The Third Option for the South China Sea

The Political Economy of Regional Conflict and Cooperation

David Jay Green

• Publisher: Palgrave Macmillan
• Year: 2016
• ISBN:
  9783319402741
• Topic: Business
• Subtopic: International Business
• Index: Business

This Palgrave Pivot uses a simple model from game theory to explain the behavior of countries disputing ownership of resources and of small islands in the South China Sea. It argues that the rapid transformation of the region's economy - the rise of Factory Asia – is not being acknowledged, leading countries to take chances beyond what a rational picture of costs and benefits would suggest. Regional economic cooperation may be a viable alternative to the present conflicts. However, the varied experience of regional initiatives in Southeast Asia provides a cautionary note that, while there is the potential for peaceful development of the South China Sea, there are significant challenges to structuring successful programs.

© The Author(s) 2016

David Jay GreenThe Third Option for the South China Sea10.1007/978-3-319-40274-1_1

Begin Abstract

1. Introduction

David Jay Green¹

(1)

Hult International Business School, San Francisco, California, USA

Abstract

In the South China Sea disputed claims to ownership of the small islands, to the control of passage, and to the energy and fishery resources are growing sources of tension. Clashes at sea threaten the international trade that has underwritten unprecedented economic growth in East and Southeast Asia. Using simple game theory the book argues that the rapid transformation of the region’s economy—the rise of Factory Asia—is not being acknowledged, leading countries to take chances beyond a rational picture of costs and benefits. Regional economic cooperation can be an alternative to the present conflicts. However, while there is the potential for peaceful development of the South China Sea, there are real challenges to structuring successful programs.

Keywords

ASEANChinaGame theoryPhilippinesViet NamRegional cooperation

End Abstract

In the western part of the Pacific Ocean, overlapping maritime claims have been the sources of political tension and outright conflict. Brunei , China, Indonesia, Malaysia , the Philippines, Taiwan , and Viet Nam all assert conflicting rights to control of passage in the South China Sea, to the small rocky outcroppings, or to the marine resources. ¹ In the East China Sea and the Yellow Sea, similar issues plague relations between China, Japan, and South Korea . ² At stake are the undersea mineral resources (including possible oil and natural gas reserves), access to fishing areas (traditionally exploited by vessels from many countries), and the ability to meet security concerns such as controlling the movement of military or commercial vessels.

Figure 1.1 provides a picture of the overlapping maritime claims. ³ While many countries are involved in these conflicts, China predominates. This is a result of a number of factors, including the country’s size and geographic centrality, the extent of China’s claims, and the explosive growth of the Chinese economy spurring an expansion of both the fishing and naval defense fleets. China’s claims follow from those made by the Republic of China in 1947 on the basis of a “nine-dashed line ” on a historical map of the region (US EIA 2013). As a result of this history, the Government in Taiwan generally has “mirrored” the claims by China (BBC 2015a), although not completely. ⁴ The other countries’ claims are generally smaller; often claims of exclusive economic zones flowing from their respective coastlines such as provided by the United Nations Convention on the Law of the Sea (UNCLOS). ⁵

Fig. 1.1

Overlapping maritime claims Source: US EIA 2013 (http://​www.​eia.​gov/​beta/​international/​analysis_​includes/​regions_​of_​interest/​South_​China_​Sea/​images/​maritime_​claims_​map.​png)

Table 1.1 provides a summary list of some of these disputes with a short, representative note on the overlapping claims and examples of the violence these have occasioned. A perspective on the political disagreements in the region can be judged by the way the names used for the various bodies of water are contested, see Box 1.1. Although the focus of this book is on resolving the South China Sea disputes, the similar issues of the East China Sea need acknowledging—they help us understand the behavioral dynamics, the interrelationships of the countries involved.

Table 1.1

A partial list of and parties to Western Pacific Ocean territorial conflicts

Parties	Disputed regions
	Illustrative headline clash or actions
China-Japan	Diaoyu Islands (Chinese designation)/Senkaku Islands (Japanese designation) in the East China Sea^(1)
	2011, Japanese military aircraft “confront” Chinese plane^(2) 2012, Chinese naval vessels “blocked” Japanese vessels^(2)
China-Philippines	The Scarborough Shoal (Huangyan Island in China) and some of the Spratly Islands in the South China Sea^(3)
	Naval “standoff” in 2012 at Scarborough Shoal^(4)
China-South Korea	Maritime resources in Yellow Sea and East China Sea, including a submerged reef, Ieodo (Korean)/Suyan (Chinese)^(5)
	2012 Deadly clashes between Korean maritime security personnel and Chinese fishermen^(5)
China-Viet Nam	Islands in the Paracel^(6) and the Spratly^(3) groups in the South China Sea
	Violent clashes in 1974 (Battle of the Paracel Islands, between China and South Viet Nam)^(2) and 1988 (Johnson Reef Skirmish)^(2, 7) resulting in fatalities; 2014 naval confrontation over Chinese oil drilling rig^(8)
Currently non-violent or less-violent disputes
Brunei-China	Parts of the maritime territory of Spratly Islands in the South China Sea^(9)
China-Indonesia	Region of the South China Sea, including near Indonesian-controlled, natural gas rich, Natuna Islands^(10)
	2010 Faceoff between Indonesia naval vessels and “a Chinese ‘fishery management vessel’”^(11)
China-Malaysia	Maritime area and parts of the Spratly Island group in the South China Sea^(3)
	1995, Malaysian naval vessels fire on a Chinese ship^(2)
Japan-South Korea	Conflicting claims to South Korea administered Dokdo (Takeshima in Japanese) in the East China Sea^(l)
	“Last year (2012) witnessed a particularly angry diplomatic spat, when then South Korea President Lee Myung-bak visited the islands…. Japan responded by recalling its ambassador.”^(12)
Japan-Taiwan	Tiaoyutai Islands (Taiwanese designation)/Senkaku Islands (Japanese designation) in the East China Sea^(2)
	2012 Confrontation between naval vessels^(2)
Philippines-Taiwan	The Scarborough Shoal (Huangyan Island in China) and some of the Spratly Islands in the South China Sea^(3)
	2013 Fatal encounter between Philippines coast guard and Taiwanese fishing vessel^(13)
Philippines-Viet Nam	Conflicting claims to parts of the Spratly Island group in the South China Sea^(9)
	1999 Philippines plane fired on by Vietnamese troops^(2); 2011 Naval agreement eased tension^(14)
Taiwan-Viet Nam	Islands in the Paracel^(6) and the Spratly^(3) groups in the South China Sea
	1995 Taiwan military fires upon Vietnamese vessel from Taiwanese held island^(2)

Notes: (a) The listing of disputed regions or islands is not meant to be exhaustive or authoritative

(b) The English transliterations of the Chinese and Vietnamese names for the Paracel and Spratly Islands can be found in Buszynski 2011

(1) BBC 2014; (2) CNAS 2014; (3) BBC 2015a; (4) DeCastro 2013; (5) Roehrig 2012; (6) Encyclopedia Britannica 2013; (7) Torode 2013; (8) Spegele and Khanh 2014 and The Economist 2014a; (9) US EIA 2013; (10) Shekhar and Liow 2014; (11) Currie 2010; (12) O’Shea 2013; (13) Thayer 2015; (14) Bordadora 2011

Box 1.1 The Name Game

The issues over these oceanic swaths on the West Pacific map have been highly politicized, to the extent that the names applied to the different bodies of water have become political issues. (McLaughlin 2011)

The South China Sea is the name most readily recognized in the USA for the body of water centered between China, Taiwan, and the Southeast Asian nations of Brunei, Indonesia, Malaysia, the Philippines, and Viet Nam. This book will use that name. Using English translations, in China, the area is generally referred to as the South Sea, but in Viet Nam, it is the East Sea (Hookway 2013). In the Philippines, it is increasingly referred to as the West Philippine Sea (Green 2013). The Philippine President Benigno Aquino III showed a sense of humor in calling it “this sea known by many names” (Hookway 2013). A US non-governmental organization, the Nguyen Thai Hoc Foundation (2014), advocates using the name Southeast Asia Sea.

Similar issues arise in the west Pacific Ocean areas between China, Japan, and Korea.

Following Baker (2016) we acknowledge that “Maritime borders are ephemeral and subject to diverse concepts of use and passage.” But this book will not attempt to further delineate the territorial extent of, the legal aspects surrounding, or the historical development of the overlapping claims to ...

Table of contents

• Cover
• Frontmatter
• 1. Introduction
• 2. Low-Level Simmering Disputes
• 3. A Model from Game Theory
• 4. The Economic Context: Costs and Vulnerability to Conflict
• 5. Hypothetical Rewards, Resources in the South China Sea
• 6. Broader Issues in the West Pacific
• 7. Regional Cooperation as the Third Option: A Modified Game
• 8. The Experiences of Existing Regional Cooperation Initiatives
• 9. South China Sea Regional Cooperation: A Tentative Exercise
• 10. Conclusion
• Backmatter