Beijing Masters the Art of Geopolitical Posturing in Southeast Asia

Beijing Masters the Art of Geopolitical Posturing in Southeast Asia

By Tim Daiss

Beijing has mastered the art of geopolitical posturing to such an extent that it’s keeping her smaller Southeast Asian neighbors guessing what to do next.

Nowhere is this more evident than the relationship between Beijing and Manila. While Sino-Japanese relations continue to worsen over the (Diaoyu in China and Senkaku in Japan) DSI island chain in the East China Sea, Tokyo’s political gamesmanship is more mature than Manila’s. Japan’s economy and Maritime Self Defense Force (navy) are vastly superior to anything an Association of Southeast Asian Nations (ASEAN) country can muster.

Meanwhile, China’s constant tension with Vietnam over the Paracel Islands in the South China Sea (SCS) taxes Beijing’s patience. One word to describe Vietnam’s stance against China is defiance, something the Philippines seems unable to do.

Vietnam has matured diplomatically since its 1975 reunification. With an anxious eye on Chinese aggression, Hanoi has courted and won over India as an ally by giving the Indian Navy berthing rights at its ports as well as forging oil and gas exploration ventures in waters that are claimed by both Vietnam and China. Furthermore, Vietnam thawed relations with the US, and has allowed the US Navy to make nearly two-dozen port calls since 2003 – a perfect counter against Chinese ships plying near Vietnamese waters.

The Philippines however is a different story. The one time American commonwealth is losing a war of attrition over areas disputed claims in the SCS.

As Carlyle Thayer, a professor at the Australian Defence Force Academy told Energy Tribune a few weeks ago, China has, to all intents and purposes, annexed Philippine territory [Scarborough Shoal].

This played out at the shoal’s un-inhabited islets and reefs in April and May last year. Though Philippine ships finally withdrew from the area, China has maintained a continual naval presence there, with more plans in the works.

Against this backdrop Manila is scrambling for answers while Chinese aggression is starting to dictate the Philippines’ offshore Exploration and Production (E&P) plans.

Reed Bank, 150-miles east of the disputed Spratley Islands in the SCS, is a prime example. London-based Forum Energy Plc, a subsidiary of Philex Mining Company, led by Filipino businessman Manny Pangilinan, won a bid to be the contractor for Service Contact (SC72) to engage in the drilling of two exploratory wells to be conducted before August 14. Yet, until a week ago these plans had been blocked by the Philippine Department of Foreign Affairs due to ongoing tensions with China. However, on January 25 the Philippine Department of Energy granted Forum’s request for a two-year extension.

Forum has a 70 percent stake in SC72 while Philippine owned Monte Oro Resources & Energy Inc. owns the remaining 30 percent. According to the Philippine Daily Inquirer, gas potential at SC72 is estimated at about 16 trillion cubic feet—enough to last the Philippines for 100 years.

Just before the extension, Pangilinan told reporters that it was difficult to say whether exploratory drilling can get underway this year “given that the weather window is March and April.”

At the time of this writing it is unclear if Forum will start drilling even with its new two-year extension. What is clear is the fact that Manila is hesitant to provoke China in waters that are clearly within the Philippines’ 200-nautical mile Exclusive Economic Zone (EEZ), while China has no qualms about making a permanent presence there.

Death of an idea

An idea that has been floating around Manila for some time is joint development at Reed Bank. Pangilinan said that delays in his company’s oil and gas exploration at the reef could be overcome if an international operator joined the project. On January 17 he said that Philex had asked China National Offshore Oil Corporation (CNOOC) to join in joint exploration to “skirt the sovereignty question.”

He added however that the outcome depends on Beijing. China at least acknowledges the idea. Late last year Ma Keqing, China’s newly installed ambassador to the Philippines, told reporters in Manila that China was open to joint exploration. She said that the resources could remain idle for a very long time if the Philippines and China waited for a final resolution of their territorial dispute before engaging in any commercial development. Interestingly, China state-media did not carry the ambassador’s comments.

Sounds good, but how realistic is joint exploration? For starters, Manila has been here before and tripped over its own feet. In 2005, the Philippines initiated the Joint Maritime Seismic Understanding (JMSU). Under JMSU, Petron (the Philippines’ largest refiner), PetroVietnam and CNOOC agreed to conduct exploration in disputed waters for three years. However, Manila lawmakers criticized the plan as being unconstitutional for failing to comply with a 40-percent foreign ownership limit on joint exploration deals involving Philippine natural resources. Essentially, they killed the idea.

This time around, similar thinking persists. Commenting on the recent joint exploration dialogue, Philippine congressmen consented with one caveat: CNOOC must recognize Reed Bank as Philippine territory.

Frankly, China will never comply. In fact, just a few days before Philippine congressmen debated the idea, China published a new official map that included these islands as part of Chinese territory.

Sensing defeat in bilateral attempts with Beijing, on January 22 the Philippines brought China before a UN arbitration tribunal to challenge its nine-dotted line claim to virtually the entire SCS.

Not to be outdone, China fired back, denouncing Manila’s “illegal occupation” of disputed islands. Some analysts however think that this time Manila might actually force Beijing to defend its claims.

Taiwan’s The China Post said in a commentary that “the Philippines has essentially dealt a clever hand — China might have to clarify the extent and basis for its nine-dotted line claim” and if it doesn’t do so, will lose in the court of international public opinion.

When and if that ever happens however remains to be seen. For the present China still seems to hold most of the cards while the Philippines is still learning how to play poker.

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