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<p>Vietnam News Agency/AFP/Getty Images</p>

Vietnam News Agency/AFP/Getty Images

Phan Vinh Island in the Spratly archipelago, June 14, 2011.

Fish, Oil And Gunboats Without Borders

A tense standoff in the South China Sea was eased only by the recent onset of typhoon season. Australia will still have to weather much riskier diplomatic territory, wedged between China and the United States.

Floating hundreds of kilometres out from shore, Miguel Betana gazed up with trepidation at the towering hull of the Chinese fishing patrol ship shadowing his wooden outrigger.

It was April, and Betana, a 45-year-old fisherman from the northern Philippine island of Luzon, had muddled his way into a tense international standoff at the Scarborough Shoal, an uninhabited reef in the South China Sea claimed by both countries. Betana wandered into the rich fishing grounds inside the atoll, but outsized and outgunned, he was blocked by the Chinese.

<p>The Global Mail</p>

The Global Mail

"It's like a giant and an ant, when they pull up beside you. Your morale drops," Betana says in his home, a wooden shack on stilts above a morass of seawater and plastic junk in the town of Masinloc. "It's like you're sitting in the water and looking up to the top of a big coconut tree."

On April 14, Philippine authorities ordered fishermen away from Scarborough Shoal, depriving Betana of as much as 9,000 pesos, or about AUD211, a "beautiful" amount he would have likely made on three last trips to the reef before the onset of the typhoon season. But while Betana is now kept close to shore, Philippine and Chinese vessels continue their standoff at Scarborough.

Betana's experience sums up much about a more than two-month standoff over the Scarborough Shoal, which began after the Philippine navy's biggest ship, a former US Coast Guard cutter, raided several Chinese fishing boats here and tried to arrest the crews. Chinese marine surveillance ships stepped in and blocked the arrests.

What started as a dispute over a haul of coral, sharks and giant clams in a rich fishing ground quickly escalated into a confrontation involving dozens of vessels, most of them Chinese. On the internet and in more traditional media, Chinese nationalists have called for war while diplomats on both sides have struggled to find a way to resolve the territorial dispute.

The Philippines last week withdrew the two ships it had at the shoal, citing safety fears during the typhoon season. China responded by ordering out fishing boats, but has left some non-military patrol vessels behind. Whether the confrontation resumes in earnest when the typhoon season passes remains to be seen.

The standoff is the latest episode in the decades-long dispute over the South China Sea, a massive region that is subject to unresolved claims by six nations: China, the Philippines, Vietnam, Taiwan, Malaysia and Brunei. The sea is one of the world's busiest shipping routes, one of its richest fishing grounds, and a potential source of oil and gas on a huge scale.

It's an old and tangled mess. But these days, things are getting more dangerous. Crises in the sea are becoming more frequent. China's power is surging and drum-beating nationalism at home is on the rise. Other Southeast Asian nations are increasingly outgunned. Resources are becoming tighter. And the United States, after a decade distracted with misadventures in the Middle East, is back on the scene in a big way.

Australia's backyard just became a riskier place.

The nightmare scenario at some point in the future goes something like this: a miscalculated piece of brinkmanship leads to a clash between Chinese fisheries patrol vessels and the Philippine Coast Guard. Driven on by outraged nationalism at home, both countries send in their militaries. The United States, a treaty ally of the Philippines, gets sucked into war. Even if the fighting is short and few people die, almost everyone, everywhere, suffers.

Few people think things will get that far, at least not now. All sides have too much to lose.

But in the long run, what is happening in the South China Sea is deeply important. It's a slow-motion strategic dance that is a key test of just how peaceful China's rise will be, and how much the ally to which Australia has chosen to hitch its Asian security — the United States — is set to fade.

So, if you’re in the mood to be pessimistic, think about the Persian Gulf – and imagine nobody has sorted out the borders yet.

In Australia, a recent agreement will see 2,500 US Marines rotating through Darwin in the next five years. (The first 200 arrived in May.) The agreement is part of a much-vaunted effort by US President Barack Obama to "pivot" American foreign policy back towards Asia. The outcome of a baffling struggle over rocks, oil and fish will go a long way to determining, for Australia, whether or not we wake up one day in a very dangerous neighbourhood. It will also tell us whether or not we've chosen the right friends.

For Robert Kaplan, the chief geopolitical analyst for the private consultancy Stratfor, what is unfolding in the South China Sea "can show us the future of conflict in the 21st century".

"Not necessarily war, not necessarily an outbreak of military hostilities, but a lot of jockeying for position, a lot of brinksmanship, a lot of to-ing and fro-ing of warships," he says.

"The time when Australia could just rely on the United States to be the dominant force in the western Pacific while getting rich off trade with China, you know, that very convenient situation may slowly be changing."

<p>Photo by Aubrey Belford</p>

Photo by Aubrey Belford

The Philippine Navy headquarters in Manila.

Who is chasing after what?

Trying to explain the South China Sea means grappling with a mess of maritime law, history, diplomacy and hyperbole.

Each of the six countries with territorial claims base them on different arguments. Countries for decades have hung grimly onto isolated islets and rocky outcrops scattered across a huge swathe of water from Borneo up to Taiwan in an effort to establish sovereignty claims. While Scarborough has been the site of the latest headlines, most jostling has traditionally been over the Spratly and Paracel islands, two petroleum rich archipelagos.

In numbers, the prize is huge. About 80 per cent of China's energy imports come through the South China Sea, along with USD5 trillion in shipping trade.

About a tenth of the world's fish is caught in these waters. Estimates of the sea's largely unexplored oil reserves range from 28 to 213 billion barrels; there could be as much as 900 trillion cubic feet of gas under the sea. This year, China is estimated to consume 9.9 million barrels of oil every day.

"As resources, because they are non-renewable, become less and less easy to find, now some say the South China Sea is the new hydrocarbons El Dorado," says Chengxin Pan, a senior lecturer at Deakin University. "It's like the second Gulf. It could become the new centre of attention of middle powers. And as we know, the Persian Gulf is so unstable precisely because of oil."

So, if you're in the mood to be pessimistic, think about the Persian Gulf — and imagine nobody has sorted out the borders yet.

Most of the tension now is between Vietnam and the Philippines, on the one hand, and a much bigger China. Particularly since 2009, confrontations have become more frequent. Both the Philippines and Vietnam have for decades made bold claims to islands and reefs in the South China Sea.

“The South China Sea is the new hydrocarbons El Dorado... It’s like the second Gulf. It could become the new centre of attention of middle powers. And as we know, the Persian Gulf is so unstable precisely because of oil.”

But it's China's claims that are really causing the most worry. Any child taking geography in a Chinese classroom is reared on books that show China's border extending deep into the sea along something China calls the "Nine-Dashed Line". It's a big scoop of territory, covering more than 80 per cent of the South China Sea, which hugs the coasts of the Philippines and Vietnam before dipping to Borneo. Another name for it is the "Cow's Tongue," and it runs fairly close to the shorelines of other countries.

For China, the Nine-Dashed Line is a fact based on centuries of Chinese history — and was uncontested by other countries before resource hunger set in during the 1970s. For everyone else, it's a deeply disturbing and aggressive bit of bravado. Right now, the sea is a busy international sea-lane where freedom of navigation is guaranteed by America's overwhelming military dominance. About one-fifth of America's military strength, or 325,000 personnel, is concentrated in the Asia-Pacific region. America has 180 ships in the region, including six aircraft carrier strike groups; China has just one carrier — its first — which was just recently launched.

But the fear among neighbours is that, over the coming years, an increasingly powerful China will seek to turn the region into its own private lake.

Adding to the complexity is the fact that China has never really defined how exactly the line joins up or what exactly it wants to claim. China resists efforts by other countries for multilateral agreements on territory, or resolution through United Nations mechanisms. Instead, they insist on one-on-one agreements with other countries and projects for the "joint development" of resources, such as oilfields.

What's happening at Scarborough is all very galling for the Philippines. The reef is only 124 nautical miles, or 220 kilometres, from the Philippines — and well within the 200 nautical mile exclusive economic zone the Philippines claims under the United Nations Convention on the Law of the Sea, or UNCLOS. China's Hainan Island is more than 500 nautical miles from Scarborough. Among non-Chinese, opinions on China's legal claim vary between those who see it as merely flimsy, and those who see it as preposterous.

"It sounds a bit fanciful when they put it that way," exclaims Risa Hontiveros, a former Philippine congresswoman and senior member of the leftist Akbayan Party, of China's claims. "But fancy will not have first place in an arena like the international tribunal."

<p>Photo by Aubrey Belford</p>

Photo by Aubrey Belford

Risa Hontiveros of the Akbayan Party.

The problem, of course, is that China isn't going near such an arena.

And of course the Philippines is hopelessly outgunned. But what they do have is the United States as an ally. While the US has said it's not taking sides in the dispute, its military relations have warmed in recent years with both Vietnam and the Philippines, which forced the US to pack up its major military bases there in the early 1990s. President Obama has made a show of "rebalancing" forces to Asia, including the Marines in Darwin. At the start of this month, US Defence Secretary Leon Panetta announced that the US would shift 60 per cent of its navy to the Pacific by 2020, up from about half now.

While the Philippine political left is aghast at the prospect of a US military comeback, the country's government has signaled its continued closeness to America with the continuation of annual joint military exercises in April and a visit by President Benigno Aquino to the US in early June. The US is opposed to any fighting in the region and supports the resolution of the dispute via UNCLOS, explains Senator Loren Legarda, the chair of the Philippine Senate's foreign relations committee. "In that respect, we share a common position on how we think this dispute should be resolved," she says.

In other words, America isn't taking sides. But the way they're not taking sides lines them up with everybody but China.

“Civilian vessels are showing up and trying to assert jurisdiction in areas where China doesn’t even know what it’s claiming because they’ve left it ambiguous.”

So, is it all China's fault?

Travel to China, or see what Chinese are saying online, and the picture is all very different. For China, the dispute isn't about being aggressive abroad. It's about defending China's sovereignty.

For decades China has lived by the dictum that its economic rise shouldn't upset the world's political order too much. Nothing has changed about this policy, argues Jin Canrong, a professor of international and American Studies at China's Renmin University, except for the fact that China is becoming too big not to make waves. "China's interests abroad have expanded. So China has to do something to protect those newly expanded national interests," he says.

China's publicly stated military budget rose 11.2 per cent this year to RMB670 billion, or AUD106.2 billion. One outside estimate, by the think tank HIS Jane's, is that the real amount the country spends on its military will be double that by 2015. China's sole aircraft carrier is widely believed to be destined to join its navy's Southern Fleet in the South China Sea.

One common misperception about China is that, somewhere in Beijing, Communist Party bigwigs are setting out a coherent foreign policy. The reality is far messier.

A recent analysis of China's actions in the sea by the International Crisis Group, a Brussels-based think tank, argued China's government alternately tries to stoke, stifle and react to a growing strain of stridently nationalist public opinion. Meanwhile, provincial governments close to the South China Sea, non-military enforcement agencies such as its maritime survey and fisheries patrol forces and industries including fishing, are taking advantage of the country's murky policy by pushing deeper into the sea.

At Scarborough, the standoff doesn't involve China's navy, but rather an assortment of Chinese civilian vessels as well as its fisheries patrol force and marine surveillance ships. The real big guns of China's navy are lurking further away.

<p>Vietnam News Agency/AFP/Getty Images</p>

Vietnam News Agency/AFP/Getty Images

Vietnamese sailors patroling on Phan Vinh Island in the Spratly archipelago, June 14, 2011.

China "refuses to clarify where the nine-dash lines are, other than on a map, how they'd be connected, what it is that China's claiming," says Carlyle Thayer, professor emeritus at the University of New South Wales's Australian Defence Force Academy. "And thus the civilian vessels are showing up and trying to assert jurisdiction in areas where China doesn't even know what it's claiming because they've left it ambiguous."

Naturally, this is very worrying to everyone else in the region. And the United States has used this concern to reassert its military might in Asia, argues Renmin University's Jin. America, in China's eyes, has taken advantage of concern over Chinese ambitions in the South China Sea to forge closer military links with Southeast Asian nations such as Vietnam and the Philippines, he says.

How risky is the future?

Earlier this month, the Indian frigate INS Shivalik and three other ships left the Philippines and steamed through the South China Sea on the way to South Korea.

According to a report in the Indian newspaper The Hindu, the Chinese navy soon sent a friendly sounding message to the ship: "Welcome to the South China Sea, Foxtrot-47." For the next 12 hours, the ships were shadowed by a Chinese warship in what the rest of the world has long treated as an open international sea-lane.

"The tone of the message was welcoming, but was also as though we were entering Chinese waters," the newspaper quoted an unnamed official as saying.

So far, few people think we're in for a war right away in the South China Sea.

But at the heart of it all is a major conundrum: the rest of the world wants the disputes solved, China seems content to let things sit. And the more time that goes by, the bigger and more powerful China becomes.

"I think a low-level kind of conflict is possible and also is likely at the very local level. It may not be directly caused by a central government," argues Pan, of Deakin University. "I think any larger scale conflict is possible but I think unlikely.

"I think the competition at some level is almost inevitable," Pan adds. "As we know, the competition does not take two to tango. It takes one party to raise the temperature and the other would most likely respond. I think given the US focus on Asia, I think you'd see more military deployment in those countries, including Australia.

"Australia probably cannot stay neutral because of the ANZUS treaty, and the agreement on the US Marines in Darwin has basically locked Australia in this US alliance.

"So the choice has been made if a conflict happens between the US and China."

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