South China Sea Dispute

• Philippines decided not to suspend a defense pact with the U.S., avoiding a major blow to one of America's oldest alliances in Asia.
• The alliance is seen as having deterred aggressive Chinese actions in the disputed South China Sea, including the possible construction of structures in Scarborough Shoal, a disputed fishing area off the northwestern Philippines that China effectively seized after a tense standoff in 2012.
• Also, Beijing has been raising the stakes over the past year by threatening major offshore oil and gas projects inside Malaysia’s and Vietnam’s internationally recognized exclusive economic zones (EEZs).
• Recently, a Chinese survey ship escorted by the China Coast Guard harassed an exploration vessel operated by the Malaysian energy giant Petronas inside Malaysia’s EEZ. The intimidation of the drillship followed similar standoffs last year.
• Before reaching Malaysia, the survey ship sailed through Vietnam’s EEZ near the site of a previous incident.
• In 2019, Chinese and Vietnamese ships tried to block each other’s exploration of five offshore oil blocs inside Vietnam’s EEZ.
• This has raised worries in the region that China is trying to disrupt and gradually strangle Malaysian and Vietnamese oil and gas operations in the area and erase their territorial claims.
• The cost to Malaysia will be severe if Petronas has to pull the plug on important projects. Similarly, Hanoi fears that ExxonMobil and Rosneft might abandon projects in Vietnamese waters if Chinese harassment continues.

Significance of the South China Sea

• The sea carries tremendous strategic importance; one-third of the world's shipping passes through it, carrying over $3 trillion in trade each year, it contains lucrative fisheries, which are crucial for the food security of millions in Southeast Asia. Huge oil and gas reserves are believed to lie beneath its seabed.
• 80 percent of China's energy imports and 39.5 percent of China's total trade passes through the South China Sea.

The Dispute

• Territorial disputes in the South China Sea involve both island and maritime claims among several sovereign states within the region, namely Brunei, the People's Republic of China, Malaysia, the Philippines, and Vietnam. 
• The disputes include the islands, reefs, banks, and other features of the South China Sea, including the Spratly Islands, Paracel Islands, Scarborough Shoal, and various boundaries in the Gulf of Tonkin.
• China claims almost the entire South China Sea, reflected in a map created with a 9-dash line to show them as a part of China.
  

The Permanent Court of Arbitration (PCA) verdict

• The PCA award undermined the Chinese claim. It held that none of the features of the Spratly’s qualified them like islands, and there was no legal basis for China to claim historic rights and to the resources within the ‘nine-dash line’.
• The UNCLOS provides that islands must sustain habitation and the capacity for non-extractive economic activity. Reefs and shoals that are unable to do so are considered low-tide elevations.

India’s interest in the region

• India is seen as a vital player in the region, and Southeast Asian countries are keen to partner with India both economically and strategically.
• With India’s maritime discourse expanding and 55% of India’s trade passing through this region, India must pursue its interest in the region. 
• India’s “legitimate interests” are reflected in the energy contracts that its public sector giant Oil and Natural Gas Commission’s Videshi Limited (OVL) had acquired through legal and global norms in the South China Sea.
• India has, on several occasions, called upon all parties to avoid unilateral action that leads to tensions in the region and called for peaceful resolution of disputes without the threat of use of force.

Importance of the South China Sea for the USA

• America’s concern with the South China Sea is a result of China’s effort to secure control over the maritime territory and the resources it contains.
• Washington argues that UNCLOS permits nations to exercise “high seas freedoms,” which include, inter alia, peaceful military operations, in the Exclusive Economic Zones (EEZs) of coastal states. China disagrees.
• For America, then, the future of the current regional order and the security of its allies are at stake. To maintain its geopolitical position in the western Pacific, the US is obliged to defend the regional alliance system and reassure local powers who are concerned about China’s intentions.

• Preventing the Western Pacific from turning into a China-owned lake requires working together to defend partners and international law.
• Maritime states like the Philippines, Vietnam, Indonesia, Malaysia, and Brunei should enhance cooperation by coordinating their coast guard operations, increasing their sharing of intelligence, and reaching an accord on how their overlapping South China Sea maritime boundaries should be demarcated.
• India must continue to actively pursue its defense diplomacy outreach in the Indo-Pacific region: increase military training and conduct exercises and exchanges at a higher level of complexity, extend Humanitarian Assistance and Disaster Relief activities, share patrolling of the Malacca Strait with the littoral countries, etc.