Brunei in the South China Sea hot seat

All play and no constructive work makes a laughing stock of ASEAN? - School of Vice

“While some analysts and ASEAN states have blamed Cambodia's apparent decision to prioritize bilateral ties with China over ASEAN's multilateral interests, others have accused the Philippines and Vietnam of purposefully antagonizing China and drawing the United States into the situation.”

By Richard Javad Heydarian - Asia Online

MANILA - Territorial tensions in the South China Sea created unprecedented divisions within the Association of Southeast Asian Nations (ASEAN) in 2012, with member states taking divergent approaches to China's increasing assertiveness in the contested maritime area.

Now, as the chairmanship of the 10-member grouping shifts from China ally Cambodia to Brunei, also a claimant to South China Sea territory, in 2013, many analysts wonder whether there will be a qualitative shift in ASEAN's stance on the divisive but strategically important issue.

As China and Southeast Asian nations such as the Philippines and Vietnam have pushed the frontiers of their claims in the Spratly and Paracel islands, ASEAN has shown unprecedented disunity, raising doubts about the organization's future ability to steer regional integration and manage complex security-related conflicts.

While some analysts and ASEAN states have blamed Cambodia's apparent decision to prioritize bilateral ties with China over ASEAN's multilateral interests, others have accused the Philippines and Vietnam of purposefully antagonizing China and drawing the United States into the situation.

Brunei, which is both a claimant in the ongoing South China Sea disputes and a major Chinese energy partner, faces the dual challenge of managing territorial tensions while reestablishing group unity as ASEAN moves towards forming a single market and production base by 2015.

Whether the small oil-rich kingdom can disentangle the complex set of competing country interests and put ASEAN back on a common track will be pivotal to regional stability in the year ahead.

The South China Sea disputes date back to the Cold War era, when Vietnam and China first squared off over contested features in the Paracel Islands. In the immediate aftermath of the Cold War, the Philippines - after it evicted US military bases in 1992 - lost the contested Mischief Reef in the Spratly islands to Chinese aggression.

To prevent future conflicts, ASEAN and China agreed in 2002 to a non-binding Declaration on the Conduct of Parties in the South China Sea (DoC), which broadly called for a peaceful diplomatic resolution to the disputes. In 2006, the three main protagonists - China, the Philippines and Vietnam - forged a tripartite agreement on joint marine seismic undertaking, which provided a basis for shared exploration, surveying, and potentially even the future development of hydrocarbon resources around the Filipino island of Palawan in the South China Sea.

In retrospect, this prolonged period of on-off engagement created a sense of complacency among the claimant states and within ASEAN. While touting an atmosphere of goodwill, amity and cooperation vis-a-vis China, ASEAN failed to notice how the diplomatic niceties hinged on China's willingness to maintain a moderate approach, consistent with its economic-oriented charm offensive towards the region.

Recent experience has shown there were no group contingency plans in place to deal with a more hawkish Chinese posture or provocative moves by member states such as the Philippines and Vietnam. When tensions flared again in 2010, unlike before, tough rhetoric from China was followed by aggressive military posturing.

China, responding to a rising tide of popular nationalism and increasingly influential hard-line factions within the ruling Communist Party, opted to up the ante on the situation by harassing Filipino and Vietnamese vessels, including oil and gas exploration rigs, in the contested areas.

In response, the Philippines and Vietnam looked to ASEAN and the US to help contain China's rising assertiveness. When the US placed itself at the center of the disputes by announcing its commitment to "freedom of navigation" in the South China Sea during an ASEAN Regional Forum meeting in Hanoi in 2010, a new layer of Sino-American rivalry emerged.

Over the next two years, under the chairmanship of Vietnam and Indonesia, ASEAN pushed for a binding code of conduct (CoC) to settle the disputes and deter further Chinese aggression.

However, that unified course shifted in 2012 under Cambodia's chairmanship, with ASEAN members failing to agree even to discuss the disputes or to make mention of them in a joint communique after the ASEAN Ministerial Meeting in Phnom Penh in July. It represented the first time the grouping failed to issue a joint statement after such a high-level meeting.

Cambodia's chairmanship underlined two important points: (a) the perils to group unity of weaker member states with considerable ties to China assuming the organization's leadership; and (b) the impact of the presiding chairman on the entire organization's performance, especially over contentious territorial issues that require unanimity in action and strategic vision.

Diplomatic test

Similar to Cambodia, but unlike Indonesia, Brunei is neither a major nor an original member of ASEAN (it joined in 1984, 17 years after the organization was founded by Indonesia, Malaysia, the Philippines, Singapore, and Thailand). As such, there are already concerns among certain member states about Brunei's diplomatic maturity, capability, and commitment to the organization and its ability to effectively handle the ongoing and intensifying disputes.

When ASEAN fell into disarray after the fiasco in Phnom Penh, influential and older group members such as Singapore, Malaysia, Thailand and Indonesia played a crucial role in salvaging the organization from diplomatic implosion. In particular, Indonesia's proactive mediation efforts, including shuttle diplomacy between rival states, resulted in "Six-Point Principles" which called for (i) a peaceful, diplomatic resolution of the disputes in accordance to prior agreed upon principles and (ii) the development of a regional code of conduct for the South China Sea.

Like Cambodia, Brunei has considerable economic ties to China. While Beijing has leveraged multi-billion dollar concessional loans, investments, and grants to woo comparatively poor Cambodia, it has also become increasingly involved in Brunei's crucial oil and gas sector. Brunei is heavily dependent on its soon-to-be-depleted hydrocarbon resources, which currently account for around 60% of gross domestic product (GDP) and 90% of total export earnings. [1]

In the absence of strong democratic institutions, Brunei's ruling royal family depends heavily on hydrocarbon earnings to prop up its security apparatus and appease the population through generous welfare and subsidy schemes. China is thus not only a major customer and source of advanced offshore-drilling technology, but also a means as Brunei's second-largest market for Brunei to diversify its highly hydrocarbon-dependent economy.

That diversification has been seen in fast growing bilateral trade. From 2001 to 2011, two-way trade between China and Brunei ballooned from a meager US$100 million to $1.3 billion, surpassing the two sides earlier stated $1 billion target. Brunei has recently exported between 13,000 to 20,000 barrels of oil per day to China, accounting for as much as one-eighth of its total crude exports. [2] [3] [4]

Meanwhile, Chinese energy companies, ranging from the Zhejiang Henyi Group and Sinopec Engineering Inc to the Chinese National Offshore Oil Corp (CNOOC), are involved in large-scale multi-billion dollar downstream, refinery, and exploration projects in Brunei. [5] Small and medium-sized enterprises in Brunei have also ventured into China, bidding to tap into larger market possibilities.

Chinese Premier Wen Jiabao paid an official visit to the country last year, while President Hu Jintao met Brunei's Sultan Hassanal Bolkiah on the sidelines of the 2012 Asia-Pacific Economic Co-operation Summit, underscoring the growing importance of bilateral relations.

Those growing links explain why certain ASEAN states, including the Philippines, are concerned about Brunei's ability and willingness to transcend its growing economic interdependence with China to perform a more decisive regional role as ASEAN's new chairman.

Given Brunei's generally low-key foreign policy, where it has consistently avoided controversy by maintaining neutrality in regional affairs, many ASEAN states are keen to see the country live up to the challenges of serving as chairman amid the rising tensions.

Unlike Cambodia, Brunei is a direct party to the ongoing territorial disputes through its overlapping exclusive economic zone (EEZ) with other littoral states. After Cambodia handed the rotational chairmanship to Brunei last November, certain regional states are known to have prodded the small kingdom to play a more constructive role than Cambodia.

"Brunei's chairmanship will lead to 2015, so there is plenty of interest on our part to make sure that there is a continuation of agenda in the progress of ASEAN achievement. We have confidence in Brunei's chairmanship," said Teuku Faizasyah, spokesperson for Indonesian President Susilo Bambang Yudhoyono.

In late November, just after the ASEAN Summit, Vietnamese President Troung Tan Sang visited Brunei to sign agreements in the areas of commerce, industry and energy. Crucially, they affirmed their commitment to the 2002 DoC and the development of a regional CoC, as reiterated by the Indonesia-sponsored "Six-Point Principles" on the South China Sea.

With Vietnam's former Deputy Foreign Minister Le Luong Minh set to become ASEAN's secretary general for the next five years, there will likely be more pressure from the top of the organization to forge a multilateral front to guard against rising Chinese assertiveness.

For Southeast Asian claimant states, there are certain reasons for optimism. As the world's fifth-richest country measured by per capita gross domestic product at purchasing power parity, Brunei is not as dependent on Chinese aid or investments as comparatively poor Cambodia. The ruling monarchy is also believed to be keen to use the status of the chairmanship to raise the country's profile, meaning it will likely emphasize conflict management and the need for freedom of navigation in the disputed waters.

Since its traditional hydrocarbon resources are now heavily depleted, Brunei also has a long-term interest in developing offshore oil and gas fields, both within the country's territorial waters as well as within its contested EEZ. Neither an armed conflict over the contested areas nor a move towards total Chinese domination is in Brunei's national interest. Whether it can avoid either scenario will determine the failure or success of its chairmanship.