January 11, 2012

Changing the Tide in the South China Sea: Opportunities for Energy Cooperation

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.

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.)

a common estimate of fossil fuel resources in the South China Sea would help
reduce the tensions caused by unilateral surveying efforts. Moreover, if the
estimates prove lower than many of that states expect – or indicate that
exploiting the resources would be too costly – they may be less likely to
aggressively pursue independent exploration. Since 1990, the Asia-Pacific
Economic Cooperation (APEC) Energy Working Group has provided a forum for
countries to address the region’s energy challenges, and it could lead the
effort to develop common estimates. Even if China rejects cooperation through
APEC, however, it would still be worth pursuing a multilateral estimate without
China’s participation. Since any such estimate would likely be much lower than
current Chinese estimates, the participating countries would have a common
basis for contesting China’s claims, giving them greater diplomatic leverage.
Moreover, given China’s penchant for engaging states bilaterally, developing a
shared multilateral estimate would provide states common ground from which to
negotiate with China even on a bilateral basis, thus magnifying their
bargaining power that help promote broader regional interests.     

Second, the United States should aim to reduce
the strategic importance of non-renewable resources in the South China Sea by
keeping energy resources out of the geopolitical spotlight, and by helping
states move away from petroleum as the dominant source of transportation fuels.

Specifically, the United States should
encourage ASEAN to continue to address energy resources and other environmental
issues at the working level, but – not at the ministerial level. High-level
attention to these issues simply increases their strategic value, can harden
bargaining positions and may push states to engage in risky behavior if they
believe that not acting would cause them to lose face on the international
stage. In contrast, working-level discussions enable productive discussions
that can identify commons areas of agreement without the distractions and
constraints of diplomatic fanfare. Moreover, discussing these issues only at
the working level can help moderate potential domestic concerns, which would complicate
international efforts to cooperate around important energy and other resource
challenges in the South China Sea. 

United States should also significantly increase cooperation with countries in
the region on renewable energy resources in order to meet the world’s growing
energy demands. Improving the availability of alternative energy sources that
cost the same as or even less than the seabed energy resources will reduce competition
for those resources. Military-to-military cooperation that includes fuel standards
development and alternative fuel testing may provide a particularly good
opportunity for the United States, as the U.S. military and other Asia-Pacific militaries
continue to reduce their reliance on conventional fossil fuels. Indeed, given
the U.S. military’s goals of reducing its dependence on petroleum and utilizing
more sustainable liquid fuels, U.S. military aircraft and naval vessels in the
region would benefit in the near- and long-term from access to foreign supplies
of sustainable and compatible alternative liquid fuels.

Tune in
tomorrow for my thoughts on how U.S. policymakers can promote cooperation
around climate change.