As the decision of the Permanent Court of Arbitration, upholding the Philippines' claim for the disputed waters of the South China Sea came as a sudden blow to what can be best described as China's meteoric rise to power, Churchill's famous description of Russia ("It is a riddle wrapped in a mystery inside an enigma") at the beginning of World War II, still holds ground. Only this time, the subject is China and the dispute, in the South China Sea.
The islands of the South China Sea have always been a volatile hotbed of geopolitics. For the first time, China, unaccustomed to being restrained, has been pushed into a corner. China claims that the Spratly and Paracel islands, along with the waters around, have belonged to them since the 3rd century.
While the responsible step would be for China to follow the ruling, this could result in a major economic setback. At the same time, not heeding it would reflect adversely on China's willingness to abide by global rules, especially so, because China has always claimed a benevolent stance in the geopolitics of the South China Sea.
The unreal picture and the real stakes
To truly appreciate the gravity of the ruling, it is essential to understand exactly what is at stake. A geopolitical flashpoint for decades, the South China Sea covers 3.5 million sq km of water and stretches between China, Taiwan, Vietnam, Cambodia, Thailand, Singapore, Malaysia, Brunei, the Philippines and Indonesia. Reports estimate that around 28 billion barrels of oil and 266 trillion cubic feet of natural gas are found in the region, making it highly resourceful. Moreover, approximately 33% of the world's overseas shipping takes place in that route and it is a rich fishing area as well.
The Permanent Court of Arbitration, on 12 July, by a unanimous decision, ruled that the rocky outcrops claimed by China cannot be used as a basis of their territorial claim. In fact, it ruled, some of these were within the Exclusive Economic Zones (EEZ) of the Philippines and, therefore, there was even a violation of Philippines' sovereign rights. The UNCLOS stipulates a 200 nautical mile zone of the coast for economic exclusivity, and what China claims is almost 90% of the area, far beyond the permissible area. China refuted their claim by arguing the very applicability of the UNCLOS since the reefs and rocks in question are considered to be land, and therefore, not covered under the maritime territory; and by relying on historical maps that further their territorial claim.
In the months leading up to the decision, China had rapidly escalated its activities in the South China Sea region, in an attempt to entrench its presence. The decision evidently came as a disappointment. Chinese state media agencies jumped into action, reporting heavy criticism of the holding.
What is evident is that China has taken a firm stand that they will not relinquish any land that which is rightfully theirs, nor touch any that does not belong to them.
Some analysts contend that China does not have the patience to wait until the G-20, which they are hosting, to take their next step; even though ideally, they would have liked the summit to carry on without any major international conflict.
More than a dispute; less than a war
Meanwhile, the world is closely watching. Russia has backed Beijing's request that direct talks between the countries should take place to reach a mutually acceptable understanding. On the other hand, Vietnam has issued a statement in support of the Tribunal's decision. The other key player, the United States, a treaty ally of the Philippines, has wholly supported this ruling as a step towards peaceful resolution of the prevalent territorial disputes in the region. Though the US has been concerned about China's aggression, they have not disrupted their relations. Immediately after the decision, the US had pacified the Philippines and other contenders to refrain from any instant action. While it is unlikely that China will directly challenge the United States, they could undertake actions to threaten Manila.
India has been concerned about the security of its energy interests and smooth flow of trade in the South China Sea; China's legitimacy over the disputed islands, if recognized, would enable it to potentially militarize them, disrupting peace and smooth trade. As a key security provider in the Indian Ocean, New Delhi appreciates the need for greater stability in the region.
China now finds itself in a delicate situation. While reconsidering their assertive tactics and retreating would be the responsible measure, given that the cost of violating the international law is substantially higher in this case (with the United States being involved), it would also indicate some kind of weakness, diluting the strong signal that China has been sending out to the world as a contending superpower. Besides, conceding would undoubtedly bring a flurry of litigation from the other territorial claimants.
China finds itself at a crossroads in its rivalry with the United States – it risks being labelled as an international outlaw or potentially harming its long-term position. The world waits to see how the events of this dispute unfold in the future pages of history.