Consultancy Intueri assesses the South China Sea dispute

13 January 2020 Consultancy.asia

The South China Sea dispute made little progress in 2019, with a number of stand-offs hardening stances heading into the new year. Bringing an outside perspective from a non-claimant nation, Indian strategy consultancy Intueri has analysed the current state of affairs.

Ambarish Dasgupta, a local Big Four advisory leadership veteran and the founder of Indian multi-disciplinary strategy consultancy Intueri, last year spoke of the firm’s eye toward the international stage, with a specific emphasis given to the booming markets of Southeast Asia. The firm has since outlined some of the geopolitical challenges in the region, in particular the multiple contested claims to various economic zones within the South China Sea.

“The South China Sea’s geographical location makes it a prime region for strategic trade initiatives and economic value, which has consequently spurred tensions among China, its Southeast Asian neighbors, and the US,” opens the report from Intueri, describing the disputed zone as providing a unique challenge for several countries – and especially those from ASEAN sharing maritime borders; the Philippines and Vietnam, along with Indonesia, Malaysia, and Brunei.

South China Sea

With these nations caught between the politicking of global superpowers the US and China, the researchers from Intueri outline what’s at stake and the current state of play, starting with some statistics. According to data from the US Energy Information Agency, around 11 billion barrels of oil and 190 trillion cubic feet of natural gas deposits lie underwater, they note, and then there are the viable fisheries, which combined could account for one tenth of the world’s total supply.

In addition, and perhaps the biggest driver of current manoeuvring, Intueri cites a 2015 US Department of Defense report which found that approximately $5.3 trillion worth of goods are shuttled through the South China Sea on an annual basis, with more than a fifth of this figure involving the United States. “The South China Sea is a vital conduit for global trade and attempts to restrict access to it could prove to have significant negative consequences on the global economy,” the consultancy states.

Such stakes have inevitably led to a great deal of military posturing, but also genuine operations of serious consequence. China has increased its presence in the area by stationing military bases on artificial islands and deploying warships in previously unclaimed waters and even those already under jurisdiction. Viewing this growing activity as a potential security threat, the US has responded by upping its own naval presence and operations in the area.

Despite this, and the shared security concern held among ASEAN members, Intueri points to a poll taken last year among members of the bloc which found that two thirds were of the belief US engagement in the area had decreased, while a third felt that the US didn’t hold the capacity to act as a viable strategic partner and security enforcer. ASEAN members have expressed their suspicions regarding American presence in the region, notes Intueri.

Complicating matters is the complex interplay between regional interests and global powers, compounded by a cast of ‘strongman’ leaders at the centre of the tensions; Trump, Xi Jinping, and Duterte – the latter’s foreign policy positioning according to Intueri a key focal point in the proceedings. Duterte has tilted toward Beijing, economically, despite its territorial aggression and Duterte’s occasional words to the contrary. The vast majority of Filipinos favour a far more assertive stance.

Then there’s the other major actor, Vietnam, which is growing more confident on the back of an ongoing economic boom – in part brought about by the other backdrop to this saga, the continuing US-China trade-spat. From the start of last year, Hanoi have pushed to curtail Chinese influence by advocating for a ban on certain activities. This, said Intueri previously, could set a precedent for other smaller ASEAN countries in the region to follow. That time may be now.

Looking ahead

Both Indonesia and Malaysia appear to have lost patience, hardening their stances in recent weeks as to Chinese claims. Yet, for the analysts from Intueri, and no less the political players both directly and indirectly involved, it remains to be seen how the overall dynamic will play out in the near future, with the “smattering of different perspectives and priorities increasingly contributing to an uncertain situation that needs to be traversed with caution.”

“There is a careful balance between assertion of power and tactful diplomacy that has been observed among actors on all sides, as armed conflict is not desirable for any party involved,” writes the firm. Of the interplay between aggression and containment, it concludes; “The South China Sea is a vital geopolitical and economic region, and closely observing how complicated power dynamics play out will be critical for governing bodies, businesses, and political figures worldwide.”


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