Thayer Consultancy

ABN # 65 648 097 123

Background Briefing: Vietnam-India-China Triangle Carlyle A. Thayer January 4, 2012

[clientnamedeleted] 1. Could you comment on the significance of the May 2011 dispute between VietnamandChina? ANSWER: On May 25, and again on June 9, Chinese civilian maritime surveillance ships cut the cables of the Binh Minh 2 and Viking 2, seismic exploration ships, respectively. Both were foreignowned vessels under contract to Vietnam. A third incidentreportedlyoccurredinlateinJune. These cablecutting incidents were the first time Vietnam has gone public. They representastepupinChineseaggressivenessinassertingitsjurisdictionintheSouth China Sea. Both incidents occurred well within Vietnams Exclusive Economic Zone (EEZ)butalsowithinChinas9dashlineushapedmapclaiminghistoricrighttothe SouthChinaSea.ThesignificanceforVietnamisthatChinasactionscouldintimidate and deter foreign oil companies from investing in the development of Vietnams hydrocarbon resources. These incidents have forced Vietnam to send escorts to protect foreign oil exploration vessels in its EEZ. This ups the ante and raises the possibilityofaclashatsea. 2. Could you comment on the significance of the Vietnamese naval commander's visittoIndiainJuly2011? ANSWER: Vietnam has longstanding military ties to India. They have intensified since1991withthecollapseoftheSovietUnion.Vietnamsmilitaryanditsnavyin particular have a legacy of Sovietera military equipment. India has a defence industrythatisfamiliarwithSoviettechnology. The naval commander sought to secure Indias agreement to train its submariners particular in escape procedures for a damaged submarine. Vietnam is expected to takedeliveryofsixKiloclasssubsfromRussiain2014.IndiacurrentlyoperatesKilo submarines. Vietnam is also seeking Indian approval to sell it the Brahmos land basedantishipcruisemissile. 3. China has declared the South China sea a 'core' interest. What makes it so importanttothem?WhyisitimportanttoVietnamtodefendit? ANSWER:WhetherornotChinahasdeclaredtheSouthChinaSeaacoreinterest in official policy is a contentious matter. U.S. officials, including Secretary of State

2 Hillary Clinton, are adamant that senior Chinese officials used this term in private discussions. InMarch2009aseriousincidenttookplaceinthewatersoffsouthernHainanIsland whencivilianChineseships,accompaniedbyPeoplesLiberationArmyNavy(PLAN), harassedaU.S.militarysurveyvessel,theUSNSImpeccable.Chineseremarksabout coreinterestoccurredatthistimeandshortlyafter. TheUNCommissionontheLimitsoftheContinentalShelfsetMay13,2009asthe deadlineforlittoralstatestomakeclaimsforextendedcontinentalshelvesbeyond the200nauticalmileEEZ.ChinaprotestedthesubmissionsbyMalaysiaandVietnam andforthefirsttimeofficiallytabledamapoutliningitsclaims.Themapcontained 9dash line forming a ushape rim around the South China Sea. Chinas reported characterization of the South China Sea as a core interest reflects its claim to sovereignty over the islands and features in the South China Sea. China views oil explorationandoilproductionintheSouthChinaSeabyVietnamandthePhilippines asactsofplunderofChineseresources.TheSouthChinaSeaalsocontainedvitalsea linesofcommunication(SLOCSs)overwhichChinesetradeandenergyresourcesare carried. These SLOCs are vulnerable to interdiction by the US Navy. The core interest claim is a reflection Chinese increased assertiveness at a time that the UnitedStatesisseenasonthedecline.Chibascoreinterestclaimisamarkerofthe politicalandgeostrategicimportanceoftheSouthChinaSea. 4. How do the offshore resources here impact things? What are the key resources (oilandanythingelse)? ANSWER:Therearenoagreedestimatesoftheamountofhydrocarbonreservesoil and gas located in the South China Sea. The proper seismic work has not been carried out. China regularly issues claims of oil and gas reserves that are six times thoseprovidedbytheUSDepartmentofEnergy.Ifsignificanthydrocarbonresources arediscoveredthiscouldbeatriggerforconfrontationbetweenChinaandtheother claimant states, particularly Vietnam and the Philippines but also Malaysia and Brunei. These hydrocarbon resources are located near to China and would have reducedshippingcosts. Given the projected economic rates of the Chinese economy, alongside that of Vietnam and the Philippines, industry analysts argue that the South China Sea resourcesarepeakoil.Thatis,theseresourceswillbequicklyconsumed. However,resourcenationalismhasraisedthestakesbyinjectingtheemotionalissue ofnationalsovereignty.Thisisavolatilemixturethatcouldleadtomiscalculationon the part of China about the ability of regional states to resist Chinas claims to sovereignrightsovertheoilresources. Fisheries represent another resource as the main source of protein for millions of people living around the South China Sea. Fishing stocks, however, are being depletedthroughoverfishingandenvironmentalpollution. 5. Could you comment on historical antagonism between Vietnam and China, and possible negative sentiments among the Vietnamese public toward the Chinese? How does this negative public perception compare with the attitude of the Vietnamesegovernment?

3 ANSWER: Historical antagonism between Vietnam and China lies beneath the surface of their bilateral relationship because the relationship isso asymmetrical. I havetermedthisthetyrannyofgeography.Vietnamcannotpickitsneighbor.At 89millionpeopleorthetwelfthmostpopulouscountryintheworld,Vietnamisonly amiddlesizedChineseprovince.InfactVietnamandChinahavelivedmoreinpeace than in conflict. Vietnamese leaders know that they cannot afford to permanently alienate China. So they pursue a policy of autonomy and independence while promotingreassuranceintheirrelationswithChina. Chinese assertiveness in the South China Sea since 2007 has provoked a backlash within Vietnam. This also has taken the form of cyber warfare. Chinese hactivists havepostedasupposedinvasionplanofVietnamontheinternet.Chinesehackers have defaced Vietnamese government websites. Both Vietnamese and Chinese netizenshaveengagedinhighlyemotionalboutsnamecallingontheinternet. TheVietnamesegovernmentisdividedbetweenthosewhounderstandtheneedto actwithprudencetowardsChinaandthosewhowouldliketoseeamoreassertive stance. The former may be termed realists, while the latter could be termed nationalists. The nationalists find support among retired government officials who have served in Vietnam and recall the animosity surrounding the 1979 border war whenChinaunsuccessfullytriedtoteachVietnamalesson. 6. The Vietnamese government allowed weeks of public protests against Chinese aggression in May/June 2011, a surprising move given how demonstrations are frowned upon there. What was the rationale behind that, and why were the demonstrationseventuallyclampeddownon? ANSWER: Vietnam witnessed isfirst antiChinapublicdemonstrationsin December 2007andtheywerequicklyshutdown.In2011,11antiChinademonstrationswere held over a twelve week period from 5 June to August. Demonstrations in Ho Chi MinhCitywerequicklystoppedaftertheirsecondweekwhenthepolicemovein.In Hanoi repressive action by the police provoked widespread sympathy for the anti Chinaprotestors.Prominentintellectualsandretiredofficialswroteapetitiontothe government.Thegovernmentitselfwasdivided.Initiallythedemonstrationsserved thegovernmentspurposebecauseitsignaledtoChinathatitsassertivenessinthe SouthChinaSeawashaveacounterproductiveimpactonbilateralrelations. AsthedemonstrationsworeontheybecameapotentialliabilityontheVietnamese governments diplomatic approaches to China. On 25 June a special envoy was dispatched to Beijing. Both sides agreed to steer public opinion, that is clamp down on the public animosity and antiChina demonstrations. Vietnams private diplomacywasaimedatarrangingavisitofthepartysecretarygeneraltoChina. 7. Vietnam has allowed Indian ships to dock at Nha Trang, which could lead to a notable Indian naval presence in the South China sea between the Andamans and NhaTranghowaretheChineselikelytolookuponthis? ANSWER:VietnamsnavyhasamajorbaseatNhaTranganditishometoVietnams naval academy. India has provided thousands of spare parts to Vietnams aging Sovietera patrol boats and other vessels. India also conducts professional military

4 educationandtrainingexchangeswithVietnam.Indiannavalshipshavebeenvisiting Vietnamforwelloveradecade. IndiaseekstodemonstratethatitcandeployshipstotheSouthChinaSeaintitfor tatresponsetoChinasassistancetoPakistananddeploymentstotheIndiaOcean. ButIndiadoesnothaveintentionorthecapacitytomaintainasignificantpermanent presenceintheSouthChinaSea.ChinaregularlywarnsVietnamaboutplayingwith firebyinvitingoutsidepowersintotheSouthChinaSeadispute.Chinarealizesthat India represents one of a number of countries that are concerned about its assertiveness in the South China Sea. China therefore fears that an antiChina coalitionmayemerge.Thereisclearlyanelementofnavalcompetitivenessbetween India and China; but the main game is their land border and growing economic interdependence. 8.AsidefromusingeachotherasmilitaryhedgesagainstChina,whatelsecanIndia and Vietnam look to gain from each other? Is there room for trade between the countries?HowdependentisVietnamonChinafortrade? ANSWER: China is Vietnams largest trading partner. Vietnam also has a massive trade deficit of the order of US $13 billion in 2010. There is no way this can be balanced.VietnamhassoughtincreasedChineseinvestmentbutthishasprovento be a double edged sword. Growing domestic antiChina sentiment has politicized ChineseinvestmentinVietnamsbauxiteindustryandjointventureswhereChinese laborisimported.Bilateraltradeisonlyoneaspectofamuchlargerpictureofthe economicintegrationofmainlandSoutheastAsiawithsouthernChina. Vietnam needs economic relations with other countries to balance its deficit with China.NocountryloomslargerthantheUnitedStateswithwhomVietnamhasaUS $9billionsurplus.TotaltwowaytradebetweenIndiaandVietnamamountedtoUS 2.3billionin20092010.IndiaexportedUS$1.8billionforasurplusof$1.3billion. 9. Could you comment on the November 2011 East Asia summit's discussion of maritime aggression by the Chinese and the bilateral v multilateral solution of maritimedisputes? ANSWER:Priortothe2011EastAsiaSummit(EAS)maritimesecuritywasnotoneof the traditional agenda items. China and some ASEAN states argued that maritime securityshouldnotbediscussed.Attheinformalleadersretreatsixteenofeighteen EAS participants raised maritime security. With the exception of China, the other fifteen countries raised their concerns along a spectrum of views. After several ASEANmembersexpressedstrongviews,theUSspokeinfavourofinternationallaw, freedomofnavigationandoverflightandthenonuseofthreatsofforceortheuse of force. China then interjected and lodged its objection. Indonesia, as the ASEAN Chair,offeredtheviewthatmaritimesecuritywasanappropriateitemfordiscussion thusestablishingitsplaceontheagendaforfutureEASSummits. BythetimetheEASmet,ChinaandtheASEANmemberstateshadalreadyagreed on Guidelines to Implement the Declaration of Conduct on the South China Sea (DOC).TheDOCwasadoptedin2002.In2006ajointChinaASEANWorkingGroup wassetuptoadoptguidelines.Thesetooksevenyearstonegotiate.Sometwenty oneormoredraftswerecirculatedinthisperiod.Therewasonlyonestickingpoint

5 ASEANs insistence that it meet as a group to work out a common position before meetingwithChina.Thiswasfinallydroppedin2011andamuchweakerstatement supportingdialoguetookitsplace. ASEAN as an organization, as distinct from the ten ASEAN member states, has not adoptedapolicyontheSouthChinaSeadisputes. WhattheEASsummitrevealedwasthattheinternationalcommunityasreflected intheviewsof15ofthe18EASmemberswasconcernedaboutmaritimesecurityas a result of Chinese aggressiveness. China finds the intervention of nonclamant states particularly objectionable. Thus Chinas agreement on the Guidelines to ImplementtheDOCmaybeseenasapreemptivemovetokeepexternalpowersat bay.ChinaofferedtohostthefirstmeetingoftheJointWorkingGrouptoImplement the DOC this month. As long as China and ASEAN members discuss this issue, in Chinasview,thereisnoneedforUSorotherexternalintervention. NonethelessheASEANChartermakesprovisionforASEANmemberstomeetfirstto workoutcommonpositionsintheirrelationswithoutsidepowers.ASEANmembers aredraftingacodeofconductthattheyexpecttogivetoChina. Finally, Vietnam has already begun bilateral discussion with China on South China SeadisputesbutVietnaminsiststhatwhentheinterestsofthirdpartiesareinvolved theymustbebroughtintothediscussion. Thebottomlineisthatbothbilateralandmultilateralapproachesarebeingpursued simultaneously. 10.CouldyoucommentontheoverallgeopoliticalsignificanceoftheVietnamIndia Chinatrifecta? ANSWER:VietnamisrapidlyemergingasamiddlepowerinSoutheastAsiaandone ofASEANleadinglights.ButVietnamsmomentintheASEANsunsetwhenitceased being ASEAN Chair in 2010. Indonesia assumed this role in 2011 and ASEAN continued to play an important role in South China Sea issues. Now the Chair has passedtoCambodia(2012)andwillbehandedovertoasuccessionofstatesthatare unlikelytoplayaproactiverole:Brunei(2013),Myanmar(2014)andLaos(2015). Economic interdependency is a driving force in the triangular relations between China, India and Vietnam with India playing a catch up role. Here there is convergenceamongthethreestates. There is marked divergence when political and geostrategic relations are considered. Both India and Vietnam must learn to live with China but without undermining their own independence and autonomy as players. There is thus a naturalconvergencebetweenIndiaandVietnam.Therearealsoselfimposedlimits. NeitherIndianorVietnamarelikelytobecomefirmalliesduetodomesticattitudes againstalignment. China has considerable interests in the stability of its southern border. It can bully Vietnam so far but not so far that Vietnam turns to India or the United States for support. Vietnam has adopted a policy towards China that is calls struggle and cooperate. Struggle when Vietnams vital interests are at stake, and strive to cooperate on all other matter to enmesh China in a broad ranging relationship.

6 VietnamwillalsoseektodowhatitdidbestduringtheSinoSovietdisputes.Itwill playtheroleofpivottogainmaximumadvantageofSinoIndianrivalry.