Following the Path of Oil: The Law of the Sea or Realpolitik - What Good Does Law do in the South China Sea Territorial Conflicts?

This Article describes the relevant features of United Nationas Convention on the Law of the Sea ( UNCLOS ), demonstrates how the Convention is ill-equipped to handle the complexity of the South China Sea disputes, and explores the role of the private sector behind State actors in any negotiated resolution of these disputes. This Article also surveys the development of these disputes from the last decade to the present day, using as a case study the tension between China and Vietnam in the 1990s when UNCLOS went into force. Although the case study occurred in the past decade, the pattern of behaviors observed may recur at any time, due to the Realpolitik dynamics of the situation. Specifically, this Article argues that: (1) The South China Sea disputes will likely be resolved, if at all, through ad hoc negotiation of bilateral or multilateral treaties influenced by Realpolitik. In such a negotiation, as the proponent and/or implementer of “joint development” among nations, the private sector will play a crucial role behind the frontal role of governmental parties. The private sector could be caught between the competing nations, thereby forced to play the role of an opportunist intermediary while managing political risks. (2) Meaningful treaty negotiation requires equal bargaining powers among the negotiating nations--a utopian picture. Treaty resolution will more likely tip toward the interest of the more militarily and economically powerful State, to the detriment of weaker and smaller nations. The dominant State with the most sweeping claim to the South China Sea is China. Propositions one and two above point to the following reality: A major role in the structuring of a negotiated solution may belong to those companies receiving the support of China, i.e., those multinational enterprises that have the most incentive to please China because of their substantial economic stake in China as a consumer or supplier market. Accordingly, to counterbalance the military and economic dominance of China (and its alliance of private companies behind the scene), the Association of Southeast Asian Nations (“ASEAN”) Member States should strategically join forces as one negotiating bloc. Such strategic alliance must be predicated upon the successful building of consensus among the ASEAN claimants. If successful, the multilateral treaty resolution of the South China Sea disputes may serve as an example of, or a de facto predecessor for, the long-desired (yet so far unachievable) regional investment and trade bloc for Asia. Ultimately, it is the powerful oil and gas multinationals--the implementers of upstream technology in the wildcat chase for oil--that fashion and drive the determination of sovereign boundaries, whether or not these economic entities sit at the negotiating table among the Nation-States. As engineer, proponent, and implementer of joint development, these economic enterprises help shape the resolution of the South China Sea disputes, and, hence, ultimately determine the distribution of petroleum resources for the people of East and Southeast Asia. These observations confirm the “monarch” and “monopoly” theories expounded in the Author\u27s previous writings: modern international petroleum transactions in the developing economies represent the “confidential handshake” between governments--the modern monarchs--and the multinational corporate rainmakers, to the exclusion of middle-class entrepreneurs and Third World inhabitants. This Article hopefully will serve as another awakening bell