Report

China's Oil Rig Gambit

China's dispatch of an oil rig to waters claimed by Vietnam threatens armed conflict, and makes Washington a party whether it likes it or not.

As China and Vietnam enter the second week of their tense naval standoff in the South China Sea, three questions loom large: What is China trying to achieve, could this turn into a shooting war between the two historical enemies, and what does this all mean for the U.S. pivot to Asia?

The short answers: China watchers are puzzled by Beijing's aggressive behavior, which seems both a departure from its previous approach to regional relations and potentially counterproductive; no guns have yet been drawn, but this could quickly turn violent; and U.S. desire to maintain influence in the region could hinge on how it handles a dispute between two communist countries -- and on whether neighboring nations believe Washington is willing to go to the mat to stand up to a rising China.

China's dispatch of a huge, billion-dollar offshore oil rig to waters claimed by both Beijing and Hanoi sparked the biggest conflict in years between the two countries. Over the weekend, Vietnamese officials said, Chinese ships sent to escort the oil rig rammed and fired water cannons at Vietnamese coast guard vessels sent to investigate. Tensions remain at a fever pitch, with Chinese officials claiming Friday, May 9, that Vietnamese ships and frogmen are interfering with the oil rig's operations, though no further naval clashes have been confirmed.

The clash, the most serious since a similar showdown between China and Vietnam in 2007, has zoomed to the top of the agenda for the summit this weekend of the Association of Southeast Asian Nations (ASEAN), which in turn has infuriated Beijing. China doesn't want any international groupings to discuss the maritime disputes, which it prefers to settle on a bilateral basis.

The Philippines, which has its own fresh dispute with China this week after Philippine Coast Guard officials arrested someone they said was an illegal Chinese fisherman, will seek to put maritime disputes at the heart of the ASEAN confab and seek progress on a code of conduct that could give countries a peaceful way to resolve territorial disputes. In response, Chinese state-controlled media attacked the Philippines for trying to "instigate tension" in the region by promising to bring up maritime disputes at the annual ASEAN summit.

The real bad guy, in Chinese eyes, isn't the Philippines or Vietnam, however. Instead, Beijing says that the United States, by pursuing its pivot to Asia, has emboldened countries in the region to take an unnecessarily tougher and more provocative stance toward China than they had in recent years.

"It must be pointed out that the recent series of irresponsible and wrong comments from the United States, which neglect the facts about the relevant waters, have encouraged certain countries' dangerous and provocative behavior," a Chinese Foreign Ministry spokeswoman said at a regular briefing Friday, Reuters reported.

China was responding to tough talk from the U.S. State Department in the wake of news that the two countries had actually clashed over the oil rig's deployment. On Wednesday, State Department spokesperson Jen Psaki stated that China's aggressive approach to advancing its claims over a broad stretch of the South China Sea "undermines peace and stability in the region."

On Thursday, after Chinese officials alleged that Vietnamese ships had attacked their vessels more than 170 times, Psaki reiterated that the United States sees China as the bad actor in this particular drama. "We think it's the Chinese side that is exhibiting provocative actions here," she said.

She repeated the U.S. position at a briefing on Friday, saying that though the United States takes no position on the sovereignty dispute "any time there are provocative or unhelpful actions taken that put the maintenance of peace and stability at risk, I think that's something that any country has the right to have concerns about."

For a nation that spent 30 years reassuring neighbors that it sought a "peaceful rise" in both economic and military power, China's bold move to dispatch an oil rig to waters inside Vietnam's exclusive economic zone, and then defend it with about 80 coast guard and naval vessels, raises serious questions. Here's a good one with which to start: Just what is China thinking?

"Something fundamental is taking place in China's foreign-policy behavior," said David Lai, a China expert at the Strategic Studies Institute at the U.S. Army War College. "The Chinese are changing from a 'low profile, avoid showdowns' approach to one that is more proactive."

Lai has spent years teaching U.S. defense officials to understand Chinese strategy through the board game of wei qi, also known as Go in the West. He says China's dispatch of the oil rig to disputed waters, which is hard to justify on commercial, oil-extraction grounds, makes more sense if understood in terms of the stones, or pieces, that are strategically placed on a wei qi board.

"When you put facts on the ground, it's like you put a stone there, and that stone has impact. The game is all about position-based power," he said, drawing parallels between the seemingly immovable oil rig and Chinese designs in the South China Sea.

Other China experts chalk up Beijing's aggressive behavior to concerns among the ruling Communist Party's senior leadership that one of the main pillars of its legitimacy and popular support -- the country's roaring economy -- could be wobbling amid signs of slowing growth and a potentially devastating real estate bubble.

"Domestic political stability is probably the single most important interest that the Chinese are pursuing with their regional maritime strategy," said Peter Dutton, the head of the China Maritime Studies Institute at the U.S. Naval War College.

He sees parallels with the way that China fanned the flames of nationalism and anti-Japanese sentiment during a 2012 dispute over the Senkaku Islands. "It was an opportunity to create domestic political space by dangling the bright, shiny object of nationalism off to the side and changing the focus of the conversation," Dutton said.

The big question is whether the brinkmanship around the oil rig is mere posturing or has the potential to turn into something far more serious. There are a couple of reasons to worry: Vietnam, unlike the Philippines and Japan, has no formal defense agreement with the United States, which means Beijing doesn't have to worry about Washington being obliged to ride to Hanoi's rescue. At the same time, Vietnam and China have fought each other, on and off, for centuries.

More recently, Vietnam and China fought a major land war in 1979; they clashed over Chinese occupation of the Paracel Islands, where the rig is, in 1974; and they collided in a deadly spat over disputed territories in the late 1980s that left scores of Vietnamese dead.

And while U.S. President Barack Obama made a point of reaffirming formal defense ties with Tokyo and Manila during his recent, four-country Asian tour, Vietnam has no such agreement with the United States. Until recently, in fact, many observers feared that U.S. defense obligations to Japan could suck the United States into a conflict with China because those obligations extend to the disputed Senkaku Islands claimed by both countries. Lately, however, China has made moves to lower the tension with Japan over those islands with diplomatic missions to Tokyo and fewer naval and air patrols of the disputed islands.

Could the naval skirmish between China and Vietnam move beyond water cannons to live fire?

"I think so," said M. Taylor Fravel, an expert on Asian maritime disputes at the Massachusetts Institute of Technology. "I'm not at all worried by shots being fired between China and the Philippines. But the Vietnamese have a different set of capabilities and they have a different history with China."

Given Vietnam's desire to keep China from tapping what it sees as its national oil and gas wealth, and given the close proximity of so many ships, the jostling could "conceivably escalate to the use of armed force," Fravel said.

Dutton, meanwhile, says the combination of Vietnam's vulnerability and China's apparent belief that its vital national interests are at play in the oil dispute means that shots could soon be fired.

"It would seem to me that conflict is something that we all have to consider as a very real possibility," he said.

How does this affect the United States? In Japan, Obama went out of his way to stress that U.S. security guarantees extend to the Senkaku Islands, perhaps to forestall the kind of ambiguity that led to the 1950 invasion of South Korea, when U.S. officials intimated that Seoul was not covered by the U.S. security blanket.

But in the South China Sea, the United States has no defense accord or alliance with Vietnam, and it takes no position on which country actually owns the collection of islands in the Paracel chain, which form the basis for China's insistence that its oil rig is operating lawfully. Washington has simply stressed, as it has for years, that it wants to preserve freedom of navigation in the area and that it urges states to use peaceful means to resolve disputes. Notably, Tokyo and Washington backed the Philippines' decision to take China to court over their islands dispute.

Still, just because Washington doesn't want to become directly involved in the South China Sea doesn't mean it can avoid it.

"This is a real challenge for the United States. One of the objectives in the region is to reassure allies, partners, and friends. And if we don't get involved, then reassuring allies, partners, and friends is called into question," Dutton of the Naval War College said.

Photo by Vietnam Coast Guard - AP

Report

Myanmar's Unrepentant Arms Czar

The general sanctioned for dealing with North Korea -- and the village he razed to build a weapons factory.

This is Thein Htay.

He is, by all accounts, a pretty bad guy. We're sure his mother loves him, of course, but he has been sanctioned by the U.S. Treasury Department.

Although Barack Obama's administration has been engaging Myanmar's generals to facilitate the country's transition to civilian rule, they've made an exception for this guy because of his dealings with North Korea.

Thein Htay controls something called the Directorate of Defense Industries (DDI) in Myanmar -- a massive state enterprise alleged to comprise more than two dozen arms factories, secret overseas bank accounts, and a bustling trade with North Korea in missiles and who-knows-what-else. If Myanmar is going to make the transition to democracy, guys like this have to go. But the disturbing aspect to this story is that, despite U.S. sanctions against Thein Htay and the regime's promises to end cooperation with North Korea, his empire is getting bigger.

But don't take the Treasury Department's word on whether Thein Htay is a bad guy. Ask the people who used to live in the tiny village of Lebinaing, a little hamlet near a place called Pauk. One day the army showed up, confiscated their farms, razed their village, and built a huge factory -- one of more than two dozen in Thein Htay's empire of arms factories. 

You can read all about the episode in Unity Journal, a weekly publication in Myanmar whose reporters interviewed the villagers and took pictures of the facility in January 2014. Well, you could have read all about it -- but Thein Htay apparently doesn't like scrutiny. The Myanmar government quickly arrested four reporters and the CEO for violating the state secrets act and confiscated all copies of the magazine. The five journalists remain rotting in jail. 

The United States has engaged Myanmar in the hopes that the country will move toward a more open society. As part of the process of relaxing military rule, loosening censorship, and releasing dissidents, Myanmar's generals were also supposed to quit North Korea. The Obama administration has been willing to accept at face value Myanmar's promises to end its ties with North Korea and any illicit weapons programs because U.S. officials believe that democratization will solve any nonproliferation problems, whether these involve the missile trade with North Korea or unanswered questions about Myanmar's interest in nuclear technologies. What happened near Pauk, however, suggests that the White House is wrong. An open society can't take root in Myanmar as long as institutions like the Directorate of Defense Industries seize people's farms for their factories and the government arrests journalists to avoid scrutiny.

The story of what happened near Pauk is an interesting one. In February, Unity published an article based on interviews with people living near Pauk. They claimed that the site was unusual: It had very heavy security, it had been visited by senior regime figures, and it was staffed by foreign workers. And, of course, they were upset that their farms had been taken and their village destroyed. The story received international attention following the detention of the Unity journalists and the confiscation of all copies of that edition of their magazine, which contained images of the site. The government acknowledged that the facility is defense-related, and it later claimed that the facility is a standard ordnance factory of unspecified purpose.

The images as published in Unity.

Based on a single satellite image purchased by Foreign Policy, we were able to locate and analyze the facility. Its scale is surprising. It certainly doesn't look like a standard ordnance factory. (The Center for Nonproliferation Studies has published a full analysis of how we matched the picture to the site.) 

Site of alleged chemical weapons facility.

The image confirms many of the details provided by the villagers. The security perimeter, including the main gate, is formidable. There is a helipad of the sort one only sees at facilities that receive VIP visitors. And, in addition to housing constructed for Myanmar workers, there are barracks-style buildings similar to housing provided for foreign personnel at other DDI sites. Lebinaing has been demolished to clear an area around the perimeter and make room for a transformer substation.

In the left image from 2012, the village of Lebinaing is still visible. In the right January 2014 image the village has been razed.

The locals made a number of other claims that are more difficult to verify. They believe that the facility is intended to produce chemical weapons. The Unity story also reportedly quoted a local employee saying he saw "rockets" at the site. It is very difficult to identify a chemical weapons facility using only overhead imagery, but the scale of the facility and its location are certainly unlike "standard ordnance factories" seen elsewhere. It comprises five enormous warehouses, with more than 200,000 square meters of floor space.

The allegations of chemical weapons production would be easy enough to address if Myanmar were simply to make good on its promise to accede to the Chemical Weapons Convention (CWC). Myanmar signed the agreement in 1993 but has delayed bringing it (and its verification measures) into force for more than two decades. Myanmar keeps making promises: The country hosted a technical assistance delegation from the CWC's implementing organization in February 2013, and, as recently as December, a spokesperson said that Myanmar continues making preparations to accede to the treaty. The same spokesman again repeated this promise in February in the wake of the allegations. Although it certainly does take time to prepare initial declarations and the requisite implementing legislation and institutions to abide by the CWC's terms, Myanmar seems to be stalling. Once it accedes to the treaty, the government will have a 30-day period to declare all materials and activities under the scope of the CWC. All declarations will then be subject to inspection and open to requests for clarification.

The locals also stated that the foreign workers were Chinese. Again, overhead imagery is no help unless the foreign workers bring their mothers and you image them doing qigong at the crack of dawn. But the site bears a number of startling resemblances to another DDI facility -- this one near Minbu -- that the United States believes is a North Korean-supplied factory that makes missiles of an unspecified type. The two facilities have identical security gates and helipads, as well as similar barracks that are not for Myanmar workers.

Left: A security gate, helipad and barracks at a facility near Minbu where North Korean personnel are rumored to live; Right: similar features at the site near Pauk.

There is ample evidence of ties between North Korea and the Directorate of Defense Industries. Thein Htay accompanied the head of Myanmar's military on a visit to Pyongyang in 2008. His Korean is apparently good enough that he served as the interpreter. Thein Htay later led a delegation of Myanmar officials to Beijing to meet with North Korean officials. He reportedly maintains secret bank accounts in Singapore that fund much of his country's trade with North Korea. It's not hard to understand why the Treasury Department singled him out.

What is surprising, however, is that the Directorate of Defense Industries is expanding. The facility near Pauk is enormous -- and brand-new. DDI is building a number of new industry sites, as well as modernizing and expanding existing sites. The facility near Pauk is just the tip of the iceberg.

This cannot be what the Obama administration expected when Myanmar agreed to end its illicit programs and cut off ties to North Korea. Rather than withering, DDI is getting bigger, richer, and more powerful. And when nosy journalists poke around and interview the farmers who've been turned out of their homes, the entire repressive apparatus of the state descends to stop any scrutiny. This is the antithesis of a democratic, open society.

The Obama administration may have been right to defer nonproliferation concerns while working with Myanmar's generals to transition to quasi-civilian rule. But what is clear, to us at least, is that this process is no longer sustainable without additional steps to bring Myanmar into compliance with international nonproliferation commitments and norms. A democratic society must be able to hold accountable people like Thein Htay and institutions like DDI if it is to be worthy of the name.

EPA/NYEIN CHAN NAING; Irrawaddy; Astrium; Microsoft Corporation/Digital Globe; Astrium; Digital Globe/Astrium