China Vs International Law: The Vanguard Reef Incident

Srikanth Kondapalli

Before any binding Code of Conduct (CoC) is arrived at by 2021 on the South China Sea (SCS), a spate of new developments is emerging. After a three-year lull since the Permanent Court of Arbitration's July 2016 judgment at The Hague that quashed any sovereignty claims in the region, China has begun testing the waters by sending its survey ship Haiyang Dizhi 8 about 80 metres close to a Malaysian rig, encountering Vietnamese contracted rigs in Vanguard Reef, and coming closer to the Philippines-claimed reefs. These events that have occurred in quick succession are in assertion of Chinese dominance in the region. This has serious consequences for the rule of law, concerns of weaker states, energy security, and freedom of navigation in the SCS.

In early July 2019, China deployed the Haiyang Dizhi (HD) 8 (Marine Geology 8) survey ship, along with two other coast guard vessels (the 12,000 tonne Haijing 3901 and a 2,200 tonne vessel) to the Vietnam-controlled Vanguard Reef, where Vietnam has been drilling for energy resources. The area is within 200 nautical miles of Vietnam’s coast, and according to the provisions of the UN Convention of the Law of the Sea (UNCLOS), comes under Vietnam’s jurisdiction. Vietnam has been drilling in the region since mid-May through the Russian company Rosnet, which has leased the Japanese drilling platform, Hakuryu 5.

After a week-long confrontation and a stiff message from Vietnam, and 30 dialogues at various levels, HD-8 shifted to the Philippines-claimed reefs, only to return to Vanguard Bank after refueling in late August 2019. China also escalated by conducting a military exercise, in addition to flying H-6 bombers in the region as a measure to coerce Vietnam. While China warned Hanoi not to have any “illusions” in the region, the US condemned China’s “bullying tactics” to scare Southeast Asian countries.

The scene of the tussle is the 0.6 Oil Block in the Vanguard Reef, which has been operated by Vietnam for 17 years; nearly 10 percent of Vietnam's is being pumped through this into the domestic market. The oil block is not even in the so-called nine-dash line claimed by China but rubbished by the Permanent Court of Arbitration in July 2016. Earlier, due to China’s coercion, a Spanish company, Repsol, which had a US$ 200 million in contract, had to withdraw from a contiguous block.

This suggests that while China’s state-owned energy firms like China National Offshore Oil Company can drill in the area with the backing of its coastguard and naval forces, any other oil company wishing to drill in the SCS should first kowtow to Beijing. This has lessons for other energy companies, including for India's Oil and Natural Gas Corporation Limited (ONGC), which is drilling in a contiguous block.

The timing of this renewed confrontation, after a lull since a similar incident in May 2014 involving another Chinese vessel, Haiyang Shiyou 981, is interesting. While the turbulent weather conditions in the region and the end of the fishing ban are cited, more plausible reasons for China’s assertiveness can be traced to its recent initiatives in the region.

Before the completion of the CoC, as proposed by Beijing to ASEAN, China intends to extend its outreach and claim to as many reefs, islands, or areas in the SCS as possible – as an “extended claim area.” China does this with other territorial disputants; such as with India on Tawang or Chumar. By including the provision of discussing only "regional affairs" with the concerned countries in the CoC, China is forestalling any intervention and possible role of any other state in the region.

The other concerned countries have vital commercial passages through the SCS through which nearly US$ 5 trillion worth of goods pass. The US, which said in 2010 that its “national interests” through these waters would be protected, has been at the forefront. It has conducted over two dozen freedom of navigation operations and overflight to enforce international law, and the USS Ronald Reagan was dispatched to the region in early August. However, the US' 'isolationist' policies and its unpredictable responses to China – obsessed as it is with only tariffs – have raised concerns about an emerging G-2 (US-China consortium).

The next big country in the region is Japan, which has more than two-thirds of its energy resources passing through these waters. Japan had broadly incorporated the region into its “surrounding areas” of concern and as a part of US-Japan operations. However, despite “collective self-defence” and the selling fast attack craft and others, Japan’s recent normalisation of relations with China sends different signals. Even though a Japanese rig, Hakuryu 5, is involved, no major announcement from Tokyo has been forthcoming.

India’s response after the HD-8 incident was also lacklustre. The Ministry of External Affairs (MEA) made an anodyne statement about its “legitimate interests” in the region. Besides the ONGC Videsh Ltd, which has invested billions, there is also trade (nearly a half of the country’s commerce) passing through vital sea lanes of the SCS. This will be drastically affected if New Delhi does not show its flag in the region. To protect its interests in the far away Indian Ocean, China sent 29 naval contingencies, built the Hambantota and Gwadhar ports, and a naval base in Djibouti. India needs to be similarly proactive in protecting its own interests in the SCS.

By sending ships close to Malaysia's Luconia Breaker, Vietnam's Vanguard reef,and reefs claimed by the Philippines in the span of a few weeks, China has sent strong signals of its unquestioned power in the region; that too, in just three years after the Permanent Court of Arbitration at The Hague quashed its “historical claims” argument. Civilian incorporation, military dominance, and escalation even beyond the nine-dash line; and converting non-disputed into disputed areas have created vast regional uncertainties.

In this episode at the Vanguard Reef, Vietnam – unlike the Philippines or Malaysia – stood up to China by sending its coast guard to resist China's presence. It could take up the issue at the UN, protect its own energy interests as well as organise and protect energy the interest of energy companies in the region, or like the Philippines, take the matter to The Hague, given the reef's clear legal status. The costs for China, too, seem to have thus escalated.