Written by Vidya Sagar Reddy, The Red Queen’s Navy will discuss the influence of emerging naval platforms and technologies in the geostrategic contours of the Indo-Pacific region. It identifies relevant historical precedents, forming the basis for various maritime development and security related projects in the region.
“Now, here, you see, it takes all the running you can do, to keep in the same place.”– The Red Queen, Through the Looking Glass, Lewis Carroll.
By Vidya Sagar Reddy
Introduction
Contrary to Western assessments that Russia’s military intervention in Syria would only deepen the economic crisis it is already facing, Vladimir Putin is tactfully turning this situation into an advantage. He is betting on the enormous Russian military-industrial complex with the logic that increasing the cash flow into this sector would create jobs and enhance military exports, reviving the economy. He is not alone in this thought. Foreign military sales is one of the principal sectors of the U.S. national economy creating millions of jobs, supporting local industries, and promoting innovation.
Russia provided ideological and military support to Communist forces in Asia, influencing the outcome of the Korean and Vietnam conflicts during the Cold War. The fallout of these conflicts continues to overshadow emerging security dynamics in the Asia-Pacific. In this context, the Asia-Pacific region, which is grappling to respond to the rise of a regional hegemon, appears to be most promising for exporting Russian weapon systems.
Russian Arms Sales in the Asia-Pacific
It is hard to substantiate whether Russia is a direct stakeholder in the stability of the Asia-Pacific. Its principal support to China in the South China Sea dispute is more of a measure to obtain a reciprocal response from China in its own altercations in Europe and West Asia. The conflicts in Ukraine and Syria continue to interrupt Russia’s plans to establish a network of energy pipelines, which is a major source of revenue for the country. The deteriorated political relations with Ukraine also means a setback for Russia’s military exports since it is dependent on Ukraine-made engines and sensors.
Amid these tensions, Russia has swung to Asia-Pacific, concluding a string of strategic partnerships and securing export orders for its defense industry. China is set to buy 24 Russian Su-35 fighter jets and 36 S-400 air defense systems. India has also finalized a deal to buy the S-400 which only adds to the dominance of Russian military equipment in its arsenal. India and Russia are also discussing the exportation of jointly developed BrahMos cruise missiles to other countries such as Vietnam.
During the recent BRICS Summit in Goa, India finalized the $2 billion deal to lease a second nuclear powered attack submarine (SSN) from Russia. India is currently operating an Akula II class SSN, rechristened the INS Chakra, on lease since 2012 for a period of ten years. India will also be buying four improved Talwar class frigates from Russia for $3 billion. Two of these ships will be built in Russia and the other two in India with the former’s assistance. These four add to the six commissioned warships of the same class, all built in Russia.
The decision to let the initial two warships be built in Russia has come as a surprise since India has already built the next generation Shivalik-class frigates domestically and has approved the construction of seven follow-on Project 17A stealth frigates by Indian shipbuilders. India will also need to buy the required power plants for these new frigates independently from Ukraine as the latter refuses to export military equipment to Russia due to the ongoing conflict. The fact is that Russia has already semi-built these frigates in its shipyard, but is struggling to obtain the engines from Ukraine. The Indian-Russian deal will arrange for these engines to be supplied to Russia through a third party (India) and the finished platforms will be commissioned for the Indian Navy.
The cruise missile salvo launched from the Caspian Sea flotilla against the targets in Syria is not only a show of force for Russia but also a live demonstration for elevating the export potential of its missiles. Several international customers including a few countries in Southeast Asia have expressed interest in the Russian Klub cruise missiles. As Russia’s official arms exporter Rosoboronexport puts it, this interest in cruise missiles leads to more orders for Russian warships and submarines because these cruise missiles require transportation and command and control platforms for deployment. Vietnam is keen to acquire land attack and anti-ship cruise missiles given the ever increasing threats from China to its territorial integrity. It has already purchased six Kilo class submarines from Russia, which will be armed with the Klub.
Russian Navy ships fire cruise missiles into Syria nearly 1000nm away from the Caspian Sea. (Russian Ministry of Defense)
Russia’s military equipment has a steady demand in the Asia-Pacific and other regions, partly due to the absence of issue linkages such as the human rights record the Western democracies would entangle their prospective buyers with. Russia is also generally insensitive to the security interests of its clients as evidenced by large deals with Vietnam, China, and India despite those nations’ concerns about one another.
Building on this demand and increasing its political leverage, Russia is even mulling reopening Soviet-era bases in the Asia-Pacific and beyond. For example, Russia is in discussions with Egypt, which is keen on allowing Russia to operate military bases in the country, thereby increasing the latter’s military footprint in the Mediterranean. There is speculation that Russia is also interested in renewing bases in Cuba and Vietnam. This will allow Russia to closely monitor both U.S. and Chinese naval activities, especially in the South China Sea.
Conclusion
Military might has always been a source of inspiration and pride for Russians, but military power does not automatically translate into economic well-being for the country. This is where Putin’s strategy comes into play, building on Russia’s vast military industrial apparatus for both international stature as well as the economic build up of the country. The Syrian conflict and the emerging security situation in the Asia-Pacific are being exploited for this purpose. The success of this economic strategy can only be awaited.
Vidya Sagar Reddy is a research assistant in the Nuclear and Space Policy Initiative of the Observer Research Foundation, New Delhi
Featured Image: Russian warships are seen during a naval parade rehearsal in the Crimean port of Sevastopol (Moscow Times)
Welcome to the September 2016 members’ roundup. Throughout the month, CIMSEC members examined several international maritime security issues, including the successful testing of Raytheon’s SM-6 surface-to-air-missile by a Ticonderoga-class Aegis cruiser, developments surrounding the Littoral Combat Ship (LCS) program, the rise of non-state actors in international maritime security affairs, continued hostility between China and regional nations relating to the South China Sea maritime disputes, and the worsening of security tensions between American and Russian air and naval forces patrolling the Black Sea.
Dave Majumdar, for The National Interest, discusses the Raytheon SM-6 Standard surface-to-air missile test that recently set a new record for the longest-range over-the-horizon intercept in naval history. The interceptor, which also has a long-range anti-ship variant, is a central component of the U.S. Navy’s Naval Integrated Fire Control – Counter Air (NIFC-CA) battle network. He highlights that the missile is effective against cruise missiles, aircraft, ballistic missiles, and enemy surface combatants while its range is estimated to be as great as 250 nautical miles. He also explains that the SM-6 interceptor is a major reason for why the U.S. Navy is confident in its ability to operate in highly contested environments, including regions where near-peer competitor powers have employed anti-access/area-denial weapons, such as the Baltics or the Western Pacific.
Bryan McGrath, for Scout Warrior, provides several recommendations for how the U.S. Navy should methodically approach future fleet architecture and force structure planning. He explains that developing the fleet to meet the challenges of great power competition should be central to this approach, largely because the capabilities this requires will allow for other critical security demands to be met as a byproduct, including control over trade routes, combating non-state actors, and enforcing maritime security. He also suggests that the relationship between the Navy and the Marine Corps should be funded as an asymmetric advantage unique to American seapower capabilities, while Congress should increase the overall resource allocation the Navy receives in order to meet the rigors of growing great power dynamics and the increasingly complex, multi-domain operational objectives associated with those adversaries.
Steven Wills, for U.S. Naval Institute News, provides a review of the changes made to the Littoral Combat Ship (LCS) program and explains that although the ships’ new training procedures, modularity, and operational organization may seem revolutionary, these new features simply reinforce the ship’s core missions. He explains that the majority of the LCS force will be forward deployed in support of operational commander tasking while personnel swaps will be undertaken to keep the ships forward deployed for longer periods of time. He also adds that mission modules will be exchanged between different LCSs to meet strategic operational requirements. Although the LCS has received significant opposition from both military and political officials, he notes that the large numbers of LCSs planned for forward deployment will meet the fleet’s specific demand for 52 small combatant vessels, and more generally, the need for increased warfighting capacity across the force.
Paul Pryce, for The NATO Association of Canada, discusses the rise of non-state actors across the international maritime environment, highlighting the People’s Liberation Army Navy (PLAN) and the Chinese Coast Guard’s training and funding of fishing militias to support China’s territorial claims in the South China Sea. He explains that the advent of these actors and their practices represent an overall increase in hybrid warfare on the oceans, a development which is likely to undermine regional security across the highly contested waters in the Asia-Pacific. With non-state actors offering plausible deniability for the states that support their activities, he suggests that states should seek greater cooperation in the enforcement of international maritime law by launching frequent and functional joint patrols as a means of building mutual trust between countries. He explains that this trust will increase constructive dialogue towards resolving ongoing disputes and will mitigate the tensions non-state actors and militias can induce between nations.
Members at CIMSEC were active elsewhere during the month of September:
Alex Calvo, at Japan Times News, is quoted in an article discussing the South China Sea and the maritime and territorial disputes surrounding Scarborough Shoal. He explains that China will likely make a move to increase their strategic posture near the Shoal, largely because the U.S. and regional allies have not explicitly threatened to use force to prevent such an action from occurring.
Mina Pollmann, for The Diplomat, provides an analysis on the bankruptcy of South Korean shipping giant, Hanjin Shipping Co. She highlights the significance of the company’s 2.9 percent global market share of container shipping, and that the primary capital lenders for the company, led by the state-run Korea Development Bank, rejected the company’s restructuring proposal – ultimately resulting in Hanjin Shipping Co.’s bankruptcy protection.
Christian Davenport, for The Washington Post, discusses the recent explosion of a SpaceX rocket and the comments made by the United Launch Alliance (ULA), who suggested that the explosion demonstrates the risks associated with choosing the lowest bidder on sensitive national security launch contracts.
Kyle Mizokami, for Popular Mechanics, analyzes the U.S. Air Force’s proposal for Ground Based Strategic Deterrent (GBSD), which is intended to replace the Minuteman III land-based intercontinental ballistic missiles (ICBMs). He adds that GBSD will be designed to last until 2075, upgrade the nation’s ICBM force with new technologies, and will be cheaper to operate – with an estimated price tag between $62 and $85 billion dollars.
At CIMSEC we encourage members to continue writing, either here on CIMSEC or through other means. You can assist us by emailing your works to [email protected].
Sam Cohen is currently studying Honors Specialization Political Science at Western University in Canada. His interests are in the fields of strategic studies, international law and defense policy.
Featured Image: A P-8A Poseidon flying alongside a Lockheed P-3 Orion, close to Naval Air Station Patuxent River, Maryland, 2010 (U.S. Navy photo by Liz Goettee)
The following article is part of our cross-posting partnership with Information Dissemination’s Jon Solomon. It is republished here with the author’s permission. Read it in its original form here.
By Jon Solomon
There was a pretty lively debate in the comments to Chris Mclachlan’s post last month about the Combat Logistics Force. No one took issue with his observations that the CLF might be undersized for sustaining high-tempo forward U.S. Navy operations in the event of a major Sino-American war. Nor did anyone contest his argument that our replenishment ships lack the basic self-defense capabilities their Cold War-era predecessors carried. Instead, the debate focused on Chris’s assertion that CLF ships ought to be escorted during wartime by a small trans-oceanic surface combatant possessing medium-range anti-air and anti-submarine capabilities.
Needless to say, I agree with Chris’s view. Such an escort would be a necessary part of the overall combined arms solution set to protecting not only CLF assets but also the shipping that would surge reinforcements and materiel to embattled U.S. allies in East Asia, provide steady logistical sustainment to the U.S. and allied forces deployed to or based in those countries, and maintain the flow of vital maritime commerce to and from those countries. One rarely sees any of these four critical tasks acknowledged in discussions within the security studies community. I believe that represents a dangerous analytical oversight, as an American failure to adequately protect its own and its allies’ sea lines of communications in a war with China would be strategically disastrous. In today’s post, I’m going to outline China’s ability to threaten these lines in a notional major war. On Thursday, I’ll outline how the U.S. and its allies might offset that threat.
Chinese Active Defense Layers (Office of Naval Intelligence graphic). Note that the range lines reflect where PLA aircraft and submarines might be expected to operate in wartime based on evidence to date. While PLA aircraft would be unlikely to fly further east from the second layer’s line if U.S. and allied air coverage from bases along the Second Island Chain was strong, the same might not be true for PLAN SSNs. Also note that the maritime approaches to Luzon and the northern/central Ryukyus fall within the PLA’s middle layer, and Taiwan and the southern Ryukyus within the inner layer.
Let’s first look at the strategic geography of the problem. The sea lanes in question pass through the waters between the First Island Chain and the line stretching from Hokkaido through the Bonins and Marianas to the Palaus (e.g, the “Second Island Chain”). I’ve recently written about the PLAAF’s effective reach into the Western Pacific, and it’s been widely understood for years that late-generation PLAN submarines possess the technological capability to operate for several weeks in these waters before having to return to port. China would be hard-pressed to achieve localized sea control anywhere within this broad area; its own surface combatants and shipping would be just as vulnerable to attack. It wouldn’t need sea control, though, to achieve its probable campaign-level objectives of bogging down (or outright thwarting) an effective U.S. military response, or perhaps inflicting coercive economic pain upon one or more embattled American allies. The use of PLA submarines and strike aircraft to pressure U.S. and allied sea lines of communications would be entirely sufficient. And as Toshi Yoshihara and Martin Murphy point out in their article in the Summer ‘15Naval War College Review, these kinds of PLA operations would be consistent with the Mao-derived maritime strategic theory of “sabotage warfare at sea,” albeit at a much greater distance from China’s shores than the theory originally conceived. Such operations have been widely discussed in Chinese strategic literature over the past two decades.[i]
It bears noting that our East Asian treaty allies like Japan, South Korea, and the Philippines would have inherent roles and responsibilities defending their sea lines of communication. Nevertheless, they probably would not be able to fulfill the mission entirely on their own given their maritime forces’ sizes and capabilities. There would probably need to be a geographical line of responsibility similar to what the U.S. and Great Britain worked out in the Atlantic during the Second World War; shipping protection west of the line would primarily be the ally’s responsibility, and the U.S. would be primarily responsible for shipping protection east of the line. Even so, the U.S. would probably still need to contribute escorts and supporting forces to assist the ally in protecting sea lanes that were within some threshold distance of the Chinese mainland. Shipping protection in the approaches to the Ryukyus, Taiwan, or western Luzon particularly come to mind.
While it is true that U.S. and allied forces could probably pressure the PLA’s ability to push submarines and aircraft through the Ryukyus’ various straits or the Luzon Strait in a war, they would probably not be able to fully seal those doors—at least not during the conflict’s early phases. The biggest reason for this would be the straits’ sheer proximity to the Chinese mainland: PLAAF/PLAN fighters would be readily able to escort their strike aircraft brethren out into the Western Pacific and back, not to mention threaten any U.S. or allied anti-submarine aircraft or surface combatants patrolling the straits. Granted, Chinese fighters would be exposed to any sea-based and mobile land-based area air defense systems covering the straits and their approaches. They might also be confronted by U.S. or allied fighters operating from austere island bases in the vicinity of the straits, or from aircraft carriers or land bases located at various distances “over the horizon” to the east. U.S. and allied defenders could additionally use any number of countertargeting tactics to reduce their susceptibility to attack.
However, even if the PLA could not damage or destroy many of these forces per raid, it could still take actions that effectively suppressed the straits “guardians.” One tactic might be to salvo land-attack or anti-radar missiles to distract the defenders or induce them to keep their “heads down” shortly before or during a straits transit. Another might be to damage runways or austere airstrips as possible in order to constrain the defenders’ air operations; repairs could take precious hours. Electronic attacks and tactical deception could also be used to screen transiting PLA aircraft and submarines. Periodic PLA suppression raids would neither be small undertakings nor without risk to the forces performing them, but they might be sustainable on an as-needed operational tempo for several weeks or months at minimum.
The other factor that would make it impossible to hermetically seal the First Island Chain barrier would be the difficulty in maintaining persistent U.S. or allied submarine coverage in all of the requisite straits. The U.S. presently has thirty-one non-special-purpose SSNs stationed in the Pacific; three are homeported in Guam and twenty in Pearl Harbor. Only a small number would be deployed at sea within quick steaming of the straits, though, unless timely indications and warning of an impending crisis or conflict were received and then acted upon by U.S. leaders. The high-readiness Guam boats would be able to arrive on scene fairly rapidly once sortied, but it would take several more days for them to be reinforced by Pearl Harbor boats—not all of which might be immediately surgeable due to inter-deployment maintenance. Japan could surely contribute a number of its sixteen modern SSs in active service, but again not all of them might be surge-ready at any given time. And while the U.S. and Japanese fleets will be receiving additional boats over the coming decade, it will not be at a rate and scale that would dramatically change the straits coverage math. Hypothetical seabed-mounted sonar arrays in these straits or their approaches might help improve these odds by cueing available U.S. or allied submarines (or other anti-submarine forces) to a PLA submarine transit. The probability of a friendly submarine intercepting a PLA submarine detected this way, though, would depend upon the time between when the cue was broadcast and when it was received by the friendly sub, how the friendly sub’s effective sonar ranges in those waters affected its ability to redetect the trespasser, and whether the friendly sub could cover the distance from its starting point to have a chance at redetection before the cueing data “aged out.” More than one boat might be required to cover any particular strait with a certain margin of confidence; this would be especially true for the wider straits. Nor would anti-submarine patrols in the straits be the two sub fleets’ sole mission at the beginning of a major war: there would be equal if not greater demands for land-attack strikes, anti-submarine and anti-surface patrols inside the First Island Chain, anti-submarine patrols between the two island chain lines, special forces insertion/extraction, and far-forward intelligence/surveillance/reconnaissance. U.S. and Japanese submarine coverage of the straits simply could not be absolute.
It would be excellent if U.S. and allied forces could attrite the PLA forces making or supporting straits transits by a few percent each time without suffering equivalent attrition; the cumulative effects on the PLA’s overall warmaking capacity would be significant. But it would take weeks if not months for those effects to really show. That’s why the ability to logistically sustain the land-based forces waging the protracted frontline fight would be so crucial to U.S. war strategy. If the PLA were to inflict enough pressure on these logistical flows, the barrier defense would eventually wither on the vine.
It’s also important to remember that this imperfect barrier would only function in an open war—not during a crisis. Any PLAN submarines sortied prior to the outbreak of open hostilities could in theory patrol between the two island chain lines for campaign-significant amounts of time before having to hazard a trip back through the First Island Chain gauntlet. Modern PLAN SSNs like the Type 093 and its Type 095 follow-on would have an obvious endurance advantage over Air-Independent Propulsion (AIP) boats like the Type 041, but even the latter could probably remain underway for a few weeks before requiring a return to port. During that time, the mere fact that PLAN submarines were unlocated in the Western Pacific would undoubtedly affect U.S. operations (and tempo) in theater. The Royal Navy’s experience coping with a single unlocated Argentine submarine during the Falklands War is instructive on that point.
It would not take many PLAN submarines to generate such effects. For instance, let’s assume that the PLAN allocated its Type 041s, Type 093s, and Type 095s for war-opening operations between the two island chain lines while simultaneously holding its Type 035A/B/G, Type 039, and Kilo-class diesel-electric boats back for operations within the East and South China Seas. Let’s also assume China had its planned twenty Type 041s and five Type 093s in commission, plus perhaps five Type 095s as well, when a conflict erupted. Lastly, let’s assume that these boats’ material conditions of readiness were high enough to sortie two-thirds of them into the Western Pacific as the crisis phase peaked. Thirteen AIP boats and six SSNs might not seem like a lot within such a broad expanse. However, as Julian Corbett pointed out a century ago, the most “fertile” areas for hunting ships are “the terminals of departure and destination where trade tends to be crowded, and in a secondary degree the focal points where, owing to the conformation of the land, trade tends to converge.”[ii] If the PLAN followed Corbett’s logic, it might position its submarines in waters the U.S. and its allies would have to traverse to access (or break out of) selected major ports along the First Island Chain during the war’s first weeks. Or it might assign those duties to the Type 041s and deploy its SSNs in the waters just west of the Marianas that shipping from Guam, Hawaii, or the continental U.S. might seek to traverse. Or if the Chinese Ocean Surveillance System’s (COSS) coverage between the island chain lines remained adequate after the war started, China might try to steer its SSNs into mid-transit contact with U.S. or allied shipping.[iii] What’s more, the lingering effects of a PLA conventional first strike against major U.S. and Japanese bases in the Japanese home islands and Okinawa, subsequent PLA suppression operations against U.S. or allied straits-guarding forces along the Ryukyus-Luzon line, and in-theater U.S. and allied anti-submarine-capable forces’ sheer combat load prior to the arrival of reinforcements from the U.S. suggest that at least some PLAN submarines could complete at least one full cycle from their patrol areas to port for replenishment and then back into the Western Pacific before the “happy time” window began to close. This would especially be true for PLAN submarines patrolling the approaches to the Ryukyus, Taiwan, or Luzon.
Add the PLAAF/PLAN strike aircraft threat back into the mix and it should be apparent that U.S. and allied use of the Western Pacific’s surface between the two island chain lines would likely be opposed early in a notional war. The key variables driving China’s anti-shipping potential within these waters would be COSS’s ability to provide PLA aircraft and submarines with actionable targeting cues despite intense U.S. (and possibly allied) efforts to degrade and deceive this system-of-systems, the PLA’s ability to push those forces through contested First Island Chain straits when and where needed, and the operational range and endurance of those forces.
Jon Solomon is a Senior Systems and Technology Analyst at Systems Planning and Analysis, Inc. in Alexandria, VA. He can be reached at [email protected]. The views expressed herein are solely those of the author and are presented in his personal capacity on his own initiative. They do not reflect the official positions of Systems Planning and Analysis, Inc. and to the author’s knowledge do not reflect the policies or positions of the U.S. Department of Defense, any U.S. armed service, or any other U.S. Government agency. These views have not been coordinated with, and are not offered in the interest of, Systems Planning and Analysis, Inc. or any of its customers.
Featured Image: QINGDAO, CHINA – JULY 02: (CHINA OUT) CNS Harbin DDG-112 frigate fires a missile during live-fire drill on Yellow Sea on July 2, 2015 in Qingdao, Shandong Province of China. Naval vessels and soldiers mainly from China people’s Liberation Army Navy North Sea Fleet and part of soldiers of China people’s Liberation Army Navy East Sea Fleet, the Second Artillery Force of the PLA, Chinese PLA Shenyang Military Region and Chinese PLA Jinan Military Region attended the live-fire drill on Yellow Sea on Thursday. (Photo by VCG/VCG via Getty Images)
Part I examined the military implications of China’s continued “military” actions versus Japan in the East China Sea or the United States and other countries in the South China Sea if China were to establish an ADIZ. Part II examines whether China has real economic or trade leverage to force other countries, including the United States, to support its point of view regarding the ruling. Part II also analyzes the related question of whether there are costs to China from continuing to ignore the legal ruling and ways in which China can be legally compelled to comply.
By Mark E. Rosen
Embargoes and Sanctions
Shortly after the Tribunal ruling, China’s Deputy Minister of Trade was careful to encourage Chinese citizens to not boycott the U.S. and the Philippines; however, that does not mean that sanctions and boycotts are off the table. Bloomberg reported on August 4th that China will likely resume trade retaliation tactics against South Korea for its decision to deploy U.S. THAAD missiles to counter North Korean missile launches. Korea’s International Trade Association has identified 26 measures currently in place to restrict trade and is expecting more non-tariff barriers such as bogus safety inspections of inbound products, establishment of new licensing requirements, and manipulation of quarantine and safety inspections to frustrate Korean imports.
The above actions are not unprecedented. In 2000, China banned all imports of South Korean mobile phones and polyethylene in retaliation for Seoul’s increase of duties on Chinese Garlic. In 2010, Chinese Customs Officials halted the shipments of rare earth minerals destined for Japan (for user in hybrid cars, wind turbines and guided missiles) as a form of protest for detention of a Chinese fisherman fishing near the Senkakus. The United States has also been victimized by China’s extensive unfair trade practices (dumping and illegal subsidies), theft of intellectual property, and hacking of U.S. companies. Working within the WTO system, the U.S. has filed a record number of suits versus China in the WTO on behalf of U.S. poultry producers and is now considering the unilateral institution of a total ban on Chinese steel imports because of illegal price fixing and other illegal actions by Chinese steel producers.
The use of non-tariff barriers has been a favorite ploy by countries to sneakily frustrate imports to protect local producers while at the same time staying compliant with WTO rules. As for embargoes, WTO (Art 21) recognizes that states can impose measured national security, health, and welfare controls on both exports and imports to protect their citizens’ “essential security interests” or to prevent the proliferation of weapons. Using this exception, China passed a new national security law in 2015 which required foreign technology companies to be “secure and controllable” by Chinese National Security Agencies as a way of pushing out foreign technology firms like Microsoft, Apple, and Cisco in favor of local suppliers. However, there are limits to this type of activity, as witnessed in the 1998 Shrimp Turtle Decision in which a WTO Panel found that a U.S. ban on shrimp from India, Malaysia, Thailand and Pakistan (because those states shrimp fishermen had allegedly killed Sea Turtles) was illegal because controls can only be used to immediately protect one’s own citizens from harm. Controls cannot be used to “send signals” or indirectly pressure an exporting state to reform.
In the short term, China has considerable legal room to maneuver should it wish to impose national security controls or erect non-tariff barriers to punish Japan, the United States, the Philippines, and others for opposing them in maritime disputes. WTO cases are very time consuming to document and litigate. However, that same legal maneuver space can also be exploited by the United States and others to frustrate Chinese imports. Therefore, China should do the math and assess whether they have more to gain or lose by instituting de facto embargoes.
In 2015, China amassed a $365 billion merchandise trade surplus with the United States. Chinese businesses have put this cash to good use by investing in new plants and equipment, educating its young people abroad, and investing billions in the U.S. and other safe offshore markets. This is not unique to the U.S.; China has a global trade surplus of $600 billion. It continues to have small trade deficits with Japan and South Korea and its principal imports are electrical and industrial machinery (no. 1 and 3), oil (no. 2), and ores (no. 4). This cursory analysis of China’s economy overwhelmingly demonstrates that China is highly dependent on international trade to fuel its economy. China’s offshore investments of its U.S. trade surplus helps China diversity its holdings outside of Asia. China is also heavily reliant on international suppliers for the raw materials it lacks and risks a great deal by starting a trade war in which it is deprived access to the U.S. and other foreign markets.
History confirms that China would likely suffer more than the U.S. or Japan, Australia, and the Philippines as a result of an embargo. Tough Allied embargoes against Nazi Germany and Italy proved ineffective when self-interest among allied business interests caused the embargoes to leak or, in the case of Germany, forced innovation when Germany developed synthetic substitutes for oil and other commodities. When the U.S. embargoed wheat exports to the USSR in 1973, Canada and Australia picked up the business. The latter is especially important in the current situation. If China were to stop buying Australian ore or Japanese finished products, the world economy is sufficiently diverse to compensate for some of these losses. After the U.S. embargoed exports of scrap iron, steel, and oil to Japan and froze Japan’s assets, Japan was put into the position of having to choose between fighting for additional raw materials or abandoning their plans for a “New Order” in Asia. It is unlikely that any country would launch a Pearl Harbor attack if China were to embargo their products; however, embargoes have a high potential for “blowback” and could result in unintended consequences to the PRC’s overseas businesses, mines, and industrial operations.
It is also fiction that the U.S. is vulnerable to Chinese action because of its stake in the U.S. public debt (20% foreign owned). In reality, China buys U.S. sovereign debt because it is safe, liquid and can be used by China to finance dollar denominated international transactions (such as oil). China’s central bank also buys U.S. sovereign debt to maintain the exchange rates for renminbi and help drive down the costs of Chinese exports. Also, U.S. sovereign debt is overwhelmingly held by U.S. domestic entities (66%); such that were China to dump its nearly $1 trillion in U.S. debt, that debt will simply be purchased by domestic and foreign purchasers – as happened in August 2015 when China reduced its U.S. debt holdings by $180 billion. For China, the impact of “a broad scale dump of U.S Treasuries…would be that China would actually export fewer goods to the United States.”
Sanctions and embargos tend to “leak” because the global market will almost always produce another supplier or purchaser of something that is being withheld from the international market. Philippine bananas and mangos also taste good in Tokyo, Paris, and New York. Given China’s extreme dependence on international trade to fuel its domestic growth and overseas investment, it would be almost suicidal for China to engage in actions that might restrict its access to foreign markets. Likewise, a government-lead boycott of foreign products would, apart from the legal repercussions, would have extremely destructive impacts on its economy since it still relies heavily on imports of agricultural products, industrial equipment (from mostly Japan and Korea), and metal ores for manufacturing applications. Finally, dumping U.S. debt might cause some angst but, in the long run, U.S. debt instruments would be purchased by investors in the U.S. and other countries.
Continued Trashing of the Tribunal Decision and International Law in General
China continues to condemn the Tribunal ruling. The traditional attacks focused on questions of lack of jurisdiction and “overstepping” its legal mandate. Another Chinese daily’s reported that the Tribunal was a “front” for the United States and “lackey” of outside forces and had an inherent bias because the Philippines paid the “court costs” for the proceeding. A few speculated that China might withdraw from UNCLOS, but China will more likely establish its own arbitral panel to adjudicate the territorial disputes outside of UNCLOS. This later course of action has precedent; recall China’s 2015 establishment of an Asian Infrastructure Bank to finance Asian infrastructure projects outside of the regulation-burdened World Bank system.
China seems to labor under the perception that the Tribunal Ruling is purely a regional matter and that its impacts end with the states bordering the SCS. China continues to ignore that many countries take the ruling very seriously because the SCS is a maritime superhighway between the Middle East, South Asia, East Africa, North Asia, and Australia. Roughly 60 percent of South Korea’s energy supplies, nearly 60 percent of Japan’s and Taiwan’s energy supplies, and 80 percent of China’s crude oil imports come through the South China Sea. According to a 2015 report from the Council of Foreign Relations:
“Each year, $5.3 trillion of trade passes through the South China Sea; U.S. trade accounts for $1.2 trillion of this total. Should a crisis occur, the diversion of cargo ships to other routes would harm regional economies as a result of an increase in insurance rates and longer transits.”
Money talks. For this reason, states that would ordinarily have been silent registered their support for the Tribunal decision. The EU issued a statement on July 15, underscoring their support for a rules-based order and respect for UNCLOS. The G-7 called on states to “fully implement decisions binding on them in … tribunals under the Convention.” Canada, France, Germany, the UK, Japan, Vietnam, Singapore and the U.S. issued statements support of the ruling. Indonesia, India, South Korea issued more “measured” statements urging China to show restraint and respect for UNCLOS.
There were some dissenters, but much of the industrial world supported the outcome and expects China to comply. If China continues to signal that it has no interest in conforming to the ruling, China could be excluded from important international negotiations, including, for example, the upcoming negotiation of an agreement under UNCLOS that deals with biodiversity beyond national EEZs. As I suggested in After The South China Sea Arbitration, China could have its privileges essentially suspended in three UNCLOS institutions: (1) the International Tribunal for the Law of the Sea (ITLOS); (2) the International Seabed Authority (ISA), and the (3) the Commissions on the Limits of the Continental Shelf (CLCS).
If China continues its island-building activities and interferes with Philippine fishing in the vicinity of Second Thomas Shoal, Scarborough Shoal, and Mischief Reef, an international court such as the International Court of Justice (ICJ) or ITLOS, could be asked to impose sanctions on the China for flaunting a lawful UNCLOS decision. The case would be predicated on the notion that China cannot take advantage of the benefits of UNCLOS if it lives outside of the law. In practical terms, an injunction could be sought which: recalls China’s judge on ITLOS; blocks the CLCS from any further proceedings involving the Continental Shelf entitlements of China; and lastly suspends both China’s ability to file further deep-seabed mining applications before the ISA and enjoin any further prospecting of its sites in the Indian Ocean. It might also be appropriate for a Tribunal to suspend China’s participation in UNCLOS related bodies including the International Seabed Authority (ISBA) (which writes the regulations for deep seabed mining), the International Hydrographic Organization (IHO) (the charting and oceanography body) and the International Maritime Organization (IMO). The latter action would be especially harmful for China given that the IMO has broad responsibilities to write the rules for merchant ship design, construction, operations, and navigational routes/practices while China has one of the largest merchant marine fleets in the world.
A meeting of the International Maritime Organization (IMO Photo)
These legal maneuvers would be slow to orchestrate but, like other types of sanctions, could be far-reaching and difficult to reverse once they are put in place. However, China’s continued island reclamation after the ruling, their recent military actions in the vicinity of Scarborough Shoal, and the Chinese Supreme Court’s reaffirmation of the 2012 fishing ban are in direct contravention of the Tribunal’s decision. Since the effects of China’s actions have impacts beyond the Philippines, almost any bordering state, international organization, or possibly NGO would have standing to seek to have the Tribunal’s decision enforced since the ICJ (and for that matter ITLOS) has “inherent jurisdiction…to ensure that its exercise of jurisdiction is not frustrated and that its basic judicial functions are safeguarded.”
Conclusion
Inexorably, China is painting itself into a corner in which its escape options become more limited. While it was hoped by officials in the U.S. and elsewhere that China would eventually come to the realization that it needed to capitalize on the favorable aspects of the ruling and “pivot” on those it did not like, that is not happening. The recent military displays in the ECS and SCS, the threatened sanctions towards South Korea, and continued “trashing” of the Tribunal ruling suggest that China is opting for confrontation versus conciliation and now runs the risk of becoming involved in a major military conflict with Japan and perhaps the United States. China says that it is committed to a rules-based order and leadership in Asia but its recent actions say otherwise. Lastly, and perhaps most importantly, pursuit of high risk strategies which could place China’s international trading relations at risk is antithetical to the Chinese Community Party’s 13th Five Year Plan for 2016-2020 to promote balanced international trade, inbound investment, and free trade zones.
It is entirely possible that China’s leadership does not fully appreciate the dangerous choices their countrymen are making and how their actions are being perceived on the world stage. Military-to-military encounters at sea are occurring on a daily basis, and the potential for a costly misstep increases with each passing day. So too, a miscalculation in the trade or economic arena would likely backfire since China is a trading nation and it can ill afford to have its products excluded from foreign markets. High-level diplomacy and cool heads should be the order of the day.
A maritime and international lawyer, Mark E. Rosen is the SVP and General Counsel of CNA and holds an adjunct faculty appointment at George Washington School of Law. The views expressed in this paper are those of the author alone and do not represent the views of CNA or any of its sponsors.
Featured Image: Triple-E class container ship “Madison Maersk” of Maersk Line loaded with containers is berthed at Nansha port in Guangzhou. (Reuters)
influence of emerging naval platforms and technologies in the geostrategic contours of the Indo-Pacific region. It identifies relevant historical precedents, forming the basis for various maritime development and security related projects in the region.
