Both sides use political posturing to accompany bilateral diplomacy to advance their claims. The Philippines has adopted a three-pronged strategy - legal, political and diplomatic - threatening to take the dispute unilaterally to the international tribunal; seeking support from fellow members of the Association of Southeast Asian Nations and the international community; and continuing negotiations with China.
China resorts to a variety of measures to pressure the Philippines: Responding to minor anti-China protests in Manila and elsewhere around the world, China issued a travel advisory leading to cancellation of 80 scheduled Chinese tour groups and charter flights to the Philippines; temporarily halted imports of Filipino bananas on a pretext of infestation; and orchestrated a hostile press campaign. In 2011 the Philippines exported $60 million worth of bananas to China, its third largest banana export market. Losses of banana exports in May were estimated at around $34 million. China is the source of the fourth largest number of tourists to the Philippines. The average Chinese tourist stays for three days, spending $200 per day. In May, 1,500 Chinese tourists cancelled visits to the Philippines resulting in a loss of nearly $1 million to the tourist industry.
China also announced imposition of a unilateral fishing ban in the South China Sea covering the area that includes the shoal, warning that action would be taken against foreign fishing vessels that violate the ban, with the ostensible purpose of protecting fishing stocks during the spawning season.
The Philippines countered by refusing to recognize the validity of the Chinese ban, but issued its own fishing ban covering the shoal.
Many observers viewed the reciprocal fishing bans as a positive sign, offering a way to deescalate tensions. These expectations were short lived. In late May China dispatched three additional civilian enforcement vessels to Scarborough Shoal accompanied by 10 Chinese fishing boats according to Philippine sources. China admitted that 20 fishing boats were at the shoal. The Philippines claimed that, when dinghies operating from the fishing boats were added up, China had nearly 100 vessels at the shoal. Chinese civilian authorities took no steps to prevent these craft from fishing while China's ban remained in force.
Security implications of the standoff could not be missed. In the midst of the standoff, the Philippines and the United States conducted their annual Balikatan military exercise. One phase involved Filipino and US forces conducting counterterrorism raids on an oilrig in waters off the west coast of Palawan Island facing the South China Sea. China charged that US support for the Philippines only emboldened Manila to act rashly and called on the US to rein in its ally.
To underscore its determination in pursuing area claims, China announced in May that its first locally produced deep water mega oil-drilling rig would commence operations in the South China Sea, leading to protests in the Philippines. In fact, the oil rig is off the mouth of the Pearl River, south of Hong Kong, well within China's EEZ, where it will likely remain for years.
The Philippines may have overplayed its hand with misguided expectations of receiving support from fellow ASEAN members and its US alliance. Some ASEAN members and even Filipino activists have expressed misgivings about how Manila confronted Beijing. In the words of one Filipino senator, the Philippines found itself an orphan.
Both sides stumbled into this confrontation, taking immediate actions that precluded quick diplomatic resolution. Subsequent posturing only served to entrench antagonistic positions, fueling domestic nationalism on both sides.
The United States must calibrate its response and avoid getting dragged into a territorial dispute with China not of its own making. At the same time, the US must prevent its Mutual Defense Treaty with the Philippines from being devalued through lack of perceived support for an ally.
China's actions - refusing to make diplomatic concessions, deploying civilian enforcement ships and using economic sanctions - serve as an object lesson to other regional states about potential costs of confronting China over territorial disputes in the South China Sea. The standoff also reminds Washington about the need for careful diplomacy that reassures allies without entangling itself in a distant conflict.
