Deploying Pawns

16 Jul

Large Fleet Deployed to the Spratly's Hainan province officials, according to China Daily Mail, have deployed a 30-vessel fishing fleet from Hainan into the disputed territory near the Spratly Islands.

Among them was a 3,000-ton master ship and 29 fishing boats with tonnage of more than 140 tons each. They will fish in Nansha area near Fiery Cross Reef for about 20 days. Nansha is the name the Chinese give to the Spratly Islands.

It is the fishing expedition of the largest scale ever spontaneously organized in Hainan Province. Different from the separate fishing operation in the past, it is an organized combined fishing operation coordinated by fishing co-operatives and enterprises.

There is one commander-in-chief and three deputy commanders-in-chief in the fleet. The fleet is divided into two sub-fleets consisting of 6 groups. It has clearly determined manners of command and communications during the operation. Some fishermen told reporters that they had never been fishing so far away from Sanya.

It’s unclear if this is a National initiative, or just Hainan’s. The latter alternative seems to be confirmed by Hainan’s decision to incorporate three areas as a city, to create China’s southernmost prefecture-level city.

Meanwhile, Japan has recalled its ambassador in protest, after China deployed fishing vessels near the Senkaku/Daioyu chain in response to a Japanese Foreign Ministry plan to purchase the privately-owned islands.

On May 9, Chinese National Offshore Oil Corporation (CNOOC) deployed an oil rig, HYSY 981, with a companion pipe-laying vessel, HYSY 201. But, far from being an example of Beijing flexing its muscle, this situation underscores how complicated these international issues have become.

In the short-to-medium term, neither the PLA Navy nor any of China’s several paramilitary patrol and surveillance entities have sufficient capability to completely ensure the safety of any significant oil installations and transport vessels in areas of the South China Sea beyond its EEZ. Subsequently, the risk of such an action to regional stability and China’s security would likely be too high to accept given the high cost of expanding its oil and gas operations to the unexplored fields of the disputed areas with the unavoidable nationalistic backlash in other claimant states, with which China has important and growing trade and investment ties. In fact, much of CNOOC’s expansion strategy of late has revolved around boosting its overseas production outside the region, such as its involvement in the development of Canadian oil sands projects and in the Missan Oil Fields of Iraq.

Given these realities, the introduction of HYSY 981 has the potential to be a positive development for the region. HYSY 981 could end up making CNOOC more attractive as a development partner because of its newfound capability to exploit resources in areas that would be beyond the technological reach of some of China’s neighbors. This could have the effect of promoting joint development without either a resolution of the underlying maritime boundary dispute or a formal government-to-government agreement. When speaking about Filipino plans to develop the natural gas fields around Reed Bank, Philex Petroleum chairman Manuel Pangilinan said recently that, “a gas field will need major expenditures and the help of international oil firms that have the technical capability and financial resources.”

Pangilinan, himself, made a recent trip to Beijing to talk with CNOOC executives about the possibility of partnering to develop gas resources in the Reed Bank, despite the recent row between Manila and Beijing over Scarborough Shoal. Though Pangilinan said that CNOOC was only a potential partner and that Philex had not ruled out partnering with other foreign companies, CNOOC at least has a foot in the door for this type of project, and the added technological expertise of deep-water drilling can help their prospects while potentially setting a precedent for joint-development projects in other areas of the South China Sea.

It is often lost on observers that the development of undersea oil and gas deposits inevitably involves production-sharing agreements with foreign state-owned and multinational oil companies. In this case, the most difficult aspect of negotiation between Filipino and China energy companies would be whether the terms of such an agreement were sufficiently balanced to avoid enflaming Filipino national sentiments and eliciting accusations of betrayal in the way that an earlier joint exploration agreement with China did several years ago. The stakeholders of any potential agreement in both countries would have to tread carefully lest this potential opportunity for progress harms, rather than helps, the possibility for cooperative development and the avoidance of conflict.

Dr. Robert Farley and Chris van Avery at the Asia-Pacific Center for Security Studies try to answer the questions, what is China (and other contiguous states) doing, and what is the United States’ interests in all this? I responded in the comments.

Far from being a sinister strategy, I think China’s actions are based on a lack of strategy and the lack of good governance. One counter-interpretation about these conflicts based on exclusive economic zones (EEZs). is, that they are generated by the lack of discipline between provincial and national actors in each country. In this scenario, national bureaucracies task provinces or localities, to acquire or protect energy or food resources, like fish. Provinces comply to the tasking by any means necessary, including pushing beyond EEZ boundaries. The national government is then forced to put out diplomatic fires when navies and merchant fleets clash, as also happens in the Yellow Sea between South Korea and China. Foreign ministries resort to diplomatic language, but have no authority to change the original tasking by other ministries that started the conflict.

It’s interesting to note, that North Korean and Chinese clash over fishing in the Yellow Sea, but China and North Korea have ways to deal with the incidents. During the Cold War, the U.S. and the former Soviet Union had an Incident At Sea treaty which stipulated bilateral responses when Soviet and American ships or planes encountered one another and a mistake occurred. The point is, both Washington and Moscow wanted to avoid war and to avoid an escalation caused by a blunder. No one in East Asia has reached that level of wisdom or calculation. And, the various actors, multiplied by bureaucracies and private entities, do not see a reason, to trade off their current behavior for future gains from a more peaceful legal regime. And, the United States which is the ultimate benefactor, because American power is based on trade, has not expended diplomatic capital, to convince its allies even to agree with one another. As a result China can divide and conquer, because there is no unanimity in the region: it’s all self-serving short-term exploitation at the cost of the national and regional interests.

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