Some skirmish in the South China Sea could well become for Asia in the twenty-first century what the assassination of Archduke Ferdinand was for Europe in 1914—a trigger for a broader conflict between a rising power and the established order. And such a scenario looks all the more likely after the July 12 ruling by the Permanent Court of Arbitration at The Hague, which negated the very basis of China's territorial claims in the South China Sea.
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Beijing's response in the weeks that followed—nationalist venting and overt rejection of the ruling through military exercises—undermines once and for all China's claims about its peaceful rise. China's Supreme People's Court even issued its own counter-Hague ruling, threatening to arrest any intruders into its claimed South China Sea territories. China is relatively calm now, but judging by the reception during U.S. National Security Advisor Susan Rice's recent trip to Beijing—in “diplomatese” for tough talks, the trip was filled with “candid conversations,” with few obvious results—the peace might only be a pause before China hosts the next G–20 meeting in September.
Still, there is some reason to believe that Beijing's current demeanor may reflect increasing recognition of the consequences of how the world perceives China's rise. And on that score, the ruling at The Hague does offer Beijing a chance to rethink the complex issues of sovereignty in the South China Sea. Creative thinkers in Beijing could see the ruling as providing China with a much-needed off-ramp.
The July 12 decision has created a new status quo by clearly defining the legal map of the South China Sea. It found no lawful basis for China's claims to 85 percent of the South China Sea, delimited by the so-called nine-dash line. There are no “historic fishing rights” that China can claim to justify pilfering maritime resources in other nations' exclusive economic zones (EEZ). None of the disputed rocks, reefs, or islets qualify as islands that legally entail a 200-mile EEZ. Rather, countries are only entitled to 12-mile territorial zones around their claims.
Now that the legal status of the area is defined, Brunei, China, Malaysia, the Philippines, and Vietnam can get to work litigating their non-territorial disputes, including fishing and natural resource rights. And resolution of these issues could, over time, open the door for the settlement of more difficult, conflicting sovereignty claims.
To unpack this problem, it might help to go back to the basics. None of these specks of land has any intrinsic value based on the UNCLOS definition of land (that is, it is able to support human habitation). So why do they matter? Beyond rising Asian nationalism, the disputes are about resources, fishing rights, oil and gas reserves, and to a large, extent, security of the region's sea-lanes, through which some $5 trillion of the world's trade passes each year and on which a $22 trillion Asian economy depends.
It is unlikely that the decision by The Hague on the Philippines case will settle all of these matters. That said, one can envision a path forward, beginning with an immediate freeze on all activities in the disputed territories. That would lower tensions, allowing everyone to take a deep breath.
Meanwhile, both Washington and Beijing will have to recognize that these disputes, if not addressed, will suck the oxygen out of the entire bilateral relationship, with negative consequences for both. Breaking out of the standoff requires several things: the convening of a “new diplomacy” to safeguard the Global Commons and agreement that any serious diplomatic process will occur under the auspices of the UN Security Council or the UN Secretary General. Under such an overarching diplomatic umbrella, multilateral talks addressing the maritime commons in tandem with some bilateral talks on overlapping claims could occur. This is the varied geometry approach used in the 1921 Washington Naval Conference.
A prerequisite to such diplomacy would be agreement on a common set of principles. Those principles would have to include respect for the ASEAN–China Declaration of Conduct and the Five Principles of Peaceful Coexistence and recognition that UNCLOS will be the basis for deciding disputes. That will involve not only U.S. observance of UNCLOS principles but actual ratification. Diplomacy will simply not work with either Chinese exceptionalism—rejection of the July 12 decision—or American—failure to ratify UNCLOS.
Both sides will also have to recognize that the maritime and aerial commons are a shared interest of all members of the international community, as is safeguarding the environment and sustainable resource management, in particular fish stocks. Fishing resources are being depleted to the detriment of all. There needs to be agreement on the methods and limits for sustainable fishing. All nations involved in fishing in the Western Pacific should be at the table: agreed codes of conduct and regulations are necessary, perhaps under the auspices of the UN Environmental Program and the UN Fish Stocks Agreement.
Finally, the parties will have to come to an agreement on the joint development of oil and natural gas reserves in the South China Sea. Following former Chinese leader Deng Xiaoping's dictum that resolving sovereignty issues should be left to future generations, focus for now should be on the joint development of resources. The parties would need to first clarify overlapping EEZs, as some ASEAN countries have already done. Joint development could be negotiated bilaterally or multilaterally among claimants, perhaps with a mediator who is acceptable to all sides under the auspices of the East Asia Summit (EAS).
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One impediment is the enormous difficulty ASEAN has demonstrated in speaking with a clear voice that reflects the interests of its key maritime nations—Indonesia, Malaysia, the Philippines, and Vietnam—all of which are threatened by Beijing's expansive definition of its interests. Through its client state, Cambodia, China has an effective veto over ASEAN decisions, which are based on consensus. This is why China's approach seeks bilateral talks on territorial disputes and China–ASEAN talks on peace and security, effectively giving Beijing the upper hand.
Addressing the South China Sea issue could also be a catalyst for upgrading the EAS from a talk shop to a more functional regional institution. A good first step would be creating a steering committee comprised of China, Indonesia, Japan, Russia, South Korea, and the United States. The three permanent members of the UN Security Council (all nuclear weapon states) could be the liaison to both the United Nations and the multi-tiered talks.
Such an approach might seem unrealistic given the vehemence of the current standoff. But it at least offers a new way to think about the problem. And China has changed course before, for example after the 1996 Taiwan Straits missile crisis, when the United States responded to missile tests near Taiwan by deploying aircraft carriers, China launched its peaceful rise diplomacy.
This new approach would be a bumpy diplomatic path with lots of trial and error before it arrives at a reasonable balance of interests. Yet as indicated by the Philippines offer of bilateral talks with China, all parties, with the exception of China, are ripe for a compromise that gets everyone something but no one everything. And it is difficult to see any alternative to an approach along these lines. Continuing along the current trajectory will be Asia's twenty-first century equivalent of the march of folly leading to August 1914—sleepwalking into conflict.
This piece was originally published in Foreign Affairs.
