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FWD: [vnforum] [avsl-l] FYI: Vietnam-China (fwd)
[vnforum] - Mesg from David Marr <dgm405@coombs.anu.edu.au>
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CHINA/VIETNAM: Exploration Conflict
240 Lines Updated On:Tuesday, April 8, 1997
Oxford Analytica Asia Pacific Daily Brief(c)
Thursday, March 27, 1997
CHINA/VIETNAM: Beijing's choice of area and timing for its
sea exploration conflict with Hanoi appears to have been
carefully calculated for its international implications. It
has put Hanoi in a particularly awkward position. See APDB
today.
VIETNAM: The proportion of non-Communist Party members in the
National Assembly will be raised to 20% from 8% through
elections on July 20, an official said today. Candidates may
also be allowed to campaign for votes through the mass media.
Political pluralism is a highly sensitive issue. Reformers
are attempting to expand the autonomy and popular legitimacy
of the national assembly, but a shift to multi-party politics
is not advocated.
CHINA/VIETNAM: Exploration Conflict
EVENT: Hanoi called for urgent talks with Beijing this week,
following China's unilateral commencement of oil and gas
exploration in disputed waters.
SIGNIFICANCE: The choice of area and timing of China's
exploration initiative appears to have been carefully
calculated for its international implications. It has put
Hanoi in a particularly awkward position.
ANALYSIS: China's surprise commencement of exploratory
drilling this month for hydrocarbons off Vietnam's central
coast has come at a difficult time for Hanoi. It is also in a
location which allows China to advance its claims over almost
the whole South China Sea seabed without becoming entangled in
the claims of the other littoral nations: Malaysia, the
Philippines and Brunei.
China's Kan Tan III exploration rig is in waters 64.5 nautical
miles off the coast of Vietnam in an area designated by Hanoi
as Block 113. Vietnam has not awarded exploration licences
over this block, although it has for the blocks immediately to
the west, closer to its coast.
The site is slightly closer to the Vietnamese coast than it is
to China's Hainan island. Vietnam says that it is on its
continental shelf and within its Exclusive Economic Zone. It
is also well to the south of the Gulf of Tonkin, which is also
a disputed area, but subject to negotiations between Vietnam
and China. Unlike other areas in the South China Sea, the
Tonkin Gulf dispute is a relatively simple one over median
lines and does not involve the much more difficult question of
conflicting island claims. It is also viewed as a relatively
promising area for natural gas rather than oil.
Chinese claims. It is hard to dispute the fact that Block 113
lies on Vietnam's continental shelf and is mostly closer to
Vietnam than to Hainan. However, China has not specified the
precise basis of its claim, merely affirming its assertion
that the rig was "in Chinese waters".
As well as being south-west of Hainan, the area is also almost
due west of the Paracel island group, which is claimed by both
countries, but has been occupied by China since it seized them
from the former South Vietnamese government shortly before the
end of the Vietnam war. It is possible that China could base
a claim to the waters on the basis of proximity to the nearest
of the Paracels. However, as Beijing views its claims as
"historic", it prefers not to make territorial assertions
based on recent Law of the Sea or other international maritime
conventions; recognition of such agreements might cast doubt
on the legitimacy of its claims to rocks, reefs, shoals and
seabeds far beyond its continental shelf and well within the
200-mile limits of other littoral states.
China evidently believes it to be less provocative to press
forward with exploration in this area than with those further
south. The latest move is unlikely to raise the same level of
international controversy as China's 1992 award to the US
company Crestone. That exploration area lay between Vietnam
and Malaysia, and closer to the Spratly islands, which are
claimed in whole or in part by China, Vietnam, Philippines,
Malaysia, Brunei and Taiwan (see APDB, August 7, 1995, II).
ASEAN response. Although Vietnam has raised the latest issue
with its ASEAN partners, it is likely to get sympathy but not
much more. Unlike Chinese forward policy towards the Crestone
block and the reefs off the Philippine coast, the neighbours
see this as a bilateral issue between Vietnam and China.
Although some members see the latest episode as a Chinese
tactic to put a wedge between ASEAN claimants, most prefer not
to see any wider implications. They prefer instead to believe
that dialogue with Beijing will eventually result in Chinese
willingness to negotiate claims, or at least not to actively
pursue contentious issues (see APDB, July 1, 1996, II).
Hanoi's dilemma. Vietnam's reaction has also been relatively
subdued. A March 21 visit to Hanoi by a senior Chinese
official, State Council Secretary General Luo Gan, who met
Prime Minister Vo Van Kiet, was described in positive terms by
Vietnam, with the accent on cooperation. However, mounting
alarm has generated a more heated reaction this week; Hanoi
has accused Beijing of violating international law and called
for urgent bilateral talks. Beijing has said only that it is
considering Hanoi's suggestions. Meanwhile, an official from
the China National Oil Corporation has said that there are no
plans to remove the rig until exploration is complete.
Hanoi is in a difficult position. It knows its ASEAN partners
are lukewarm allies and, at present, are more concerned with
countering western opposition to the accession of Burma into
ASEAN (see APDB, December 3, 1996, II) than with potential
threats closer to home. Moreover, Vietnam's emphasis on
economic development requires closer links with China, as
emphasised by the recent re-opening of a second passenger rail
link between the two countries. While memories of the Sino-
Vietnamese 1979 border war remain strong, Hanoi has in recent
years found it prudent to prioritise economic relations above
territorial disputes.
In addition, Vietnam cannot afford this dispute to jeopardise
exploration hopes elsewhere off its coast. It has been
looking to oil and gas to finance the import demands of a fast-
growing economy. However the very high hopes of three-to-four
years ago have not been realised. Several contacts with
foreign companies have turned sour:
-- Australia's BHP is in dispute with the government over
the Dai Hung field, where estimates of reserves have
been revised sharply downwards.
-- Shell, the Anglo-Dutch oil company, has reduced its
commitment to the country.
-- France's Total pulled out of plans for a 6.5 million
tonnes per year oil refinery after Hanoi decided is
should be sited in an underdeveloped central
province. A second consortium, including a number of
Asian companies, pulled out earlier this year, after
the government failed to provide sufficient
incentives. Hanoi now says it will go it alone.
However, internal government conflict over the
refinery's location has re-emerged. An official in
the planning and investment ministry this week
suggested that the current plan could be scrapped in
favour of two smaller refineries, one in the north
and one in the south.
Offshore gas finds remain attractive for domestic use.
Nevertheless, there is little doubt that the attractions of
Vietnam in this area to foreign investors have faded. The
last thing the government needs now is too much talk of the
danger of conflict. China views the South China Sea as a
strategic prize, while its smaller neighbours view it more as
an economic or ethnic issue.
Vietnam also remains low on the list of US sympathies,
whatever the fundamental importance of the South China Sea
issue to the United States' role in Asia. The coincidence if
its exploration initiative with the visit of US Vice-President
Al Gore to China is convenient to Beijing. With the domestic
US row over alleged Chinese involvement in Democratic Party
fund-raising receiving much media attention, Washington was
not about to create another source of friction with China.
Overall, China could not have chosen a better time to take a
small step forward in its long-term campaign to gain hegemony
over the South China Sea. With paramount leader Deng Xiaoping
dead and the landmark Communist Party Congress looming in the
autumn, it was also a small display of nationalism which will
do Chinese President Jiang Zemin no harm (see APDB, February
20, 1997, II).
CONCLUSION: By picking a bilateral dispute with Hanoi,
Beijing can realistically hope not to draw Vietnam's ASEAN
partners into the row. Vietnam is in a weak negotiating
position, as it wants closer economic ties with China and is
anxious not to erode further foreign investor sentiment
towards its oil and gas sector.
Keywords: AP, China, Vietnam, ASEAN, United States,
international relations, industry, economy,
border conflict, foreign policy, gas, oil,
foreign investment
Australia Vietnam Science-Technology Link
http://coombs.anu.edu.au/~vern/avsl-list.html
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Date: Fri, 11 Apr 1997 10:02:01 +1000 (EST)
From: David Marr <dgm405@coombs.anu.edu.au>
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Subject: [vnforum] [avsl-l] FYI: Vietnam-China (fwd)
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