PetroVietnam CEO Do Van Hau stated recently that the nine blocks are located deep within the Vietnamese continental shelf. As a result, the foreign ministry of Vietnam condemned the tender as an infringement upon national sovereignty, prompting a diplomatic spat between Hanoi and Beijing.

Beijing's appetite for new energy reserves outside of its territory is largely due to completely reasonable concerns over the situation in the Middle East, the region supplying the lion's share of the Chinese hydrocarbon import. As for Vietnam, it has been conducting energy explorations in the south China Sea for quite some time, with long-term licenses already issued to several foreign partners including ExxonModi and Gazprom. The Chinese CNOOC currently invites investors to blocks ##128-132 and 145-146, but it has to be taken into account that Gazprom started drilling works on four Vietnamese blocks in cooperation with PetroVietnam back in 2007, and in October, 2008 the Russian energy giant sealed a deal with Hanoi for the term of 30 years over blocks 129, 130, 131, and 132. Moreover, in April 2012 Gazprom and Hanoi reached an agreement to jointly cultivate license blocks 05.2 and 05.3.

China was late to step into the game but plays hard. In May, CNOOC launched its first deep-water drilling project in the South China Sea and designated the territory for an offshore platform worth around $1b. So far, China's exploratory activities remain confined to the coastal zone, but its more ambitious plans are not deeply hidden.

It is clear that, on top of the conflict with Vietnam, China is headed for serious polemics with Taiwan, Malaysia, Brunei, and the Philippines which similarly can cite convincing foundations for claims to the disputed shelf. Brawls over the Spratly and the Paracel Islands are a long-standing tradition which survived recurrent attempts to overcome the discord. The last of such attempts was made on June 12, when China and ASEAN diplomacy chiefs pledged to formulate in the foreseeable future a binding legal framework to decide which country should own the islands. Beijing, however, announced the above tender on June 23, before the intention became reality, and the prospects for further dialog dimmed. Chances are China does not believe that an agreement with ASEAN, of which Vietnam became member in 1995, can materialize any time soon, while the Chinese energy needs simply can't wait. 

Every party to the dispute can draw arguments in its favor from the 1982 UN Convention on the Law of the Sea, which authorizes countries to extract natural resources within the respective exclusive economic zones, at distances up to 200 miles from their shores. With the legislation in mind, over 100 countries branded 200-mile zones as their assets, but those occasionally overlap, making conflicts imminent.

The only viable type of solution is compromise based on territorial exchanges or shared use of natural resources. Actually, Petrovietnam and China's CNOC have a record of interacting in such a mode, as they implemented in concert energy projects in the northern part of the Gulf of Tonkin. Petrovietnam's list of foreign partners counts around 60 entries, and, at the peak of the current crisis, Hanoi reiterated that Beijing is welcome, but only as a foreign investor on pars with others.

Chinese and Vietnamese ships were briefly locked in a standoff over the exploration blocks last year, and though no fatalities were incurred, the relations between the two countries were scarred by the incident. Information campaigns linked to the territorial problem raged on both sides as a parallel process, though Hanoi denies the very existence of a territorial dispute and continues to hold that there is absolutely no subject for one. China is known to exert pressure on some of the potential partners of Petrovietnam, though it must be noted that Russia's Gazprom has faced none up to date. It came as a big win for China's energy diplomacy that Beijing managed to talk BP out of the exploration projects in the South China Sea, but the US ExxonMobile did not choose to capitulate on the issue.

In the light of the above, the decision made by India's ONGC to ignore the Chinese warnings and to stick to block 128 reads as an episode in the unfolding cold war over energy resources. Beijing sent a message to ONGC in 2011 that its exploratory activities on the Vietnamese shelf hurt China's sovereignty and, accordingly, were seen as illicit in the country. Indian Minister of State for Petroleum and Natural Gas R.P.N. Singh told the parliament in May, 2012 that ONGC would scrap the South China Sea project as economically unfeasible, but a policy U-turn followed shortly. Still, the impression is that India is trying to mitigate the impact of the discord on its relations with China: in June, ONGC and China's energy heavyweight CNPC inked a memorandum on exploratory activities in third-party countries, expanded cooperation in oil and gas processing, pipeline construction and management, etc. The deal can be interpreted as a form of exchange but may reflect far more strategic considerations.

Two key circumstances factor into the context. First, India and China quarrel chronically over a segment of the border in the Himalayas. Secondly, the West, Washington, in particular, is courting Delhi with a thinly veiled objective of convincing its leaders that India should take the role of a counterforce vis-a-vis China. It is likely that the decision made by the state-run ONGC to keep the block on the South China Sea shelf can be traced back to the Indian government rather than to the company's own top brass, and was born under the pervasive US influence. National Energy Institute director S. Pravosudov, for example, asserts, with references to Iran, Sudan, Libya, etc., that the US deliberately destabilizes the countries supplying oil to China. The rule of thumb on the chessboard is to cause the opponent's space four maneuvering to shrink, which, applied to China, means cutting the country off the energy supplies.

If the hypothesis is right, Washington can be expected to respond resolutely to any escalation putting the interests of ExxonMobile, the world's biggest energy company, in jeopardy. President Obama, by the way, recently laid out a US foreign-policy vision with the priorities shifted towards Asia Pacific. Importantly, the US has military assistance accords with Japan and Taiwan, and the overall conclusion is that Washington will get involved in whatever diplomatic or military conflicts arising in the region.

It is also an easy guess that, if the conflict erupts, it will immediately spill beyond the South China Sea. Multiple cases exemplify the trend: the gas reserves discovered in the proximity of Israel's shores were quickly contested by Lebanon. An Israeli air force commander then said that the zone to be defended was huge and the proper strategy was to build up the Israeli military presence across it, since the interests of the country were at stake and the government was fully aware of the challenge. France's Tribune explained in this connection that Israel had to strengthen the military group in the region even before the development of the gas deposits started. Curiously, the marine area Israel prepared to safeguard made 44,000 km squared, that is, twice the territory of Israel.

In the meantime, another conflict over energy reserves is rolling on near Cyprus. Claims to the natural riches are staked by Turkey based solely on the existence in the region of the totally unrecognized Turkish Republic of North Cyprus.

As the older mineral reserves dwindle and the costs of bringing new ones on line climb, conflicts over them, at times armed, are growing completely routine, and downright seizures authorized by national governments occur with increasing frequency. The overall tendency is, therefore, that energy demand emerges as the driver of global politics.
 

No doubt the Washington’s many years old human rights rhetoric, grown to become a foreign policy dogma, failed it. By ostracizing the ruling regimes in the Asia – Pacific for their incompatibility with “democratic values” in the US perception, it has involuntarily pushed them into China’s embrace. That’s the way it happened in case of Myanmar (Burma). Till the USA criticized the Myanmar leadership for lack of freedom the Chinese promoted their interests there while cooperating with the powers that be of this poorest country at all levels. The Myanmar’s economy and infrastructure received from China dozens of billion of US dollars, about the same amount was rendered as military aid. Myanmar President U Thein Sein’s visit to China in 2011 became an evident prove of the growing bilateral cooperation. Then the China’s leadership said very important things about Beijing and Rangoon sharing strategic vision of international problems, the fact that couldn’t go unnoticed by the White House and not put it on guard. 

The Myanmar’s geographic position has an important military strategic advantage – common border with India, China. Thailand and Laos. Myanmar is a good platform to exert pressure on China and exercise control over the strait of Malacca, passed by about 50 thousand ships yearly (one fifth or one fourth of the world commodity turnover). 11 millions barrels of oil are shipped through the strait daily. One of the oil consumers is China. Moreover Myanmar is rich in resources: oil, tin, tungsten, zinc, lead, copper, coal, precious stones, gas. It allows to easily win influential neighbors favor. Under the given circumstances Washington’s calls for the country’s international isolation will hardly produce any results. Myanmar will always find someone instead of the US.

The same story takes place in case of a small island nation called Timor-Leste. The island enjoys an advantageous geographic position. It’s situated at arm’s length from neighboring Australia and Indonesia, the bottom of the Timor Sea is rich in oil and gas. For instance, the Bayu – Undan’s oil reserves are estimated to be $ 3 billion. The vicinity of the strait of Vetar is important too. It’s a deep water strait and is ideal for submarines passage from the Pacific into the Indian ocean. In contingency submarines effective activities will require control over it, that, in its turn, requires control over Timor-Leste. In 2002 this former Portuguese colony eyed by Indonesia became independent. Since then the Washington and Beijing have been vying for influence there, the last one doing much better. The Chinese have already received a $ 378 million contract for two power plants construction. Light arms, uniform and other military equipment are bought in China. There is a 4000 Chinese diaspora on the island. A $ 3 billion credit from China was agreed on in January 2011. Before the career open Timorese used to get education in Australia or the USA to be promoted to high positions in politics or economy. Now it’s not the case anymore, they prefer to go to China for the purpose. 

As the situation dictates, Washington strengthens its military strategic ties with Australia and New Zealand. An Australian military delegation headed by Stephen Smith, minister of defense, visited the US in July 2011 on the occasion of the 60 anniversary of the bilateral alliance. Afghanistan and growing might of India and China were among the issues topping the agenda. Australia confirmed its resolve to go on being the US “south anchor” in South-East Asia (1). US State Secretary Hillary Clinton made public the Washington’s intent to make the XXI century a century of the US Pacific policy (2). Australia is the major US ally in this part of the globe, its army strength is 51 thousand and it has over 19000 reservists. The country’s mobilization reserve is 4,9 million men. Canberra’s military expenditure is 2% of its GDP. There are 16 US military facilities on its territory, including a missile test site and a navy communication station for nuclear submarines. Timor-Leste, Indonesia and Papua – New Guinea are situated to the North. The distance between Papua – New Guinea and continental Australia is only 145 km, narrowing down to just 5 km in case of the Australian Boigu and Papua – New Guinea. Vanuatu, New Caledonia and the Solomon Islands lie to the North- East of the Australian continent. New Zealand is situated to the South-East. Among the countries listed here only New Zealand is a staunch and unambiguous ally of Australia, be it economy or policy. The others are attentively (and not without results) viewed by Beijing. 

The United States and Australia have an agreement on US military presence on Australian soil. No new bases are envisioned but the US servicemen have a right of permanent access to the Australia’s military infrastructure and the US naval presence in adjacent seas is to grow. Having military facilities in South Korea and Japan the United States is able to boost its influence in Western and Southern Asia-Pacific, including the South China Sea considered to be sovereign territory by the Chinese. The Sea control presupposes obvious geopolitical advantages once this waterway is the shortest and the most safe one for shipping from China, Japan and Russia to the Singapore strait and back. 

New Zealand watches the Chinese Asia-Pacific diplomatic expansion closely, especially after China became close to the island nation of Fiji, situated in Southern Pacific, 1170 km from it. There is an apprehension that the very pace of Chinese – Fiji cooperation development may lead to one of the Fiji island becoming a place of China’s permanent naval presence. Here – the Chinese in Fiji, there – the Chinese in Timor. 

Moreover, there is a chance the Chinese would have a foothold in the Seychelles. China’s Defense Minister Liang Guanglie said so in September 2011 in response to the Seychelles president James Michael’s proposal to host a China’s naval base on his country’s soil. Situated between Asia and Africa to the North of Madagascar in the Western part of the Indian ocean, the Seychelles is a country of great strategic importance. Control over a significant part of the Indian ocean, as well as the waters adjacent to the shore of East Africa (Kenya, Mozambique, Somalia) becomes possible once an adequate naval force is based there. The Seychelles signed a military cooperation agreement with China in 2004 that includes 50 Seychellois servicemen getting training in China (3). Besides the Chinese rendered significant aid to the Seychellois navy. In turn the Seychelles openly declared adherence to the principle of “One China” that is refused to recognize Taiwan. The Chinese navy ships already patrol narrow waters of the Indian ocean where the pirates threat is high. They need logistics resupply and maintenance facilities. May be that’s what the Seychelles may provide them with. Once the Chinese economy depends on external trade to great extent, Beijing has vital interest in eliminating piracy in this waters. Washington fears then there will be no way to push the Chinese navy out (2). In 2004 Booz Allen Hamilton, US government consulting firm, reported the substance of the Chinese tactics is to acquire a “necklace” of naval basing facilities in the Indian ocean (3). The Chinese interest towards the Seychelles evokes apprehension on the part of Washington keeping in mind there is a US unmanned aerial vehicles facility on the islands destined to tackle mysterious Somali pirates and exercise control over the territory of Somalia. 

Still there are weak points of China’s position in the Asia-Pacific. Some experts say Beijing has no clear blue water strategy at the state’s level. Defense and promotion of economic interests is one thing, but a full-blown doctrine of strengthening its presence in the whole Pacific is something else. 

A blue water strategy is something of a larger scale than just strategy and tactics adopted by a navy. It should comprise coordinated multifunctional activities of special state institutions – from major staffs and military experts to oceanographic institutes and economists. That’s why China will avoid sea conflicts as long as it can to upgrade its naval potential and implement its strategy towards Pacific countries including those in the immediate vicinity of the two major US allies – New Zealand and Australia. Beijing needs time. China relies on diplomacy (inexpensive means of taking care of its interests) and economy. In case of economy China’s advancement into Africa is a good example: in 2003 the bilateral trade turnover was $10 billion, it was already $20 billion in 2004. China signed agreements on cooperation in the field of natural resources extraction with Angola, Nigeria, Zambia, Congo, Zimbabwe etc. Asia-Pacific is still only third China’s aid recipient – after Australia and the USA but it strives to get a foothold in as many strategically areas as possible, so that at the moment the US becomes critically weak it could start a dialogue with it not from the position of weakness but rather the position of strength. 

1. Edi Walsh «America’s Southern Anchor?» (The Diplomat August 25, 2011)

2. “Clinton says 21st century will be US`s Pacific century” (Xinhua/Wang Fengfeng, 12.11.2011)

3. Jody Ray Bennett «Seychelles: An Open Invitation for China» (ISN Insights, 27. 12.2011)

As the international media flashed on 1 December 2010 the photographs of culprits arrested in Barcelona, the picture of this particular international terror network came to surface. The Spanish police arrested seven people including six Pakistani nationals and one Nigerian national in the morning hours of 1st of December. The group was engaged in the task of stealing passports and other crucial items such as credit cards from the tourists visiting Barcelona, and sending them to Thailand for forgery so that they could be used for terrorist purposes. As the Thai police stated, “The group supplies fake passports to many groups, including those involved in terrorism, credit card fraud, human trafficking, weapons trading and illegal immigration.” The Spanish police claimed to have seized nine passports awaiting shipment to Thailand and another that had already been forged, along with a computer and 50 cell phones during the ongoing operation. The Thai police arrested two Pakistanis and one Thai, named Muhammad Athar Butt, Zeeshan Ehsan Butt and Sirikanya Kitbamrung at the border while they were trying to escape to Laos. Athar Butt, also known as Tony, was the head of the operation, and had under his control the offices of Brussels and London. But it is naïve to believe that the network has been busted in its totality. It may be the tip of the iceberg.

On a larger scale the terrorist linkages are with every passing day and with every new revelation appear evidently wide and global. The Madrid train bombings in the year 2004 had killed more than 190 people besides injuring 1500. In August 2009, Spanish police had arrested a Moroccan suspected of recruiting extremists through internet and helping them to go Pakistan’s Waziristan area, Afghanistan and Chechnya. Earlier in January 2008, the Spanish police had arrested 14 men, accused of being part of a wider suicide plot to target places in continental Europe. The Catalonia region of Spain has recently witnessed much turbulence, owing partly to immigrant communities, and particularly those who became influenced by extreme version of Islam. According to research institute, Elcano, 16 out of 28 anti-terrorist operations carried out since Madrid attacks of 2004 took place in the Catalonia region.  Not only Spain but also the whole Europe is increasingly included in the terrorist radar. Few months back, trained militants from the Afghanistan-Pakistan border areas were arrested, who were trained to strike targets across Europe, particularly Germany.

The name of Al Qaeda and its sister organizations, particularly Pakistan based LeT appeared widely in connection with recent arrests. What is more worrying is that the increasing collusion between these groups in devising common agenda and operations. Iliyas Kashmiri, an Al Qaeda operative with links with LeT, plays a major role in masterminding attacks in Europe. While Lashkar’s major focus is India, in recent years it has increased its operations beyond India and trained terrorists from other regions including Chechnya, Germany, Central Asia, etc. to give concrete shape to its operations. As media highlighted, the network arrested this month also provided necessary instruments such as fake passports to LeT to make its India operation successful. LeT was the main force behind the Mumbai terror attack in 2008, which killed more than 160 people, besides injuring hundreds. The fragile situation in Afghanistan-Pakistan region has further bolstered the LeT spirit to act in an unrestrained manner.

The collusion between forces like the Taliban, LeT and Al Qaeda has proved dangerous and may prove further disastrous in coming years. Perhaps it was incomprehensible a decade back that the terror networks could be so wide and so dangerous in terms of its operation and reach. Of late, it has almost become beyond comprehension to see terror network existing almost everywhere, in every part and corner of the world. The Indian government claimed that in the last few years it has defused about 800 sleeping terror cells on Indian soil itself. It is also common knowledge how part of the money to fund Mumbai terror network was routed through the north Italian town of Brescia. With huge support system including finance from smuggling and drug trafficking, the terrorist forces are playing dangerous games in the world.

But what is more important is the issue of perception among the terrorists as well as non-terrorists. Addition of religion colour made terrorist ploys further deadly, and at times made the differentiation between religious propagation and propagation of violence blurred. Hence, the more dangerous is the brainwashing of the innocent minds to take to guns for some inexplicable reasons, or for reasons not explicable rationally. When the young educated skilled men join the terror groups with a religious extremist zeal and provide guidance and intelligence support, then it becomes difficult on part of the governments to tackle them by mere means of force. The Pune arrests by India in 2009 showed how the young professionals such as doctors and engineers were actively involved in terrorist operations and designs.

The recent arrests in Spain and Thailand may appear trifle in terms of the mammoth networks the terror groups have raised worldwide. This global problem obviously needs a global approach. It may not be prudent enough to raise merely the security system at home of a particular country, and leaving the situation as it is at abroad. This approach lacks one of the crucial components terror groups employ in their operations, which is the penetration of the mind of the uninitiated. While illegal trafficking in arms and passports can be curtailed though even in that it is necessary to have international cooperation, the flow of radical and extremist ideas is difficult to be contained by computers or machines. This brings the most urgent necessity of the time to the fore: a collective approach to tackle the collective menace. The recent revelations just reinforce this argument.