I. CASE BACKGROUND
Claims to various islands of the archipelago began in the 1930s. Since the 1950s, the involved claimants have developed 29 oil fields and 4 gas fields in the Spratly region.(1) China's rising energy demands, decreasing ability to meet demand growth with domestic energy sources, and continued reliance on oil have propelled China to look to alternative energy sources -- in particular the relatively untapped South China Sea in general, and the Spratly Islands in particular.
According to Kent Calder, China's energy balance of trade has dramatically deteriorated since the early 1990s, causing China to become a net importer of oil for the first time in over 25 years.(2) Dependence on imported oil is likely to continue, given its low per capita energy consumption rate -- 40% of the world average. Unless China can find a way of coping with the high start-up costs, waste products and safety concerns affiliated with the implementation of nuclear energy, oil will remain one of China's leading energy sources for the mid-to-long term. (3)
The Spratly Islands are situated in the South China Sea -- one of the largest continental shelves in the world. Typically, continental shelves are abundant in resources such as oil, natural gas, minerals, and seafood. According to James Kiras, a contributing editor of the Peacekeeping & International Relations journal, one study conducted by China estimated oil reserves in the South China Sea to be larger than Kuwait's present reserves.(7)
Oil and natural gas reserves in the Spratly region are estimated at 17.7 billion tons; Kuwait's reserves amount to 13 billion tons.(8) The Spratly reserves place it as the fourth largest reserve bed worldwide.
You can also visit the CIA World Factbook site for descriptive information on the Spratly Islands' ecology.
Continent: Asia
Region: East Asia
Country: China
China:
China's claim to all islands in the Spratly archipelago stems from its historical presence in the region, dating as far back as the Han dynasty of the 2nd century, BC.(10) According to Marcus Hall's evaluation, China's historical claim is dubious and neglects similar historical claims by Taiwan, Vietnam and Malaysia.(11) Moreover, China's historical interpretation of its sovereignty rights ignores current international law.
The
Philippines:
Vietnam:
Taiwan:
Malaysia:
Brunei:
the
United States:
Japan:
ASEAN
members:
| China | Vietnam | the Philippines | |
| Tanks | 9,200 | 2,000 | 126 |
| Submarines | 51 | 0 | 0 |
| Destroyers and Frigates | 55 | 7 | 1 |
| Patrol and Coastal Aircraft | 870 | 55 | 44 |
| Combat Aircraft | 5,845 | 190 | 43 |
| Armed Forces | 2,930,000 | 572,000 | 106,500 |
II. Environment Aspects
Act Site Harm Site Example China Pacific Ocean Acess to Oil Resources
III. Conflict Aspects
Disputes have become more frequent in recent years, in part the result of burgeoning energy demands in China. In an article written by Japanese Professor, Shigeo Hiramatsu, China's inadequate domestic oil-refinery and extraction capabilities inhibits China's ability to increase energy production to meet rising demands.(20) Consequently, China must either import more oil and gas, improve its production capabilities, or undertake joint exploration of off- shore areas to develop potential oil and gas fields. Unfortunately, the third option will likely entail exploration in the potentially oil-and-gas-rich Spratly Islands, where territorial disputes are hotly contested.
Economic exploration endeavors appear to ignite the tenuous stability in the Spratly region. China granted oil exploration rights to foreign oil firms in territories with overlapping claims. In 1992, China National Offshore Oil Corp signed a joint exploration contract with Crestone Energy Corp. for a disputed area in the Spratly Islands. The Sino-U.S. contract infuriated Vietnam, who claimed the contract location is part of its exclusive economic zone. The situation was further aggravated in 1996, when Vietnam forged ahead with joint exploration plans in Spratly waters also claimed by China. Vietnam awarded exploration rights to Conoco in 1996, infuriating China. China claims that the area covered in the 1996 Vietnam-Conoco deal overlaps with the block awarded to Crestone Energy by China in 1992.(21)
The conflict is further exacerbated by foreign firms willing to undertake riskier oil development projects in Asia. The foreign oil firms are looking to profit from the current energy boom in Asia as well as to find replacement reserves for those in the United States and the North Sea where production approaches their peak.(22)
Aside from granting foreign firms exploration rights in disputed waters and conducting military exercises in the Spratly area, China has also committed itself to the build-up of its navy and air force. The Financial Times reported in August of 1996 that China planned to purchase advanced navy radar from the British. This radar would improve warning signals to China of 'impending' attacks as well as facilitate naval task group deployment in the South China Sea.(23) The islands are particularly strategic to China.
1930s
1934-1944
1946
1968
1973
1974
1978
1979
1988
1989
1992
1992
1992
1992
1992
1994
1995
1995
1996
1997
Joint Development:
A 1992 ASEAN declaration, endorsed by China,
stipulated that Spratly-related territorial disputes would be resolved by
peaceful means. China, however, proceeded with foreign company contracts to
explore areas with overlapping sovereignty claims in 1994, and in 1995 destroyed
Philippino military structures and erected Chinese concrete markers on the
Philippine-claimed Mischief Reef. These antagonistic moves by China, virtually
renders the 1992 joint declaration null and void.
The UN Convention on the Law of the Sea and the World Court:
Issues
pertaining to the territorial control of sea waters have long been the subject
of international law. Although there are some generally accepted rules of
maritime shipping and the extension of a state's territorial limits, emphasis in
recent years on potential undeveloped sea resources has generated a number of
inter-state disputes around the globe (29) Undersea oil exploration has been
particularly contentious. The former Soviet Union in 1960 extended by 12 miles,
its territorial waters. Other countries claim a 200-mile off-shore territorial
zone. To resolve disputes and regulate issues, the United Nations drafted the
Law of the Sea Convention (UNCLOS) in 1982. The UNCLOS is aimed at establishing
coastal boundaries, erecting an International Seabed Authority to regulate
seabed exploration not within territorial claims, and to distribute revenue from
regulated exploration. As of 1990, only 42 of the required 60 ratifications to
make the Convention effective were completed.
Article 56 of the treaty outlines parameters for the establishment of a country's Exclusive Economic Zone (EEZ), which extends 200 nautical miles from the country's coastline. Article 56 gives sovereign rights for exploration, exploitation, conservation, and resource management of living and non-living natural resources of waters in the country's EEZ. The UNCLOS further attempts to exclude rocks incapable of sustaining human habitation. The problem, however, stems from the country's right to define the natural feature as a rock or an island.(30)
Aside from defining an EEZ, the UNCLOS also contains parameters for a country's continental shelf in article 77. The continental shelf is defined as the underwater portion of the country's coastal land mass -- including the sea bed as well as the subsoil of the shelf. The deep ocean floor, however, is not considered part of a country's continental shelf.(31)
The third important part of the UNCLOS is Part VI, which justifies claims by Brunei, Malaysia and the Philippines. Justification is based on proximity, not history; hence, China's and Taiwan's historical claims would not likely win arbitrated cases.
In May of 1996, China's parliament passed a resolution to approve the Law of the Sea UN Convention. Signing onto the Convention would enable China to extend its exclusive economic sea zone to 340 km.(32) Yet, it remains unknown whether China will follow through with its pledge to become a signatory.
Aside from the UNCLOS, the World Court (International Court of Justice) could also serve as a conduit to resolve the Spratly- related territorial disputes. In order for the World Court to hear a case, however, all disputants must be willing to permit the Court to hear the case and render a binding decision. James Kiras believes that China will be unwilling to take this conflict resolution route, given that China claims rights to a sea area extending 1,000 nautical miles south of Hong Kong. Kiras cites four motives driving China's resistance to international arbitration: (1) land-based resource scarcity; (2) population growth; (3) aspirations to become a regional naval power; and, (4) territorial claims far exceed anything established in existing international maritime law.(33)
Consultative or Semiofficial Intergovernmental Forum:
Ali Alatas,
the Indonesian Foreign Minister, suggested that political conflicts in the
region need to be diffused by a consultative or semiofficial intergovernmental
forum.(34) China, however, has continued to acquire territory by means of force
rather than through diplomatic negotiations. This was evident in China's
acquisition of the Paracel Islands from South Vietnam in 1974, and again in 1988
when China clashed with Vietnam over Johnson Reef in the Spratly Islands. See Time Line for a
list of conflicts and disputes. According to a 1995 article from The
Economist, China has resisted suggestions to expand the purview of ASEAN's
Regional Forum (ARF) to include Spratly-related disputes. China emphasizes that
the forum is to exchange views not to negotiate.(35)
A senior fellow with the Programme on International Economics and Politics, Mark Valencia, envisions a cooperative regime, whereby China and Taiwan lay aside their 'historic' claim to the region for a 51% share of the 'multilateral Spratly Development Authority' (SDA).(36) The SDA would be responsible for managing resource exploration and exploitation. The Spratly region would become demilitarized and authority disputes set aside. Mr. Valencia admits that the cooperative regime is not perfect, yet asserts that this type of arrangement should be considered. Otherwise, inaction and gridlock may inhibit the development of a collective security agreement for the region.
Asian Executives Poll:
In a 7 November 1996 poll, 47.6% of Asian
business leaders indicated the Philippines had the strongest claim to the
Spratly Islands. China accounted for 24.1% of the vote, while Vietnam claimed
13.9% of the vote, Malaysia picked up 9.6%, Taiwan carried 3.6%, and Brunei
captured 1.2% of the business leaders' votes.(37)
III. Environment and Conflict Overlap
China has provoked, however, limited military clashes in pursuit of exerting control in the region. According to Kevin Muehring's Institutional Investor article, China's military exercises in the Taiwan Strait in 1996 and its aggressive behavior in the Spratly Islands may be indicative of China's larger, long-term regional ambitions.(25) Thus, China's actions in the Spratly Islands may form one part of China's plan to exert greater control in the larger East/Southeast Asian region.
Although China is unquestionably the most active claimant in building its military, the other actors are preparing for a possible armed clash. In 1990, Malaysia announced the erection of a submarine base and proposed a free trade port on Labuan Island, situated near the Spratly Islands. Taiwan asserted the right to sea and air patrols over its Spratly claims in 1992. Moreover, the Philippines is building up its naval forces. Yet, China's build-up endeavors surpass all other parties' efforts. Defense spending has been rising as a percentage of total budget expenditures and naval and air force fleets have been targeted for extensive modernization.(27)
IV. Related Information and Sources
TED Cases DAYABAY
SPRATLY ISLANDS
SHETLAND
HAWAII
ICEFISH
NAURU
VIETWOOD
SOLOMON
CHOPSTIK
ICE Cases KALIMAN
FALK
KUWAIT
CODWAR
KURILE
"Asian Executives Poll." 7 Nov 1996. http://www.abn.com.sg/polls/aep/aep961107.html.
"Asia: What, No Kow-Tow?" The Economist. Vol 335 No 7916. 27 May 1995: 31+.
"Beijing Said to Warn SRV Against Spratlys Oil Deal." Hong Kong Standard. 11 Apr 1996.
Calder, Kent E. "Asia's Empty Tank." Foreign Affairs Vol 75 No 2. Mar/Apr 1996: 55+.
Chang, Felix K. "Beyond the Unipolar Moment: Beijing's Reach in the South China Sea." Orbis. Summer 1996: 353-374.
Chien, Chung. "Strategic Importance of the Islands in the South China Sea and a Discussion of Essential Defense Measures for the ROC." Taipei Chien-Tuan K'e-chi (Defense Technology Monthly. 1 Jun 1996: 81-85.
"China Takes to the Sea." The Economist. 29 Apr 1995: 41-42.
"China to Buy British Advanced Navy Radar." Financial Times. 6 Aug 1996: 1.
"Editorial Hopes for Peaceful Solution to Spratly Dispute." Hong Kong Standard. 8 Jun 1996: 10.
Hall, Marcus. "Trouble Brewing in the South China Sea." http://psirus.sfsu.edu/IntRel/IRJournal/sp95/hall.html.
Heinemann, Rigby. "The Spratly Islands Dispute." http://www.reedbooks.com.au/heinemann/hot/sprat.html.
Kiras, James. "The South China Sea: Issues of a Maritime Dispute." Peacekeeping & International Relations. Jul/Aug 1995: 3-4.
"Military Strength of China, Vietnam, and the Philippines." http://www.reedbooks.com.au/heinemann/hot/spratab.html.
Marsh, Nicholas. "The Spratly Islands Dispute." http://snipe.ukc.ac.uk/international/dissert.dir/marsh.html.
Muehring, Kevin. "Some Cold War II Investment Scenarios." Institutional Investor. Vol 30 No 4. Apr 1996: 19+.
"Risk and Return." The Economist. 27 Apr 1996: 66.
"Spratly Islands." http://www.odci.gov/cia/publications/95fact/pg.html.
"Territorial Disputes Simmer in Areas of South China Sea." Oil & Gas Journal. Vol 90 No 28. 13 Jul 1992: 20+.
Valencia, Mark J. "A Spratly Solution." Far Eastern Economic Review. Vol 157 No 13. 31 Mar 1994: 30.
Trouble Brewing
in the South China Sea by Marcus Hall
The Spratly Islands
Dispute by Rigby Heinemann
The Spratly
Islands Dispute by Nicholas Marsh
Spratly
Islands in the CIA Factbook
Go to ICE Home Page
December, 1997