The Habibie Center, Jakarta July 26, 2016

THE HABIBIE CENTER DISCUSSION REPORT No. 25/July2016 th 36 TALKING ASEAN Post-Tribunal s Ruling South China Sea Dispute The Habibie Center, Jakarta July 26, 2016

INTRODUCTION JAKARTA On Tuesday, 26 July 2016, The Habibie Center hosted the 36 th Talking ASEAN dialogue Post- Tribunal s Ruling South China Sea Dispute at The Habibie Center Building in Jakarta. This edition of Talking ASEAN was moderated by Mr. A. Ibrahim Almuttaqi (Head ASEAN Studies Program, The Habibie Center) and featured an expert panel made up of Dr. Siswo Pramono (Director General/Head of the Policy Analysis & Development Agency (BPPK) at the Ministry of Foreign Affairs of the Republic of Indonesia), Mr. Rene Pattiradjawane (Chairman of the Center for Chinese Studies Foundation), and Mr. Muhamad Arif (Researcher at the ASEAN Studies Program, The Habibie Center). The objectives of this Talking ASEAN were: (a) To identify how the ruling would affect the prospect for the rule-based order and stability in the region; (b) To identify the challenges and opportunities presented by the ruling to the unity and centrality of ASEAN in maintaining peace and stability in the region; and (c) To explore the possible courses of action that Indonesia, and other concerned parties, could take to make the most of the ruling for the sake of maintaining peace and stability in the region. This discussion report summarizes the key points of each speaker, as well as the question and answer session that followed.

SPEAKERS PRESENTATION Mr. Muhamad Arif international politics. Mr. Arif used this view to explain China s behavior. When China refuses to accept the ruling, basically no one can do anything about it. It is also logical for China to not abide by the ruling because it does not serving its interest. Mr. Muhamad Arif - Researcher at the ASEAN Studies Program, The Habibie Center As the first speaker to present, Mr. Muhamad Arif wished to highlight two major points for the discussion. First, he wanted to explore why China would not abide by the ruling issued by the Permanent Court of Arbitration (PCA). Second, Mr. Arif would also try to see how the ruling would affect the future strategic environment in the South China Sea. In his opinion, China s behavior, the United States response towards it, and ASEAN s position on the matter are the three important factors that would drive the future strategic environment in this area in the coming future. Mr. Arif proceeded by explaining some of the theory of why international law lacks an independent role that governs states behavior. In a very fundamental sense, Mr. Arif saw that there is no higher authority above states. In the current Westphalian system, states are the ultimate highest authority. He explained that the existence of international institutions could only govern states behavior but not in an independent way. States will only follow the prescriptions of these institutions only and as long as they serve the state s interests. Therefore, he saw that there was a lack of independent role for international institutions, including regarding international laws in governing states behavior. He further added that unlike domestic politics, there is no agreed or legitimate mechanism of law enforcement in In addition to the aforementioned argument, this case is even further complicated when the states explained above are great powers. He mentioned that states like China and the United States do not like to be governed or to be told what to do. This is because great powers need to maintain their strategic autonomy and to keep their options open. If they lose a proceeding in an international arbitration court, they could resort to the use of military force as an option to maintain their strategic autonomy. Mr. Arif saw that these great powers have more alternatives at their disposal compare to smaller powers. By using this theoretical framework, Mr. Arif continued to explain the factor behind China s reluctance to abide by the ruling. First, the South China Sea is basically China s core interest as a major source of the government s legitimacy. From a geo-strategic perspective, there is a need for China to maintain its presence and secure the sea-lanes of information in the South China Sea. Whether it is legitimate from a legal perspective, would be another discussion. Second of all, Mr. Arif considered that foreign policy is a twolevel game. When the government does something, it is not only for the international audience but also for its own domestic audience. In the issue of the South China Sea, the core interest of China is to show its strength and their legitimacy not only to the United States and other regional powers, but also to its own domestic audience. The third factor that Mr. Arif highlighted is the low cost of non-compliance on the side of China. He saw that there would not be any drastic change in Obama s foreign policy in that Obama was unlikely to take too much risks. From the legal perspective, Mr. Arif also considered that the United States is in an awkward position as the United States is not a signatory of UNCLOS and yet call on others to abide by the PCA s outcome. 1

SPEAKERS PRESENTATION Mr. Muhamad Arif Taking from the ASEAN perspective, Mr. Arif mentioned that, as expected, the Joint Communiqué failed to mention specifically about China and the PCA ruling. He argued that this was because of ASEAN s vulnerabilty towards Chinese s position. He highlighted the asymmetric relationship between ASEAN memberstates and China. Mr. Arif also mentioned that as long as ASEAN does not have a credible alliance partner, balancing position would not be effective. As long as the United States is reluctant to balance China militarily, there is no choice for Southeast Asian countries other than to compromise and facilitate the rise of China. The issue is further complicated when the states involved are great powers. Great powers do not like to be governed or to be told what to do. This is because great powers need to maintain their strategic autonomy and to keep their options open. - Mr. Muhamad Arif - Lastly, Mr. Arif predicted what the future South China Sea strategic environment look like. He considered that everyone will adopt and wait and see policy, including China. Second, the diplomatic pressure on China would push China to be more receptive towards the idea of resource sharing in return for de facto acceptance of China s presence in the South China Sea. Third, he saw that the hedging strategy of ASEAN towards China would most likely be continued. 2

SPEAKERS PRESENTATION Dr. Siswo Pramono after the PCA ruling. At this point, Dr. Pramono echoed Mr. Arif s statement that in the short term future, it is more likely to be a status quo situation. Dr. Pramono also added that up to now, there is no report on the rise of chauvinistic nationalism, such as big demonstrations in response to the PCA verdict. He considered this as a good thing, because every party has shown some degree of restraint, which is a very good starting point after the PCA ruling. Dr. Siswo Pramono - Director General/Head of the Policy Analysis & Development Agency (BPPK), Ministry of Foreign Affairs of the Republic of Indonesia Dr. Pramono began by explaining that his presentation would be more of a personal perspective based on his conversation with diplomatic circle, and underlined that it did not represent the views of the Ministry of Foreign Affairs of the Republic of Indonesia. He proceeded to highlight some of the key points of the rulings. He mentioned that China s historical right and nine-dash line was ruled as contrary to UNCLOS. As far as Indonesia was concerned, from the very beginning, the country does not recognize the existence of the nine-dash line. Dr. Pramono also mentioned that the Indonesian government expects everyone who is a party to UNCLOS, including China, to behave and honor the international law in solving the dispute in the South China Sea. Dr. Pramono continued by exploring the political standing of each party post-pca ruling. First, from the Chinese side, he pointed to media reports that stated both China and Taiwan rejected the verdict and that their political elites are feeling humiliated by the outcome. Secondly, China resorted to diplomacy as a mean for open negotiation. To some extent, Dr. Pramono also noticed mild military show of force as a tool to influence the outcome of diplomacy. The third point that he highlighted was that China has not designed a comprehensive policy towards the South China Sea On the next part of his presentation, Dr. Pramono discussed ASEAN s political standing. ASEAN has issued a statement and joint communiqué, and moreover so too had individual ASEAN member states on the outcome of the PCA. There are several common elements in most of the national statements issued by ASEAN member states including the point of self-restraint, conformity with international law and UNCLOS in reference with other ASEAN documents, such as the Treaty of Amity of Cooperation (TAC) and the Declaration of Conduct of Parties to the South China Sea(DOC). In reading China s reaction, Dr. Pramono saw that they actually understand the complexity of the issue and the power of the norm. For the last 20 years, the PCA has issued active verdicts with legal certainty, of which 17 out of 18 verdicts were implemented by the parties. China also understands its limitations. Such as in the economic sector, there is declining growth. China s food security and energy security are tied up with regional markets, not to mention about the income gap and China s growing ageing community. Beside economic development, China also has a rapid and growing military expenditure. In the past, China put a diversion of issue between the domestic domain and external domain. Dr. Pramono mentioned that it may work in the past, but it is too risky to apply the same thing in the present. China s public diplomacy agenda presented as the peaceful rise of China is also important for them and it has been going on for the past 10 years. Therefore China will be very careful in their reaction to the South China Sea issue. He further elaborated that China is going to use the so- 3

SPEAKERS PRESENTATION Dr. Siswo Pramono called smart power formulation in order to strike the balance between the behavior that is acceptable in the region and at the same time showing a firm diplomatic position on the South China Sea issue. On the ASEAN side, Dr. Pranowo emphasized that Indonesia should take leadership in this crucial time. He argued that the statement coming from ASEAN is necessary but difficult to execute because the existing ASEAN norms have to be wrapped in acceptable words. As China remains an important partner in the region, it is also crucial for ASEAN to provide a comfortable negotiating room for China. Dr. Pranowo further suggested that ASEAN norms reflected in ZOPFAN, TAC and DOC need to be revisited. There are also several outcomes following the meeting in Laos this month, namely: (1) Joint Statement of The Foreign Ministers of ASEAN Member States and China on The Full and Effective Implementation of The Declaration on The Conduct of Parties in The South China Sea; (2) 49 th ASEAN Foreign Ministers Meeting Joint Communiqué; and (3) Joint Statement of the Foreign Ministers of ASEAN Member States on the Maintenance of Peace, Security, and Stability in the Region. At the end, Dr. Pranowo mentioned that based on Indonesia s initiative, there is an ASEAN Stand-Alone Statement on the Maintenance of Peace, Security, and Stability in the Region. It is reiterated that Southeast Asia should become a peaceful, stable and secure region that creates prosperity at the regional level and beyond. The Indonesian government expects everyone who is a party to UNCLOS, including China, to behave and honor the international law in solving the dispute in the South China Sea. - Dr. Siswo Pramono - 4

SPEAKERS PRESENTATION Mr. Rene Pattiradjawane Mr. Rene Pattiradjawane - Chairman of the Center for Chinese Studies Foundation The last to speak was Mr. Pattiradjawane who offered his perspective on ASEAN s stances post the PCA ruling on the South China. He started by stressing the importance of the North in Indonesian culture by pointing to the phrase mengutarakan. Whatever happens in the North, will bring some effect to Indonesia and to all others south of China.. Mr. Pattiradjawane further reviewed some of the important paragraphs in the PCA ruling. First, in paragraph 261, it was highlighted that China s claim to historic rights is incompatible with UNCLOS as it exceeds the limits of China s maritime zone. This is important because for the past 20 years, since the workshop on the South China Sea was started by Amb. Hasjim Djalal, the maritime rights that has been raised by the Chinese is closely related to this issue. Secondly, Mr. Pattiradjawane also highlighted paragraph 270 which stated, The Tribunal is unable to identify any evidence that would suggest that China historically regulated or controlled fishing in the South China Sea, beyond the limits of territorial sea. He found this particular part interesting because it emphasized on the fisheries issues. According to Mr. Pattiradjawane, what happened in the South China Sea is not only a matter of overlapping sovereignty claim, but it also has to do directly with food security and energy security. Mr. Pattiradjawane then referred to a map that showed China s so-called traditional fishing ground. According to the map, the Chinese are trying to express their maritime rights and interests regarding to this particular line, the nine-dash line. But Mr. Pattiradjawane pointed out that the nine-dash line in the map was different from the way we understand it in our perception. The Chinese claimed the nine-dash line as their traditional water borders. It further asserts that the whole seas in the South China Sea belong to China. He also pointed out that Beijing has no objections towards Indonesia s sovereignty over Natuna Islands, but it did not mention about the water surrounding Natuna. This is one of the important aspects that explains China s attitude of dragging Indonesia into the conflict. On the next part of his presentation, Mr. Pattiradjawane touched upon the changing strategic regional environment affecting ASEAN and the South China Sea dispute. First, he emphasized that we need to understand that ASEAN right now is maturing into a credible, international organization with a clear vision of community. Looking at the European Union case recently, ASEAN will try to avoid that. Although in the Statement, ASEAN did not mention explicitly about the PCA ruling, this was unsurprising given it was a norm of ASEAN to stay united and avoid anything that could divide the regional grouping. Secondly, Mr. Pattiradjawane noted that ASEAN is an establishment similar to an intricate web of cooperation. There is no regional organization in the world that has this complex mechanism of cooperation. Thirdly, Southeast Asia and East Asia has been growing in their prominence as drivers of global economic growth. Fourth, he saw that Southeast Asia has strong political and social stability compared to most part of the worlds, especially the Middle East. Fifth, this trend is also supported with the blossoming of regional initiatives such as China s One-Belt-One-Road, Indonesia s Global Maritime Axis, and the rise of foreign direct investment into Indonesia and the region. 5

SPEAKERS PRESENTATION Mr. Rene Pattiradjawane Finally, Mr. Pattiradjawane also argued that the increasing use of arbitration and mediation as a credible means of dispute resolution show that Asian societies have evolved to become more rule-based within the culture of international law in Southeast Asia. What is happening in the South China Sea is not only a matter of overlapping sovereignty claim, but it also has to do directly with food security and energy security. - Mr. Rene Pattiradjawane - 6

Q&A SESSION Dr. Siswo Pramono I think in many statement of ASEAN, we would like to have an early conclusion of the COC. This is an area where ASEAN would like to have a speed up negotiation. ASEAN s stance is quite clear that we would like to urge China and the Philippines to settle the dispute peacefully. If we look at the DOC or other convention, they suggest respecting international law, including the mechanism under the UNCLOS. Mr. A. Ibrahim Almuttaqi - Head ASEAN Studies Program, The Habibie Center Comment No.1 How far is the progress of the Code of Conduct? How to preserve the non-use of force in this situation? Comment No.2 What are the next steps and the possibilities after the ruling in The Hague? Comment No.3 How about Indonesia s perspective? Indonesia is not a party to the overlapping claims. However with its location and its role in ASEAN, it will affect Indonesia s position. Mr. Rene Pattiradjawane On the COC, I think it has received all the attention post-pca. We need to adjust the COC. The principle is there, it s a confidence building mechanism between ASEAN and China. But if Manila and Beijing are going to proceed to negotiations, what kind of rulings will the negotiation be based on? Is it going to be based on the UNCLOS? The PCA? Or are these parties going to make their own ruling without mentioning the PCA? ASEAN, especially Vietnam, will use PCA as jurisprudence. Everything has to be objective to the PCA. This is a very delicate situation as we do not know about the post-pca situation so far. There is already a reduction of tensions and no hard-speaking comments, either from Washington or Beijing. The PCA ruling will take some time to be digested. Even the Chinese is still looking for its new position to adjust with the PCA ruling. It is interesting because for the past one week, there isn t any mention about the nine-dash line in the Chinese media. This will be a good indication that the Chinese actually considers the PCA ruling. On the issue of Indonesia s position, we never really take any position. Since 2009, we already said that there is no such thing as the ninedash line. However, being the largest country in ASEAN, it is our responsibility to ensure the South China Sea is not influenced, not only by the Chinese but also by the Americans. 7

Q&A SESSION Muhamad Arif On the DOC and the COC, I disagree with Mr. Pattiradjawane. Instead of being out of fashion, the post-pca situatoin has given the DOC new momentum. When China refused to participate in the proceedings, there are two points that China made. First, they claimed that the Philippines filed a case regarding sovereignty; hence the PCA has no jurisdiction over it. Second, China claims that the Philippines has violated the DOC, because DOC contains a mechanism on dispute settlement. China thinks that the Philippines should go through DOC mechanism first, before they filed the case to the PCA. Now, when China refuses to accept the proceedings, there is an opportunity for ASEAN member states to ask China to accelerate the negotiation through the COC. However at some point, I have to agree that the COC or the DOC is a strategic document. It is not meant to be operational. Therefore, it needs to be complimented by documents that are more operatable and more detailed in terms of how the Southeast Asian countries will interact with China on this issue. One point that we need to explore further is the need of a document that rules how these countries could avoid the unexpected encounter at sea and if such encounters happens, how to manage it in order to stop its escalation. This kind of operationalised mechanism needs to be there and negotiated to compliment the strategic ones. On what is next, the PCA has stated that it s ruling is legally final and binding. With China s refusal to accept it, I think there is little prospect that China would go the same path as the Philippines. How the stories develop would not depend on the ruling per se. It depends on how the states in the region will respond to the ruling. --- END --- 8

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PROJECT SUPERVISOR: Rahimah Abdulrahim (Executive Director) Hadi Kuntjara (Deputy Director for Operations) HEAD OF ASEAN STUDIES PROGRAM: A. Ibrahim Almuttaqi RESEARCHERS: Fina Astriana Muhamad Arif Askabea Fadhilla FINANCE & ADMINISTRATION : Mila Oktaviani Layout and Design by Rahma ASEAN Studies Program - The Habibie Center The Habibie Center Building Jl. Kemang Selatan No.98, Jakarta 12560 Tel: 62 21 781 7211 Fax: 62 21 781 7212 Email: thc@habibiecenter.or.id www.habibiecenter.or.id www.thcasean.org facebook.com/habibiecenter @habibiecenter