China’s Offshore Energy Ambition is its Own Prisoner’s Dilemma
The signing of the memorandum of understanding for oil and gas development in the resource-rich South China Sea between China and the Philippines, which coincided with Chinese President Xi Jinping’s state visit to the country last month, may hardly come as a surprise given the dovish approach of Philippine President Rodrigo Duterte towards China at the onset of his administration.
As critics assail the tough-talking Duterte for kowtowing to China’s whims and acquiescing to its purported ownership of the South China Sea, the memorandum of understanding signing actually brings to light that a behemoth China, despite its unilateral actions in the South China Sea over the years, can otherwise be in a prisoner’s dilemma where cooperation through joint-exploration will turn out to be more beneficial than taking the route of avarice by siphoning oil and gas beneath this contested sea by itself.
The essence of the prisoner’s dilemma theory is that despite two competing parties possessing their own respective dominant strategies in a given situation, cooperation is conclusively more beneficial and outweighs any supposed gains if unilateral actions were taken by each competing party at the expense of the other.
While the exact area for this offshore development remains to be identified, there is no question that this area is centered within the vicinity of the Reed Bank, a contested guyot (underwater volcanic mountain) in the South China Sea which holds approximately 764 million to 2.2 billion barrels of oil and between 7.6 to 22 trillion cubic feet of natural gas. As both countries share the same energy insecurities, access to the Reed Bank’s resources has been dubbed a zero-sum game for both parties. China’s rejection of the 2016 United Nations Convention on the Law of the Sea (UNCLOS) ruling in favour of the Philippines’ sovereign rights and entitlements over Reed Bank, alongside the inability of the international community to enforce this ruling and the failure of the U.S. to reign in on China’s actions in the region throughout the years, have only strengthened China’s unimpeded resolve in the South China Sea.
In the grand scheme of things, China’s leadership’s pursuit of comprehensive maritime power has further been abetted by the development of its offshore energy sector in the region while simultaneously boosting its merchant fleet, ports infrastructure and naval modernization. Unequivocally, China’s military coupled with its modern offshore drilling capabilities, could enable it to take over Reed Bank easily just as it wrested control of the Mischief Reef in 1995 and Scarborough Shoal in 2012 from the Philippines. It could have also replicated the installation of a 2014 oil rig near Vietnam’s waters if it wanted to.
Yet China’s signing of the memorandum of understanding with the Philippines makes it cognizant of the fact that the Philippines also has a couple of tricks up its sleeve. For one, the Philippines controls Lawak Island and Ayungin Shoal, which both serve as strategic gateways to the Bank. Ayungin Shoal for its part, is guarded by a rusted World War II-era ship deliberately ran aground by the Philippines as a response to China’s takeover and fortification of Mischief Reef in the 1990s. Albeit rusted, the ship is still a commissioned Philippine navy ship replete with Philippine Marines. As such, this military ensemble is ensconced in the 1951 Mutual Defense Treaty (MDT) with the United States. And despite Duterte’s loathing of the U.S., the MDT nonetheless obligates both parties to come to the defence of the other if under attack by a foreign entity. And this doesn’t exempt Philippine military personnel stationed on a dilapidated ship.
Then there’s Duterte’s implausible comments culminating in his campaign when he planned to ride a jet ski and plant the Philippine flag on a disputed island to assert the country’s claims, further fortifying Philippine-held islands, his willingness to go to war with China if it crosses the red line – that is in specific reference to unilateral drilling for resources in the South China Sea within Philippine claimed territory; and telling China to ‘temper’ its behaviour after Philippine military aircraft have received repeated radio warnings from the Chinese while patrolling near disputed islands. While these contradictory statements may have everyone scratching their heads, they highlight an apparent silver lining within Duterte’s perceived pro-China policies. Given that strategies are nonetheless available to the Philippines through military and diplomatic means (as mentioned above) at Duterte’s disposal, the signing of this memorandum of understanding shouldn’t then be easily dismissed as another which serves solely China’s own interests. It should also be interpreted that the memorandum of understanding is another way for the Philippines to put China’s aspirations in the South China Sea in check.