Inside America’s quiet diplomacy on the South China Sea

Amid growing tensions between China and its neighbors, the Obama administration has embarked on a quiet but determined mission behind the scenes to push China and the countries of Southeast Asia to resolve their disputes in the South China Sea.

The escalating dispute between China and several of its neighbors over the territories of the South China Sea, which contain extensive mineral and fishing deposits, threatens to boil over into a hot conflict. China and the Philippines already had a close call last month when both countries dispatched military ships to the area known as the Scarborough Shoal and China has already started deep sea mining operations in the disputed Paracel Islands.

The United States and the Philippines signed a mutual defense treaty in 1951 and Filipino officials have said that they expect the U.S. to come to their country’s defense in the case of open conflict. The Obama administration has deliberately avoided specifying America’s obligations under the treaty. But the issue is sure to be front and center when Philippines President Benigno Aquino meets President Barack Obama on Friday in Washington.

The United States is not a party to the South China Sea disputes but has an interest in preserving freedom of trade and navigation in its waters. Washington also wants to urge the Association of Southeast Asian Nations (ASEAN) to defend its rights and stand up to Beijing on the issue. The case is a test of China’s commitment to responsibly solve problems in multilateral ways as well as a test of ASEAN’s ability to work together to further its own interests.

In 2010, Secretary of State Hillary Clinton began an increasingly public U.S. effort to play a role in the resolution of the South China Sea disputes. The latest public display of that effort came at last weekend’s 2012 IISS Shangri-la Security Dialogue, when Defense Secretary Leon Panetta outlined the U.S. position on how tensions in the South China Sea should be resolved.

"The United States believes it is critical for regional institutions to develop mutually agreed rules of the road that protect the rights of all nations to free and open access to the seas. We support the efforts of the ASEAN countries and China to develop a binding code of conduct that would create a rules-based framework for regulating the conduct of parties in the South China Sea, including the prevention and management of disputes," he said. "On that note, we are obviously paying close attention to the situation in Scarborough Shoal in the South China Sea. The U.S. position is clear and consistent: we call for restraint and for diplomatic resolution; we oppose provocation; we oppose coercion; and we oppose the use of force. We do not take sides when it comes to competing territorial claims, but we do want this dispute resolved peacefully and in a manner consistent with international law."

China signed onto a Declaration on Conduct of Parties (DOC) for the South China Sea in 2002, but that is a non-binding agreement meant to pave the way for more concrete Code of Conduct (COC). The negotiations on the COC are stalled. In response to a question in Singapore, Panetta gave even more detailed guidance on what the U.S. wants to see in the COC.

"Pursuant to developing that code of conduct it is very important that the ASEAN nations develop a dispute forum that can allow for the resolution of these disputes. It is not enough just simply to develop a code of conduct. You’ve got to back it up with the ability to negotiate and resolve disputes in this area. And that is what the United States is encouraging," he said. "It’s pretty clear that every time these events take place that we always come very close to having a confrontation, and that’s dangerous for all countries in this region."

Administration sources said those words were carefully chosen and indicate an increasing frustration throughout the U.S. government with the lack of progress on the COC. The "dispute forum" Penetta referred to would not seek to solve the overall territorial disputes, officials said, but would rather be used to settle immediate, smaller disputes such as over fishing and mineral rights, as to avoid open conflict.

Meanwhile, the administration has been increasing its activity behind the scenes. Two U.S. officials confirmed to The Cable that Assistant Secretary of State for East Asian and Pacific Affairs Kurt Campbell traveled to Cambodia last week and pressed regional countries on the issue on the sidelines of the ASEAN defense ministers’ meeting.

Campbell distributed what officials called a "non-paper," setting out broad guidelines for the COC that Washington feels are constructive. The "non-paper" was not an official U.S. government document, the officials emphasized, as the United States is not a party to the disputes and therefore doesn’t want to be seen as directly intervening.

"The lack of progress between ASEAN and China in negotiating the COC is driving the U.S. to undertake a more active role. The Obama administration is not seeking to insert itself in the territorial and sovereignty disputes; rather it is seeking to inject momentum into a stalled process," said Bonnie Glaser, senior fellow at the Center for Strategic and International Studies in Washington.

She said the lack of progress is due in part to the inability of the ASEAN nations to agree on the contents of the COC and whether it should be drafted first among ASEAN and presented to China for signature or negotiated jointly with Beijing. China insists that it be included in the drafting of the document and undoubtedly hopes to water down the language, Glaser said.

"ASEAN is hopelessly divided on this issue and it is helpful for the U.S. to nudge the process in the right direction. Ultimately, however, it is up to ASEAN members to decide what they want to include in the COC," said Glaser.

We’re told by inside sources that the quiet U.S. efforts regarding the South China Sea go beyond just suggesting guidance for the COC. The State Department is asking both China and the Philippines to keep military and government ships outside of the most sensitive areas, to take the risk of a military confrontation out of the equation.

The State Departmentis also communicating that it would be best if neither side took any steps to advance their sovereignty claims while negotiations continue, such as building permanent structures on contested islands. The State Department is also urging both sides to take environmental considerations into account when dealing with fishing and mining operations, which should be in the interest of all parties.

"We want to make sure that the threat of force or coercion does not serve as a tool for claimants," a senior administration official said. "The U.S. has sought to multilateralize the discussions around these issues… because we believe that’s the best way to ensure a fair process."

Involvement in the issue risks upsetting Washington’s relationship with Beijing, as the Chinese government is opposed to any U.S. action on the South China Sea issue. A front page commentary in the People’s Daily this week says that China’s disputes with its neighbors related to the South China Sea "have nothing to do with the U.S."

"Issues that arise from the South China Sea need to be solved through negotiations by China with the claimants," states the commentary. "Intervention by external sources will only make existing contradictions more complicated and sharpen conflicts further, especially when a force of hegemony intervenes."

But many in Washington see the issue as crucial for establishing the precedent that China must work through multilateral bodies to resolve regional disputes — rather than trying to bully smaller countries in grossly uneven bilateral confrontations.

"That really means that the dispute is not going to be resolved unless it is resolved coercively in an unequal way between this giant power and these small countries that also have claims," Sen. Joe Lieberman (I-CT) told The Cable in Singapore. "What’s happening now with these disputes is important in terms in terms what the Chinese are saying to the rest of the world about what kind of great power China will be."