Key Points

Background and Significance of the South China Sea Dispute

Nature and Status of the South China Sea Claims

Approaches to Resolving the Dispute

Implications for U.S. Policy Toward the South China Sea

USIP South China Sea Meeting Series

USIP Grantees on the South China Sea

About the Study Group

SPECIAL REPORT 18

The South China Sea Dispute
Prospects for Preventive Diplomacy

Scott Snyder

Approaches to Resolving the Dispute

Mechanisms for Sustaining Dialogue
Developing the Political Will to Sustain Peaceful Settlement

The complexity and ambiguity of the conflicting claims in the South China Sea have been cited as factors that have frustrated previous attempts to arrive at a lasting solution, but the fact that not all positions are set in stone may allow flexibility in future negotiations. A wide variety of approaches have been presented for consideration if the parties can develop the political will to resolve the dispute through negotiations.

Mechanisms for Sustaining Dialogue

• South China Sea Informal Meetings--The annual Indonesian-hosted Workshops on Managing Potential Conflicts in the South China Sea were initiated in Bali in 1990. The meetings have been attended by government officials in their private capacities and technical experts on aspects of maritime cooperation, security, and resource development in the South China Sea. Representatives from both the PRC and Taiwan have participated since 1991.

  An important feature of the Indonesian-hosted workshops has been the establishment of technical working groups on resources assessment; marine scientific issues; safety of navigation, shipping, and communication; and legal matters. The significance of the technical working groups lies in their attempts to establish practical areas of cooperation and contact among disputants even while the sovereignty issue remains unresolved. Confidence-building measures (CBMs) have also been a part of the agenda for the workshops--with much success in generating ideas but little consensus on how CBMs might be implemented in practice.

  While the Indonesian-hosted meetings have provided useful contacts and a bottom-up approach toward creating a basis for cooperation, some critics doubt that these meetings can provide the basis for political negotiations to resolve the dispute. This type of incremental approach has supported the status quo but thus far has not found a way to generate the political momentum necessary to achieve a negotiated settlement.

  In addition, the meetings have failed to forestall confrontations or the escalation of bilateral tensions between some claimants, such as the Mischief Reef incident of March 1995. In view of the widely varied estimates of the Spratlys' oil and gas reserves, it is conceivable that some of the claimants are intentionally delaying a political solution as they wait for more conclusive information regarding the area's economic potential.

• Creation of an Eminent Persons Group--It has been suggested that to create the political breakthrough necessary to lay the groundwork for substantive official negotiations, an Eminent Persons Group might be formed to complement the Indonesian workshops. A group of senior representatives from ASEAN nonclaimants (that is, Singapore, Indonesia, and Thailand) might be called upon to play a mediating role among the disputants. China might balk at this formulation, however, since it essentially would pit Beijing against the ASEAN bloc. In another formulation of this approach, the group could be made up of high-level participants from among the disputants--with potential assistance from highly respected representatives of the international community playing private roles--as a means to create the necessary political momentum.
  
• Third-Party Mediation--Another possibility along the lines of an Eminent Persons Group is mediation by a third party. The ICJ administers decisions in cases where the parties are willing to submit to a judicial decision, but it is difficult to predict how the ICJ might rule in such a complex case, and China is not likely to accept ICJ jurisdiction in the South China Sea because such a process would "internationalize" the dispute and run counter to its preferred strategy of dealing with each of the other claimants bilaterally.

  Professor Ji Guoxing from the Shanghai Institute of International Studies has proposed that an ad hoc tribunal or nonofficial third party could play a role without "institutionalizing" the negotiating process or "internationalizing" the dispute, two critical Chinese concerns. Third-party mediation has played a role in resolving other maritime disputes, such as the Iceland Continental Shelf Agreement, and in settling a dispute between Argentina and Chile in the Beagle Channel. As with the creation of an Eminent Persons Group, mediation by a third party would be a way of catalyzing political negotiations at the highest levels. Perhaps a useful model for conducting such negotiations would be to consider "proximity" talks hosted by a nonofficial third party--similar to the role provided by the United States during the Dayton negotiations on Bosnia. (In this case, the United States might provide communication and the technical means for verifying complex boundary negotiations.)

• Creation of Joint Resource Development Authority--The idea of setting aside claims to sovereignty in favor of joint resource development has been articulated on many occasions by Chinese representatives. However, the Chinese concept of "joint resource development" appears to be defined as bilateral cooperation in disputed areas, while ASEAN claimants appear to prefer a multilateral joint development scheme. A series of bilateral development agreements would in effect expand the Chinese claim to resources in contested areas that would most likely not be open to Chinese participation following a final settlement.

  The idea of joint resource development has been proposed in various forms, including as part of the Indonesian-hosted workshops. University of Hawaii and East-West Center researchers Mark Valencia, Jon Van Dyke, and Noel Ludwig have developed a range of possible options for consideration as part of a multilateral joint resource development authority similar to the Antarctic Treaty, a multilateral agreement to share resources in Antarctica. The Timor Gap treaty between Australia and Indonesia, agreements in the Persian Gulf, and other bilateral resource development agreements provide ample precedent for considering this approach; however, a multilateral maritime development authority, if implemented, would be the first of its kind.

• Multilateral Talks between ASEAN and the PRC--The entry of Vietnam into ASEAN in the summer of 1995 and the solidarity of the ASEAN members in support of the Philippine position regarding Mischief Reef has made a coordinated ASEAN approach to the South China Sea dispute more likely.

  Professors David Denoon and Steven Brams of New York University have proposed that a new mathematical technique, called "fair division," be used to help facilitate the negotiations over sovereignty. They suggest a two-stage negotiation: first between ASEAN and China and then among ASEAN members.

  In fair division, each side is given an agreed-upon number of points to allocate over various assets they desire, and a neutral umpire then calculates how to divide the assets in a way that gives each side the same percentage of its preferences. As an example, Denoon and Brams suggest that the South China Sea could be divided into five zones, and the PRC and ASEAN could bid for the areas that were most important to them. Thus, the PRC and ASEAN might each get some of the islands and some of the deep water hydrocarbon development areas. The advantage of this technique is that it would be fair and resolve sovereignty definitively, thus making it easier to get businesses to invest in the follow-on development needed.

• Resolving Bilateral Issues First, Then Pursuing Multilateral Negotiations--There has traditionally been a reluctance among the smaller claimants in the Spratly Islands to pursue bilateral negotiations with larger states for fear that a larger state would diplomatically overpower its smaller neighbors, resulting in unsatisfactory precedents for other bilateral negotiations. China, on the other hand, has resisted calls for multilateral discussions of the Spratly Islands issue in an official setting, insisting on bilateral negotiations involving the PRC while condemning bilaterals involving other claimants.

  However, the fallout from the discovery of a Chinese presence on Mischief Reef has led to progress in raising the Spratly Islands issue in both the bilateral and the multilateral context, at the ASEAN Regional Forum meeting in Brunei in August 1995, and through the negotiation of bilateral "principles for a peaceful settlement" with Vietnam and the Philippines.

  Given the enhanced cohesiveness among ASEAN claimants following the Mischief Reef incident (and since Vietnam entered ASEAN in the summer of 1995), perhaps the time has come to initiate bilateral negotiations to resolve disputes in areas of the South China Sea where there are not multiple claimants. If successive bilateral negotiations were to succeed in areas where there are only two claimants, such agreements would eliminate significant portions of the overall area under dispute. In addition, the conclusion of agreements in areas where there are only two claimants might create sufficient momentum toward a multilateral solution to the "doughnut" area where multiple claims overlap. There is a need to study carefully the significance of the areas where bilateral claims overlap, the resource potential of these areas, and the strategic implications of proceeding with bilateral talks.

  One concern expressed in connection with this approach is that bilateral solutions might serve as a precedent for subsequent negotiations that would recognize expansive claims of the most powerful parties to the dispute. If a strong coordinating mechanism were developed among the ASEAN claimants, it might be possible to "backstop" a bilateral negotiating process with multilateral consultations in the same way that a coordinated position was developed among South Korea, Japan, and the United States during nuclear negotiations with the Democratic People's Republic of Korea. The consultative infrastructure within ASEAN states is already in place, and a coordinated ASEAN position would provide smaller Southeast Asian states with sufficient leverage to protect the interests of ASEAN members in negotiations with China. Such an approach is consistent with ASEAN's efforts to pursue the "integration" of China into the region.

Developing the Political Will to Sustain Peaceful Settlement

Mischief Reef marked a new phase in the South China Sea dispute. It mobilized the ASEAN claimants to pull together in response to China's occupation of a reef located well within the EEZ of the Philippines. The incident forced China's acquiescence in allowing the South China Sea dispute onto the formal agenda of the ASEAN Regional Forum held in Brunei in August 1995. At that meeting, PRC foreign minister Qian Qichen responded by declaring that the PRC would pursue a solution to the dispute consistent with the UN Convention on the Law of the Sea, declaring that the PRC's claim did not contradict the right of safe passage or freedom of navigation through international waterways in the South China Sea. The PRC has also acquiesced to bilateral talks with the Philippines and Vietnam to establish a "code of conduct" in the South China Sea, in effect building on ASEAN's Manila Declaration of 1992.

Nevertheless, in the absence of a resolution of the dispute, the next phase could be much more volatile. Rather than seizing additional unoccupied features, claimants desiring to strengthen their claims might seek to play "king of the hill" by taking physical occupation of features currently occupied by other claimants. The current outposts in the South China Sea already pose a significant obstacle to resolving the dispute because a unilateral withdrawal from these features might represent a loss of face that would be much more difficult to negotiate. Competition for resources through oil exploration or fisheries disputes may constitute additional sources of conflict. Major oil companies may continue to be reluctant to invest money or other resources in the area of overlapping territorial claims.

These potentially destabilizing factors serve only to emphasize that none of the mechanisms for achieving a lasting resolution of disputes in the South China Sea can be put in place if all the parties do not have the political will to come to the negotiating table and seek a peaceful settlement. The Mischief Reef incident crystallized regional concern about the dangers of a military confrontation in the South China Sea and heightened ASEAN's suspicions regarding China's long-term intentions and tactics. It also gave a clearer picture of the potential costs of a militarily imposed solution. But a comparison of the advantages of cooperation and the costs of confrontation is not necessarily sufficient to overcome the emotional response that is precipitated when core issues such as sovereignty are involved. Moreover, the immediate crisis in relations between the Philippines and the PRC has ebbed with the passage of time. Attention has shifted to the escalation of tensions between China and Taiwan, dissipating the momentum necessary to shape a negotiated settlement in the Spratly Islands. A failure to come to grips with the core issues increases the likelihood that another crisis will be necessary before the parties will find the political will to come to the negotiating table.

Some analysts have suggested that there is no near-term evidence that the parties are ready to come to a negotiated settlement, given domestic political transitions in the PRC and the need to focus on the more urgent tensions in cross-straits relations. According to this analysis, the best hope under current circumstances is that any simmering potential disputes will stay beneath the surface and that the claimant states will be able to avoid aggressive actions or new crises that might cause renewed confrontation.

Others argue that now is the time to pursue a political settlement. This analysis suggests that rising nationalism and the political transition from authoritarianism to democratic rule will make it even more difficult to muster political support for painful compromises on sensitive issues such as sovereignty. In addition, the discovery of new resource potential, negative long-term trends in the military balance in the area of the Spratly Islands, or tensions among claimants over unrelated side issues might emerge, setting the stage for a more far-reaching conflict than the current one. Regardless of whether the dispute will be easier or harder to resolve in the future, it is in the interest of all the parties to seek to create the political will necessary to reduce the likelihood of conflict in the South China Sea.

Implications for U.S. Policy Toward the South China Sea

Given the complexities of the South China Sea dispute and the difficulty of evaluating the legal and historical legitimacy of competing claims, what are the implications for U.S. policy toward the South China Sea? In view of the possible options that have already been presented for jump-starting political negotiations among the claimants, what role, if any, might the United States play in supporting a peaceful settlement?

A coherent and effective U.S. policy toward the South China Sea must include two objectives: (1) to help the disputants to generate the political will to engage in a negotiating process, and (2) to maintain the credibility of the U.S. intent to deter any one (or group of) claimants from unilaterally asserting a solution by force of arms.

The immediate U.S. interests in the South China Sea disputes include maintaining peace and stability in the South China Sea, maintaining freedom of navigation, and upholding international law, including the UN Convention on the Law of the Sea. These points were emphasized in a May 10, 1995, statement by the U.S. Department of State on the Spratly Islands and the South China Sea. While maintaining its neutral position on the legal merits of the various territorial claims, the United States expressed concern over destabilizing unilateral actions in the region, declared that maintaining freedom of navigation is in the fundamental interest of the United States, and strongly urged that the disputants peacefully resolve the dispute among themselves consistent with international law, including the UN Convention on the Law of the Sea.

The initial reactions of Chinese government press spokesmen to the U.S. statement were negative, but Foreign Minister Qian Qichen's statements the following August at the ASEAN Regional Forum (ARF) meeting in Brunei ostensibly committed the PRC to a path consistent with what the U.S. government had recommended. This pattern suggests that repeated U.S. expressions of interest in seeing an expeditious and peaceful settlement of the South China Sea dispute might help deter unilateral actions by the claimants and maximize the possibility for a negotiated solution, rather than waiting for all sides to continue to harden their respective positions. At the same time, the United States might underscore its neutrality and avoid mediating the dispute on behalf of any single party.

The National People's Congress (NPC) ratified the UN Convention on the Law of the Sea in May 1996, a move that specialists hailed as a major step forward in clarifying the rules under which China will consider its claim, as only islands and rocks above water at high tide generate maritime zones. Simultaneously, the NPC declared straight baselines from which Chinese claims to an EEZ and continental shelf will presumably be measured, including some baselines surrounding the Paracel Islands that deviate from conventional practice, in which only archepelagic states may draw baselines enclosing groups of islands. As part of its interest in upholding the generally accepted interpretations of the Law of the Sea, it is likely that the United States will dispute the Chinese baselines around the Paracels or any other future baseline claims that do not conform to conventional international practice (as has also been the case with Vietnam's expansive baseline claims).

Many specialists believe a leading U.S. role in trying to resolve the Spratly Islands dispute is likely to complicate matters by adding another contentious issue to the already-overloaded agenda of U.S.-Chinese relations. Such a role would also be perceived by China as interference by a nonclaimant in an attempt to internationalize the issue. At the same time, the fact that China responded at the ARF meeting in Brunei to the major U.S. concerns highlighted in its May 10, 1995, statement on the Spratly Islands suggests that the United States may be able to indirectly influence the claimants to be active in constructive directions while also taking actions to diminish the possibility that intimidation tactics might be used as part of a negotiation process.

The U.S. naval presence in the region is essential in implementing the second aspect of U.S. policy toward the South China Sea by deterring the use of military force by any of the disputants. A regular U.S. naval presence in the South China Sea area underscores the nation's interest in stability and reinforces the prevailing interpretation that a significant part of the South China Sea outside of the immediate area of the Spratly Islands is categorized as high seas, where no party exercises territorial jurisdiction.

In the event of destabilizing unilateral actions by any party to the Spratly Islands dispute, the U.S. Navy has an interest in playing its balancing role in the Asia-Pacific area by undertaking an augmented presence in international waters proportional to the severity of any unilateral provocation. Such a response would underscore the U.S. commitment to seeing the dispute resolved nonviolently, while avoiding taking sides in or becoming a party to the conflict. The recent U.S. naval response to Chinese missile exercises in the Taiwan Straits show that a stepped-up U.S. military presence in response to aggressive unilateral actions may be important in reassuring Asian allies that the United States maintains the political will to deter aggressive or destabilizing unilateral actions that threaten the status quo in Asia.

Some analysts have suggested that the United States support greater transparency in the South China Sea by using satellite reconnaissance to actively monitor and make public reports on activities in the area. Another possibility--if such information were made available to a nongovernmental mediator respected by all sides in the Spratly Islands dispute--would be to find a way to provide technical support for South China Sea "proximity" negotiations by using satellite imagery similar to that provided by the Defense Mapping Agency for the Bosnian proximity talks.

The likelihood is slim that direct U.S. intervention will be useful or accepted in resolving the Spratly Islands dispute. After all, there is a range of mechanisms that might be used to bring about a peaceful settlement of the issue without U.S. involvement. The most constructive role for the United States may be in urging the parties to muster the political will necessary to find peaceful solutions while continuing to discourage a military resolution of future disputes. Most important, the United States might support preventive diplomacy by the parties involved by underscoring positive precedents such as the decision by Great Britain and Argentina to enter into negotiations over Falkland Islands boundaries without prejudice to the claims made by the disputants themselves. A steady U.S. policy of "active neutrality"--combined with a "forward-leaning" posture to deter potentially destabilizing military aggression and stepped-up support for an expeditious and peaceful resolution of the parties' conflicting claims consistent with the Law of the Sea--is the surest sign of support for preventive diplomacy that the United States can offer to deter potential conflict in the South China Sea.

USIP South China Sea Meeting Series

Meeting 1: H.E. Hasjim Djalal, Ambassador-at-large, Republic of Indonesia, March 31, 1995
Meeting 2: Mr. Jon M. Van Dyke, University of Hawaii, June 14, 1995
Meeting 3: Professor Ji Guoxing, Shanghai Institute for International Studies, July 13, 1995
Meeting 4: Dr. Gregory Austin, Australia National University, September 11, 1995
Meeting 5: The Honorable Stapleton Roy, Ambassador-designate to Indonesia, October 24, 1995
Meeting 6: Professor David Denoon, New York University, Feb. 8, 1996
Meeting 7: Professor Ian Townsend-Gault, University of British Columbia, March 27, 1996 USIP Grantees on the South China Sea

USIP Grantees on the South China Sea

1991
Mr. Ning Lu, International Center for Development Policy, The South China Sea: Potential Conflicts and Conflict Resolution

Current
Mr. Jon M. Van Dyke, University of Hawaii, The South China Sea Issues: Approaches and Solutions
Professor Ji Guoxing, Shanghai Institute for International Studies, China's Maritime Jurisdictional Disputes with East Asian Neighbors and Options for Settlement
Professor David Denoon, Fair Division: A New Approach to the Spratly Islands Controversy

About the Study Group

The United States Institute of Peace has convened a series of seven study group meetings since March 1995 on managing potential territorial conflicts in the South China Sea. These meetings were held as part of an ongoing series of activities on potential conflicts in Asia and implications for U.S. policy. Senior experts and grantees of the Institute researching the issue were invited to present their latest findings on aspects of the South China Sea dispute to a group of forty to fifty specialists from the Washington, D.C. area.

This report, authored by Institute Program Officer Scott Snyder, draws on that series of discussions as well as proceedings from a number of conferences and meetings on the South China Sea issue that have been held during the past two years. The contents of the report do not necessarily represent the views of the United States Institute of Peace, which does not advocate particular policies. For more information regarding the meeting series or this report, please contact Scott Snyder at (202) 429-3808.

See the complete list of Institute reports. The views expressed in this report do not necessarily reflect those of the United States Institute of Peace, which does not advocate specific policies.