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Background Brief: South China Sea: Code of Conduct Back on Track? Carlyle A. Thayer August 16, 2012

[client name deleted] Why are tensions increasing now and how much of this is due to the prospects of oil and gas? Who is to blame? What is your view of the increased involvement of the U.S.? How likely do you think this could result in armed conflict (such as between Vietnam and China)? What needs to happen to resolve conflicts, reduce tensions? ANSWER: China and ASEAN are committed to opening discussions on ASEAN's draft code of conduct. ASEAN's Secretary General Surin Pitsuwan indicated senior officials from ASEAN and China could meet as early as September. His announcement came prior to the complete breakdown of discussions by ASEAN foreign ministers to reach agreement on their joint communique. These are two separate issues. China and ASEAN held informal discussions on July 8 the day before the 45th ASEAN Ministerial Meeting took place. The intervention by Indonesia's Foreign Minister Marty Natalegawa served to recommit ASEAN ministers to "the early conclusion of a Regional Code of Conduct in the South China Sea." Indonesia's role is significant because of its strategic importance in Southeast Asia. It is brokering a consensus that Cambodia, as ASEAN Chair, failed to do. China took note of Indonesia's proactive diplomacy and dispatched its foreign minister for a quick fence mending trip to Southeast Asia. China's foreign minister put greater stress on implementing the DOC than he did on the COC. But the two processes will go ahead in tandem. China knows that any foot dragging on working with ASEAN for a COC will only invite intervention by the United States and other like-minded ASEAN dialogue partners: Japan, Australia, South Korea, Canada, the EU, New Zealand, and India. Failure to make progress on the COC would bring matters to a head at the East Asia Summit in Phnom Penh in November. As for the Chinese garrison: It is important to note that it was approved by the Central Military Commission, the highest decision-making body over the People's Liberation Army. This is a potentially ominous development because most of the incidents involving China have been civilian vessels attached to the Fishery Law Enforcement Command or the China Maritime Surveillance force. At the moment the creation of a military garrison is largely a symbolic act. Woody Island cannot sustain a large military presence and the use of PLA Navy ships in the South China

2 Sea would escalate matters and draw in external powers such as the United States. The greater threat comes from the Yalong Naval Base on Hainan Island where the East Sea Fleet is being beefed up and modernized. Suggested citation: Carlyle A. Thayer, South China Sea: Code of Conduct Back on Track, Thayer Consultancy Background Brief, August 16, 2012. Thayer Consultancy Background Briefs are archived and may be accessed at: http://www.scribd.com/carlthayer.