US Asian Foreign Policy


October 26, 2014

US Asian Foreign Policy

by Dr. Munir Majid@www.the star.com.my

“US foreign policy in Asia, therefore, has to be delicate and sensitive enough to adjust to what can be described without exaggeration as seismic economic change. On the one hand, it should not be drawn too deeply into exclusively political-security manifestations despite China’s unacceptable belligerent and assertive actions. On the other, America must adjust to Asia’s economic rise.”–Dr. Munir Majid

Tan_Sri_Dr_Munir_MajidTHE United States is a global power. Asia the largest continent on earth. The Asian economies of the proposed RCEP (Regional Comprehensive Economic Partnership) alone now constitute 30% of global output, with consistently the highest growth rates and holding the largest reserves in the world.

It is not likely the United States would have missed Asia in the conduct of its foreign policy in pursuit of its interests. The interminable discussion, particularly among academics, on the US pivot or rebalance to Asia, following President Barack Obama’s use of the former term, can be overdone. It can result in the wood being missed for the trees.

That discussion, furthermore, leads to concentration on the military and security aspects of US foreign policy in Asia. US policy-makers lend their weight to this, with statements such as those by former US Secretary of State Hillary Clinton at the Asean Regional Forum in Hanoi in 2010 or previous Defence Secretary Leon Panetta at the Shangrila Dialogue in 2012.

Clinton had said freedom of navigation and the peaceful settlement of disputes were vital to US interests in the region. Panetta said that in the rebalance, US naval forces in the Pacific would be increased to 60% from the present 50%.

All this was said in relation to China, in the context of disputes the rising Asian power has with a number of states in the East China Sea and South China Sea. It did not take a leap of imagination to leave the impression the new emphasis of US foreign policy in Asia is primarily political-security in nature – and is intended to contain China as it became more assertive in the sea disputes.

A number of reasons has conventionally been offered for China’s greater assertiveness. It is a rising power; these things historically happen. On the other hand the US is a declining power; often a parallel is drawn with the conflict between Sparta and Athens in the 5th century BC which ended the latter’s domination of ancient Greece.

It is also asserted that there has been a loss of central control in China of the country’s bureaucratic political structures which allowed the fisheries department, for instance, to go ahead of the foreign ministry in asserting the sea claims. Unlikely as it may sound, this is not impossible especially as another reason offered is not mutually exclusive: the desire, at China’s centre, to shore up legitimacy at home at a time of increasing domestic stress, such as contending with the social consequences of slowdown in GDP growth from 10% to 7.5%.

All these reasons are not implausible, although I would add ASEAN’s desultory approach in pursuing the code of conduct under the terms of the Declaration of the Conduct of Parties in the South China Sea of 2002 until the Scarborough Shoal stand-off in 2012 between China and the Philippines, and the failure of foreign ministers from the regional grouping to agree on a joint communique for the first time in that same year, gave Beijing time and space to fashion that greater assertiveness whatever its leitmotif.

In the context of US foreign policy in Asia, the China Question has become predominant again as it was all those years ago in regard to recognition of the communist regime, its representation of China at the United Nations and final establishment of diplomatic relations with Beijing in 1979.

The objective of balancing, if not containment of, China cannot become the sole reason for the United States’ greater involvement in Asia. It delivers a political-security good which most countries in the region secretly desire, but it cannot become the sum total of US foreign policy in Asia.

The drama of the sea disputes has obscured the good reason for US’ greater interest in Asia which is primarily economic, the region’s dynamism which has moved the centre of global economic gravity eastwards to the Asia Pacific. While the political-security interest may secure economic benefits, it can also spoil their achievement if relations between US and China are possessed by such a concern alone.

What has been happening in Asia is that both US and China are driving each other into positions which are antagonistic and not cooperative. Leaving aside military chest-thumping and bellicose diplomatic language, they are also trying to exclude, or at least marginalise the other, in the organisation of Asia-Pacific regional economic cooperation.

The RCEP (negotiation for which involves Asean and six Asia-Pacific states) does not include the United States. China has not been invited to join the Trans-Pacific Partnership (TPP) negotiations. Vietnam, for instance, is a negotiating partner which would not pass the same pre-qualification as China if the US had some such objective test. It is realpolitik – and the compliment is returned with the RCEP.

Other Asian states are being forced into making a choice between the two constructs, whether they are members, or potential members, of both. Even if it is argued the two groupings will ultimately coalesce, the burning issue is the standards and style of trade and investment relations which differ, with the TPP particularly bearing heavy American imprint.

The US has done well in signalling its economic interest in Asia with the rebalance, often considered as the second pillar of the pivot to Asia. Understandably, having been at the centre of the international economic system that had driven Asian growth, it now wants, as a long-established Pacific nation, to share in further regional prosperity – by still being at that centre and by entrenching as well as by strengthening the rules of economic conduct.

Asian restoration

The latter gives rise to problems in the pursuit of US foreign policy objectives in Asia. It is a new Asia the US is dealing with, not the Asia of yore when the American writ was overwhelming.

It is a more confident Asia. Indeed the whole sweep of the change in the centre of economic gravity is something of an Asian restoration. Earlier this month, the International Monetary Fund ranked China’s economy as the world’s biggest in purchasing power parity terms. American predominance in at most the last century is over. The Chinese economy which was the biggest in many more hundreds of years is now back.

The Economist observed: “The brief interlude in which America overshadowed it (China) is now over.”

Asia has also looked on as the American capitalist system came close to meltdown in the 2008 crisis because of many excesses embedded in the rules of the economic game. Rules and forms of crisis management which America taught Asia never to entertain were employed to save the economy. There have not been contrition and enough humility afterwards.

Indeed it would seem to Asia some of those rules are being strengthened with a vengeance in American trade and investment proposals, such as to be found in the TPP, particularly in respect of corporate rights against the state. Have not any lessons been learned both from recent economic experience and from the historic rise of Asia in the desire – perfectly understandably – to further Americans interests?

Yet the system America offers is still the best to achieve optimal economic outcomes. But it has to be substantially adjusted to avoid considerable social and political cost, and to reflect that other countries, especially in Asia, have grown up and grown big.

US foreign policy in Asia, therefore, has to be delicate and sensitive enough to adjust Barack Obamato what can be described without exaggeration as seismic economic change. On the one hand, it should not be drawn too deeply into exclusively political-security manifestations despite China’s unacceptable belligerent and assertive actions. On the other, America must adjust to Asia’s economic rise.

Schemes of trilateral or quadrilateral alliances, even of a “soft” kind, involving the United States, Japan, India and/or Australia, are provocative. While it is always stated by the advocates they are not against China, this is what Beijing reasonably feels. At the very least they isolate China. Alliances have a history of bringing about precisely the outcomes they purportedly want to avoid.

CHINA-RUSSIA-UN-DIPLOMACYChina for its part should not continue to be a stick in the mud, carping and complaining, self-righteous in proclaiming always that others are in the wrong, never Beijing. Whereas China’s actions in the South China Sea particularly have been bullying and abominable. Its sovereignty over areas it claims is not God-given. It is disputed. Other states have rights. It cannot go about behaving in the vein that might is right. It must recognise international laws and the friendships it eschews.

Actually, both America and China must give substance to the new type of great power relationship which was identified in the Obama-Xi Jinping meeting in Sunnylands, California in June last year. As Henry Kissinger wrote in the Washington Post in March this year the US must articulate its own vision for the evolving international order that is acceptable to both countries.

On the other hand, China should not expect to replicate principles of that kind of relationship which it had first forged with Russia in the mid-1990s. That model would not fit. Russia is not the United States. As the status quo global power and the revisionist rising regional power due weight must be recognised in each other. A very difficult process no doubt but neither should be in denial of the other’s position and a creative relationship can be forged without recourse to tired old foreign policy constructs.

ASEAN_logo_1ASEAN too has a role beyond tedious repetition of the ASEAN platform being the basis of regional cooperation and security. That platform will float away if there was not a stronger foreign policy positioning – particularly on the South China Sea disputes. There is some belated effort on the code of conduct but to always work from the technical and official position on these issues upwards without clear leadership at the top is disappointing to say the least. How many times have Asean leaders focused for more than half an hour on the South China Sea issues? There has to be deep concentrated effort.

The fear of failure cannot rule the day. If ASEAN states cannot take on at least one major foreign policy position in their region, how could they expect the US and China to negotiate on the more daunting evolving international order?

The states of Asia as a whole, of course, must also play the responsible part of grown-up countries to ensure their new found prosperity and outstanding economic prospect are not upset by stupid swagger and assertive expression. They must remember they still have some way to go. Future prospect is not current reality.

And, as the present global superpower, the US has a complex role quite unlike the situation in the past when its word was law. It is a different world. Therefore it cannot be the same America.

 

Without Bureaucratic Cobwebs, ASEAN cooperation can now move forward


October 10, 2014

Without Bureaucratic Cobwebs, ASEAN cooperation can now move forward

by Tunku A. Aziz@www.nst.com.my

tunku-azizWHEN ASEAN came into being on August 8, 1967, it was largely driven by considerations of peace and security among neighbours in a troubled region. We Malaysians had just emerged, with scars to show, from Indonesia’s “Konfrontasi”. There were admittedly serious concerns about countries in Southeast Asia being drawn inexorably into the Communist orbit, but Malaysia refused to be stampeded into embracing the “Domino Theory”.

Although the Malayan Communist Party-inspired insurgency was far from over, we were confident that we were in effective control of our country’s security and with the right mix of poverty eradication and industrial development policies, we could manage our own affairs without unwelcome United States intervention.

Malaysians were with their elected government. Embracing the US would have been the kiss of death for us, an emerging nation in search of a role and an identity. We had to develop our own home- grown model for regional cooperation.

We created ASEAN, then made up of Thailand, Malaysia, Singapore, Indonesia and the Philippines, in the confident expectation that it offered the best hope for our vision of a conflict-free region. However, ASEAN’s founding fathers, in envisioning their grand design, had not given sufficient thought to the role that their civil servants would be playing in policy formulation and implementation. The passage towards some semblance of unity of purpose was excruciatingly slow. ASEAN official inertia had to be experienced to be believed.

The private sector in ASEAN wanted to move at a much faster rate and felt that the civil servants were not only dragging their feet but were being totally obstructive. The ASEAN Chambers of Commerce and Industry (CCI) were quick to see the business potential presented by a regional market of more than 250 million people, and took to the new opportunities like duck to water, only to find that the bureaucrats had forgotten to fill up the pond.

Several industry-based working groups were formed and important trade links were made with the US and European Union chambers of commerce and industry. I remember a trip to Washington DC in the ‘70s by the ASEAN CCI and being received in the White House where a meeting with US officials and senior business leaders was arranged in the Franklin Room.

US Vice-President Walter Mondale was to host the meeting but he had to be called away on urgent state business. We were going all out to promote ASEAN to the American business community, but soon realised that we were so far ahead of the ASEAN governments that we were put in an embarrassing position. We cajoled, huffing and puffing, but to no avail. We were stuck in a bureaucratic maze.

We were running out of patience and the inevitable clash was not long coming. On Dec 12, 1979, some 12 years after the formation of ASEAN, 250 top ASEAN business leaders from all the national chambers met in Singapore. This was the opportunity I needed as chairman of the ASEAN CCI Working Group on Industrial Complementation to read the riot act.

Let The Straits Times of Singapore of December 13 echo my disappointment. Under the headline, “ASEAN civil servants rapped — ‘Too rigid an attitude towards cooperation”, it reported:

“Malaysian business leader, Tunku Abdul Aziz, yesterday lashed out at civil servants of Asean for their rigid, uncompromising and hopelessly impractical attitude towards closer regional cooperation.

Tunku Abdul Aziz said: “I have detected of late evidence of disenchantment and disquiet within the private sector with the way in which the question of economic and industrial cooperation is being handled by the economic ministers through their Committee on Industry, Minerals and Energy (Coime).

“A measure of the general euphoria prevailing throughout the ASEAN private sector is that until a few months ago, most of us were satisfied that Coime understood its role and was prepared to exercise its power and authority in a way that would satisfy private sector aspirations.

“What we did not know, of course, was that this body of hardened bureaucrats, sitting collectively in splendid isolation and insulated from the reality of a real world, was no more ready to deal with its appointed task than the Ayatollah is ready to grant the Shah of Iran the freedom of the city of Teheran.”

Questioning the effectiveness of the guidelines laid down by ASEAN civil servants on industrial complementation of regional projects, Tunku Aziz said:

“In spite of the usual pious declarations of selfless devotion to economic cooperation, these guidelines must be seen for what they are. They are rigid and uncompromising and are so obviously intended to protect the national position at all costs.

“These guidelines are a blight on the concept of regional cooperation. It is not surprising that we are beginning to wonder whether our governments are intellectually ready to cope with the rather special demands of a concept that requires a high degree of political will.

“Let us hope the governments of ASEAN will recognise the importance of private sector participation and involvement at all levels of policy formulation so that what emerges is a concerted effort distilled from the best available talents from both the government and the private sector.”

The Business Times Malaysia in its editorial, “ASEAN — useful plain speaking”, said that: “It needed to be said, sooner rather than later. But no one did until Wednesday when Tunku Abdul Aziz, in his capacity as Chairman of the ASEAN CCI’s Working Group on Industrial Complementation, hit out at the official Committee on Industry, Minerals and Energy in which rests the responsibility for reviewing ideas for reviewing ideas in these fields.”

The Asian Wall Street Journal waded in to support my “blast”, reporting my attack on the official guidelines that “are intended to regulate and control rather than promote and encourage private sector participation in and contribution to economic cooperation. These guidelines are a blight on the concept of regional cooperation”.

The tenor of my speech took ASEAN ministers and their bureaucrats by complete surprise, but it had the desired effect. Governments understood our position better and helped to remove much of the cobweb that had befuddled their collective mind.

Today, ASEAN is jogging along nicely and thriving. Successive regional leaders, 4th PM of Malaysiaparticularly Tun Dr Mahathir Mohamad, can take pride in nurturing ASEAN to become a regional force for good.

ASEAN has been well-served by many distinguished secretaries-general, but in my considered opinion, the best ever was undoubtedly Dr Surin Pitsuwan of Thailand, the quiet and thoughtful man of diplomacy, the United Nations Secretary-General we never had because he was in the wrong party and the government of Thailand did not support his candidature for that high office — a great loss to the world.

The ASEAN bureaucrats of my time very nearly scuttled the vision and hopes of millions of Southeast Asians for their rightful place in the larger global scheme of things. Mercifully, in spite of them, ASEAN has arrived.

Symmetrical characters, parallel fates


August 19, 2014

Symmetrical characters, parallel fates

COMMENT by Terence Netto@www.malaysiakini.com

Men of destiny seek proof of their greatness by exercising a license to go too far, and as the fear grows that destiny may have played a terrible joke on them, they double and redouble the stakes on the wheel of fortune. In this way they destroy themselves.-Terence Netto

hype_najib1Now that the cat has sprung out of the bag and is dashing about among a wider public, the only news would be if anyone has died of shock from the revelation that Dr Mahathir Mohamad has withdrawn support for Prime Minister Najib Abdul Razak.

After months of premonitory sniping at the Premier by his satraps, notably A Kadir Jasin and Zainuddin Maidin, the man himself has come out in the open with a formal declaration of hostilities. There is no more cogent example of déjà vu nor self-parody than the producer himself reiterating he is about to re-start a familiar business – the demolition of a sitting PM.

A fortuitous benefit of this incipient extravaganza – to the federal opposition, Pakatan Rakyat – has been the confirmation that their self-destructive shenanigans in Selangor have furnished the opportunity to the premier demolisher of incumbent PMs to fix on this as the most opportune time for the unleashing of his decanal decapitation of national head honchos, not to mention a few deputies as well.

The wonder is that anyone at all, at this advanced juncture of their career trajectories, could be surprised at how the two protagonists, one of the drama about to start and the other of an already running one in Selangor, confirm a truism of classical Greece – that character is fate.

Character here is taken to mean the way in which a person confronts the things that happen to him, a number of which may come about as a consequence of his characteristic behavior. Fate is the sum of the decisive things that happen to a person, whether as a result of his characteristic behavior, or fortuitously, at the behest of some transcendent power.

That the characters of Mahathir and Anwar Ibrahim have fed off each other is by now a staple of Malaysia’s modern history. Malaysians are beginning to realise that the one’s career could not have been possible without the other and vice versa.

Truly, the reformasi movement would not have been catalyzed into something urgent and insistent without what Mahathir did to Anwar in September 1998 and how the latter reacted to the events.

Before September 1998, the movement was an inchoate yearning; after Anwar’s jailing and obloquy, reform became a national agenda. Mahathir would not have been able to prolong his tenancy of the PM’s office – 22 long years – without Anwar’s lieutenancy for 16 years of that tenure.

Certainly, the accretion of power to the office of the PM and UMNO President could not have taken place without Anwar’s tacit support, as heir presumptive to Mahathir.

The long running drama of their interaction since they first met in 1971 and their influence on the life of this nation over the last four decades is so pivotal that our history itself becomes confused with their own biographies which goes to illustrate historian Thomas Carlyle’s theory that humanity advances by means of these demi-gods or ‘heroes’.

Succumbing to the danger of self parody

But as the philosopher Ralph Waldo Emerson cautioned: “Every hero becomes a bore at last”: the two are presently in danger of inducing a yawn in arenas they once bestrode as giants. If it happens it would be due to their succumbing to the danger of self-parody each is tempted to flirt with, Mahathir more so.

Tun Dr. MahathirMen of destiny seek proof of their greatness by exercising a license to go too far, and as the fear grows that destiny may have played a terrible joke on them, they double and redouble the stakes on the wheel of fortune. In this way they destroy themselves.

By claiming at the commencement of his unseat Najib campaign, after the fashion of Brutus, that it is not because he loves his leaders less but that he loves the people and country more, Mahathir is parodying what Anuar Musa, then a young delegate from Kelantan to the UMNO general assembly in 1983, who quoted from the Shakespearean play Julius Caesar the words Brutus used before stabbing Caesar. The Roman emperor was surprised that a friend like Brutus could be part of squad of assassins with regicide in mind.

Anuar cited the quotation in the course of rhetorical flights faintly critical of Mahathir’s leadership of UMNO. Mahathir’s response was characteristically brusque. “Brutus stabbed Caesar” he reminded the UMNO delegates. In other words, back-stabbers are back-stabbers, their lofty motives notwithstanding.

If Mahathir unseats Najib, the wheel would have come full circle in his career: he began his ascent to the top of the greasy pole by destroying one UMNO President (Tunku Abdul Rahman) and is set to end his career by destroying the son of the man (Abdul Razak Hussein) who gave him the chance to rise after a display of Oedipal rage against the Tunku.

If PKR allows Anwar to convert the party into his personal fiefdom, his thrust to the top of the totem pole that began with his rebellion against nepotism, cronyism and corruption in 1998 would flirt with what could well be a fatal contradiction. Not for the first time in history would pivotal allies-turned-adversaries have symmetrical characters/parallel fates.

Happy 69th Birthday, Indonesia


August 17, 2014

Happy 69th Birthday, Indonesia

To All Our Friends, Associates, Bapak Presiden, Government and People of Indonesia

Indonesia's 69 th Year of Independence

indonesiaindependenceday_300Dr Kamsiah and I warmly congratulate your great country on the occasion of its 69th Birthday which falls today. As a major partner in ASEAN, you have a crucial role to play for peace and stability of South East Asia. Your economic prosperity too is vital to all of us. That is why your recent Presidential Elections was closely watched by all of us. It was a resounding success and we can be justifiably proud of what you have achieved in furthering the cause of democratic politics.

August 17, 2014

On this very special day, we pray for your continued success and prosperity, and extend our warm salams to you  all. Dirgahayu, Republik Indonesia –Dr. Kamsiah and Din Merican

The Regional Octopus to merge with rivals to create mega Islamic bank


July 11, 2014

The Regional Octopus to merge with rivals to create mega Islamic bank

by Reuters-www.themalaysianinsider.com

OctopusCIMB Group Holdings Bhd is seeking to acquire two lenders to create the country’s biggest bank in a move that is likely to push larger rival Maybank and others in the region to bulk up too.

CIMB, the nation’s second-largest bank, is likely to offer an all-stock deal to buy RHB Capital Bhd and Malaysia Building Society Bhd although details have yet to be hammered out, a source familiar with the matter said

The three banks confirmed today they had obtained approval from Bank Negara Malaysia to begin merger talks.

The “three parties have entered into a 90-day exclusivity agreement to negotiate and finalise pricing, structure, and other relevant terms and conditions for a proposed merger of the three entities and the creation of a mega Islamic bank,” the three banks said in a statement.

The statement came after shares in all three banks were suspended on Thursday pending an announcement. Shares will resume trade on Friday. The proposal comes ahead of a planned partial integration of Southeast Asian economies that is due to begin by the end of next year, with countries in the 10-nation alliance keen to build national champions to bolster their banking systems.

CIMB has been the most acquisitive of Malaysia’s banks and a deal would be the last major move by CEO Datuk Seri Nazir Razak, brother to the Prime Minister, before he relinquishes the helm in September after 15 years.

A successful deal would see CIMB’s assets climb to RM614 billion, 6% bigger than Malayan Banking Bhd (Maybank), and could help with pricing power in an intensely competitive domestic market.

“We believe that we can structure a value creating combination between our three groups and that is worth taking the next steps,” Nazir told employees according to an internal memo.

“I would urge everyone to look forward to the possibility of a significant scale change for us overall, but specially in Malaysia and Singapore, with the caveat that we have only just begun negotiations.”

But some analysts warned CIMB may pay too much and that there could be too much overlap between CIMB and RHB – the nation’s No. 4 bank, as they have similar portfolio mixes and strengths. RHB and Malaysia Building Society have a combined market capitalisation of around US$9 billion (RM28.5 billion), almost half of CIMB’s US$19 billion market value.

“We opine that such a merger could be value destructive to the merged entity given the degree of operational and revenue duplications between CIMB and RHB Capital,” brokerage UOB KayHian said in a client note.

Representatives for CIMB did not respond to requests for comment while RHB said there was no further update at this stage. Representatives for Malaysia Building Society were not immediately available for comment.

A deal would make CIMB the fourth-largest bank in the Association of Southeast Asian Nations (ASEAN) after Singapore’s three biggest lenders. By comparison, the largest, DBS Group Holdings, has assets of US$337 billion.

CIMB's Nazir3Malaysia’s Top Banker in ASEAN

Nazir is the architect of the bank’s expansion over the past decade that saw it buy domestic rival Southern Bank, the Asia equities and investment banking business of RBS as well as lenders in Indonesia and Thailand.

A new deal is bound to heap pressure on Maybank to acquire a rival too, analysts said, with some speculating that Public Bank Bhd could fall within its sights.

“Maybank might want to take over Public Bank, which compared to RHB Capital, is much better in terms of asset quality, and is well-managed and well-capitalised. This makes Public Bank a vulnerable target,” said Ei Leen Tan, an analyst with Affin Investment.

A key player in any acquisition by CIMB of its two smaller rivals will be the Malaysian state pension fund, Octo2the Employees Provident Fund (EPF). It owns 41.3% of RHB and 65% of Malaysia Building Society. The fund also owns a 14.5% stake in CIMB, according to Thomson Reuters data.

Another will be Abu Dhabi-based Aabar Investment which bought a 25% stake in RHB for RM10.80 per share in 2011 – regarded as a particularly high valuation.

Both CIMB and Maybank walked away from a deal to buy RHB in 2011 after failing to secure support from Aabar. The state fund currently owns nearly 22% of RHB. The EPF said in an email it would not be able to comment on the matter as it is very preliminary in nature and specific details are still pending.

A spokesman for Aabar said it doesn’t comment on any of its investments.While plans for ASEAN integration are widely expected to suffer delays, bankers and analysts expect more deals done as the banks from Singapore, Malaysia and Indonesia prepare for a more competitive landscape.”This will give impetus to other countries in the region to think of something similar,” said a M&A banker who advises on bank deals. – Reuters, July 10, 2014.

China’s James Shoal Claim: Malaysia the Undisputed Owner


July 4, 2014

RSIS Commentaries

RSIS presents the following commentary China’s James Shoal Claim: Malaysia the Undisputed Owner by B.A.Hamzah.  Kindly forward any comments or feedback to the Editor RSIS Commentaries, at RSIS Publication@ntu.edu.sg.

No. 122/2014 dated 1 July 2014

China’s James Shoal Claim: Malaysia the Undisputed Owner

By B.A.Hamzah

Synopsis

Malaysia owns James Shoal, a submerged feature that is within its continental shelf. Being one thousand nautical miles from Hainan, James Shoal is outside the continental shelf of China; it is also outside the continental shelf of Taiwan, Vietnam, the Philippines, Brunei and Indonesia.

Commentary

James Shoal

JAMES SHOAL, a feature that is permanently 22 metres (66 feet) under water in the South China Sea, should not have attracted public attention regionally but for geopolitics and ignorance of international law. Malaysians have been alarmed by recent reports of vessels of the People’s Republic of China Liberation Army (Navy), gathering and celebrating above the feature on more than one occasion.

China cannot appropriate any submerged features that are not part of its continental shelf and in its Exclusive Economic Zone (EEZ). James Shoal is more than 1,000 nautical miles (nm) from Hainan, well outside China’s Exclusive Economic Zone (EEZ) and not part of its continental shelf.

James Shoal and International Law

The whole affair could have been quietly resolved if the PLA Navy commanders acknowledged the international law governing a permanently submerged feature, embedded to the continental shelf of a coastal state. Unlike islands, rocks and low-tide elevations, permanently submerged features, cannot generate any maritime zone under international law.

Islands are entitled to a belt of territorial sea, continental shelf and EEZ. Low-tide Elevations (LTEs), on the other hand, belong to the state in whose territorial sea they are located. LTEs can be used to draw the state’s baseline if they are located within its 12 nm territorial sea.

Map 2--James ShoalMap showing the limit of proposed extended continental shelf of Vietnam and Malaysia jointly submitted to the United Nations Commission on Limits of Continental Shelf (CLCS) in May 2009.

International law defines continental shelf as a natural extension of a country’s landmass to a distance of 200 nm (maximum 350 nm). Drawn from the mainland or any of its islands in the South China Sea, the continental shelf of China is well short of James Shoal. Similarly, contrary to some suggestions, James Shoal is also not part of the extended continental shelf of Vietnam, the Philippines or Taiwan.

In May 2009, Vietnam and Malaysia put up a Joint submission on the Extended Continental Shelf to the UN Committee on the Limit of Continental Shelf (CLCS) whereby Vietnam acknowledged that James Shoal is not part of its extended continental shelf.

James Shoal is 500 nm from Pagasa Island in the Spratlys that the Philippines has occupied since 1971. The Shoal is more than 400 nm from Itu Aba, an island that Taiwan has occupied since 1956. James Shoal is also outside Brunei’s extended maritime zone which the 2009 Letter of Exchange Brunei had with Malaysia attested to. In 1969, Malaysia and Indonesia signed a Treaty on the continental shelf, off Tanjung Datu, Sarawak, which has placed James Shoal on the Malaysian side.

Contiguity not an issue

Map--James Shoal2Map showing limits of EEZ in the Spratlys

James Shoal, located 63 nm from the nearest base point (Batuan Likau) on Sarawak coast, is embedded in the continental shelf of Malaysia and within its EEZ. Although the feature is nearer to Malaysia, Kuala Lumpur’s ownership of James Shoal is not premised on geographical contiguity but on customary international law. In the Island of Palmas (or Miangas) (United States v. The Netherlands), Arbitral Award, 1928 Judge Huber stated, “it is impossible to show the existence of a rule of positive international law” on contiguity to “the effect that islands situated outside territorial waters should belong to the state”.

China claims James Shoal is within the disputed nine-dash line boundary which China has drawn, incorporating close to ninety percent of the South China Sea, and overlapping with the maritime domains of five other states (Brunei, Indonesia, Malaysia, Philippines, Vietnam) as well as Taiwan.

Some experts believe China did not even know of the existence of James Shoal as a submerged feature when it drew the controversial nine-dash line maritime boundary over it in 1947/1948. After all, China was not the first state to conduct any physical survey of the maritime area. Besides, there is no evidence that China discovered and administered the feature.

The British discovered James Shoal

The British discovered the Shoal and its two nearby features (Parsons’ Shoal and Lydie Shoal) in the early 19th Century via many of its surveys. James Shoal first appeared on the British Admiralty Chart in the 1870s; China renamed the feature (as Tseng Mu Reef) circa 1947/1948 (1912 in some documents), when it published the nine-dash line.

The only possibility for China to “acquire” the feature, according to some experts, is via cut- and-paste method. While the international law recognises five traditional methods of territorial acquisition, the cut- and- paste method is not one of them.

The 1982 United Nations Convention on the Law of the Sea (UNCLOS) and 1958 Geneva Convention on the Continental Shelf (Malaysia and China subscribe to both Treaties) stipulate, “The rights of a costal state over the continental shelf do not depend on occupation, effective or notional, or in any express proclamation”. In other words, Malaysia does not have to do anything under UNCLOS to own the submerged feature that is embedded on its continental shelf.

Malaysia’s extensive activities on James Shoal

This notwithstanding, Malaysia has effectively asserted its jurisdiction over its continental shelf including the areas in and around James Shoal, Parson’s Shoal and the Lydie Shoal. As in nearby Laconia shoals, where currently a large chunk of Malaysia’s hydrocarbon resources comes from, the entire area has been explored for gas and oil.

The activities of the Malaysian authorities, which are extensive, peaceful, continuous and public in nature, include the construction and maintenance of a light-buoy on nearby Parsons Shoal on a 24/7 basis; daily patrolling and policing of the area by the Royal Malaysian Navy and the Malaysian Maritime Enforcement Agency; and undertaking economic activities like exploration for and production of hydrocarbon resources on a sustained basis.

Under international law, such display of peaceful and continuous activities over a long period is tantamount to establishing a titre de souverain (acts of the sovereign). This legal principle is critical in determining ownership of disputed islands, rocks and low tide elevations and by inference, submerged features on continental shelf.

Map 3-James Shoal Enlarged Map showing the location of James Shoal (Beting Serupai), Lydie Shoal (Beting Tugau) and Parson’s Shoal (Beting Mukah) (drawn by Vivian Forbes, 2014).

The International Court of Justice (ICJ) and International Arbitration have applied this principle on numerous occasions. Two recent ICJ Cases on territorial disputes, decided on this principle, involved Malaysia with Indonesia (Case concerning sovereignty over Pulau Ligitan and Pulau Sipadan) and Indonesia (2002) and Malaysia with Singapore (Case concerning sovereignty over Pedra Branca and Pulau Batu Putih (2008).

In sum, the activities of the Malaysian authorities (effectivité to some) are by themselves sufficient to demonstrate that Malaysia is the bona fide owner of James Shoal.

BA Hamzah is a lecturer at the Department of Strategic Studies, National Defence University, Malaysia. He contributed this specially to RSIS Commentaries.