China and the Philippines: Implications of the Reed Bank Incident

Following the flare up of tensions over the territorial dispute in the South China Sea last year, there was a hope and expectation among security analysts that in 2011 the claimants would recalibrate their policies, adopt more flexible and conciliatory positions, and prioritize the search for a diplomatic breakthrough to better manage the dispute (See "China's Missteps in Southeast Asia: Less Charm, More Offensive," China Brief, December 17, 2010). In the first quarter of 2011, however, the dispute continued to trend in a negative direction. Most notably there was an uptick in tensions between Manila and Beijing after two Chinese patrol boats harassed a seismic survey vessel operating in Philippine-claimed waters. The incident underscored China's continued willingness to apply limited coercion in disputes with Southeast Asian countries over maritime resources such energy resources and fisheries.

The skirmish at Reed Bank has provoked the administration of Philippine President Benigo Aquino to adopt a harder line toward Beijing in the South China Sea, including moves to strengthen the presence of the Philippine Armed Forces (AFP) in the disputed Spratly Islands and lodge formal objections to China's sovereignty claims. Meanwhile, despite the political rhetoric from members of the Association of Southeast Asian Nations (ASEAN) and China that they remain committed to implementing cooperative confidence building measures (CBMs) contained in the 2002 Declaration on the Conduct of Parties in the South China Sea (DoC), the negotiation process remains stymied with no sign that the impasse will be broken any time soon.

The Reed Bank Incident

On March 2, two Chinese patrol boats aggressively approached the survey ship MV Veritas Voyager near Reed Bank forcing it to withdraw. Reed Bank lies west of Palawan Island and within the Philippines-declared exclusive economic zone (EEZ). The survey ship was chartered by Forum Energy, a UK-based oil and gas company, which had been awarded a contract by the Philippine government in 2005 to conduct seismic studies in the Sampaguita gas field located inside Reed Bank. That survey indicated the presence of 3.4 trillion cubic feet of gas and thus a potentially significant source of income for the Philippine government. In February 2010, Manila extended the contract and in March the Veritas Voyager began work to identify locations for appraisal wells to be sunk [1]. According to Major-General Juancho Sabban, head of Western Command whose area of responsibility includes Philippine claims in the Spratlys, the Chinese vessels had ordered the survey ship to cease its activities because the area was under Chinese jurisdiction (AFP, March 3).

The Philippines' response was immediate and fairly robust: Western Command deployed an OV-10 light attack aircraft and an Islander observation aircraft to Reed Bank (by which time the Chinese vessels had departed); two coastguard vessels were subsequently dispatched to escort the Veritas Voyager until its survey activities had been completed. In describing the incident Sabban warned: "It's clearly our territory. If they bully us, well even children will fight back" (AP, March 3). Defense Secretary Voltaire Gazmin and Chief of the Armed Forces of the Philippines (AFP) Lieutenant-General Eduardo Oban later visited Western Command headquarters in a show of support. During the visit Gazmin revealed that the government had lodged a protest note with the PRC Embassy in Manila over the incident but had yet to receive a reply. China finally responded on March 24 when a Foreign Ministry spokesman reiterated that: "China owns indisputable sovereignty over the [Spratly] Islands and their adjacent waters. Oil and gas exploration activities by any country or company in the waters under China's jurisdiction without permission of the Chinese government constitutes violation of China's sovereignty, rights and interests, and thus are illegal and invalid" [2].

In addition to sending patrol aircraft and escort vessels for the Veritas Voyager, the Aquino administration took two additional courses of action in reaction to the Reed Bank incident: first, it announced measures to strengthen the AFP presence in the Spratlys, and second, after an interval of two years, protested the bases of China's sovereignty claims in the South China Sea.

Vis-à-vis its territorial dispute with the PRC, Manila has always been disadvantaged by its weak armed forces. Although a defense modernization plan was promulgated in 1995 following China's occupation of Mischief Reef, it was never implemented due to lack of funds and political will. Post-9/11, the United States provided significant financial support to help modernize the AFP, but the focus was on helping the army counter radical Islamic groups in the south of the country. As a consequence the navy and air force have been unable to provide a credible deterrent in the Spratlys. The AFP's top brass has long bemoaned this fact and repeatedly called on successive post-Marcos governments to address shortcomings in air and naval power. Senior AFP officers have been brutally honest about the armed forces' inadequacies. In August 2010, for instance, in a joint press conference with visiting Pacific Command (PACOM) Commander Admiral Robert Willard, AFP Chief Ricardo David conceded: "Our capability in the South China Sea is almost negligible" and that if it came to a "shooting match" the AFP "had nothing to shoot with" (Philippine Daily Inquirer, August 19, 2010). In March, the recently appointed head of the Philippine Navy, Rear Admiral Alexander Pama, admitted that of the 53 ships under his command, only 25 were operational and that their average age was 36 years old (some date from World War II). As Pama noted: "For us to be taken seriously by other claimants, we have to back our claim with credibility. We cannot rely on mere words" (Philippine Star, March 27).

Moreover, in sharp contrast to Vietnam, China and Malaysia, all of whom have significantly upgraded their military infrastructure on occupied islets, Philippine facilities have fallen into disrepair. This was highlighted in November last year when a C-130 transport plane carrying Defence Secretary Gazmin and General David was embarrassingly forced to abort a landing on Philippine-occupied Pag-asa Island because of the poor state of the landing strip. Ironically, Gazmin had come to inspect the condition of facilities (Philippine Daily Inquirer, November 10, 2010).

Prompted by Chinese actions at Reed Bank, Aquino has promised an additional $255 million for the AFP on top of the 2011 defense budget (Reuters, April 13). According to reports, the extra budgetary resources will come from royalties generated by the sale of gas from the offshore Malampaya field which lies close to Sampaguita but is not claimed by China. The AFP has asked that the extra money be used to purchase air defense radars, communication facilities, long-range patrol aircraft and fast patrol boats. As a priority, $700,000 has been allocated to upgrade the runway on Pag-asa (Philippine Daily Inquirer, March 29).

Yet at the same time Aquino has pledged to increase funding for the military, he has put the AFP on notice that the problem of systemic corruption must be stamped out. A Philippine Senate investigation last year found evidence of massive corruption within the AFP, and that senior officers had siphoned off millions of dollars from funds intended for new equipment, combat operations and salaries (New York Times, January 30). The revelations led to the suicide of former AFP chief General Angelo Reyes in February who had been implicated in the scandal. Endemic corruption in the AFP suggests that monies earmarked for the Spratlys could end up lining the pockets of senior officers.

In addition to Aquino's assurances of extra funding, the United States has promised to accelerate maritime capacity building support for the AFP. This policy was first outlined by Deputy Assistant Secretary of Defense Robert Scher in 2009, in testimony before Congress on how Washington aimed to "prevent tensions in the South China Sea from developing into a threat to U.S. interests" [3]. In January, Assistant Secretary of State Kurt Campbell said he was examining ways the United States could help "increase the Philippines' maritime capacity" and a month later Admiral Willard promised PACOM would continue to cooperate with Manila in "safeguarding its territorial integrity and security" (AFP, January 27 and Manila Bulletin, February 20). As part of these efforts, later this year the United States will transfer a refurbished 3,250-ton cutter to the Philippine Coast Guard. The vessel will be deployed to the Western Command area and will boost the Philippines' monitoring and interdiction capabilities in the South China Sea (Manila Bulletin, April 14). The United States also seems to have provided political support to the Aquino government in its dispute with the PRC. According to press reports, following the Reed Bank incident, U.S. Secretary of State Hillary Clinton telephoned her Philippine counterpart, Albert del Rosario, to discuss how to improve maritime security in Asia. At a press conference shortly thereafter, China's ambassador to the Philippines, Liu Jianchao, retorted that U.S. "meddling" would only "complicate" the South China Sea dispute (Philippine Daily Inquirer, March 17).

The Aquino government's second response to the March 2 incident was to formally object to the map that China lodged with the United Nations Commission on the Limits of the Continental Shelf in May 2009 in protest at the joint Vietnam-Malaysia submission (see The South China Sea Dispute: Increasing Stakes, Rising Tensions, November 2009). The map shows nine discontinuous lines encompassing almost the entire South China Sea, and Beijing's refusal to explain what the map means and how it can be justified under international law has generated concern across the Asia Pacific. In a letter dated April 5, the Philippines asserted that the Kalayaan Island Group (the name Manila gives to the islets it claims in the Spratlys) is an integral part of the Philippines, that it exercises sovereignty over the waters surrounding them and that China's 9-dash line map has "no basis under international law" [4]. Beijing responded that the contents of the Philippines' note verbale were "totally unacceptable" to the Chinese government. Beijing claimed that since the 1970s Manila had moved to "invade and occupy" islets over which China had "indisputable sovereignty" [5]. President Aquino had planned to visit China on May 23 – 25, but as a result of the spat his trip has been postponed until later in the year (Philippine Star, April 15).

The DoC Process Fails to Gain Traction

Increasingly fractious and potentially dangerous incidents at sea, such as that which occurred at Reed Bank, once again highlight the urgent need for conflict avoidance mechanisms in the South China Sea. In this regard the DoC contains some useful CBMs. Yet, talks between ASEAN and China on implementation guidelines remain deadlocked over modalities, primarily because Beijing insists that ASEAN members should not discuss the dispute prior to meeting with Chinese officials. A meeting of the Joint Working Group (JWG) on the DoC in Kunming on December 22 – 23, 2010 yielded no progress, prompting Foreign Minister Marty Natalegawa of Indonesia–who, as the current chair of ASEAN, has promised to make the South China Sea dispute a priority–to acknowledge the need to move the stalled discussions forward by involving senior officials. Noting the importance of the issue to regional peace and security, Natalegawa stressed that "a breakthrough is necessary" (Jakarta Post, January 17). Yet the dispute was only briefly touched on at a meeting of foreign ministers from China and ASEAN in January (Straits Times, January 26), and in March a planned meeting of the JWG failed to eventuate. Worryingly, Natalegawa has indicated that while the November 2011 East Asia Summit will for the first time address security issues, the South China Sea dispute will not necessarily be on the agenda, presumably due to opposition from China (VOA, April 11).

The positions and behaviors of the key players in the Spratlys dispute remained unchanged in the first quarter of 2011, and efforts to build trust and cooperation through dialogue have been disappointing. Symptomatic of this discouraging situation was the Reed Bank incident, which prompted the Philippines to push back against continued Chinese assertiveness by protesting Beijing's expansive jurisdictional claims and announcing plans to beef up its military presence in the Spratlys. China also intends to augment its presence in the South China Sea with the addition of 36 new patrol boats over the next several years (Jakarta Globe, May 3). As a consequence, tensions are unlikely to subside for the foreseeable future.

Notes:

1. See Forum Energy's website, www.forumenergyplc.com.
2. Foreign Ministry Spokesperson Jiang Yu's Regular Press Conference on March 24, 2011, www.mfa.gov.cn/eng/xwfw/s2510/2535/t810015.htm.
3. Testimony of Deputy Assistant Secretary of Defense, Robert Scher, Asian and Pacific Security Affairs, Office of the Secretary of Defense before the Subcommittee on East Asian and Pacific Affairs, Committee on Foreign Relations, United States Senate, July 15, 2009, foreign.senate.gov/testimony/2009/ScherTestimony090715p.pdf.
4. See www.un.org/Depts/los/clcs_new/submissions_files/mysvnm33_09/phl_re_chn_2011.pdf.
5. See www.un.org/Depts/los/clcs_new/submissions_files/mysvnm33_09/chn_2011_re_phl_e.pdf.