FD12: Friday 4:00 PM - 5:45 PM

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Panel

Difference/Diffusion, Deference/Defi ance : Unpacking Chin a Southeast Asia Relations

Sponsor(s) :

Int erna ti onal Security Studies

Room: Continental 8, Hilton Union Square Chair Donald K. Emmerson, Stanford University Disc. Donald K. Emmerson, Stanf ord University Defe rence/Defi ance : How Does th e Philippin es Co pe with China ? Aileen Baviera, University of the Philippines Parsing the Dragon : Disaggregating China's Outlook on
Southeast Asia
li Mingjiang, Rajaratnam School of International Studies, Singapore Deference/Defiance: South east Asia, China, and t he South China Sea Carlyle Alan Thayer, University of New Sout h Wales Deference/Defiance : How Does Vietn am Cope w ith Chin a? Alexander Vuving

Southeast Asia, China, and the South China Sea

Deference/Defiance:
Carlyle Thayer

Presentation to panel on Difference/Diffusion, Deference/Defiance: Unpacking China-Southeast Asia Relations International Studies Association Annual Convention Hilton San Francisco Union Square San Francisco, April 5, 2013

Deference/Defiance: Southeast Asia, China, and the South China Sea Carlyle A. Thayer*
Introduction One constant throughout history that has governed inter-state relations between China and Southeast Asia has been the accommodation of smaller and weaker states to Chinas preeminent power. In the decades after the mid-1960s, as Southeast Asian states gradually developed a sense of regional identity, their interaction with the major powers took on a more structured and institutional nature through the Association of South East Asian Nations (ASEAN) and other multilateral regional institutions. ASEAN states seek to enmesh all major external powers in ASEAN-centric multilateral institutions in order to moderate the impact of their rivalry on regional security. ASEAN states have pursued three inter-related strategies toward this objective: economic interdependence, the promotion of ASEAN norms and soft-balancing. This paper argues that all states in Southeast Asia seek to accommodate Chinas rise through ASEAN-centric multilateral arrangements. 1 This is a long-term strategic commitment on which all ten ASEAN members have reached consensus. ASEAN has been largely successfully in enmeshing China in multilateral economic arrangements. But Chinas military rise and assertiveness in the South China Sea since 2006-07 has exposed differences among ASEANs members, and weakened their ability to accommodate Chinas military power through multilateral security institutions.

Emeritus Professor, The University of New South Wales at the Australian Defence Force Academy in Canberra. Email: c.thayer@adfa.edu.au
1 Carlyle A. Thayer, The Rise of China and India: Challenging or Reinforcing Southeast Asias Autonomy?,

in Ashley J. Tellis, Travis Tanner and Jessica Keough, eds., Strategic Asia 2011-12: Asia Responds to its Rising PowersChina and India (Seattle: National Bureau of Asian Research, 2011), 313-346 and Carlyle A. Thayer, Southeast Asia: Patterns of Security Cooperation, ASPI Strategy Report (Canberra: Australian Strategic Policy Institute, September 2010).

This paper argues that because ASEAN states are divided in their threat perceptions they pursue different bilateral strategies towards China exhibiting differing degrees of deference and defiance.2 This paper explores these differing patterns of deference and defiance by focusing on China-Southeast Asia relations and territorial disputes in the South China Sea. This paper is divided into five parts. Part one provides an overview of ASEANs relations with China in a multilateral setting. Part two examines differing threat perceptions of China by ASEAN states on territorial disputes in the South China Sea. Part three examines the prospects for managing South China Sea disputes through a Code of Conduct between China and ASEAN states. Part four discusses the U.S. policy of rebalancing and its impact on maritime security in the South China Sea. Part five presents conclusions. 1. ASEAN-China Relations: An Overview Multilateral Relations Formal linkages between China and ASEAN date to 1991 when ASEAN granted China consultative partner status. During the first half of the 1990S, Chinas economic rise was viewed by Southeast Asia states as both a challenge and opportunity. Southeast Asian states initially feared that Chinas economic rise would be at their expense because it would result in the diversion of trade and investment. ASEAN states also feared being pulled into Chinas orbit in a dependent relationship as supplier of raw materials. These fears intensified as China began negotiations for entry into the World Trade Organization. Gradually, ASEAN states began to view Chinas economic rise as the main engine of regional growth and therefore an opportunity. ASEAN took steps to enhance

My discussion on threat perception has been influenced by discussions with Scott Bentley and Patricia Weitsman. See: Scott Bentley, Southeast Asia Responds to Chinas Maritime Law Enforcement Strategy: Balancing a Perceived Threat by Responding in Kind, M.A. Thesis (Southeast Asian Studies), Ohio University, 2013 and Patricia Weitsman, Dangerous Alliances: Proponents of Peace, Weapons of War (Stanford University Press, 2004), 20-21.

their unity and cohesion by forming a viable ASEAN Free Trade Area to better enable them to bargain collectively with China. In 1996, China was accorded official Dialogue Partner status by ASEAN. In February the following year, ASEAN and China formalized their cooperation by establishing the ASEAN-China Joint Cooperation Committee to act as the coordinator for all the ASEAN- China mechanisms at the working level.3 As an ASEAN Dialogue Partner, China regularly participates in the annual ASEAN Post-Ministerial Conference consultation process. This takes the form of a meeting between ASEAN and its ten dialogue partners (ASEAN Ten Plus Ten), and a separate meeting between ASEAN members and each of its dialogue partners (ASEAN Ten Plus One). A major turning point in ASEAN-China economic relations was reached during the Asian Financial Crisis of 1997-98 when China not only refrained from devaluing its currency but also contributed to regional bail out packages. Chinas policies were in contrast to those of the International Monetary Fund (supported by the United States) that imposed conditionality on its loans. As a result ASEAN member came to view Chinas economic rise more as an opportunity than a challenge. China was perceived to be Southeast Asias indispensable but not only - economic partner. The process of enmeshing China advanced in late 2002 with the adoption of the Framework Agreement on Comprehensive Economic Cooperation. This agreement laid the foundations for what became the ASEAN-China Free Trade Area (ACFTA).4 In 2003 and 2006, ASEAN and China further institutionalized their relationship buy raising their relations to a strategic partnership and enhanced strategic partnership, respectively. ACFTA came force in January 2010 for ASEANs six developed economies and will come into effect for ASEANs four least developed members in 2015.

3 4

Joint Press Release, The First ASEAN-China Joint Cooperation Committee Meeting, Beijing, February 26- 28, 1997, http://www.aseansec.org/5880.htm. This is also abbreviated CAFTA for China-ASEAN Free Trade Agreement.

Chinas economic rise has altered the regions political economy and absorbed regional states in a production network feeding into Chinas export-orientated manufacturing industries. China not only buys primary commodities and natural resources, particularly oil and gas, but electronic parts and components. Chinas economic rise also has resulted in the displacement of the United States as the major trading partner for most Southeast Asian states. Bilateral Relations Between February 1999 and December 2000, China negotiated long-term cooperative framework arrangements with all ten ASEAN members: Vietnam, Thailand, Brunei, Malaysia, Singapore, Indonesia, the Philippines, Burma, Laos and Cambodia. 5 Subsequently, several of these long-term cooperative framework agreements were enhanced through additional joint declarations and/or memoranda of understanding. For example, in April 2005 bilateral relations between China and Indonesia were raised to a strategic partnership.6 At a summit meeting held in Kuala Lumpur in late 2005, China and Malaysia agreed to expand strategic cooperation by promoting the exchange of information in non-traditional security areas, consultation and cooperation in defense and security areas, and military exchanges between the two countries.7 In April 2006, China and Cambodia reached agreement on a Comprehensive Partnership for Cooperation. In May 2007, China and Thailand signed a Joint Action Plan for Strategic Cooperation to flesh out their 1999 cooperation agreement. In June 2008, following a 5 These arrangements were variously titled: framework agreement, framework document, joint
statement and joint declaration. For a detailed analysis consult: Carlyle A. Thayer, Chinas New Security Concept and Southeast Asia, in David W. Lovell, ed., Asia-Pacific Security: Policy Challenges (Singapore: Institute of Southeast Asian Studies: 2003), 92-95 and Carlyle A. Thayer, China and Southeast Asia: A Shifting Zone of Interaction, in James Clad, Sean M. McDonald and Bruce Vaughn, eds., The Borderlands of Southeast Asia: Geopolitics, Terrorism, and Globalization, Center for Strategic Research, Institute of National Strategic Studies (Washington, D.C.: National Defense University Press, 2011), 235-261.
6

Ronald N. Montaperto, Dancing with China, Comparative Connections: An E-Journal on East Asian Bilateral Relations 7, no. 2 (2005), http://csis.org/files/media/csis/pubs/0502qchina_seasia.pdf. In January 2010 China and Indonesia reached agreed to sign a Plan of Action to implement this agreement.
7

Robert Sutter, Emphasizing the Positive; Continued Wariness, Comparative Connections: An E-Journal on East Asian Bilateral Relations 7, no. 4 (2005), http://csis.org/files/media/csis/pubs/0504qchina_seasia.pdf.

summit of party leaders in Beijing, Vietnam and China raised their bilateral relations to a strategic partnership, and a year later this was upgraded to a strategic cooperative partnership. 2. Threat Perceptions The China Threat During the three decades following the formation of ASEAN most of its members viewed China as a threat to regional security because of its support for communist insurgencies. In the early 1990s ASEAN member became concerned about rising Sino-Vietnamese tensions in the South China Sea and this reinforced their earlier concerns about Chinese assertive behaviour. By the second half of the 1990s, Southeast Asian preoccupations turned from concern over the China threat to the implications of Chinas economic rise and its impact on the region. 8 In 1994, ASEAN and China agreed to open consultations on political and security issues and the 1st China-ASEAN Senior Officials Meeting was held in Hangzhou in April 1995. Also in 1994, China became a member of the ASEAN Regional Forum (ARF). China, arguably , was socialized into ASEAN norms as a result of this experience. China, which was initially dismissive of multilateral arrangements, soon came to appreciate that it could benefit from engagement. China then assumed a proactive role in the ARFs inter-sessional work program related to confidence building measures. In 2003, China launched a major initiative to further its new concept of security by successfully proposing the creation of a Security Policy Conference comprised of senior military and civilian officials drawn from all ARF members. Finally, China has been a strong proponent of cooperative measures to address non-traditional security challenges. In response to regional concerns over the China threat in the 1990s, Chinese strategists and policy makers began to consider how to assuage Southeast Asian concerns. The result was Chinas new security concept that was first presented to a
8

Evelyn Goh, Southeast Asian Perspectives on the China Challenge, The Journal of Strategic Studies 30, nos. 4-5 (August-October 2007): 809-832.

meeting of the ASEAN Regional Forum in 1997.9 Chinas new security concept signaled Beijings intention to pursue a policy of cooperative multilateralism with ASEAN and the ARF. Concerns about Chinese assertiveness in the South China Sea largely dissipated after the signing of the DOC in November 2002 and Chinas accession to the Treaty of Amity and Cooperation (TAC) the following year. China was the first external power to accede to the protocol endorsing ASEANs TAC and undertook in writing faithfully to perform and carry out all the stipulations therein contained.10 Chinas interaction with ASEAN arguably has led to Chinas socialization into ASEAN norms. This was demonstrated in 2003 when China established a strategic partnership with ASEAN. This was the first formal agreement of this type for both ASEAN and China. The joint declaration was wide-ranging and included a provision for the initiation of a new security dialogue as well as general cooperation in political matters. The following year ASEAN and China agreed to a five-year Plan of Action (2005-2010) to raise their interaction to the level of enhanced strategic partnership. Chinas embrace of the ARF stood in contrast to the United States and the publicity accorded in 2005 to Condoleezza Rice who became the first Secretary of State not to attend an ARF ministerial meeting since its creation. Secretary Rice was also absent at the ARF ministerial meeting in 2007. Chinese Assertiveness in the South China Sea In 2005, Southeast Asian states became increasingly concerned about the growth of Chinese naval power particularly after satellite imagery confirmed that China was constructing a major naval base on Hainan island. In 2006-07, when China adopted a policy of rights protection in the South China Sea,11 its actions provoked differing security concerns among ASEAN members, now expanded to ten states with the
9

Carlyle A. Thayer, Chinas New Security Concept and Southeast Asia, In Asia-Pacific Security: Policy Challenges ed. David W. Lovell (Singapore: Institute of Southeast Asian Studies, 2003): 89-107.
10

Instrument of Accession to the Treaty of Amity and Cooperation in Southeast Asia, October 8, 2003, http://www.aseansec.org/15271.htm.
11

Bentley, Southeast Asia Responds to Chinas Maritime Law Enforcement Strategy, 6.

addition of Vietnam in 1995, Laos and Myanmar in 1997, and Cambodia in 1999. After 2007, renewed Chinese assertiveness in the South China Sea once again reawakened concerns about Chinas intentions. 12 In 2009, China documented its claims to indisputable sovereignty over the South China Sea by officially tabling a map with nine dotted lines to the United Nations Commission on Extended Continental Shelves. This map implied that China was claiming eighty percent of the maritime area. By 2012 differing threat perceptions of Chinas actions resulted in a division of ASEAN into three broad groupings: the claimant states (sub-divided into two groups the Philippines and Vietnam, and Malaysia and Brunei), the maritime non-claimant states (Indonesia and Singapore), and the mainland states (Cambodia, Laos, Myanmar and Thailand). This three-way division was most evident in discussions at the July 2012 ASEAN Ministerial Meeting (AMM) Retreat that failed to issued a joint communiqu due to disagreement over wording of several paragraphs dealing with the South China Sea. The Philippines and Vietnam, which held the strongest threat perceptions, respectively, wanted to include reference to the stand-off at Scarborough Shoal and the award of oil concessions inside Vietnams Exclusive Economic Zone (EEZ) by the China National Offshore Oil Company (CNOOC). Malaysia, Indonesia, and Singapore strongly pushed for a compromise that took these concerns into account in order to maintain a unified ASEAN position vis--vis China. Among the mainland states, Cambodia strongly opposed any references that implied a dispute between China and ASEAN. Cambodia argued that the concerns expressed by the Philippines and Vietnam were purely bilateral thus reflecting Chinas policy position. Thailand, Myanmar and Laos were perfunctory in their interventions, generally supported a unified ASEAN stance, but were content to accept Cambodias lead as ASEAN Chair.13
12

Carlyle A. Thayer, Recent Developments in the South China Sea: Grounds for Cautious Optimism?, RSIS Working Paper No. 220 (Singapore: S. Rajaratnam School of International Studies, Nanyang Technological University, December 14, 2010).
13

Carlyle A. Thayer, "ASEANS Code of Conduct in the South China Sea: A Litmus Test for Community- Building?," The Asia-Pacific Journal, vol. 10, issue 34, No. 4, August 20, 2012, 1-23 and Carlyle A. Thayer, "Deference/Defiance: Southeast Asia, China, and the South China Sea," Paper to the workshop The Deer st and the Dragon: Southeast Asia and China in the 21 Century, co-sponsored by Southeast Asia Forum,

Threat Perceptions. Claimant states that perceived Chinas actions as directly threatening to their vital national interests adopted policies that most strongly opposed (or defied) Chinese pressures. Maritime non-claimant states, who felt less threatened by Chinas actions, tried to insulate themselves from Chinese assertiveness by pressing for an ASEAN united front. Mainland states that were not directly threatened by Chinese assertiveness gave greater priority to accommodating China. Claimant States. The threat perceptions held by the claimant states have been shaped by a number of factors including geographical proximity to China, the legacy of historical interactions, and their estimation of Chinese intentions in the near term. This sub- section reviews threat perceptions held by the Philippines and Vietnam, the two states most affected by Chinese assertiveness, and threat perceptions held by Malaysia and Brunei. The Philippines under President Benigno Aquino, has chosen to engage in higher-profile acts of defiance towards China than Vietnam. The Philippines does not share a land border with China but is the nearest maritime claimant state. The present day Philippines was not a unified state in the pre-colonial era and thus has no historical legacy of tributory diplomacy with China comparable to Vietnam. During the Spanish colonial era Manila was linked in a trans-Pacific trading network with China. During the Cold War years the Philippines adopted an anti-communist foreign policy and supported the containment of mainland China as an ally of the United States. The Philippines also maintained close with the Republic of China on Taiwan. The Philippiness threat perceptions have been shaped by (1) Chinas occupation of Mischief Reef in 1995 and the failure of ASEAN diplomacy to prevent China from consolidating its presence there, (2) the continual encroachment by Chinese fishermen into Philippine waters, (3) harassment of Filipino fishermen operating in the Philippines EEZ and (4) Chinese actions to disrupt the exploitation and production of oil and gas
Shorenstein Asia-Pacific Research Center, Stanford University and the China Programme, Institute of Defence and Security Studies, S. Rajaratnam School of International Studies, Nanyang Technological University, Singapore, November 15-16, 2012. This paper is available at Scribd.com.

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resources in the Philippines Exclusive Economic Zone (Recto Bank and the Malampaya Field). The Malampaya Field, for example, provides 40-45 per cent of Luzon's power generation requirements. The Philippines threat perceptions are heightened by the run down state of its armed forces, the problematic nature of its alliance with the United States, and increased incursions and assertiveness by Chinese paramilitary ships into Philippine waters. Therefore, the Philippines perceives Chinese assertiveness in the West Philippines Sea as a threat to its vital national security interests because the Philippines lacks the means to prevent China from (1) further occupying and constructing facilities on features lying within its maritime jurisdiction and (2) interfering with the exercise of sovereignty by the Philippines Coast Guard and Philippine Navy. Efforts by The Philippines to engage China diplomatically have been unsuccessful in the face of increased Chinese assertiveness. The Philippines has responded by employing weapons of the weak high-profile defiance of China including private and public diplomatic protests (including threats to raise territorial disputes at the United Nations), diplomatic efforts to forge a united ASEAN policy on the South China Sea and lobbying external powers for support. In addition, the Philippines has revitalized its alliance with the United States and procured weapons to modernize it armed forces and increase their capacity for territorial defence. Despite repeated Chinese efforts to prevent the Philippines from internationalizing the South China Sea dispute, the Philippines lodged a Notification of Claim seeking the intervention of a United Nations Arbitral Tribunal to rule on the legality of Chinas nine- dash line claim to the South China Sea, occupation of low tide elevations and interference with freedom on navigation. The Philippines undertook this action after the failure of prolonged diplomatic efforts to secure an agreement with China and, more significantly, after Chinas virtual annexation of Scarborough Shoal. The Philippines acted unilaterally without prior consultations with other ASEAN members.

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Vietnam shares land and maritime borders with China. Vietnams historical legacy includes selective cultural and political borrowing from China, resistance to Chinese invasions, and a well-developed diplomatic practice of accommodation to China. Vietnams threat perceptions are shaped by recent experience in which China used force to secure the western Paracels (1974) and Johnson South and Fiery Cross reefs (1988). Vietnam views Chinese assertiveness in the South China Sea as a deliberate attempt to disrupt its national development plans contained in the Maritime Strategy of Viet Nam to 2020, adopted in 2007.14 This strategy lays out plans to integrate Vietnams coastal economy with the resources (marine and hydrocarbon) in its EEZ and continental shelf and waters surrounding Vietnamese-occupied features in the South China Sea. Vietnamese economists estimate that by 2020 the maritime economy will contribute between 53-55 per cent of GDP and 55-60 per cent of exports.15 In 2007-08, China responded to this strategy by putting pressure on foreign oil companies to pull out of any deals to assist Vietnam with its offshore oil and gas exploration activities. In addition, in mid-2011 Chinese paramilitary enforcement vessels cut the cables of survey ships carrying out seismic surveys in Vietnams EEZ. These Chinese actions are viewed as a direct threat to Vietnams vital national interests because they are perceived as deliberate attempts to disrupt Vietnams national development plans. Chinese harassment and ill treatment of Vietnamese fishermen in waters around the Parcels Islands and intrusions into Vietnams EEZ by Chinese fishermen, are not viewed as gravely as threats to its offshore oil and gas industry. Nevertheless, the Vietnamese government feels compelled to respond with diplomatic protests because Chinese actions are perceived to be a threat to Vietnamese sovereignty and because they illicit strong anti-China nationalist sentiment.
14

Chien luoc bien Viet Nam den Nam 2020 (Vietnams Maritime Strategy to 2020), Resolution 09- NQ/TW, 9 February 2007. Prime Minister Nguyen Tan Dung later approved Decision 568, 28 April 2010, to develop Vietnams sea and islands-based economy by 2020.
15

Thong Bao Hoi Nghi (Plenum Communiqu), Tap chi Cong san no. 772 (February 2007): 5.

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Vietnam pursues simultaneous policies of deference and defiance towards China through a strategy it describes as cooperation and struggle. 16 Vietnam seeks to promote cooperation with China across the full spectrum of bilateral relations. At the same time, Vietnam struggles (or resists) China when its national interests are threatened. Vietnam is concerned to prevent any maritime incident from escalating to the point where it is drawn into an armed clash with superior Chinese military forces and/or provoking China to seize an islet or rock that Vietnam presently occupies. Vietnam seeks to prevent its territorial dispute with China from spilling over and affecting bilateral relations in general. In 2009, for example, Vietnams relations with China were raised from a strategic partnership to a strategic cooperative partnership in spite of tensions in the South China Sea.17 Vietnam manages its relations with China through a Joint Steering Committee that oversees all aspects of their bilateral relations. The Steering Committee is co-chaired by deputy prime ministers (who are also members of their respective party Politburos). The Joint Steering Committee has continued to meet despite rising tensions in the South China Sea. In addition, Vietnam maintains a dense network of high-level party, government and military contacts and exchanges hundreds of delegations each year. Vietnam has also taken steps to dampen domestic anti-China nationalist sentiment by gagging the press and suppressing public anti-China demonstrations. Vietnams struggles against China in response to specific incidents in the South China Sea, such as harassment of its fishermen and Chinese intrusions into its EEZ, by issuing diplomatic protests. Vietnamese Maritime Police chase away Chinese fishermen and on occasion muscle Chinese maritime enforcement ships Vietnams responses are
16

Carlyle A. Thayer, The Tyranny of Geography: Vietnamese Strategies to Constrain China in the South China Sea, Contemporary Southeast Asia, 33(3), 2011, 348-369.
17

Carlyle A. Thayer, Vietnam on the Road to Global Integration: Forging Strategic Partnerships Through International Security Cooperation, Keynote Paper to the Opening Plenary Session, 4th International Vietnamese Studies Conference, co-sponsored by the Vietnam Academy of Social Sciences and Vietnam National University, Hanoi, Vietnam, November 26-30, 2012, 13. Available at Scribd.com.

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carefully calibrated acts designed to underscore Vietnams sovereignty without unduly provoking China. At the same time, Vietnam engages in self-help modernization of its naval, air and missile forces to present a credible counter-intervention deterrent.18 Finally, Vietnam engages in hedging by encouraging the major external powers, particularly the United States, to contribute to maritime security by balancing Chinese military power. Vietnam-Philippine Interaction. In March 2012, during discussions held in Hanoi between Philippine Navy Flag Officer in Command Vice Admiral Alexander Pama and Vietnam Peoples Army Navy Commander Admiral Nguyen Van Hien agreement was reached to conduct coordinated maritime patrols in waters where the two countries have overlapping claims.19 These patrols will be conducted under the terms of the SOP [Standard Operating Procedures] on Personnel Interaction in the Vicinity of Southeast Cay and the Northeast Cay Island between the VPN [Vietnam Peoples Navy] and PN [Philippine Navy] reached in October 2011. Admirals Pama and Hien also signed a Memorandum of Understanding on the Enhancement of Mutual Cooperation and Information Sharing between the two navies; the MOU includes a provision for a hotline between their naval operations centres and possible cooperation in shipbuilding. Other Claimant States. Malaysia and Brunei are further removed from China geographically than Vietnam and the Philippines. Chinas nine-dash line claim to the South China Sea cuts into their EEZs and includes features in the South China Sea occupied by Malaysia. Brunei does not claim any feature. The Sultanates of Malacca and Brunei interacted with China as tributory states during the pre-colonial era and benefitted from the trade relationship. Malaysias present day policies towards China are unaffected by past Chinese support for communist insurgents on peninsula Malaya.

18 19

Carlyle A. Thayer, Strategic Posture Review: Vietnam, World Politics Review, January 15, 2013. 1-11.

According to a statement released by the Philippines Navy quoted in Rene Acosts, PHL, Vietnam navies to jointly patrol Spratlys, Business Mirror, March 27, 2012 and Barbara Mae Dacanay, Philippines and Vietnam agree to hold joint war games in the South China Sea, Gulf News, April 1, 2012.

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Neither Malaysia nor Brunei share the same degree of threat held by the Philippines and Vietnam towards China. Malaysian-occupied features lie to the southwest of the main Spratly islands. Malaysias and Bruneis EEZs lie at the southern extremity of China nine- dash line claim. Neither has experienced the same degree of physical intimidation experienced by the Philippines and Vietnam. Malaysia has substantial economic and commercial ties with China, while Bruneis wealth mitigates against possible Chinese political pressures and economic sanctions. Malaysia and Brunei have both adopted strategies in dealing with China designed to keep territorial and maritime disputes as low key as possible though quiet diplomacy. Malaysia rarely publicizes encounters between Chinese paramilitary enforcement ships and its fishermen and state oil company vessels. In September 2012, for example, Malaysia did not publicly protest when a China Marine Surveillance ship confrontd a vessel operated by Petronas, the state oil company, in Malaysias EEZ. Even the March 2013 visit by a squadron of four modern Chinese warships to James Shoal off the coast of Sarawak failed to elicit a public protest. Malaysia maintains relatively modern air and naval forces and is confident in their ability to respond if Malaysian sovereignty is threatened. Malaysia continually modernizes its naval and air forces and recently acquired conventional submarines. Brunei, which maintains a modest armed force, calculates that its interdependence with Malaysia and Indonesia provides a measure of insulation against Chinese abrasiveness. Both Malaysia and Brunei support ASEAN and its efforts to hammer out an agreed Code of Conduct for the South China Sea as the best policy for protecting their maritime interests. At the same time, both engage in hedging behavior through defense exercises and cooperation with the United States and other external powers. Malaysia, through the Five Power Defence Arrangements (FPDA), has encouraged robust naval exercises among its members to defend the approaches to the Malacca Straits.20 The FPDA does
20

Carlyle A. Thayer, The Five Power Defence Arrangements at Forty (1971-2011), in Daljit Singh and Pushpa Thambipillai, eds., Southeast Asian Affairs 2012 (Singapore: Institute of Southeast Asian Studies, 2012), 61-72.

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not include eastern Malaysia (Sabah and Sarawak), but has responsibility for the area defence of peninsula Malaysia, presumably including naval and air threats from the South China Sea. Maritime Non-Claimant States. Singapore and Indonesia do not have claims to disputed territory in the South China Sea. Chinas nine-dash line claim overlaps with Indonesias continental shelf off Natuna Island. Indonesia has been unable to obtain Chinas clarification of its claims and whether this creates a demarcation dispute between them. Singapores maritime space is limited and it is not a direct party to South China Sea territorial disputes; its interests lie in secure sea lines of communication through the South China Sea and the eastern approaches to the Straits of Malacca and Singapore. Both Singapore and Indonesia encourage the enmeshment of China in ASEAN-centric multilateral institutions. Indonesia and Singapore do not feel directly threatened by Chinese assertiveness towards the Philippines and Vietnam. They are both concerned that maritime tensions are managed through regional diplomacy in which ASEAN plays a central role. Both caution China and the claimant states not to provoke or over react to incidents in the South China Sea. Both Indonesia and Singapore support a unified ASEAN policy on a Code of Conduct for the South China Sea. Both played a leading role behind the scenes in trying to broker a compromise on the wording of the joint communiqu at the 2012 45th ASEAN Ministerial Meeting (AMM). Indonesia has been proactive in promoting ASEAN consensus behind a draft COC for the South China Sea. Singapore publicly responded to the Philippines legal action against China by calling attention to the fact that it was submitted without prior consultation with ASEAN. Diplomats from Indonesia and Singapore privately express concern that the Philippines unilateral action may set back if not scuttle prospects for resumption of negotiations with China on a COC. Yet Singapore and Indonesia, on occasion, have taken a public stance critical of China when their interests are affected. Singapore, publicly chastised China when it used the

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opportunity of a friendly port visit by its newest China Marine Surveillance vessel to engage in highly publicized rights protection activities in the South China Sea prior to arrival. Indonesia challenged the legal basis of Chinas nine-dash line claim to the South China Sea buy lodging a protest with the United Nations. Mainland States. None of the four countries grouped in the mainland states category Cambodia, Laos, Myanmar and Thailand border the South China Sea or have maritme disputes with China. Myanmar and Laos share a land border with China. All four states had tributory relations with China during the pre-colonial era. Myanmar (then Burma), Cambodia and Laos all established diplomatic relations with the Peoples Republic of China after 1949. Although all four states experienced domestic communist-led insurgencies this legacy has not been an impediment to contemporary relations. The present communist government in Laos owes China a degree of gratitude for past diplomatic and other support in its struggle for power. Myanmar (then Burma) developed ties with China that have been characterized as elder brother-younger brother relations despite endemic communist insurgency since independence. Significantly, China supported the Myanmar regime after the suppression of the pro- democracy movement in 1988-90 and the two countries developed close economic, political and defence ties as a result. Thailand adopted a strong anti-communist policy during the Cold War and supported U.S.-led containment strategies. Despite this legacy, in the late 1980s and 1990s successive Thai governments developed good political and economic relations with China. In 2001, with the election of Thaksin Shinwatra, Thailand moved to develop ever- closer relations with China in order to benefit from its economic rise. Chinas support for the Khmer Rouge has not prevented the Hun Sen government from pivoting towards Beijing. All of the mainland states have adopted policies of accommodating Chinas rise through ASEANs multilateral structures and through the maintenance of good bilateral relations. Their main motivation is to benefit economically. The threat perceptions of

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mainland states are overwhelmingly focused on non-traditional security issues and the impact of illegal Chinese migrants on domestic security. None of the mainland states wants to be drawn into South China Sea disputes or great power rivalry. Laos and Myanmar were silent when this issue was raised at the 2010 meeting of the ASEAN Regional Forum. Thailand watered down references to China in the joint statement issued by the 2nd ASEAN-United States Leaders Meeting held in New York in September 2010. Myanmar and Cambodia were silent when South China Sea issues were raised at the 2011 East Asia Summit by sixteen of its eighteen members. With the exception of Cambodia, the three other mainland states made perfunctory interventions at the 45th AMM in 2012. Thailand, as the current country coordinator for ASEANs relations with China, seeks to play a mediating role on South China Sea issues. Cambodias position on the South China Sea was largely derivative of its role as ASEAN Chair in 2012. The Hun Sen regime has a self-interest in responding favourably to Chinese diplomatic lobbying. Chinese economic and commercial support provides considerable resources that benefit the regime and its capacity to remain in power. China has provided assistance to the Hun Sen regime opportunistically when European countries and the United States have imposed sanctions following human rights abuses. Cambodias diplomatic behavior illustrates that its self-interests override its commitment to ASEAN consensus making on South China Sea issues. In sum, the Hun Sen regime does not see Chinese assertiveness in the South China Sea as threatening its interests. No Southeast Asian state wants to be drawn into Chinas orbit to such an extent that its autonomy is seriously compromised through economic dependency. All the mainland states engage in hedging. Thailand is a U.S. treaty ally and recently agreed to revitalizing its relations with the United States. During the November 2012 visit to Bangkok President Barack Obama, Thai Prime Minister Yingluck:
welcomed the United States policy of forging a stronger partnership with the Asia-Pacific region and the support of the United States for ASEANs centrality in the regions development and integration,

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especially through the United States engagement at the ASEAN-U.S. Summit and the East Asia Summit 21 (EAS).

Cambodia has quietly nurtured a growing defence relationship with the United States,22 while Myanmar has responded favourably to more proactive engagement with the United States. This year U.S. diplomats report that Laos is more amenable to developing defence ties with the United States. 3. Managing South China Sea Disputes ASEAN has been engaged on South China Sea issues for over two decades. In 1992 Chinas adoption of the Law on Territorial Waters and Contiguous Zones raised alarm bells among littoral states. They viewed this law as a claim to the entire South China Sea. Chinas oil exploration activities in the South China Sea brought it into conflict with Vietnam and led both countries to scramble to occupy virtually all the islets and rocks that they could. In response to rising tensions, ASEAN issued its first formal statement on the South China Sea in July 1992.23 Southeast Asian anxieties about Chinese assertiveness were aroused again in 1995 when China occupied Mischief Reef claimed by the Philippines. In response, ASEAN foreign ministers issued their second statement on the South China Sea. ASEAN expressed its serious concern and urged the concerned (unnamed) parties to refrain from taking actions that de-stabilize the situation.24 The Philippines, as the aggrieved party, sought the backing from its fellow ASEAN
21

Thailand, The Government Information Office, Thai and US Leaders Emphasize a Deeper Bilateral Strategic Partnership and Enhance Regional Cooperation, November 20, 2012.
22

Carlyle A. Thayer, Cambodia-United States Relations, in Pou Sothirak, Geoffrey Wade and Mark Hong, eds., Cambodia: Progress and Challenges Since 1991 (Singapore: Institute of Southeast Asian Studies, 2012), 96-107 and Carlyle A. Thayer, US Rapprochement with Laos and Cambodia, Contemporary Southeast Asia, 32(3), 2010, 442-459.
23

ASEAN Declaration On The South China Sea, Manila, Philippines, 22 July 1992. http://www.aseansec.org/1196.htm. ASEAN comprised six members at this time: Brunei, Indonesia, Malaysia, Philippines, Singapore, and Thailand.
24

Statement by the ASEAN Foreign Ministers on the Recent Developments in the South China Sea 18 March 1995; http://www.aseansec.org/2089.htm. Vietnam joined ASEAN as its seventh member in July 1995.

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members for a Code of Conduct in the South China Sea that would constrain China from further encroachments on Philippines sovereignty. In late 1999, after protracted discussions, ASEAN members finally reached agreement on a COC.25 In March 2000, ASEAN and China exchanged their respective drafts and agreed to consolidate them into one document.26 Four major areas of disagreement were identified: the geographic scope, restrictions on construction on occupied and unoccupied features, military activities in waters adjacent to the Spratly islands, and whether or not fishermen found in disputed waters could be detained and arrested. A formal ASEAN-China COC proved a bridge to far. Because China and ASEAN were unable to reach agreement on a common text ASEAN and China adopted a non-binding political statement, the Declaration on Conduct of Parties in the South China Sea, in November 2002. The DOC was stillborn. It took a further twenty-five months before senior officials reached agreement on the Terms of Reference for the ASEAN-China Joint Working Group (JWC) to implement the DOC.27 In August 2005, ASEAN tabled draft Guidelines to Implement the DOC at the first meeting of the JWC. Point two called for ASEAN consultations prior to meeting with China.28 China objected and repeated its long-held position that the relevant parties should resolve sovereignty and jurisdictional disputes bilaterally. This proved such a sticking point that another six years of
25

For further background consult: Carlyle A. Thayer, Challenges to ASEAN Cohesion: The Policy of Constructive Engagement and a Code of Conduct for the South China Sea, Paper to international workshop on Regionalism and Globalism in Southeast Asia, Department of Political Science and International Relations, University of Tampere and the Centre for Southeast Asian Studies, bo Akademi University, Marienhamn, land, Finland, June 2-4, 2000, 31-44. http://www.scribd.com/doc/103248217/Thayer-Challenges-to-ASEAN%E2%80%99s-Cohesion-The-Policy- of-Constructive-Engagement-and-a-Code-of-Conduct-for-the-South-China-Sea.
26

Association of Southeast Asian Nations, Regional Code of Conduct in the South China Sea (Draft), March 2000 and Peoples Republic of China, Code of Conduct on the South China Sea (Draft of the Chinese Side), March 2000.
27

ASEAN-China Senior Officials Meeting on the Implementation of the Declaration on the Conduct of Parties in the South China Sea, Kuala Lumpur, 7 December 2004 and Terms of Reference of the ASEAN- China Joint Working Group on the Implementation of the Declaration on the Conduct of Parties in the South China Sea; http://www.aseansec.org/16888.htm and http://www.aseansec.org/16885.htm.
28

Tran Truong Thuy, Recent Developments in the South China Sea: From Declaration to Code of Conduct, in Tran Truong Thuy, ed., The South China Sea: Towards a Region of Peace, Security and Cooperation (Hanoi: The Gioi Publishers, 2011), 104.

20

intermittent discussions and twenty-one successive drafts were exchanged before agreement was reached. In July 2011, in what seemed to be a major break-through at the time, China and ASEAN finally adopted the Guidelines to Implement the DOC after ASEAN dropped its insistence on prior consultation and agreed instead to promote dialogue and consultation among the parties. A new point was added to the Guidelines specifying that activities and projects carried out under the DOC should be reported to the ASEAN-China Ministerial Meeting.29 All the other points in the 2011 Guidelines remained unchanged from the original ASEAN draft tabled in 2005. Later that year Chinese and ASEAN senior officials met to discuss the adoption of confidence-building measures (CBMs) to implement the DOC. 30 ASEAN and Chinese senior officials continued discussions on the implementation of the DOC Guidelines at a meeting held in Beijing from January 13-15, 2012. This meeting reached agreement to set up four expert committees on maritime scientific research, environmental protection, search and rescue, and transnational crime. These committees were derived from the five cooperative activities mentioned in the 2002 DOC. Significantly no expert committee on safety of navigation and communication at sea was established due to its contentious nature. Code of Conduct. The adoption of the Guidelines to Implement the DOC led to the revival of the long-standing proposal by the Philippines for a COC that was included in the 2002 DOC and never acted on. ASEAN senior officials began drafting the COC with the intention of reaching a common ASEAN position before presenting it to China for discussion. In January 2012, the Philippines circulated an informal working draft simply titled, Philippines Draft Code of Conduct. The document was eight pages in length and comprised ten articles. In discussions held by ASEAN senior officials during the first quarter of 2012 it became apparent that ASEAN members were divided on provisions
29 30

Guidelines to Implement the DOC, http://www.aseansec.org/documents/20185-DOC.pdf. ASEAN ready to discuss continuation of doc with China, Antara, 14 November 2011.

 contained in the Philippines draft.31

21

China initially took the position that the implementation of the DOC Guidelines should be given priority over the COC. China stated it would discuss the COC with ASEAN at an appropriate timing or when appropriate conditions were met.32 Now China sought a seat at the ASEAN discussions and this became a contentious issue within ASEAN. For example, at the ASEAN Summit held in Phnom Penh from April 3-4, 2012, Cambodia, as ASEAN Chair, argued that China should be included from the beginning in discussions on the COC. Cambodia also promoted Chinas suggestion that a group of expert and eminent persons drawn from ASEAN states and China should be formed to provide inputs on the draft COC. Vietnam and the Philippines objected and both proposals were dropped.33 A compromise was reached. ASEAN would proceed on its own to draft a COC, while communication with China would take place through the ASEAN Chair at the same time.34 On June 13, 2012, the seventh meeting of the ASEAN SOM Working Group on the COC reached agreement on a draft entitled Proposed Elements of a Regional Code of Conduct and forwarded it to the ASEAN SOM for their consideration.35 The ASEAN SOM met in Phnom Penh from July 6-7 and approved the draft. The draft was then passed to ASEAN foreign ministers who approved it at their 45th AMM on July 9, 2012. It was

31

For a detailed comparison of the Philippines Draft Code of Conduct with the later Proposed Elements of a Code of Conduct adopted by the ASEAN Foreign Ministers, see: Thayer, "ASEANS Code of Conduct in the South China Sea: A Litmus Test for Community-Building?."
32

Carlyle A. Thayer, Sovereignty Disputes in the South China Sea: Diplomacy, Legal Regimes and Realpolitik, Presentation to International Conference on Topical Regional Security Issues in East Asia, co- sponsored by the Faculty of Asian and African Studies and the Ho Chi Minh Institute, St. Petersburg State University, St. Petersburg, Russian Federation, April 6-7, 2012, 7.
33 34 35

Thayer, "ASEANS Code of Conduct in the South China Sea, op. cit., p. 3. Thayer, Is the Philippines an Orphan? Estrella Torres, Manila tack on China row wins Asean nod, Businses Mirror, July 13, 2012.

22

expected that ASEAN and Chinese senior officials would meet to discuss ASEAN draft in September than year.36 Unfortunately this positive development was derailed by intense disagreement between Cambodia and the Philippines and Vietnam that surfaced at the 45th AMM and AMM Retreat. These meetings were held under the shadow of the standoff at Scarborough Shoal and the decision by the China National Offshore Oil Company (CNOOC) to award exploration blocs lying entirely within Vietnams EEZ. 37 Both issues were raised in ministerial discussions. Cambodia, as ASEAN Chair, appointed the foreign ministers from Indonesia, Malaysia, Vietnam and the Philippines to a working party to draft the joint statement summarizing the AMM discussions.bWhen the draft joint statement was presented to ministers at their Retreat Cambodia blocked any reference to Scarborough Shoal and CNOOC. This led to the unprecedented situation whereby the ASEAN foreign ministers were unable to adopt a joint statement for the first time in their forty-four year history.38 In the midst of recriminations between Cambodia and the Philippines, Indonesias Foreign Minister Marty Natalegawa initiated consultations with his ASEAN counterparts in an effort to restore unity and commit ASEAN to a common position. 39 Marty conducted an intense round of shuttle diplomacy flying to Manila, Hanoi, Bangkok,

36

Michael Lipin, Cambodia Says ASEAN Ministers Agree to Key Elements of Sea Code, Voice of America, July 9 2012; Michael del Callar, DFA chief: ASEAN agrees on key elements for Code of Conduct in West PHL Sea, GMA News, July 11, 2012; and Associated Press, Asean to take up code of conduct with China, Manila Standard Today, July 10, 2012 quotes Liu Weimin, spokesperson for Chinas Ministry of Foreign Affairs, as stating When conditions are ripe, China would like to discuss with Asean countries the formulation of the COC.
37

China National Offshore Oil Company, Press Center Notification of Open Blocks in Waters Under the Jurisdiction of the Peoples Republic of China, 13 June 2012. <http://en.cnooc.com.cn/data/html/news/2012-06-23/english.322127.html.>
38 39

Thayer, "ASEANS Code of Conduct in the South China Sea, op. cit., pp. 5-14.

Carlyle A. Thayer, ASEAN Unity Restored by Shuttle Diplomacy?, Thayer Consultancy Background Brief, July 24, 2012, http://www.scribd.com/doc/101075293/Thayer-ASEAN-Unity-Restored-by-Shuttle- Diplomacy.

23

Phnom Penh and Singapore over a two-day period (July 18-19). The result was an agreement on ASEANs Six-Point Principles on the South China Sea.40 In this statement all ASEAN Foreign Ministers reaffirmed their commitment to: the full implementation of the DOC; Guidelines for the Implementation of the DOC; the early conclusion of a Regional COC in the South China Sea; full respect of the universally recognized principles of international law including the 1982 UNCLOS; continued exercise of self-restraint and non-use of force by all parties; and peaceful resolution of disputes in accordance the universally recognized principles of international law including the 1982 UNCLOS. The statement concluded: The ASEAN Foreign Ministers resolve to intensify ASEAN consultations in the advancement of the above principles, consistent with the Treaty of Amity and Cooperation in Southeast Asia (1976) and the ASEAN Charter (2008). Chinese Foreign Ministry spokesperson, Qin Gang, responded to these developments by introducing a pre-condition linking compliance with the DOC and discussions on the COC. Qin Gang stated:
What concerns people now is that some individual countries, showing no respect for or compliance with the DOC, have time and again resorted to provocative means, which undermined the basic principles and spirit of the DOC and created difficulties for discussing a code of conduct (COC) in the South China Sea. Therefore, while being open to discussing a COC with ASEAN countries, China believes that all parties concerned must act in strict accordance with the DOC to create the necessary 41 conditions and atmosphere of a COC.

China then dispatched its foreign minister for a fence-mending visit to Indonesia, Brunei and Malaysia for talks with his counterparts (he pointedly omitted the Philippines). Foreign Minister Yang Jiechi stated at a joint press conference in Jakarta that China was

40

Statement of ASEAN Foreign Ministers on ASEAN's Six-Point Principles on the South China Sea, July 20, 2012. Cambodias Foreign Minister could not resist using this occasions to lay the blame for ASEAN's failure to issue a joint communiqu on Vietnam and the Philippines.
41

Statement by Spokesperson Qin Gang of the Ministry of Foreign Affairs of China on the US State Department issuing a So-called Press Statement on the South China Sea, August 4, 2012. I am grateful to Greg Torode of the South China Morning Post for pointing out the significance of this statement.

24

willing to work with ASEAN to implement the DOC and to work toward the eventual adoption of the COC on the basis of consensus.42 At the 45th AMM Retreat Foreign Minister Marty promised, Indonesia will circulate a non paper [on] possible and additional elements of [the] COC. It is meant to be more prescriptive and operational. This non paper was quickly dubbed the Zero Draft Code of Conduct. In September 2012, ASEAN Foreign Ministers met in New York on the sidelines of the annual UN General Assembly session to consider Indonesias Zero Draft now titled A Regional Code of Conduct in the South China Sea.43 Indonesias Regional Code of Conduct draws heavily on the DOC, ASEANs Proposed Elements of a Regional Code of Conduct and ASEANs Six-Point Principles on the South China Sea. Indonesias Regional Code of Conduct includes several new and possibly contentious points. Article 2 (Basic Understandings), for example, includes the following three commitments: respect for the Exclusive Economic Zone (EEZ) and continental shelf of the coastal states; respect for the COC and the taking of actions consistent with it; and the encouragement of other countries to respect the COC. 44 Article 3 (Areas of Application) stipulates that the COC shall apply to unresolved maritime boundary areas of the parties concerned in the South China Sea.45 Perhaps the most contentious proposal was set out in Article 5 (Implementation of the Code of Conduct). The draft text states:
the parties to the code agree to refrain from conducting military exercises, military surveillance, or other provocative actions in the South China Sea; occupying or erecting new structures on the islands, and land features presently occupied or not; inhabiting the presently uninhabited islands and other land features; and conducting activities that threat navigational safely and/or polluting the 46 environment.

42

Tarra Quismundo, China says its willing to ease Asean rift on sea, Philippines Daily Inquirer, August 11, 2012.
43

This discussions draws on Mark Valencia, Navigating Differences: What the Zero draft Code of Conduct for the South China Sea Says (and Doesnt Say), Global Asia, 8(1), Spring 2003, 72-78.
44 45 46

Ibid., 75. Ibid. Ibid., 75-76.

25

Article 5, in its discussion of implementation, refers to the International Regulations for Preventing Collisions at Sea 1972 (COLREGS) and earlier Incidents at Sea (INCSEA) agreements. Finally, Article 5 sets out two dispute mechanisms previously mentioned in ASEANs Proposed Elements of a Regional Code of Conduct, namely the TACs High Council and the mechanisms set out in the UN Convention on Law of the Sea.47 In late October 2012, Thailand, as country coordinator for ASEANs relations with China, hosted an informal meeting of ASEAN and Chinese officials in Pattaya. This meeting considered guidelines for negotiations over the coming year. A Thai official told journalists that it might take another two years to reach agreement on a COC. The following month internal ASEAN divisions emerged after the ASEAN Summit held in Phnom Penh. When Cambodias foreign minister, speaking as the ASEAN Chair, announced that consensus had been reached not to internationalize territorial disputes in the South China Sea the Philippines publicly objected and the offending reference was dropped. Cambodia was echoing long-standing Chinese policy on this issue. After the ASEAN Chair passed from Cambodia to Brunei there have been straws in the wind that ASEAN would renew its efforts to engage China in discussions on a Code of Conduct.48 Brunei, the new ASEAN Chair, and ASEANs new Secretary General, Le Luong Minh, both pledged to give priority to reviving discussions on the COC.49 Thailand, as ASEANs designated coordinator for dialogue relations with China, also pledged to take up the matter with Beijing.50 However, the decision by the Philippines on January 22,
47

The International Tribunal for the Law of the Sea, International Court of Justice, Arbitral Tribunal and Special Arbitral Tribunal.
48

For discussion on a possible ASEAN Troika see: Michael A. McDevitt and Lew Stern, Vietnam and the South China Sea, in Michael A. McDevitt, M. Taylor Fravel, Lewis M. Stern, The Long Littoral Project: South China Sea, CNA Strategic Studies, March 27, 2013, 61-74.
49

New ASEAN chair Brunei to seek South China Sea code of conduct, GMA News, 14 January 2013;New ASEAN chief seek to finalise Code of Conduct on South China Sea, Channel News Asia, 9 January 2013; Termsak Chalermpalanupap, Toward a code of conduct for the South China Sea, The Nation, 22 January 2013,
50

No immediate solution for South China Sea dispute: Shanmugam, Channel News Asia, 14 January 2013; Thailand seeks talks on South China Sea, Bangkok Post, 15 January 2013; Sihasak seeks South China Sea parley, Bangkok Post, 25 January 2013 and Greg Torode, Manilas lonely path over South China Sea, South China Morning Post, 11 February 2013.

26

2013 to lodge a formal legal claim with the United Nations, and Chinas rejection of this claim, has raised uncertainty about ASEANs efforts to restart discussions with China on a Code of Conduct.51 Diplomatic sources in Southeast Asia report that the Philippine actions have breathed all the life out of the COC process.52 A recent study by an American legal specialist argues that China has four choices:
First, China still has an opportunity to change its position and litigate the issues, or at least to litigate whether the Arbitral Panel has jurisdiction over any of the Philippine claims Chinas second option and perhaps the most likely is to continue to refrain from participating and to hope for a favorable outcome. If China loses the case, it could declare the process void and ignore its results Third, China may believe its best option is to try to isolate and coerce the Philippines into dropping the arbitration Finally, given the risks and ramifications of each of these options, Beijing may decide to engage in 53 quiet negotiations with Manila to withdraw the case.

China may already be pursuing option four. Southeast Asian diplomatic sources have revealed that Beijing is putting diplomatic pressure on ASEAN states to lobby the Philippines to drop its legal action with the UN in return for restarting talks on the COC.54 4. U.S. Rebalancing and Maritime Security ASEAN has sought to enmesh all the major powers through engagement in ASEAN- centric multilateral institutions, including the ASEAN Post-Ministerial Conference and the ASEAN Regional Forum. ASEAN insists that it remain in the drivers seat in the regions security architecture and that the norms embodied in the ASEAN Way guide the decision-making process and work programs of regional security institutions. ASEAN also
51 52

Carlyle A. Thayer, South China Sea: China Rejects Arbitration Claim by the Philippines, Thayer Consultancy Background Brief, March 3, 2013. Available at Scribd.com. Based on off-the-record discussions held on March 12-13, 2013. For a pessimistic view on the prospects for a COC see: Ian Storey, Slipping Away? A South China Sea Code of Conduct Eludes Diplomatic Efforts, East and South China Seas Bulletin, no. 11, March 20, 2013.
53

Peter Dutton, The Sino-Philippine Maritime Row: International Abritration and the South China Sea, East and South China Sea Bulletin [Center for a New American Security], No. 10, March 15, 2013, 6-7.
54

Based on off-the-record discussions held on March 12-13, 2013.

27

seeks to position itself so that it does not have to choose between China and United States. ASEAN has therefore adopted a policy of soft-balancing as a hedge against the potential disruptive affects of Chinas rise. ASEAN continually encourages the United States as well as Japan, South Korea and India to remain engaged in regional security affairs as a counter-weight to China. It is this strategy of softbalancing that led to ASEANs initiation of the ASEAN Defense Ministers Meeting Plus (ADMM Plus) process and the enlargement of the East Asia Summit to include Russia and the United States. Chinas economic power has provided the foundation for the modernization and transformation of its armed forces. It is evident that China is developing robust counter- intervention capabilities (anti-access/area-denial capabilities) that will affect the ability of the U.S. Navy to operate in Western Pacific. Chinas increased military prowess has direct implications for the South China Sea. Chinas increasing assertiveness in the form deploying greater numbers of maritime enforcement ships and PLAN naval exercises has raised regional security concerns about the commitment of the United States to remain engaged in Southeast Asia. In January 2012, partly in response to regional concerns, the United States announced that with its withdrawal from Iraq and eventual withdrawal from Afghanistan, it would rebalance its force posture and quarantine defence cuts in the Asia-Pacific. This policy was contained in a new defence strategy entitled, Sustaining U.S. Global Leadership: Priorities for 21st Century Defense. This document stated:
U.S. economic and security interests are inextricably linked to developments in the arc extending from the Western Pacific and East Asia into the Indian Ocean region and South Asia creating a mix of evolving challenges and opportunities. Accordingly, while the U.S. military will continue to contribute to security globally, we will of necessity rebalance toward the Asia-Pacific region. Our relationships with Asian allies and key partners are critical to the future stability and growth of the region. We will emphasize our existing alliances, which provide a vital foundation for Asia-Pacific security. We will expand our networks of cooperation with emerging partners throughout the Asia-Pacific to ensure 55 collective capability and capacity for securing common interests [emphasis in original].

The Obama Administrations policy of rebalancing towards the Asia-Pacific involves

55

Sustaining U.S. Global Leadership: Priorities for 21 Century Defense (Washington, D.C. Department of Defense, January 2012), 2.

st

28

the full spectrum of economic, diplomatic, political and military engagement.56 The United States repeatedly declares that its policy of rebalancing includes cooperation with China and is not a policy of containment. The U.S. Pacific Command will continue to reinforce the four pillars of the rebalance: partnerships, presence, power projection, and principles (free and open commerce, access to the global commons, rule of law, peaceful settlement of disputes, promotion of democracy and universal human rights). Rebalancing will result in some force posture changes in the Asia-Pacific but will not result in a major buildup of U.S. forces. For example, former Secretary of Defense Leon Panetta stated that the number of U.S. Navy ships in the Asia-Pacific would increase to sixty percent of the total fleet by 2020. At present, the U.S. Navy totals 285 ships of which 157, or fifty-five percent, are assigned to the Pacific. U.S. rebalancing will result in the introduction of new platforms and better capabilities, including the deployment of Virginia class submarines, fifth generation fighters, P-8 aircraft, cruise missiles and enhanced Intelligence Surveillance and Reconnaissance. U.S. rebalancing also will lead to an increase in the rotation of U.S. naval and air forces to the region, including deployments to Australia, Guam and the Philippines. U.S. Littoral Combat Ships will be rotated through Singapore. U.S. forces will be more widely dispersed than previously and more capable of intervening if called upon to do so. The Philippines, as a treaty ally, and Singapore, as a strategic partner, are Southeast Asias two most supportive states towards U.S. rebalancing. Both will host short-term rotations of U.S. air and naval forces. Malaysia, Indonesia, Brunei, Thailand and Cambodia, which already conduct defence cooperation and military exercises with the United States, support a continued U.S. presence in the region to balance China. Vietnam prefers to give indirect support to U.S. rebalancing through low-key defence cooperation activities that do not yet include the presence of uniformed U.S. military
56

President Obama visited Myanmar, Thailand and Cambodia in November 2012. See: Sheldon Simon, US-Southeast Asia Relations: High-Level Attention, Comparative Connections, January 2013.

29

personnel or military exercises. U.S. rebalancing has reached out to landlocked Laos only recently.57 The U.S. is engaging diplomatically, politically and economically but not militarily with Myanmar 5. Conclusion All members of ASEAN seek to accommodate Chinas rise through ASEAN-centric multilateral arrangements such as the ASEAN Treaty of Amity and Cooperation, China- ASEAN Free Trade Agreement, ASEAN-China summits, ASEAN Regional Forum, ASEAN Plus Three, ADMM Plus and the East Asia Summit. This is a long-term strategic commitment. At the same time, each of ASEANs ten member states have pursued separate bilateral relations with China based on their differing interests. Chinas military rise and assertiveness in the South China Sea has resulted in differing threat perceptions among ASEANs members. These threat perceptions have been shaped by a number of factors including geographical proximity, the legacy of historical interactions, and their assessment of Chinese intentions. Claimant states such as the Philippines and Vietnam perceive Chinas assertiveness as directly threatening their vital national interests. They have adopted policies that most strongly resist Chinese pressures. The other claimant states, Malaysia and Brunei, along with Indonesia and Singapore, two maritime non-claimant states, feel less immediately threatened by Chinas actions. They have pursued less confrontational policies in response to Chinese assertiveness in the South China Sea. They also have attempted to insulate themselves from Chinese pressure by supporting ASEAN efforts to promote a Code of Conduct for the South China Sea. Mainland states, which are not directly threatened by Chinese assertiveness, have given greater priority to accommodating China in order to benefit economically from Chinas rise.
57

The Commander of the U.S. Army Pacific visited Laos in February 2013 to discuss future cooperation; he was the highest level U.S. military official to visit since 2007. See: USARPAC CG visits Laos, Hawaii Army Weekly, February 22, 1023.

30

ASEANs efforts to manage territorial disputes in the South China Sea have been ineffectual. Internal ASEAN divisions have weakened its hand in negotiating a Code of Conduct for the South China Sea with China. Generally ASEAN states welcome a continuing U.S. presence as a balance to China but they do not want to be put in a position of having to choose between them. Collectively the ASEAN states support U.S. engagement in regional multilateral security institutions. Individually all ASEAN states welcome the U.S. policy of rebalancing towards the region with different degrees of commitment. With the exception of Myanmar all are involved in varying levels of defence cooperation with the United States. The Philippine and Singapore pursue more overt balancing against China than the other members of ASEAN Thailand, Malaysia, Brunei, Indonesia, Cambodia, Vietnam, Laos and Myanmar that pursue hedging strategies.