Beware of China giving gifts: The risk of joint development of the South China Sea resources

A few weeks after his fifth visit to China, President Rodrigo Roa Duterte claimed that Chinese President Xi Jingping offered him a controlling stake in a proposed joint energy exploration in the West Philippine Sea if the Philippines would set aside the 2016 United Nation Convention of the Law of the Sea (UNCLOS) award that invalidated China’s historic claim in the South China Sea. According to President Duterte, his Chinese counter-part advised him to “Set aside the arbitral ruling — set aside your claim then allow everybody connected with the Chinese companies, they want to explore. If there is something, we will be gracious enough to give you 60%, only 40% will be theirs (Chinese companies).”

President Duterte did not say whether or not he had accepted President Xi’s seemingly sincere and generous offer for the joint exploration of the West Philippine Sea. However, Associate Justice Antonio Carpio claimed that Foreign Secretary Teodoro Locsin, Jr.’s timely intervention prevented President Duterte from making a “unilateral declaration” to set aside the 2016 UNCLOS award to the Philippines. According to Justice Carpio, the foreign secretary’s clarification that the Philippines was not setting aside or abandoning the award before China could accept President Duterte’s unilateral declaration setting aside the award, prevented the Philippines from being bound by the chief executive’s unilateral declaration. This incident showed the perils of absolute acceptance of China’s Trojan Horse in the South China Sea dispute — joint development of the disputed waters’ resources.

One of the most popular yet untried approaches in the resolution of the South China Sea dispute is the joint development of the South China Sea resources by the claimant states. The prospect for joint development, however, is hampered by claimant states’ distrust of each other. The claimant states’ determination (especially China) to apply force and coercion to assert their territorial claims undermines any prospect for fostering trust and more cooperation in resource sharing. This situation is further complicated by China’s heavy-handedness in enforcing its territorial claims over the South China Sea on its terms. As a result, while all parties in the dispute agree on cooperative development in principle, they fail to translate it broadly in practice.

It is frequently suggested that claimant states put aside their territorial claims and instead, engage in the exploration and exploitation of oil, gas, hydrocarbon, and fishery resources. Interestingly, however, there has been no progress in this area because the other claimant states are also wary of China’s formula for joint development based on the late Deng Xiaoping’s exhortation: “Sovereignty is ours, set aside disputes, pursue joint development.” China’s offer of joint development includes a caveat — “that the other claimant state would have to accept China’s indisputable claim on the South China Sea even before the negotiation for a joint development will take place.”

Another issue against joint development is that China has used it as part of its Salami tactic against the Association of Southeast Asian Nations (ASEAN). This tactic involves offering each claimant state a joint development venture as a means of resolving the South China Sea dispute. China was able to apply this tactic when it convinced the Philippines and Vietnam to join a Joint Maritime Seismic Undertaking (JMSU) in the South China Sea.

However, by joining the JMSU, the Philippines and Vietnam became complicit in China’s tactic for two reasons: 1.) the agreement undercuts the position of two ASEAN member states, Malaysia and Brunei, since it tacitly lends validity to China’s extreme claims to islands and maritime space in the South China Sea; and 2.) by signing a trilateral deal, the Philippines and Vietnam derogated the united front that ASEAN had successfully formed to deal with China in the South China Sea dispute in the aftermath of the Mischief Reef Incident in the mid-1990s.

NOT A BAD IDEA
Joint development of resources in a disputed area is not a bad idea. However, joint exploration of natural resources in the South China Sea should not be seen as a means to circumvent the territorial disputes or as a prerequisite for cooperative political relations among the claimant states. Rather, it should be considered as the result of improving relations among the disputing states that can further enhance reconciliation among them. Claimant states and private companies expect the territorial dispute to be resolved first, before starting oil exploration and drilling operations to prevent harassment or armed confrontation.

Any progress towards any cooperative activities in the disputed waters will only occur if China makes unilateral accommodation to the other claimant states by accepting the July 12, 2016 UNCLOS award to the Philippines. This will be followed by reciprocal restraint by the small claimant states that will involve accepting China’s growing naval presence in Southeast Asian waters and the holding of confidence-building measures between their respective navies and the People’s Liberation Army’s Navy. These developments will set clear maritime demarcations, and generate norms on joint resource exploration and development.

This will also convince external powers to limit the deployment and operations of their naval forces since the littoral states have learned to cooperate in managing their disputes in the South China Sea.

Cooperative joint development ventures involve domestic bureaucracies, private companies, ordinary citizens, and other interest groups in the process of conflict resolution. Private companies will seize the opportunity to cooperate by increasing trade and investments that will foster integration among the disputing states’ civil societies as their citizens interact with their counterparts from the other claimant states through business contacts, tourism, scientific, and cultural links, and academic exchanges. Joint development ventures in the South China Sea will create powerful constituencies among the claimant states that will have vested interests in peace and will lobby within their countries for policies of reciprocal restraint and economic integration between China and the other claimant states.

Dr. Renato Cruz De Castro is a Trustee and Convenor of the National Security and East Asian Affairs Program, Stratbase ADR Institute.