With war imminent in Iraq, terrorism plaguing Southeast Asia and North Korean nuclear threats moving to the front burner, the territorial disputes in the South China Sea appear distant, not a top regional or international concern. But it would be a mistake to ignore the long-simmering disputes in the Spratly Islands. These disputes hold the seeds for conflict and could erupt at any time.
Indeed, we need only look back to China’s moves into Mischief Reef in the middle and late 1990s, when the region was distracted by the Asian financial crisis. Similar international turmoil today could provide cover for new island takeovers and set the stage for armed conflict between the claimants.
DIPLOMACY TO THE FRONT
Some in the region are heralding a recent non-binding joint ASEAN-China declaration as an important breakthrough for conflict prevention. ASEAN has worked hard on the diplomatic front for almost eight years to get China to agree to confidence-building language on the Spratlys dispute, and, with this new declaration in hand, that alone has to be seen as a positive step. But, and unfortunately, the declaration is simply a statement of purpose that could be subject to differing interpretations, ignored and/or broken at any time. It does not mention any of the specific disputes at issue, but refers only broadly to the “South China Sea” as a whole. Also, Taiwan, one of the Spratly claimants, was excluded from the ASEAN meeting. The declaration is thus missing the signature of one of the key players. In short, the document looks good but does not really address the deeper underlying political, economic and military issues at work.
All the ASEAN claimants–Brunei, Malaysia, the Philippines and Vietnam–signed the Declaration on the Conduct of Parties in the South China Sea November 4 in Phnom Penh.  ASEAN members who do not have claims in the Spratlys [Burma/Myanmar, Cambodia, Indonesia, Laos, Singapore and Thailand], but do have interests in how the matter is addressed, also signed. Wang Yi, special envoy and vice minister of foreign affairs, signed the declaration on behalf of China. For its part, Taiwan restated its own claims separately, immediately after the meeting.
In the declaration, ASEAN and China pledge to resolve the territorial disputes peacefully. They agree to respect “freedom of navigation in and overflight above the South China Sea”–a central consideration in this vital maritime passageway. Both sides undertake “to exercise self-restraint in the conduct of activities that would complicate or escalate disputes and affect peace and stability including, among others, refraining from action of inhabiting on the presently uninhabited islands, reefs, shoals, cays and other features.” ASEAN should follow up on this significant concept with a cooperative monitoring regime that would further increase transparency and help verify that no new occupations or island takeovers occur. 
It will be important to see where the next moves for diplomacy lead. Agreeing to general principles is one thing, but tackling the sharp underlying differences will be another. None of the parties will readily relinquish its sovereignty claims. Natural resources in the disputed area–oil, gas and fisheries–only complicate the situation further.
ASEAN is in essence pursuing a holding action in hopes that China will somehow back off its broad claim to the entire South China Sea. But this is unlikely. By all appearances Beijing is biding its time until it has enough military power to back up its claim with force. China continues to reinforce its military installations in the Spratlys–an issue not covered in the declaration–and, as part of its overall military buildup, is acquiring greater blue water capabilities that will enable it in time to enforce its claims.
As recently as May 2002, the People’s Daily reconfirmed official thinking by quoting a Chinese expert’s view that “China is the sole legal owner of the Nansha [Spratly] water region.”  China’s strategy thus appears to be one of wearing down the other claimants through endless diplomacy combined with an effort to exert de facto control through continuing occupations and reinforcement of existing outposts.
For example, in the past several years China has upgraded its military communications/transmission systems on three islands under its control in the Spratlys.  These systems can be used to coordinate naval patrols in the area and provide a link to higher command at the Navy’s South Sea Fleet, which is headquartered in the Guangdong Province port of Zhangjiang. Such capabilities are consonant with China’s professed intent to exert greater control in the so-called “First Island Chain,” which runs from the Spratlys up to Taiwan and the Ryukus.
These observed tendencies track closely with Chinese internal commentaries. For example, Beijing Jiefangjun Bao, the daily paper of the PLA’s General Political Department, reported in July 2000 that in the Spratlys:
“[T]here are fast-reaction means of reconnaissance to observe conditions on the sea, in the air, and the situation of the enemy, and there is modern weaponry capable of fulfilling the tasks of counter-sneak raids, and counter-landing, and adaptable to conducting operations against sea and air attack…. Moreover, there is modern communications equipment, which ensures unimpeded contact among atoll fortresses, command centers and warships on duty at sea.” 
The Philippines has also recently reported that Chinese vessels have been increasingly frequenting Scarborough Shoal. This disputed area is within the Philippines’ Exclusive Economic Zone and lies in the northern portion of the South China Sea off the western coast of Luzon island, well north of the Spratlys. Such probing could be a prelude to China establishing a new military outpost on Scarborough Shoal.
Recent diplomacy should not be taken as a sign of success and that the region can now turn to other pressing issues. Rather, security risks in the South China Sea remain real. Up to now, we have generally assessed these risks as “routine” based on a pattern of low-level incidents that has developed over the years. But this pattern conceals an underlying unpredictability that is dangerous and could easily escalate, as we saw with the EP-3 incident last year. We could easily wake up one day in the near future and find the disputes in the South China Sea dominating world headlines with one or more parties at war. Any use of force could disrupt the vital sea lanes of Southeast Asia and damage the already fragile global economy.
1. For complete text of this Declaration, see www.aseansec.org/13163.htm.
2. For more information, see John C. Baker and David G. Wiencek, eds., Cooperative Monitoring in the South China Sea: Satellite Imagery, Confidence-Building Measures, and the Spratly Islands Disputes (Praeger Publishers, 2002).
3. People’s Daily Online, “Philippines Engages in Expansions in China’s Nansha,” May 22, 2002.
4. See Dario Agnote, “China Continues to Fortify Claims in Disputed Spratlys,” Kyodo News Service, July 12, 2002, and Jim Gomez, Associated Press Worldstream, July 16, 2002.
5. Wu Ruihu and Li Xiangdong, “Modern fortresses on the sea with improved combat readiness capacity and complete living facilities spring up on Nansha of motherland,” Beijing Jiefangjun Bao (Internet version), 26 July 2000, as translated by Foreign Broadcast Information Service.
David G. Wiencek is president of International Security Group, Inc.