in order to clearly demarcate areas where joint exploration can be conducted. Strong rhetoric must give way to sincere discussion, and pragmatism should prevail over virulent nationalism in order to address immediate economic realities and security needs.
The benefits of joint exploration for a resource-rich but capital- and infrastructure-deficient country like the Philippines includes attracting much needed investment and obtaining the necessary technologies to fully exploit its resources. Joint exploration and resource development could mitigate conflict and reduce tensions, and so diminish the pressure to expand national defence capabilities.
Conducting joint oil and gas exploration with the Philippines offers China a readily available source of energy with some political benefits on the side. By establishing a joint resource development program with a neighbour with whom it has maritime and territorial disputes, China can build its image as a good neighbour and a responsible regional and world power. This collaborative approach will allay the fears of many — notably other South China Sea claimants — that China is determined to gain complete and exclusive control of the South China Sea.
The 2002 Timor Sea Treaty between Timor-Leste and Australia is a good example of joint resource management. The treaty created a Joint Petroleum Development Area in disputed territorial waters between the two countries. The Timor Sea Treaty compromised neither country’s sovereignty because it did not draw a final boundary between the two neighbours. A designated authority was established to administrate all petroleum-related activities in the area, with the two governments equally represented. Australia gave enormous concessions to Timor-Leste under a sharing scheme of 90-to-10, with Dili getting 90 per cent and Canberra just 10 per cent of the revenue.
Signed on the day Timor-Leste gained full independence, the treaty was a great relief for the country, offering a promise of sustained economic benefits crucial for its nation-building process. It also saved Timor-Leste the huge expense of having to develop its external defence capacity to ensure sovereign control over its maritime territory at a time when it could not afford to do so.
For Australia, the deal offers a steady income from oil and gas while affirming Canberra’s credentials as a good neighbour.
One of the pitfalls of the Timor Sea Treaty from Dili’s perspective is that the resources extracted from one of the major fields in the joint development area, the Bayu-Undan field, are all processed in Australia, giving Dili less control over the end product despite its 90 per cent cut in royalties.
To avoid similar contentions, a joint hydrocarbon resource deal between the Philippines and China should place downstream activities in the Philippines, because it is closer to potential hydrocarbon-rich waters. In this way the Philippines could improve its local downstream resource industry, generate jobs, provide continuous energy supply and spur economic growth. State-owned Chinese energy companies such as CNOOC, CNPC and Sinopec have the capital, technology and expertise to help PNOC and local Filipino energy companies develop the country’s indigenous energy industry, reducing the country’s dependence on imported oil. For China, such a joint cooperation will provide it a proximate source of energy, reduce oil and gas imports from the volatile Middle East, help foster stability in its maritime corridor and win the goodwill of other claimant countries, as well as the international community. If the deal bore fruition, it may even be the start of other similar cooperative endeavours in extracting hydrocarbon resources in the hotly contested area. Joint resource exploration is a way to improve the stability and security of contested areas, avert conflicts, foster cooperation in sustainable resource extraction, environmental conservation, scientific studies and joint response to natural disasters.
The international community is closely watching the stand-off between the Philippines and China over the Panatag Shoal (Scarborough Shoal or Huangyan Island in Chinese). If China acts too aggressively, it will reinforce its neighbours’ anxiety over China’s willingness to use heavy-handed tactics. Other countries in the region, including Korea, Japan, and South China Sea claimants, are observing China’s behaviour in the hope that it may indicate how Beijing is likely to respond to their own maritime claims.
The actions of the Philippines will also be scrutinised at home and abroad. Manila wants to demonstrate that it is able to implement an independent foreign policy without being portrayed as part of a ‘grand conspiracy’ against China, which would doubtless harm Manila’s own image.
Joint resource development is a good way for Manila and Beijing to resolve their territorial disputes. Energy security, harmonious relations, good international image and overall peace and stability in one of the world’s busiest sea lanes are all at stake. The Philippines and China could prove that neighbours can peacefully resolve their differences, and though the decision may face short-term domestic opposition, it stands to improve regional stability in the long-run.
Lucio Blanco Pitlo III, is a MA Asian Studies candidate from the Asian Center, University of the Philippines, and Researcher for Forging a New Philippine Foreign Policy.
The 2002 Timor Sea Treaty between Timor-Leste and Australia is an unfair treaty. Australia bullied Timor into accepting 10per cent vs. Australia 90per cent. [The author of this article get the facts wrong]. The new Timor government later discovered that the oil exploration was within it territory. This is what the then President Xanana Gusmão said in April 2004:
“Today, with the ending of occupation by Indonesia, we come up against the wrongful seizure of our natural resources by Australia.” [http://www.etan.org/issues/tsea.htm]
Under international pressure, many years later, the Howard government was forced to change the share to 50/50 with a condition imposed on East Timor to joint venture with other countries.
If you have the copy of the treaty which says that the sharing was otherwise, please show me a copy so I can consider it. My reference is the text of the agreement itself which says that the 90-10 sharing in Dili’s favour was in effect. However, I do know that Australia previously pushed for greater concessions, but international sympathy for newly independent Timor Leste is so strong, even among Australian citizens, that Canberra eventually had to yield.
Joint exploration and development of resources should be the way forward for the disputed areas in the south China sea.
However, while China has been portrayed as the more aggressive one in the recent escalations in the south China sea disputes in the international arena, all countries that are involved should reflect on whether that is really the case.
People should analyse the role of the US involvement and the attempts of certain countries to make the disputes more complicated than necessary for fearing a more powerful China as it further grows in the development of the south China sea disputes.
Those attempts may backfire in the long term, given that a more powerful (and even more democratic) China is unlikely to give in to external pressures especially it is from the US either because of its domestic politics and the changing relative powers between China and the US.
While it may not be in China’s interest to have a large scale war with the US any time soon, the US may also realise that it is in its own interest not to fight a large scale war with China either, because neither side is likely to benefit from such a large scale war, not now and not in any of the foreseeable future.
Rational people would be able to draw the right conclusion about what is the likely outcome for the escalation of the disputes in the south China sea under this strategic outlook.
I believe that there is reason for other claimants to be anxious of China’s increasingly aggressive assertiveness in the South China Sea. The building of military structures in Philippine claimed Mischief Reef in 1998 (after initially building only “fishermen shelters” in 1994 under strong protest from the Philippines), the cutting of cables of a Vietnamese exploration ship and recent harassment of Philippine-sanctioned oil and gas exploration activities in Reed Bank (Recto Bank), aside from intensified fishing activities of Chinese fishermen in overlapping EEZs of other claimants backed up paramilitary maritime law enforcement assets of China, among others, support this thesis. As the biggest economic, military and political power among the claimant countries, China’s actions and behavior would naturally merit the attention and scrutiny of claimants and other countries interested in freedom of navigation and regional stability. South China Sea is a major commercial and trade artery and countries who depend on it as the conduit for their imports, exports and energy supply transport has every reason to worry about China’s nine dash line claim, the exact coordinates of which remain to be defined at present. Countries like the Philippines and Vietnam, as well as other ASEAN countries, fully aware of their military shortcomings,
would welcome US, Japan and other countries such as Australia, to come into the picture to counter or balance these recent Chinese moves. It must be taken into account thatthe Mischief Reef incident, for one, came about 2 years after the US left their bases in the Philippines and this timing was not lost among many Filipino who earnestly took greater interest in defense modernization and re-engaging the US in military exercises after the incident. While other claimants may have gone overboard in some occassions, their fears cannot simply be dismissed as they are supported by real facts. As the greater power, China should also act more responsibly. Resolving the problem without the intervention of other parties is no doubt an ideal approach, but as long as China continues with its increasingly aggressive stance on the dispute, other claimants will not refrain from pursuing this strategy.
It may be putting the cart before the horse if we go into joint venture without first settling the issue of who owns the reefs and shoals in the West Philippine Sea. Only if this is settled may a joint venture become possible because by its very nature, the sharing will follow ownership or sovereignty. If China would renounce its claims of ownership and be guided by law, the UNCLOS, then the next step may happen. I don’t think that the Philippines can handle by itself the full exploration of the mineral-rich sea territories, clearly within the exclusive economic zone of the Philippines and the recent move by the Chinese to create a city to encompass all of the West Philippine Sea is only the latest smoke-screen that genuinely shows the illegitimacy of their claim. Why would they create a new city if other countries have laid claims on those territories so late in the day when the controversy had shown high-handed tactics by the Chinese in the past to assert their “sovereignty”? There is wisdom in all the countries involved to dialogue, to talk intelligently, not by show of force, but around a roundtable of peace to resolve differences. Then a 90-10 sharing or something similar may come next in the discussion and agreements can launch the joint projects.
Thank you Sir for your comments! I do understand where you are coming from. I’m thinking po along the lines of a commercial agreement which would not touch on sovereignty, as it is a very sensitive, if not explosive, issue. This is not something unprecedented. our ASEAN neighbors, including fellow claimants, have been engaged and are engaging in various degrees of joint oil and gas development in the South China Sea with relative success. while some of these agreements was preceeded by a clear boundary delimitation, some are not, preferring instead to set aside sovereignty for the time being and focus on practical joint sharing/partition of the area’s resources without jeopardizing any future delimitation of the boundary disputes. I’m not saying that this is the ultimate way for us, but it may be healthy for us to think that it can be an option when no arbitrated, litigated, legal or diplomatic solution of the impasse is in sight in the immediate future. If we consider energy security and possible revenues from energy exports in the immediate to medium term as more important for the here and now, then such an idea may deserve the attention of concerned authorities.
Bienvenido, why do you suggest China to renounce its claims? Many high profile Filipinos including retired banker, law maker, academic and political parties believe that China claims are valid.