Tensions mount in South China Sea. Here's how to ease them.

Escalating international dispute over South China Sea islands involves an oil bonanza of unknown proportions. Here are steps China, Japan, the US, ASEAN, and others can take to neutralize regional competition over energy. 

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    In this September file photo, the survey ship Koyo Maru, left, chartered by Tokyo city officials, sails around Minamikojima, foreground, Kitakojima, middle right, and Uotsuri, background, the tiny islands in the East China Sea, called Senkaku in Japanese and Diaoyu in Chinese. Japan's government says it has decided to purchase several disputed islands from their private owners in a step that is likely to anger China. A big part of the islands dispute involves oil reserves, which China forecasts as 200 billion barrels or more.
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During her visit to the Asia Pacific last week, Secretary of State Hillary Rodham Clinton spoke to the dispute over the South China Sea, arguably one of the region’s most intractable challenges that, left unmanaged, could uproot stability in East Asia. Those countries at the heart of the dispute — particularly China, Vietnam and the Philippines — need to “establish rules of the road and clear procedures for peacefully addressing disagreements,” Secretary Clinton urged.

The dispute is complex. States ringing the sea are becoming increasingly assertive in their claims, driven by concerns of nationalism, sovereignty, and even the need to stake claims to the region’s lucrative (but dwindling) fish stocks.  And then there are the potential petroleum resources. Estimates of the region’s energy potential ranges widely, according to the independent U.S. Energy Information AgencyU.S. estimates suggest the region could contain roughly 28 billion barrels of oil; while Chinese estimates are much more optimistic, projecting more than 200 billion barrels of oil beneath the sea.

Despite much uncertainty about the size of the region’s oil and natural gas resources, countries in the region are increasingly behaving as though access to those potential petroleum reserves is zero-sum — a winner take all and leave none for the loser approach — that is pitting countries against each other to tap into those resources first. Indeed, China, Vietnam and the Philippines are actively soliciting bids from petroleum companies to explore for oil and gas in contested waters, escalating tensions and reinforcing this zero-sum perspective. This continued competition is destabilizing and countries in the region need to take efforts to tilt the balance of behavior toward cooperation so that countries across the region can benefit from the sea’s potential resource wealth.

Opportunities for Regional Cooperation

There are practical steps that countries in the region can take to, as Secretary Clinton suggested, “literally calm the waters.”

First, the Association of South East Asian Nations, or ASEAN — the regional forum for addressing geopolitical and economic challenges — needs to play a more prominent role in neutralizing energy competition in the South China Sea.

One role that ASEAN should play is to help sculpt and enforce a renewed regional moratorium on deep sea drilling. This approach would, as Douglas H. Paal of the Carnegie Endowment for International Peace recently wrote, quite literally “remove the fuel from the flames of territorial disputes.” Indeed, a moratorium would help calm some of the concerns that states in the region have about needing to strike oil and gas first, and, more importantly, reduce the risk that countries inadvertently get drawn into conflict by condoning attacks against drilling platforms or other obstructionist activities incited by nationalists or others.

Second, with a moratorium in place, countries should work multilaterally to get a handle on how much petroleum actually lies beneath the seabed. The Asia-Pacific Economic Cooperation, or APEC, could help lead this effort. Since 1990, the APEC Energy Working Group has provided a forum for countries to address the region’s energy challenges, and it could lead the effort to develop common estimates.

Developing a common estimate of fossil fuel resources in the South China Sea would help reduce the tensions arising from countries conducting unilateral surveys that are currently underway. (These unilateral efforts seem to be interrupted anyway, with countries ramming each other’s survey boats or cutting survey cables.) If the petroleum estimates prove to be lower than many states expect — or indicate that extracting the resources would be too costly — countries may be less likely to aggressively pursue independent exploration.

China may reject this approach out of principle. But even if Beijing rejects cooperation through APEC, it would still be worth pursuing a multilateral estimate without China’s participation. Since any such estimate would likely be much lower than current Chinese estimates, the participating countries would have a common basis for contesting China’s claims, giving them greater diplomatic leverage. Furthermore, given China’s penchant for engaging states bilaterally, developing a shared multilateral estimate would provide states common ground from which to negotiate with China even on a bilateral basis, thus magnifying their bargaining power.

What is America’s Role?

The United States needs to strike a balance between reassuring its allies and partners in the region that it will help them safeguard their interests while also continuing to support a rules-based order in the Asia Pacific, one where institutions like ASEAN can play prominent roles in regional stability.

To do this, the United States needs to continue to articulate its interest in a peaceful resolution of the South China Sea dispute, and encourage countries to pursue policies that promote cooperation. But it also needs to make clear that the United States will not stand with countries that rely on threats or actual use of force to get their way, nor will the United States stand idle when such provocations threaten international peace.

Ultimately, though, America needs to make every effort to remain as neutral a party in this dispute if these regional approaches to neutralizing energy competition are going to be effective in reducing tensions. The options laid out above rely on credible and strong institutions that can assuage the fears of individual countries. For ASEAN and APEC to ascend to those roles as credible brokers, they cannot be overshadowed or weakened by America playing too strong a role. It is a delicate balancing act.

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