Paradise Islands or an Asian Powder Keg?

Lured by up to $1 trillion in oil and gas, six nations claim at least part of the South China Sea's Spratly chain

IN satellite photos, the tiny atoll called Layang-Layang hardly seems the stuff over which a war might be waged.

The atoll's four miles of tree-less beaches and undefiled coral reefs lie about 100 miles off Borneo in the South China Sea and seem better suited to tourists than soldiers. But Layang-Layang is just one of about 60 islands known as the Spratlys chain that are claimed in part or whole by six countries: China, Vietnam, Taiwan, Malaysia, Brunei, and the Philippines.

As much as $1 trillion in oil and gas may lie in geological structures beneath the Spratly seabed, according to some analysts.

The lure of such economic riches has turned these once-forgotten shoals and reefs into Asia's potential powder keg for major conflict. ``It's well known that there is a gold mine there,'' says Derek da Cunha, a security analyst in Singapore.

Since 1991, after the cold war ended and the United States Navy withdrew from the Philippines, the six nations have become more anxious about defending and prosecuting their overlapping claims. ``During the cold war, it was too dangerous to force a claim,'' says Lee Taito, an expert on the Spratlys at the National University of Singapore. ``Now all the claims are coming out.''

Another reason for concern is that the Chinese Navy killed about 70 Vietnamese soldiers in 1988 while invading seven islands occupied by Vietnam. This ominous projection of China's new naval power set off alarms among its southern neighbors.

``Whoever controls the Spratlys can monitor sea traffic between the Pacific and Indian oceans,'' Dr. Lee says. ``In World War II, Japan used the islands to attack the Philippines and Southeast Asia. They are a watchtower on two seas.''

Most of the six states have put soldiers, airstrips, or ships on the islands that they now hold, helping to turn the Spratlys into a potential flash point for conflict in Asia. ``The Spratlys is a global issue,'' Lee says. ``If anything goes wrong, all trading nations will be affected.''

Malaysia, which controls Layang-Layang and other islands, also took the unusual step this year of reinforcing its claim by opening a tourist resort on the atoll.

For $1,400 per person, a group of divers can hire a 150-foot-long luxury boat for an eight-day cruise to the island. A chalet for visiting divers has been built on the beach, according to Susan Leong of Sabah Holiday tour agency. The only permanent residents on Layang-Layang are Malaysian Army soldiers who guard the island against foreign invaders. The diving trip is advertised for those ``who crave intrigue.''

Vietnam has taken Malaysia's lead and plans to set up a lighthouse on one Spratly island and a fishing port on another to fend off further Chinese advances. In a provocative move last year, China gave permission to the Colorado-based Crestone Energy Corp. to explore for oil in a section of the South China Sea claimed by Vietnam. China backed up the project by landing troops on a reef to set up a ``sovereignty post.''

China also appears to be building a military landing strip on one of the Paracel Islands in the waters near Vietnam, which would allow it to back up its claims to the Spratlys with more force. Beijing took the Paracels from Vietnam in 1974.

``There are different opinions among China's leaders on whether to use peaceful or violent means,'' Lee says. ``Nonetheless, the Chinese can never think of China without the South China Sea.''

For the time being, Dr. da Cunha suggests, Beijing may be just using its interest in the Spratlys to gain political influence. ``The claims are one way for China to say, `Look, you have to take us into account on all issues.' ''

To help defuse rising tensions over the Spratlys, Indonesia, which does not claim any of the islands, has hosted a series of informal, semi-academic workshops since 1991 among the six nations to discuss possible joint development of the seabed resources.

The workshops appear to be based on a general consensus that each nation should freeze its interests in oil exploration to allow talks on joint ventures.

And at the least, Lee says, the talks ``prevent people from shooting at each other.'' So far, he says, most of the ideas put forward in the workshops are really ways for each country to stake its individual claim.

But more importantly, says Bilahari Kausikan, director of Singapore's East Asia and Pacific bureau, ``the workshops help to integrate China into a network of relationships.'' Other analysts see the workshops as potential trouble.

``Suppose someone strikes oil? How do you share the goodies?'' asks Tommy Koh, former Singapore ambassador to Washington. ``Then the real bargaining begins.''

Another worry is a rising thirst for oil among these fast-growing nations. ``They all need capital, so shelving [the issue] for one or two generations is an act of self-denial that would be very difficult to observe,'' says former Singapore Prime Minister Lee Kuan Yew. ``At the moment the self-denial is enforced because of the stalemate. China hasn't got the capability to start drilling without interference, and neither has anybody else.... China has said `joint development, we can talk and share.' But do we share by population size, or do we share by proximity to shore line, or what? That will depend on the ingenuity of the negotiators and a sense of fairness.''

Vietnam, Brunei, and Malaysia are already pumping oil on their continental shelf, but they all see the day in about 20 to 30 years when they might need oil from under their Spratlys claims. Taiwan, according to a Taipei newspaper, will begin oil exploration near Taiping, its heavily fortified Island in the chain.

The waters around this archipelago are deep, making oil exploration a costly proposition suitable only for Western nations with advanced drilling technology.

Indonesia Foreign Minister Ali Alitas wants to upgrade the workshop to official talks, but China opposes such a move.

``It's difficult to see the sincerity of the countries in the workshop when they are beefing up their maritime defenses,'' says Professor Lee. ``I'm not optimistic of a solution. Managing this conflict will be most difficult. The Spratlys is just an example of other potential conflicts in Asia.''

So far, the workshops have found some common ground on proposals to deflect conflict. One idea calls for turning the largely untouched islands into a marine park for fishing, bird-watching, and diving. Another is to conduct joint scientific research on wave patterns, bio-diversity, typhoons, and other nonpolitical topics.

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