Apr 28th 2015

The Rule of Law Is China's Challenge in the South China Sea

by Daniel Wagner

 

Daniel Wagner is the founder and CEO of Country Risk Solutions and a widely published author on current affairs and risk management.

Daniel Wagner began his career at AIG in New York and subsequently spent five years as Guarantee Officer for the Asia Region at the World Bank Group's Multilateral Investment Guarantee Agency in Washington, D.C. After then serving as Regional Manager for Political Risks for Southeast Asia and Greater China for AIG in Singapore, Daniel moved to Manila, Philippines where he held several positions - including as Senior Guarantees and Syndications Specialist - for the Asian Development Bank's Office of Co-financing Operations. Prior to forming CRS he was Senior Vice President of Country Risk at GE Energy Financial Services. He also served as senior consultant for the African Development Bank on institutional investment.

Daniel Wagner is the author of seven books: The America-China Divide, China Vision, AI Supremacy, Virtual Terror, Global Risk Agility and Decision Making, Managing Country Risk, and Political Risk Insurance Guide. He has also published more than 700 articles on risk management and current affairs and is a regular contributor to the South China Morning Post, Sunday Guardian, and The National Interest, among many others. (For a full listing of his publications  and media interviews please see www.countryrisksolutions.com).

Daniel Wagner holds master's degrees in International Relations from the University of Chicago and in International Management from the Thunderbird School of Global Management in Phoenix. He received his bachelor's degree in Political Science from Richmond College in London.

Daniel Wagner can be reached at: daniel.wagner@countryrisksolutions.com.

News that the People's Republic of China is claiming ownership of and enlarging the size of some disputed islands in the South China Sea, and building air strips to enhance its ability to project its air power in the region, has been met with predictable alarm by a variety of countries in the region and around the world. Most notably so in the Philippines, where part of the PRC's construction projects is occurring within the Philippines' internationally recognized Continental Shelf and Exclusive Economic Zone. The PRC is doing this because it sees a strategic opportunity to expand its regional military footprint, and it knows that its actions will not be challenged militarily.

As a rising global power, and being the largest and most important economy and military power in Asia, the PRC has had the luxury of being able to do more or less whatever it wants in the region. And given that the U.S. 'pivot to Asia' looks less and less robust by the month (given its ongoing preoccupation with the Middle East), the PRC has achieved a new level of confidence in its own abilities and ambitions in the region. That said, the PRC must still contend with the legal issues associated with its actions.

Japan has vigorously contested the PRC's claim over the Senkaku Islands and the Philippines has taken its claim over the Spratly Islands to court. The Philippines pursued "compulsory process" under Article 287 of the United Nations Convention on the Law of the Sea (UNCLOS) and initiated arbitral proceedings under UNCLOS over the merits of the PRC's claim to much of the South China Sea (known as the West Philippine Sea to Filipinos).

The suit was immediately recognized as the first "legal case" against the PRC over a number of territorial and maritime disputes with its neighbors, many of them members of the ASEAN. In initiating arbitration in 2013, the Philippine government noted it had exhausted virtually all political and diplomatic avenues for a peaceful negotiated settlement since 1995, thus requiring the commencement of the arbitral suit.

In December 2014 the U.S. government released a report on the subject of the PRC's claims over islands in the South China Sea stating its support of UNCLOS, criticizing the ambiguity of the PRC's claims to the islands, and taking issue with the historical validity of the PRC's claims. The threshold question really is whether the PRC can be bound by UNCLOS courts and tribunals, including its arbitral panels.

The PRC ratified UNCLOS in 1996, but in 2006 the Chinese government filed a statement with UNCLOS saying that it "does not accept any of the procedures provided for in Section 2 of Part XV of the Convention with respect to all the categories of disputes referred to in paragraph 1 (a), (b), and (c) of Article 298 of the Convention." These provisions of the Convention refer to "Compulsory Procedures Entailing Binding Decisions" issued by at least four venues: the International Tribunal on the Law of the Sea, the International Court of Justice, an "arbitral tribunal" which may refer to the Permanent Court of Arbitration (PCA), and a "special arbitral tribunal."

While there are venues available for the resolutions of disputes under the UNCLOS regime, the PRC does not wish to be bound by its compulsory processes -- the ICJ and PCA included. In essence, it wants to be able to pick and choose which statutes of the treaties it has voluntarily signed it wishes to adhere to, and be free to ignore those that it finds 'inconvenient.' Can a state remain a party to a treaty or convention without being bound by its rules? Can contracting states adhere to an international legal regime and simultaneously opt out of any binding force required or to be required by that regime?

The PRC's 2006 statement effectively served as a "reservation" against any binding outcome of UNCLOS's grievance procedure in the future. It is worth pointing out that international law does accord states the freedom to disclaim whole corpuses of treaty rules through irreducible principles of self-determination, state independence, and state sovereignty. In short, the PRC can decide to opt out of treaty rules which it considers to be inconsistent with national or domestic policy, and it did so in the manner required by the treaty.

The Philippines' attempt to haul the PRC to an international tribunal is a problem because it is invoking the very compulsory jurisdiction which the PRC has disavowed since 2006. But even if the Philippine attempt to arbitrate fails, any marshaled argument can subsist, and that case may be fielded in other venues. If military conflict were to flare up, the same case can be brought to the United Nations Security Council -- the principal repository of enforcement powers under the UN system. A state can be found to be in violation of a substantive legal norm even without a coercive or compulsory judgment in a given venue, provided of course that there is truth to the argument supporting a violation and is appreciated by the alternative venue.

While the PRC disavows UNCLOS against the Philippines, it is expressly invoking UNCLOS provisions in its claims against Japan -- so it wants to have its cake and eat it, too. In 2009, the PRC submitted a claim over the Senkaku Islands (which, like Scarborough Shoal and the Spratlys, are believed to be fuel rich) and turned to UNCLOS rules in defining and delineating its Continental Shelf beyond the 200 nautical mile Exclusive Economic Zone, again within the meaning of UNCLOS. There is some international legal doctrine supporting the view that a state's acts in one place can be used as an admission and adversely bind that State in another set of circumstances.

The larger point is that the PRC has not personified the Rule of Law in this case, or in others related to maritime borders, and wants to be able to 'cherry pick' which provisions of international treaties it will willingly comply with, and which it will not. That is behavior unbecoming of a rising global power and will make states which are signatories to treaties with the PRC wonder if its signature is worth the paper it is printed on. This cannot be in the PRC's long-term interest.

The PRC has become masterful at playing the international system against itself, whether on issues related to maritime law or development finance, as has been skillfully demonstrated with the creation of the Asian Infrastructure Investment Bank. While the outcome of the suits against its maritime claims play out in international court, there is a chance it will ultimately prevail, given the complicated nature of the claims and that the courts are venturing into murky legal territory. If so, the PRC's various construction projects in the South China Sea will stand as a fait accompli and testament to its growing power in virtually every realm.

Daniel Wagner is CEO of Country Risk Solutions and author of "Managing Country Risk", please see below for link to Amazon. For Country Risk Solutions' web site, please click here.

You can follow Daniel Wagner on Twitter: www.twitter.com/countryriskmgmt



To follow what's new on Facts & Arts, please click here.




 


This article is brought to you by the author who owns the copyright to the text.

Should you want to support the author’s creative work you can use the PayPal “Donate” button below.

Your donation is a transaction between you and the author. The proceeds go directly to the author’s PayPal account in full less PayPal’s commission.

Facts & Arts neither receives information about you, nor of your donation, nor does Facts & Arts receive a commission.

Facts & Arts does not pay the author, nor takes paid by the author, for the posting of the author's material on Facts & Arts. Facts & Arts finances its operations by selling advertising space.

 

 

Browse articles by author

More Current Affairs

Jul 27th 2021
EXTRACT: "When it comes to the Chinese economy, I have been a congenital optimist for over 25 years. But now I have serious doubts. The Chinese government has taken dead aim at its dynamic technology sector, the engine of China’s New Economy. Its recent actions are symptomatic of a deeper problem: the state’s efforts to control the energy of animal spirits." ---- "... the Chinese economy, no less than others, still requires a foundation of trust – trust in the consistency of leadership priorities, in transparent governance, and in wise regulatory oversight – to flourish. --- Modern China lacks this foundation of trust ."
Jul 25th 2021
EXTRACT: "It seems that they are, as the last 18 months have seen a remarkable expansion of the central banks’ fields of activity, largely driven by their own ambitions. So they have moved into the climate change arena, arguing that financial stability may be put at risk by rising temperatures, and that central banks, as bond purchasers and as banking supervisors, can and should be proactive in raising the cost of credit for corporations without a credible transition plan. That is a promising new line of business, which is likely to grow. ---- Central banks are also trying to move into social engineering, specifically the policy response to rising income and wealth inequality, another hot button topic with high political salience."
Jul 25th 2021
EXTRACT: "The EU’s ambitious unilateral climate strategy will transform Europe into a trade fortress, encourage green protectionism worldwide, and give other regions the opportunity to develop using cheaper energy. And without China, India, and the United States on board, other countries will be careful not to follow the EU in its self-appointed role as the world’s green guinea pig. If Europe is not careful, it will risk finding itself in a climate club of one. "
Jul 9th 2021
EXTRACT: ".... ruminants belch and fart methane, an extremely potent greenhouse gas. As a result, rearing beef cattle brings about, on average, six times the contribution to global warming as non-ruminant animals (for example, pigs) producing the same quantity of protein. ..... if projected to 2050 [beef production], would use 87% of the total quantity of emissions that is compatible with the Paris climate agreement’s objective of staying below a 2° Celsius increase in temperature."
Jul 8th 2021
EXTRACT: " .... while China’s leaders never mention it, they are just as embittered over Russia’s theft of Chinese territory in the nineteenth century as they are over the West’s imperial predations. With Western imperialism having been largely rolled back, it is Russia’s continued occupation of historic Chinese territory that stands out the most to ordinary Chinese observers. For example, the city of Vladivostok, with its vast naval base, has been a part of Russia only since 1860, when the tsars built a military harbor there. Before that, the city was known by the Manchu name of Haishenwai." ---- "There is also a demographic argument for Putin to consider: the six million Russians spread along the Siberian border face 90 million Chinese on the other side. And many of these Chinese regularly cross the border into Russia to trade (and a good number to stay)."
Jul 7th 2021
EXTRACTS: "According to a new analysis by researchers at Brown University, America’s two-decade war in Afghanistan cost it nearly $2.3 trillion. Now, Afghanistan’s neighbors – Pakistan, Iran, China, India, and the Central Asian countries – are wondering just how much it will cost them to maintain security after the United States is gone." ----- "After clandestinely supporting the Taliban as a means to undermine the US war effort, Russia now fears broader destabilization in Central Asia and beyond." ---- "Similarly, after having made nice with the Taliban, China also now fears the greater regional instability that the US withdrawal may incite. In addition to disrupting Chinese President Xi Jinping’s Eurasia-spanning Belt and Road Initiative, a revitalized Taliban could re-energize the Islamist extremist threat in China’s western Xinjiang province."
Jul 1st 2021
EXTRACT: "When former Fed Chair Paul Volcker hiked rates to tackle inflation in 1980-82, the result was a severe double-dip recession in the United States and a debt crisis and lost decade for Latin America. But now that global debt ratios are almost three times higher than in the early 1970s, any anti-inflationary policy would lead to a depression, rather than a severe recession. ---- Under these conditions, central banks will be damned if they do and damned if they don’t, and many governments will be semi-insolvent and thus unable to bail out banks, corporations, and households. The doom loop of sovereigns and banks in the eurozone after the global financial crisis will be repeated worldwide, sucking in households, corporations, and shadow banks as well. ---- As matters stand, this slow-motion train wreck looks unavoidable."
Jun 19th 2021
EXTRACT: "Xi Jinping’s call for friendship gives us an opportunity to examine Chinese politics on both the domestic and international stage. On the face of it, it suggests the possibility of rapprochement between the rich liberal democracies represented by the G7 and the authoritarian Chinese state. However, despite appearances of a call for a closer relationship, there is more than one way of being friends – and Xi’s idea might be somewhat different to what many in countries attending the G7 might expect."
Jun 12th 2021
EXTRACT: "China’s recently published census, showing that its population has almost stopped growing, brought warnings of severe problems for the country. “Such numbers make grim reading for the party,” reported The Economist. This “could have a disastrous impact on the country,” wrote Huang Wenzheng, a fellow at the Center for China and Globalization in Beijing, in the Financial Times. But a comment posted on China’s Weibo was more insightful. “The declining fertility rate actually reflects the progress in the thinking of Chinese people – women are no longer a fertility tool.” "
Jun 12th 2021
EXTRACT: " I remember recounting fellow leaders of the story of a Rwanda schoolboy caught up in the genocide of the 1990s and now immortalized in the Kigali Genocide Memorial museum, where, in a section devoted to children, one can find his photograph and a plaque that reads: ----- David, age 11 ...... Ambition: to be a doctor ...... Favorite sport: football ...... Favorite hobby: making people laugh ...... Death: by mutilation ...... Last words: the UN are coming to save us ----- In his idealism and innocence, David believed the international community would save him and his mother. We didn’t. "
Jun 8th 2021
EXTRACT: " While many conservative Republicans opposed Trump and saw that he posed a danger to their party and democracy itself, they were hesitant to buck the mass movement they had created, fearing that it would turn against them. Some of these same conservatives assumed that with Trump's defeat, the horror of January 6th, and the former president's banishment from social media, the time had come to restore sanity to their party. But the GOP leadership’s continued cowering in the face of what they now call "Trump's base" has caused them to circle the wagons and purge their ranks of those who call for sanity. "
May 26th 2021
Editor's Note: This article is about the Federal Reserve, inflation in the 1970's, and possible similarities to today.
May 25th 2021
EXTRACT: "Netanyahu claims to be acting in the name of the Jewish people. He certainly is not. Many Jews around the world, including me, despise Netanyahu’s racist politics. As an American, I am also deeply troubled by the US government’s knee-jerk support of Israel. Fortunately, I am not alone in this view. A growing number of Democratic Congressmen, Jews and non-Jews alike, have called on the United States to stop supporting Israel’s lawlessness. The truth is that the US government’s uncritical support for Israel has come to depend more on evangelical Christians, such as former US Secretary of State Michael Pompeo, than on American Jews, who are deeply divided by Netanyahu’s actions. And the evangelicals’ real interest in Zionism is not Jews’ security, but Armageddon, the end of the world, which they believe will come only when all Jews are in Israel."
May 18th 2021
EXTRACT: "This period in US history could go down as the moment when America’s democratic system for electing a president – the most consequential duty of US citizens – was broken, perhaps for good."
May 16th 2021
EXTRACT: "While reading Human Rights Watch’s (HRW) monumental report “A Threshold Crossed,” I felt a range of emotions. It also left me with one big question. I was deeply impressed by the report’s rigorous scholarship. At the same time, it brought to the surface feelings of anger and profound sadness. It’s an extraordinarily complete study detailing not only the many ways Israel has violated a broad range of Palestinian human rights, but the ideology of racial superiority and entitlement that Israel has used to justify its repression." ..... "My advice to both Israel’s defenders and weak-kneed liberals is​, “Read the damn report.” "
May 16th 2021
EXTRACTS: .... "He transformed a transitioning market economy into a stable statist project that rests on an alliance of his inner circle," ..... "He transformed Russia from a respected member of the international community into a rogue state" .... ". He energized NATO by providing it with the adversary it lacked after the end of the cold war," ..... "He befriended hopelessly corrupt, dysfunctional, and unstable dictatorships..." ..... "He forged a quasi-alliance with China, thereby enhancing Russia’s dependence on the one country that might have reason to appropriate those Russian territories inhabited by Chinese."
May 15th 2021
EXTRACT: "On the face of it, the latest escalation of violence is following the template of all inter-ethnic wars. Muslims observing Ramadan shouted nationalist slogans and clashed with Israeli right-wing groups chanting “Death to the Arabs.” The Israelis haughtily marched with their national flag on Jerusalem Day, marking Israel’s capture in 1967 of East Jerusalem and the Temple Mount, the site of the biblical Second Temple, and of Al-Aqsa, completed in the year 705. Battles in and around the Al-Aqsa compound erupted, with worshipers inside throwing stones at the Israeli police, who responded by firing rubber-tipped bullets and other projectiles, wounding hundreds."
May 13th 2021
"Regardless of how the current and future violent conflicts between Israel and the Palestinians in Jerusalem will end, there will be no Israeli-Palestinian peace unless East Jerusalem becomes the capital of a Palestinian state while the city remains united."
May 7th 2021
EXTRACT: " Would the United States be prepared to risk a catastrophic war with the People’s Republic of China to protect the Republic of China, better known as Taiwan? "
May 5th 2021
EXTRACT: "Human history, ancient and contemporary, is replete with instances of genocide – that is, the effort to eradicate a people, erase their history, denigrate their culture, and destroy their physical presence. Many of these atrocities have been recognized by the victims and other nations who support them. But, with the notable exception of the German acknowledgment of the Holocaust, rarely have the perpetrators of these crimes accepted responsibility and offer recompense "