Resource Conflict in the South China Sea

By Akos Erzse

Originally published in May 2013

The economic boom and development in Asia provoked an increasing demand for sources of energy in the region and in international trade. Despite the rising need for extracted resources, the South East Asian domestic oil production is projected to stay stagnating; therefore the local states will most probably seek other solutions to the issue of energy scarcity. The main exploitable natural resources in the area of the South China Sea include oil, natural gas and food sources, such as fish. Naturally, the surrounding states rely heavily on these resources and are aiming to exploit them to the fullest extent. However, given the fact that natural gas and oil in proved and probable reserves are present in a significantly smaller amount compared to other parts of the world, a protective and hostile reaction has been developed by the local nations that are able to exploit resources in an economically feasible way. This results in the incentive of securing larger parts of the area for domestic production and the enhancement of national industry. According to the U.S. Energy Information Administration, the area contains approximately 11 billion barrels of oil and 190 trillion cubic feet of natural gas in proved and probable reserves; however the amount of exploitable natural resources can only be estimated due to the lack of exploration and territorial disputes.

International law imposes limitations on the exploitable territories of the coastal states. The United Nations Convention on the Law of the Sea (UNCLOS) set forth clear regulations regarding the limits of the territorial sea, the Exclusive Economic Zones (EEZ), the continental shelf and the rights that are possessed by nations while operating on the high seas. The legal framework provided by the UNCLOS allows states to exercise full sovereignty over their territorial seas (12 nautical miles from baseline); ensure their security in the contiguous zones (24 nautical miles from baseline); and utilise their right to exploit natural, living and nonliving resources located in their EEZs (200 nautical miles) and their continental shelfs (200-350 nautical miles, might vary according to geographical differences). The coastal countries possess the right to exploit the contents of their designated areas, however, due to the fact that the aforementioned states are located fairly close to each other, these areas tend to overlap and cause legal and military conflicts between the nations. These conflicts, according to the UNCLOS agreement, are to be resolved peacefully at all times through diplomacy or by legal means.
According to the U.S. Energy Information Administration (EIA), the majority of the states claim sovereignty over only their EEZs and Continental Shelves while other countries such as China, Philippines, Taiwan, Vietnam claim sovereignty over the Paracel and Spartly Islands as well. Besides minor conflicts between fishing vessels and scientific explorer teams, the most notable conflict was between China and Vietnam in 1974. During this conflict, China had forcibly ejected Vietnam from the Paracel Islands and occupied the area. Even today, the conflicts remain persistent. On the 22th of July in 2011 the Indian vessel INS Airavat received a warning from a Chinese military warship when it entered Chinas claimed territory. The accident officially occurred in Vietnamese waters, when the INS Airavat utilized its right of free passage, described by the UNCLOS agreement. After exchanging mutual threats of force, further confrontation was successfully avoided. More recently, in April 2012, two Chinese maritime surveillance ships confronted the largest naval vessel of the Philippines, the Gregorio del Pilar after it had investigated Chinese fishing vessels that carried illegally collected coral, fish and sharks that were still alive. Both sides had accused the other of conducting illegal and hostile activities, however, the adversaries managed to reach a diplomatic solution and prevented the conflict from escalating.

As we can see, the local states are prepared to defend their economic territories from any breach they may perceive as a hostile threat to their sovereignty. However, a future conflict could not only have a catastrophic impact on local politics and economy, but it could also pose a threat to the free flow of global trade. A survey conducted in late 2007 estimated that 117 thousand vessels will pass through in the area of the South China Sea in 2010. This approximately equates a total deadweight of 4.7 billion metric tons. According to the United Nations Conference on Trade and Development Review of Transport 2011, global maritime trade reached 8.4 billion tons in 2010. This data indicates that more than half of the total global maritime trade passed through the trade routes of the South China Sea. A conflict over the size of national sovereign territories in the region could limit the free and safe passage of trade vessels, thereby resulting in dire consequences and significantly hindering the conduct of global trade.
Besides the economy, increasing human activity also puts the environment under threat. According to S. Heileman, there are six species of marine turtles that are considered to be endangered and numerous other vulnerable species of marine mammals also live in this area. Many of the species exhibit transboundary migratory behaviour, which makes the protection of these species even harder. Heileman also points out that the destructive fishing methods utilised by the states result in massive habitat destruction and fragmentation and endanger sustainable fishing in the area. Pollution was assessed as moderate, but it can be considered severe in specific locations. Increasing naval trade and the exploitation of natural resources will only escalate the level of pollution, which together with the reckless fishing procedures, pose a direct threat to sustainable development in the area, as it risks the amount of natural food supply available in the region.

On the other hand, there have been attempts to prevent such conflicts as the countries made efforts to negotiate on a diplomatic level. For example, the Association of South East Asian Nations (ASEAN) offers a suitable forum for such discourses.
As it was mentioned before, large parts of the already discovered reserves are located in the proximity of the coastal areas; however there is an increasing presence of off-shore exploration and production. Instead of conducting unilateral ventures, numerous local states decided to cooperate in the South China Sea. Malaysia and Brunei managed to settle the question of their territorial claims and have forged a partnership to jointly explore offshore waters of Brunei, while Vietnam and Thailand developed areas of the Gulf of Thailand to their mutual benefit. However, areas that are contested by multiple parties remain heavily affected by resource conflicts.