IN TERMS of the number and complexity of overlapping jurisdictional and sovereignty claims made to it, the South China Sea is probably the most disputed place on earth. Competing claims to maritime space on the part of the littoral states are complicated by the presence of two disputed archipelagos of islands and reefs known as the Spratly and Paracel islands. Most of these islands are tiny - so why all the agitation? 

There is a widely held perception among the coastal states that, in addition to the known presence of important fishery resources, the area under dispute also boasts considerable seabed resources, especially hydrocarbons. The South China Sea is a strategic waterway that provides the key maritime link between the Indian Ocean and East Asia. Furthermore, the nationalism that underlies the sovereignty claims should not be forgotten. 

The seemingly intractable nature of these complex jurisdictional disputes has, over the years, led coastal states to rely increasing on military solutions to the sovereignty claims. The Sino-Vietnamese clash over the Paracel Islands in 1974 and the bloody engagement between the same foes in the Spratlys in 1988 prove that the parties to the dispute have not been afraid to use military force. 

While sovereignty disputes remain unresolved and the states continue to enhance their military presence in the region as a means of physically reinforcing their territorial claims, the potential for confrontation, and ultimately conflict, exists. This was reemphasised in the 1990s, most notably with the People's Republic of China's (PRC) seizure of Mischief Reef in 1995. 

In recent months the South China Sea disputes have been characterised by the occupation of more islands, enhanced construction activity and upgrading of existing installations, collisions between vessels belonging to rival claimants, shooting incidents, protests and counter-protests. This has prompted moves towards establishing a Code of Conduct on the South China Sea to regulate the dispute and reduce the chance of conflict among the claimants. What chance does this initiative have of succeeding? 

Claims to the Spratlys 

The 170-plus features collectively termed the Spratly Islands are located in the southern part of the South China Sea, extending for about 900km from southwest to northeast. The majority of the Spratlys are in fact submerged banks, reefs and low-tide elevations. Only 36 are known to rise above high-tide to form tiny islands, the biggest of which (Itu Aba Island) is a mere 1.4km long and 400m wide. The total land area of the Spratlys has been estimated to be less than 8km2, yet they are scattered over an area of around 240,000km2. Estimates of the total contested maritime area in the South China Sea vary considerably but far exceed this figure. 

Six coastal states - the PRC, the Republic of China (ROC/Taiwan), Vietnam, the Philippines, Malaysia and Brunei - lay claim to all or part of the Spratly and Paracel archipelagos and their surrounding maritime space. Of these six claimants, all, save Brunei, have a military presence on one or more islands. 

Chinese claims 

The PRC claims all of the Spratly (Nansha) Islands on the basis of its discovery and presence from the period of the Han dynasty (2nd century BC). The PRC made its first official claim to the Spratly Islands in 1950, less than a year after its foundation, in response to the Philippine claims. 

The PRC maintains a claim to a U-shaped 'traditional sea boundary line', a broken or dashed line encompassing the majority of the South China Sea. It is unclear precisely what this U-shaped line represents, but it does not appear to be a jurisdictional limit marking the extent of the PRC's claimed exclusive economic zone (EEZ) or a claim to historic waters as some analysts have suggested. Instead it seems to be designed to illustrate which islands are claimed by the PRC; that is, all the Spratlys and Paracels. 

Taiwan 

Like the PRC, Taiwan claims all the Paracel and Spratly islands on historic grounds. As a result of disputes among the wartime allies as to which government represented China, neither Taiwan nor the PRC were represented at the 1951 San Francisco Peace Conference at the end of the Second World War. As a result, Taiwan negotiated a separate peace treaty with Japan, signed on 28 April 1952. This treaty included Japanese renunciation of its claims to Taiwan and islands including the Spratly and Paracel islands. 

Taiwan has interpreted this as implying Japanese recognition of Chinese sovereignty over these features. Taiwanese forces occupy Itu Aba, the largest island in the Spratly Islands group, and have garrisoned it since at least 1971 and possibly from 1956. Taiwan, therefore, has the longest continuous presence in the island group. 

The Philippines 

In 1956 Thomas Cloma, a Filipino citizen, claimed ownership over 33 islands and reefs, plus associated fishing grounds within a polygon-shaped area of the South China Sea covering 65,000 nautical miles (nm). Cloma termed the claimed area Kalayaan (Freedomland) and requested support from the Philippines government. Manila supported Cloma's claim on the basis that, as no country had established a proper claim following Japan's 1951 relinquishment of its claims, the islands concerned were res nullis and open to exploitation by Filipinos. The governments of China, Taiwan and Vietnam protested against this interpretation. 

Philippine forces attempted to occupy Itu Aba, located within the Kalayaan zone, in 1971 but were repulsed by occupying Taiwanese troops. The Philippines authorities therefore garrisoned other features within the zone. In 1978 the Philippines confirmed its sovereignty claim to the Kalayaan area on the basis of its res nullis argument, the area's proximity to the Philippines, the Philippines' vital national interests, and on the basis of occupation and effective control of the area. 

The Philippines' claims in the Spratly Islands, while not including Spratly Island itself, overlap with those of all the other claimants. However, of the 36 garrisoned features within the Kalayaan zone, only eight are occupied by the Philippines. 

Malaysia 

In 1979 Malaysia issued a map defining the limits of its continental shelf claim - a claim that enclosed several Spratlys features, including ones occupied by the Philippines and Vietnam. Malaysia appears to have based its claim to a number of the Spratly Islands on the strength of its claimed rights to the surrounding continental shelf rather than sovereignty over the islands themselves. This apparently contravenes the principle in international maritime law that the 'land dominates the sea'. In 1983 Malaysia occupied Swallow Reef, and troops occupied two more features three years later. 

Vietnam 

For its part, Vietnam asserts that: "[It] has maintained effective occupation of the two archipelagos [Paracel and Spratly islands] at least since the 17th century when they were not under the sovereignty of any country, and the Vietnamese State has exercised effectively, continuously and peacefully its sovereignty over the two archipelagos until the time when they were invaded by the Chinese armed forces." 

Hanoi also claims that France administered the islands as part of its protectorate and that these rights passed to Vietnam with the demise of French Indochina. France claimed to have occupied Spratly Island itself in 1930. In April 1975 North Vietnamese forces seized six of the Spratly Islands which had been held by South Vietnamese troops. Chinese and Vietnamese forces clashed in the Spratly Islands in March 1988. The 'Battle of Fiery Cross Reef' left about 75 Vietnamese killed or missing and three Vietnamese ships ablaze. 

Vietnam currently occupies 25 Spratly Islands features, the most of any claimant state. It claims all the Spratly Islands, whether on the basis of sovereignty over the islands themselves or as a consequence of claims based on its mainland continental shelf jurisdiction. 

Brunei

Alone among the parties to the Spratlys dispute, Brunei has not made any overt claim to sovereignty over any of the features that make up the Spratlys group. Nevertheless, Brunei's claimed EEZ encompasses Louisa Reef. 

Indonesia

Indonesia is not generally regarded as a party in the Spratly Islands dispute. Nevertheless, it is worth noting that China's U-shaped line cuts through Indonesian claimed waters to the north of the Natuna Islands - including part of the massive Natuna gas fields development. Indonesia has, however, reportedly sought and received assurances from the PRC that it has no dispute with Indonesia. 

When is an island not an island?

None of the claimants has what would amount to an irrefutable case - at least in terms of modern international law - and so the dispute persists. Whether essentially Western-oriented legal criteria should be applied in the Southeast Asian context is in itself a contentious issue, but even if consensus was reached on that question, major legal problems remain and appear insoluble. Not least of these relates to the regime of islands. 

A distinction can be drawn between maritime and sovereignty claims. The dispute over the Spratlys not only involves the littoral states' conflicting claims to maritime jurisdiction from their mainland coastlines but their rival sovereignty claims over the Spratly Islands themselves, some (but not all) of which may also be able to generate extended maritime claims on behalf of their owner. This issue is complicated by the uncertain insular status of many of the Spratly 'islands'. 

Under Article 121(3) of the UN Convention on the Law of the Sea (UNCLOS): "Rocks which cannot sustain human habitation or economic life of their own shall have no exclusive economic zone or continental shelf." Unfortunately, UNCLOS provides no further guidance as to how a 'rock', capable of sustaining a claim to a 12nm territorial sea and a further 12nm of contiguous zone, should be distinguished from a fully fledged island with continental shelf rights and an EEZ of up to 200nm breadth. Many of the 36 Spratly 'islands' would seem to fall more readily into the category of 'rock' rather than 'island' - providing fertile ground for dispute even were the sovereignty issue to be resolved. 

Peripheral disputes

The Paracel Islands

The Paracel Islands (Xisha Islands to China) are located in the northwestern part of the South China Sea and are claimed by China and Vietnam. China occupied the Paracels following an air and sea battle with South Vietnamese troops in January 1974. Since then, China has set about upgrading military facilities on the islands. To extend the naval air force's power projection into the South China Sea, China is believed to have extended its airstrip on Woody Island in the Paracels to over 2,500m, providing a forward base and staging area for extending the range of its aircraft. 

Although the Paracels have been the subject of Sino-Vietnamese diplomatic contacts, there is little evidence to suggest that resolution of the dispute is in sight. China, after all, is in possession of the disputed territory and clearly has the military edge over its smaller, southern neighbour. 

The Gulf of Tonkin

The Gulf of Tonkin (known in China as the Beibu Gulf and in Vietnam as the Bac Bo Gulf), located in the northwestern extremity of the South China Sea, is host to a dispute between China and Vietnam. Vietnam maintains that the Sino-Vietnamese boundary had been defined at a Sino-French frontier convention in 1887 as longitude 108º3'13'E - a division that would place approximately 60% of the gulf on the Vietnamese side of the line. In response, China stated that the 1887 line was intended merely to divide ownership over islands in the Gulf and that a boundary has yet to be determined. 

Assuming that the Chinese claim is based on a median line, jurisdiction over a sizeable area (as much as 3,400nm) of the seabed of the central Gulf of Tonkin is claimed by both China and Vietnam. Negotiations on the issue, continued sporadically since the 1970s, have failed to resolve the dispute. However, the prospect of discovering hydrocarbon resources has brought the issue into focus. 

In the early 1990s bilateral relations began to thaw. In November 1991 the two states signed an Interim Agreement on Settling Bilateral Border Issues and in October 1993 they signed an Agreement on the Basic Principles of Settling Border and Territorial Issues. As a result, working groups were established on land boundary issues, the Gulf of Tonkin dispute and on wider maritime concerns including the Spratly Islands. 

Despite regular talks, the parties have not stinted in trading protests. For example, in October 1994 Vietnam tendered for offers from foreign oil companies to develop the disputed area, an action that China described as a "gross violation of its rights and sovereignty". Also, in March 1997 Hanoi angrily denounced Beijing for constructing a Chinese oil rig in the disputed area. Similarly, Vietnam issued a strong condemnation of the China National Offshore Oil Corporation's (CNOOC) November 1997 deal with ARCO over exploitation of the Ledong gas field. 

Nevertheless, Sino-Vietnamese negotiations eventually produced a treaty on the land boundary, signed on 30 December 1999. The two sides duly pledged to continue to negotiate on the Gulf of Tonkin issue - regarded as 'relatively easier' to handle than other maritime boundary disputes in the region, particularly the Spratlys, because of its bilateral nature. Negotiations are understood to be ongoing between China and Vietnam, who have pledged to reach a deal by the end of the year. Given that a similar commitment was made to conclude an agreement on the land boundary by the end of 1999 and a treaty was duly signed, albeit with only a day to spare, prospects for dispute resolution in the Gulf of Tonkin can be viewed as positive, particularly as the land boundary treaty has now been ratified (taking effect on 6 July 2000). 

The Natuna dispute

The dispute between Indonesia and Vietnam over overlapping maritime claims between Indonesia's Natuna Islands and the Vietnamese coast in the southwestern South China Sea arose out of the two states' continental shelf claims of the 1970s. 

In the late 1970s Vietnam adopted the principle of natural prolongation as the basis for determining the limits of its continental shelf claim. It was subsequently reported that in the context of opposite delimitations, particularly that with Indonesia between Vietnam's baselines and Indonesia's archipelagic baselines enclosing the Natuna Islands group, that Vietnam favoured determining the boundary by means of the 'Thalweg Principle'. 

Application of this principle, traditionally only applied in river boundary situations as it refers to a division along the deepest part of the deepest navigable channel, would result in a delimitation along the deepest part of the trough in the continental shelf between the two countries. As this trough lies just to the north of the Natuna Islands, such a delimitation would be highly favourable to Vietnam. 

Subsequently, Vietnam appears to have retreated from this position in favour of a so-called 'harmonised line' as the southern extent of the Vietnamese-Indonesian overlapping claims area. The harmonised line represents a compromise proposal running north of the thalweg-inspired line but south of Indonesia's claim line, and an equidistant line between Vietnamese and Indonesian baselines. Vietnam has subsequently offered to split equally the overlapping claims zone or develop it jointly with Indonesia. Indonesia has apparently rejected these proposals, leaving an overlap in maritime claims. 

The Gulf of Thailand

Like the South China Sea proper, the Gulf of Thailand is subject to multiple overlapping claims to jurisdiction, and overlaps of overlaps. Political differences between the Gulf littoral states - Soviet-oriented Cambodia and Vietnam on one hand and Western-leaning Malaysia and Thailand on the other - coupled with the Gulf's complex coastal geography (including the presence of numerous islands, themselves subject to competing sovereignty claims), resulted in almost 30% of the total surface area of the Gulf being subject to competing claims in the 1970s. 

As a result of the resolution of disputes over island sovereignty, together with the conclusion of several maritime boundary agreements, the area of the Gulf of Thailand subject to overlapping claims has fallen dramatically. However, substantial disputes remain. 

Of particular note is the Thai-Cambodian overlapping claims area within the Gulf of Thailand, encompassing around 7,500nm2 including the entire northern extension and eastern margin of the Pattani Trough, which hosts major proven hydrocarbon reserves in uncontested Thai waters. This overlapping claims area has been described by oil industry sources as containing "some of the best undrilled acreage in Southeast Asia". Negotiations are understood to be ongoing. 

Island antics

The Spratlys dispute has been characterised by the militarisation of the islands, creating a mosaic of small, isolated, more or less fortified outposts; the gradual reinforcement of legal claims; and the use of oil prospecting as a means of bolstering national claims to jurisdiction. These developments have continued, seemingly unchecked, despite the fact that in July 1992 the Association of Southeast Asian Nations (ASEAN) formulated the Manila Declaration on the South China Sea. This called for all disputes to be resolved peacefully and for all parties to exercise restraint - a move that prompted the PRC to declare it would not use force in the Spratlys dispute. 

The most notable event among the first category of actions in recent times was the PRC's occupation of Mischief Reef in the eastern Spratlys, which was revealed in early 1995. This brought the number of Spratly features that the PRC occupies to seven and the total number occupied to 44 (25 Vietnamese, eight Filipino, three Malaysian and one Taiwanese). 

The PRC's move caused a diplomatic furore and heightened tensions with other claimants, particularly the Philippines, which protested vigorously and attempted to internationalise the issue. Tensions peaked in May when the Philippines Navy ferried journalists to the vicinity of the disputed reef and overflew the PRC's installations located on it. 

The Philippines decided against undertaking an armed response, perhaps because the run-down Philippines military lacked the resources to successfully dislodge the Chinese troops. Instead, the Philippines military contented themselves with destroying Chinese markers on several other disputed islets. 

Diplomatic moves were made to ease tensions over the dispute. Later that year the Philippines was able to conclude similar but separate codes of conduct with the PRC and Vietnam to reduce the chances of military confrontation. 

In terms of legal moves, all the claimant states tend to reiterate their claims on a regular basis. Key events include the PRC's 1992 law on its territorial sea, which restated its claim to the disputed island groups. In 1996 Beijing followed this up by ratifying the UNCLOS and defining China's straight baselines. The PRC's subsequent 1998 EEZ and continental shelf legislation elicited a protest on the part of Vietnam (among others), which reaffirmed its earlier objection to the PRC's establishment of straight baselines around the Paracel Islands. Vietnam repeated its claim to the Spratly and Paracel islands, and referred to Chinese claims as "a serious violation of the Vietnamese territorial sovereignty". 

With regard to oil exploration, China and Vietnam have proved to be particularly active in using licensing to reinforce their overlapping claims. For example, in May 1992 China awarded the Wan'an Bei-21 concession, located in the southwestern South China Sea in Vietnamese claimed waters, to Crestone Energy Corporation of the USA. Vietnam responded in April 1994 by awarding the Blue Dragon concession to Mobil Corporation of the USA in adjacent waters to the west of the Crestone concession, and in April 1996 by awarding Blocks 133 and 134 to Conoco of the USA - concessions encompassing about half of China's Wan'an Bei-21 area. 

The Philippines also sought to employ this tactic by contracting Alcorn Exploration (the subsidiary of the US company VAALCO) to conduct surveys within the Kalayaan area. 

The oil factor

Whenever the term 'Spratly Islands' is mentioned in the news it is almost inevitably preceded by the words 'reputedly oil rich'. Estimates of the hydrocarbon resource potential of the Spratlys area vary wildly up to a staggering 30 billion tonnes of oil. The great range in estimates stems largely from insufficient data. 

While there is almost certainly oil and gas in the Spratly Islands area, whether there is enough, and of the required quality to justify exploitation is another matter. Indeed, one industry source that JIR consulted described the Spratlys area as 'Moose Pasture', that is, of strictly limited interest or oil potential. 

Although the 'oil factor' is not the dominant issue in the Spratly Islands maritime and jurisdictional disputes, the perception that the Spratlys might yet prove to be a rich source of oil is a significant consideration alongside political and strategic factors. This has only been reinforced by recent oil price rises. 

The importance attached to hydrocarbons potential is perhaps even more understandable given Southeast Asia's increasing energy hunger - GDP growth in the region is predicted to average over 3% this year, with China leading the way with 7.2%. It can be argued that oil potential has played a significant part in driving efforts toward dispute resolution in the South China Sea. Positive signs have come in particular from the Gulf of Thailand. There, joint development arrangements between Thailand and Malaysia, and Malaysia and Vietnam have been successfully applied to overcome deadlock on overlapping maritime claims, shelve the disputes and allow desired offshore oil and gas development to proceed. 

While joint development has been proposed in the past for the Spratlys dispute without success, other South China Sea disputes may well be more susceptible to this form of dispute resolution - underpinned by the parties' strong and increasing desire to unlock seabed hydrocarbon resources. 

The disputes in the Gulf of Tonkin, Natuna Sea, and between Cambodia and Thailand in the Gulf of Thailand fall into this category and are assisted by their bilateral character. The Spratly Islands dispute is more complex and less readily resolved. Nevertheless, the Code of Conduct currently under discussion, if realised, would represent a positive step forward. It may provide the foundation for future agreements on issues such as marine scientific research, piracy, navigation and ultimately resource exploitation. 

Escalating tensions

The need for some form of dispute management mechanism has been underscored by the fresh jostling for position that has taken place in 1999 and 2000. In January 1999 a Filipino fisherman was reportedly shot by Vietnamese troops occupying a Spratlys feature; in May a Chinese fisherman was killed in an incident involving a Chinese fishing boat and a Filipino naval vessel; and on 19 July a Chinese fishing boat was sunk after a collision with a vessel belonging to the Philippines Navy that was trying to apprehend it. 

The Spratlys also generated tension within ASEAN, with the Philippines issuing a diplomatic protest in June 1999 over Malaysia's occupation of Investigator Shoal, also claimed by Manila, and the construction of a two-storey building and radar facilities on Erica Reef. Malaysia responded by stating that the new structures were for marine and scientific research. Subsequently, in October 1999 the Philippines issued a formal protest to Vietnam over the upgrading of structures on Barque-Canada Reef and Amboyna Cay. Vietnamese troops reportedly fired on a Philippine reconnaissance aircraft overflying a Vietnamese-occupied Spratly islet. 

China's expansion and upgrading of what it termed a 'fisherman's shelter' on Mischief Reef in 1995 into a fortified structure with satellite communications facilities, radar and gun emplacements also drew protests from Manila, it was reported in November 1999. There were also accusations that Chinese troops had fired shots at a Philippines patrol aircraft before attention shifted to Scarborough Shoal - only some 128nm off the Philippines mainland coast. 

In January this year the Philippines Navy apprehended and boarded two Chinese fishing boats in the vicinity of Scarborough Shoal and ordered them to leave. In the following month, a Philippines patrol craft fired shots to avoid a collision with two more Chinese fishing boats attempting to avoid capture near the Shoal. In March the Philippines deployed two patrol boats to 'persuade' Chinese vessels to leave the Scarborough Shoal area. 

In May another incident occurred, when Philippines maritime police pursued and opened fire on a Chinese fishing boat, killing one of its crew. The Chinese Ambassador to the Philippines reacted by stating his "grave shock and strong dissatisfaction". He called on the Manila authorities to release the boat, crew and the remains of the fisherman immediately, pay compensation and prevent any recurrence of such actions. 

A Code of Conduct?

A Code of Conduct for the South China Sea was drafted by the Philippines and Vietnam for an ASEAN meeting in November 1999. This was rejected by China, although there was general recognition in principle that such an agreement was desirable. China accepted that further discussions were needed on the issue. This rejection led to accusations that China was acting as a 'northern bully' towards ASEAN. 

A key problem from the Chinese perspective was that the Code was intended to effectively freeze the status quo. As far as Beijing was concerned this would, to some extent, legitimise what it regards as the other claimants' illegal occupation of Chinese territory. China's position remains that it alone has 'indisputable sovereignty' over the Spratly Islands and that the South China Sea has been "China's territory since ancient times". Moreover, China has steadfastly refused to discuss the dispute in a multilateral forum, instead offering negotiations on a strictly bilateral basis, on the basis that 'internationalising' the dispute would only complicate it. 

This year, however, China appears to have taken a more proactive stance towards the Code of Conduct suggestion. Beijing stated that it was ready to sign such a document, hosting further working discussions on the concept in August 2000. However, Beijing is keen to see that such a code is applied to the Spratlys area alone (Vietnam having pushed for it to embrace the Paracels also), that further discussions on dispute resolution be conducted on a bilateral basis and that military exercises be restricted in the waters around the Spratlys. This is clearly an effort to check exercises such as the joint Philippines-US manoeuvres conducted in January 2000. 

China's own draft Code of Conduct does not mention restrictions on constructing buildings on occupied Spratly features in explicit terms, unlike the ASEAN draft of December 1999. Instead, it merely includes the bland stipulation that "activities that might complicate and escalate disputes should be refrained [from]". 

This clearly represents a Code of Conduct on China's terms and there seems a long way to go before general agreement among the interested parties is reached. Even if a Code of Conduct is eventually realised, however, it remains to be seen whether it will have more 'moral force' than the Manila Declaration, as the Philippines Foreign Secretary, Domingo Siazon, has suggested that it would. 

Nevertheless, a means of regulating the dispute is worth the effort. The South China Sea disputes, and the Spratlys dispute in particular, remain the principle source of tension in Southeast Asia. There is a genuine fear that ongoing incidents could escalate to actual confrontation. 

Without a framework to restrain them the parties are likely to continue to jostle, apparently on the rationale that possession represents nine tenths of the law. Such a situation is likely to prompt a renewed push towards military modernisation, fuel the undeclared regional arms race that was interrupted by the Asian economic crisis and retains the potential to, at the very least, sour diplomatic relations and, at worst, spark fresh conflict.