South China Sea: Resources and Economics

Sophal Ear, Ph.D. Assistant Professor

Naval Postgraduate School PACFLT RSEP 22 July 2012

Disclaimer: Material contained herein is made available for the purpose of peer review and discussion and does not necessarily reflect the views of the Department of the Navy or the Department of Defense.

Raise your hand if you know why everyone wants a piece of the

(South China) Sea.

Shout out some reasons for why everyone wants a piece of the SCS.

Exclusive Economic Zone

An exclusive economic zone (EEZ) is a seazone prescribed by the United Nations Convention on the Law of the Sea over which a state has special rights over the exploration and use of marine resources, including energy production from water and wind. It stretches from the seaward edge of the state's territorial sea out to 200 nautical miles from its coast. In colloquial usage, the term may include the territorial sea and even the continental shelf beyond the 200-mile limit. The US is not a signatory to UNCLOS, while China signed on June 7, 1996.

“Since we can't solve the South China Sea issue, we can leave it to the next generation which will be smarter."

China’s Exclusive Economic Zone and Continental Shelf Act (1998)

This Act created an exclusive economic zone (EEZ) with 200 nautical mile limits from its coastal baseline, and claimed the right, inter alia, to broadly undefined powers to enforce laws in the EEZ, "including security laws and regulations." Based on the Act, the PRC does not recognize the airspace above its EEZ as "international airspace" and has interfered with and protested US reconnaissance flights over its EEZ. China takes the position that all maritime data collection activities, including military intelligence and hydrographic collection activities, fall within the United Nations Convention on the Law of the Sea [UNCLOS] provisions for marine scientific research and therefore require coastal-state consent before they could be carried out in the two-hundred-nautical-mile EEZ.

US Position

The US has protested this sovereignty claim as a violation of international law numerous times since this law was passed. The US Government has long conducted a vigorous freedom of navigation program through which it has asserted its navigational rights in the face of what it has regarded as excessive claims by coastal states of jurisdiction over ocean space or international passages. When remonstrations and protestations are unavailing, elements of US military forces may sail into or fly over disputed regions for the purpose of demonstrating their right and determination to continue to do so.

What’s At Stake

The region is estimated to have as much as 30 billion metric tons of oil and 16 trillion cubic meters of gas, which would account for about one-third of China’s oil and gas resources, according to China’s official Xinhua News Agency. China had 2 billion tons of proven oil

reserves and 99 trillion cubic feet of natural gas reserves in 2010, according to BP Plc estimates.

213 Billion Barrels

Proven and undiscovered oil reserve estimates in the South China Sea range as high as 213 billion barrels, the US Energy Information Administration said in a 2008 report. That would surpass every country’s proven oil reserves except Saudi Arabia and Venezuela, according to the BP Statistical Review.

Spratlys

The Spratlys, a group of 250 uninhabitable islets spread over 427,350 sq km (165,000 sq miles), are claimed entirely by China, Taiwan and Vietnam and in part by Malaysia, Brunei and the Philippines.

12 July 2012

“The Association of Southeast Asian Nations failed to reach consensus on handling disputes in the South China Sea, reflecting a rift between China and the U.S. over rules to keep peace in the trade lane. Cambodia, which holds the group’s rotating chairmanship, rejected a compromise on the wording of a joint communique among the other nine members in Phnom Penh.” –Bloomberg

The bloc’s inability to agree on a communique is unprecedented, Indonesian Foreign Minister Marty Natalegawa said. “This is strange territory for me. It’s very, very disappointing that at this 11th hour Asean is not able to rally around a certain common language on the South China Sea. We’ve gone through so many problems in the past, but we’ve never failed to speak as one.”

Scarborough Shoal

“At least 28 Chinese vessels and boats remained in and around the lagoon of Scarborough Shoal as of 26 June 2012, contrary to earlier reports that China had pulled out all its vessels. Aerial surveillance conducted by Philippine Navy aircraft spotted six Chinese fishing vessels and 17 dinghies inside the lagoon. - Armed Forces chief Gen. Jessie Dellosa said 3 July 2012 it would be up to the national government whether to redeploy Philippine vessels to the hotly-contested Panatag (Scarborough) Shoal.” –GlobalSecurity.org

Defense Minister Liang Guanglie: China “never intends to threaten any nation.”