First of all, it is an obfuscation of the Hague ruling to say that it dashes all of China's territorial claims in the South China Sea.
Right from the start China has been maintaining that the Permanent Court of Arbitration is not a competent authority in settling territorial disputes. In particular, under Article 298 of the United Nations Convention on the Law of the Sea (UNCLOS), a signatory may by a formal written statement, exclude and refuse to accept "any compulsory jurisdiction over any disputes concerning interpretation or practice of the Convention" involving "maritime boundary delimitation, territorial sovereignty, military confrontation, and/or historical titles". Some 30 signatories have so exempted themselves, including China. Click here China is remains consistent in this position.
According to Professor Michael C. Davis of the University of Hong Kong, a specialist in constitutional law, "The Law of the Sea treaty does not cover sovereign claims over disputed islands and the tribunal was not asked to decide such claims. The reservation over maritime delimitation specifically bars such arbitration to delimit overlapping claims to the territorial seas, the exclusive economic zones or the continental shelf".
Contrary to press reports, Professor Davis opines that "the tribunal in fact acknowledged that Taiping and several other outcroppings in the Spratly Islands and Scarborough Shoal are islands entitled to a territorial sea. The tribunal simply lacked jurisdiction to decide who owns them". Click here Taiping is the largest of the Spratly Islands. It comprises a natural habitat of 1.4 kilometres in length and 0.4 kilometres in width with a variety of fauna and flora. It has daily natural fresh water capacity of 65 metric tons. If, as reported, the tribunal's verdict is that Taiping is no more than a rock, this would fly in the face of logic and beg the question of biased manipulation.
As pointed out by Professor Davis, the Hague tribunal also finds that China’s historical claim to the South China Sea within its "nine dotted lines" was not justified, apparently on the ground that the Chinese government has never adequately explained these "dotted-line" claims. This finding appears to contradict the fact that the tribunal is not empowered to adjudicate on territorial claims and UNCLOS is about the law of the sea, not of the land.
Well before the Hague verdict, China's position was well presented by Madam Fu Ying, Chairperson of China's Foreign Affairs Committee, in an expose in The National Interest on 9 May. 2016.
On the basis of historical facts presented, China had been the victim rather than the aggressor. From China's perspective, her historical territorial rights had been trampled upon and brushed aside while China was too weak to defend herself. Examples include treatment in the 1951 Peace Treaty of San Francisco (which excluded China) of Nansha and other Islands occupied by Imperial Japan. This was followed by serial seizures by Vietnam and the Philippines of islets and reefs claimed by China in the South China Sea. Meanwhile, the recent US Pivot to Asia is vaulted to deploy 60% of America's global naval assets to the region, which has deepened China's sense of insecurity.
China’s "island building” in the South China Sea has provided strategic military assets which strengthen China's hand in these waters. Click here They add to China's preeminent economic might at the centre of the regional supply and production chain. As a "big fish in a small pond", China is able to exercise powerful leverage to press for bilateral negotiations as she consistently proposes. In the light of past humiliations and her current comprehensive national strength, China is unlikely to back down in submission to the Hague ruling.
Even though the United States is slated to deploy two aircraft carrier groups to the South China Sea, taking account of the American people’s growing war-weariness, China does not believe that the United States would resort to an all-out war. Rhetoric on both sides notwithstanding, “Free of Navigation” operations by the US Navy and Air Force, provocative as they are, are no prelude to war provided both sides act with strategic restraint.
It must be noted that big powers have a record of ignoring international verdicts when in conflict with their overriding national interests. Witness America’s unilateral adventures in Nicaragua and Iraq. Click here
In any case, assertiveness in the South China Sea notwithstanding, China still wishes to maintain her image as a responsible stake-holder in the international rule-based order. While China is unlikely to dismantle established assets on the ground, including military installations, China has not ruled out joint exploration (and management) of resources. This means that China may well be amenable to accepting a quid pro quo on the premise of setting aside (as opposed to relinquishing) territorial claims.
Specifically, with considerable economic muscle and capacities for financial largess, China is well positioned to jointly exploit (probably on China's terms) the Reed Bank field, 80 nautical miles northwest of Palawan, which is within the Philippine Exclusive Economic Zone (EEZ) but claimed by China. This field holds a cornucopia of energy resources - an estimated 764 million to 2.2 billion barrels of oil and 7.6 to 22 trillion cubic feet of natural gas. This potential energy supply is much needed to replace the Malampaya gas field, also located offshore west of Palawan. This currently supplies about 30% of Luzon's electricity but is expected to be depleted by 2024-2030. Click here
Similarly, on the fisheries front, it is a sad reality that the region's fishing fleets are going further and further afield owing to depletion of fishing stock near-shore. To maintain sustainability of fishery resources, there is a critical need for closer cooperation and management over the region's fish stock which knows no territorial boundaries. Click here
As the PCA ruling is overwhelming in favor of the Philippines, to avoid unintended escalations, there is a need for strategic restraint on the side of both the Philippines and the United States, which is, after all, not a party to the arbitration. Against suggestions in certain quarters, Jeffrey Bader, Senior Fellow in Foreign Policy at Brookings, argues that on balance, rival territorial claimants should not be encouraged to seek similar PCA rulings. Indeed, he suggests that the United States should do well in encouraging the Philippines to settle differences bilaterally with China. Click here
In the final analysis, setting aside disputes for joint development may usher in a new era of regional stability and should be the most beneficial scenario for all.