India's decision to suspend oil exploration in a disputed area of the South China Sea could prove timely, both for diplomatic and commercial reasons
By withdrawing from an oil exploration block in the South China Sea, India might have extricated itself from a messy 50-year-old territorial dispute involving multiple players in a region in which the diplomatic cost of staying on would have been more than the commercial benefit.
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The area from which India recently withdrew is in Vietnam's exclusive economic zone (EEZ) but also crosses over the “nine-dotted line” claimed by China. A vocal section of the Indian strategic community is not convinced, but India has been steadfast in insisting that it withdrew — “suspended operations” — from Block 128, three years after it surrendered the adjacent Block 127 because there was not enough oil to justify investment in the infrastructure for bringing it to the surface.
For the past five years or so, India and Vietnam have diplomatically duelled with China over rights to scour for hydrocarbons near a sensitive base of the People Liberation Army's Navy (PLAN) but the differences have rarely got out of hand.
The closest the two sides came to squaring off was reported by a U.K.-based newspaper in 2011 when PLAN “questioned” an Indian naval ship transiting from one Vietnamese port to another. Indian diplomats deny the incident took place, taking recourse to the concept of “anomalous propagation conditions.”
By that they mean the Chinese might have been questioning another vessel, and the chatter was picked up by the Indian Navy's Amphibious Warfare Vessel INS Airavat; when reported to higher-ups, it was mistakenly presumed as having taken place between the Chinese and the Indian ships.
PLAN might or might not have `buzzed'' INS Airavat, but there is no denying that China has been jumpy since 2006 when India signed an exploration agreement for Blocks 127 and 128 in the Phu Kanh Basin. The basin is off the shore of northern Vietnam, not far away from the Hainan submarine base.
In 2009, when an Oil and Natural Gas Company Ltd. (ONGC) contracted company was surveying the Basin, Beijing eschewed confrontation.
The company's Holland-based management was called to the Chinese Embassy in The Hague and told to stop operations. But it made no further protests when ONGC, backed by assurances from Hanoi, asked the company to complete its work.
Two years before this incident, the Chinese Embassy in New Delhi served a démarche after India began moving heavy equipment into the allotted blocks in the Phu Kanh Basin. India turned to Vietnam which submitted a signed statement claiming sovereignty over the portion of the sea in dispute. This was passed on to the Chinese Embassy along with a note stating that in view of the Vietnamese letter, the Chinese had no legal basis to claim ownership over some portions of Blocks 127 and 128. The Chinese left it at that.
The last two years have been different. In 2010, the dispute moved on to diplomatic centre stage after the United States became an Observer to the Association of South East Asian Nations (ASEAN), half of whose 10 members are in dispute with China over patches of South China Sea. Simultaneously most parties to the dispute, which is centred not on the Phu Kanh Basin but the Spratly Islands, began beefing up their military postures.
The Philippines has a long airstrip on Spratly Islands where its heavy military transport aircraft now land regularly. Malaysia, Vietnam and Taiwan have also built shorter airstrips on islands they have occupied. The resultant tensions began reflecting in the exchanges between India and China, some carrying the seeds of a worsening of bilateral ties at a time when both countries have a never-before-full plate of cooperation.
Four points in defence
All along, Indian diplomats defended taking up the contract on four grounds: 1) that Vietnam has always claimed the two blocks in the Phu Kanh Basin are in its exclusive economic zone and continental shelf; 2) though India has been involved in drilling for gas in the South China Sea since 1988, China began raising objections only in mid-2000; 3) that as half of India's trade passes through the South China Sea, the contract for drilling in the two blocks underscored New Delhi's claim to unfettered access; and 4) India should pay back China in its backyard for being involved in heavy construction activity in Pakistan Occupied Kashmir, which even the United Nations accepts is disputed territory.
But it also needs to be said that when India signed a gas exploration contract with Vietnam in 1988, it was for two blocks (Lan Tay and Lan Do) in the Nam Con Son Basin, close to the Natuna Sea near Indonesian territorial waters. Phu Kanh, on the other hand, is up north, roughly equidistant between the Vietnam coast and Hainan Island of China where it has a large submarine base.
As for having a stake in unfettered navigation rights in South China Sea, this is more an issue for South Korea and Japan who have been active in resolving it for a decade. Even otherwise, the issue of open sea lanes of communication (SLOC) in the South China Sea is not relevant to hydrocarbon exploration in the Phu Kanh Basin where, due to its location as a virtual maritime cul-de-sac, is not on a transit merchant shipping route.
On the other hand, China may claim consistency in objecting to any commercial activity in the area known as the “cow's tongue” of the South China Sea, whether midwifed by Vietnam or the Philippines.
Observers have noted that Beijing ratcheted up the pitch ever since Vietnam and India resolved to enter into a tighter military embrace. India has increased the number of slots in military training courses for Vietnamese army officers and there is hardly any official delegation from Hanoi that does not contain high ranking military officers. Vietnam's request for transfer of Brahmos missiles has been pending for quite some time along with submarine training, conversion training for its pilots to fly the fighter jet, the Sukhoi-30, modernisation of a strategic port, and sale of medium-sized warships. But having armed Pakistan, China is on a weak wicket in frowning at the transfer of military arms between the two nations.
The benefits that will come from the “suspension [of drilling in Phu Kanh Basin] purely on commercial considerations,” as a high ranking official insisted, could outweigh the joy of making China endure diplomatic pinpricks for its role in the disputed area of northern Kashmir. In February this year, both sides agreed to cooperate in maritime security and oceanography research. Both sides have major stakes in cooperating on both aspects. Cooperation in maritime security has begun and India can only gain by joining hands with China in exploring an Indian Ocean ridge, something it has been unable to do despite having given permission 15 years earlier.