no country knows what really lies beneath the seabed. Officials in Beijing appear to be placing bets that the South China Sea could turn out to be a “second Persian Gulf,” driving up strategic competition over potentially energy rich territory. But for years, efforts to conduct surveys to produce better measurements of the region’s resources have been impeded by Chinese vessels obstructing survey ships and others conducting seismic measurements.

Continue reading at ConsumerEnergyReport.com.  

For those who did not tune in last week, this is a new feature to highlight the top tweets of the week to hit my Twitter feed (@wmrogers). The list is completely subjective, of course, but I hope it is helpful to readers interested in following natural security news a little bit closer.

The American Enterprise Institute @AEI: “Global warming doesn’t rank at or near the top of issues people want the president and Congress to address ow.ly/an01c.”

The American Enterprise Institute (AEI) published a compilation of polls on the environment and energy, highlighting public opinion on a range of issues, from nuclear energy, the Keystone XL pipeline to global climate change. The findings are instructive, but I don’t necessarily agree with the analysis that AEI makes about some of the issues. For example, the report notes that “Global warming doesn’t rank at or near the top of issues people want the president and Congress to address. In January 2012, 25 percent said global warming should be a top priority, ranking at the bottom in terms of top priorities.” But read another way, a quarter of Americans find that global climate change should be the top priority for U.S. policymakers. Given the litany of challenges the country faces, isn’t it still substantial that 25 percent of Americans want action taken to address climate change and consider it a top priority? Regardless, the report is worth a read and you can make up your own mind about what it all means.

MIT Professor M. Taylor Fravel @fravel: “India says oil, gas cooperation with Vietnam in the East Sea will continuej.mp/J7TcoC.”

Professor Fravel tweets that India will continue to cooperate with Vietnam to exploit energy resources in Vietnam’s East Sea (also known as the South China Sea), despite objections from China. This has been a huge source of tension recently between India and China. China objects to “outsiders” getting engaged in the South China Sea dispute – an area that China claims is its territorial sea.  (To learn more, read this post I wrote in September on India’s South China Sea gambit.)

One of the challenges with writing a paper like “The Role of Natural Resources in the South China Sea,” one of six chapters that appears in our new report, Cooperation from Strength: The United States, China and the South China Sea, is to make it accessible to a broad audience (i.e., those intimately familiar with resource issues in the region and those who know nothing about those issues at all). To do that I chose to avoid narrow recommendations that would have distracted the reader from the broader message I hoped to convey: that despite the complexity of resource challenges in the region (and potential for conflict), the United States can encourage policies that help promote peaceful competition over resources in the South China Sea, and thereby promote regional stability.

But for those interested, I’d like to share some ideas for how U.S. policymakers can encourage cooperation around several of the issues that I explore in the paper, beginning with energy. As I argue in the paper, the United States needs to focus beyond energy and give attention to fisheries, minerals and climate change, which are important resource issues that affect geopolitical behavior in the Asia-Pacific region. But I thought it would be good to start with energy, given that that’s where a lot of attention has been and is likely to be in the near future (for better or worse). Here’s what I would propose:

First, the United States should propose that APEC measure the hydrocarbon resources in the South China Sea in order to develop more realistic estimates.

Countries in the region are growing increasingly suspicious of unilateral efforts to survey oil and natural gas in contested territorial waters, in part because they may signal that the surveying country intends to develop those resources on its own – including in contested waters. For example, in May 2011, China severed the cables of an oil and natural gas survey vessel in Vietnam’s territorial waters. A similar incident in June 2011 involved a Chinese fishing boat ramming a Vietnamese survey ship. (Visit our Flashpoints feature for more information about these and other incidents.)

In January, CNAS will release its study on the South China Sea, including a chapter on how natural resources affect the behavior of states in the region. There has been a lot of attention paid to natural resources and whether or not competition over access to oil, natural gas, fisheries and minerals could lead to conflict in the region. Too often the issues are over-simplified though, and there is either an implicit or explicit assumption that it’s competition over natural resources that could lead to overt conflict. But natural resources have a more nuanced role in international relations, particularly in the South China Sea, and understanding this role can actually enable states to manage their resource issues and avoid instability and conflict.

Competition over natural resources is rarely, if ever, the sole precipitator of conflict. [There is a vast literature on this topic, and though I won’t develop a literature review here, there are some notable sources worth exploring, including the work by our friends at Woodrow Wilson Center’s Environmental Change and Security Program and their New Security Beat blog.] Instead, tensions related to competition over natural resources have the potential to exacerbate existing diplomatic or political grievances between states, which can contribute to instability or conflict.  But there are ways to relieve tensions over natural resources. Indeed, where competition over natural resources appears to lead to instability or conflict, it is more often than not a proxy for other challenges states are facing, particularly with governance or other related trends.

China is just one of the many East and Southeast Asian states that continues to pursue nuclear power in the wake of the March 2011 disaster at Japan’s Fukushima Daiichi nuclear generating station. But China, like most other states with nuclear reactors or aspirations, has not been blithe about the Fukushima crisis. According to The Wall Street Journal on Saturday, “China was one of the world's fastest-growing nuclear markets before the March disaster at Japan's Fukushima Daiichi nuclear-power facility.” That changed in March when “China's State Council, China's cabinet, ordered a suspension of approvals for new nuclear plants and began a nationwide nuclear-safety review as public fear over nuclear power widened after the Fukushima Daiichi incident.”

To help China improve its safety standards and develop other expertise, The Wall Street Journal reported that the U.S.-based Exelon Corps – which provides support services to the nuclear industry – will partner with China’s state-owned China National Nuclear Corps (CNNC), a move, the Journal says, that suggests that “China's secretive state-owned nuclear companies are determined to learn Western safety practices and other expertise in the aftermath of Japan's nuclear incident in March.”

Tomorrow, CNAS will formally launch Hard Choices: Responsible Defense in an Age of Austerity, at an event at the Newseum beginning at 8:30 AM. If you’re in downtown Washington, I strongly recommend stopping by. Along with the authors LTG David Barno, USA (Ret.), Dr. Nora Bensahel and Travis Sharp, Thomas Donnelly (of AEI) and Gordon Adams (of the Stimson Center) will discuss the critical question facing policymakers on Capitol Hill today: How can the United States responsibly and effectively maximize its security in this era of growing fiscal austerity?

Hard Choices does yeoman’s work in highlighting the implications of tough budget cuts on America's military capabilities and is a must-read for anyone who truly wants to understand the debate that is playing out on the Hill and across the river at the Pentagon. The report outlines four scenarios for defense budget reductions, with each scenario reflecting more defense cuts, and analyzes the strategic implications for the U.S. military under each example.

For me, one of the hallmarks of the report is the emphasis on the need to rethink U.S. defense strategy as it currently stands and the careful articulation of where U.S. priorities should be. “The United States has pursued a remarkably consistent military strategy over the past 65 years, although different American leaders have adopted varying approaches to national security,” the report states.

As you know, Christine Parthemore is traveling in East Asia where she is conducting research for our South China Sea project. She’s in Vietnam today, and she has put together the Natural Security News for us this morning…Vietnam Edition:

All from Viet Nam News:

• While the government has hoped to get private businesses to invest in reforestation, one top story explained that it has been ineffective.
• In raw materials news, the government will now require that steel producers increase their reserves as a hedge against future supply and price problems – a move not popular with the producers thus far.
• Vietnam’s Ministry of Industry and Trade is invoking the time-proven method of holding energy contests, this one for energy efficiency.
• Officials are warning that some waterways have become so polluted and saline that alternative sources of drinking water should be sought.
• Finally, though resources are not mentioned directly in the front page article on East Sea talks in Jakarta wrapping up, we all know they played a role; this article signals affirmation for a multilateral approach to the region’s maritime issues and other key facets of ASEAN cooperation.