 Well, thank you very much and welcome back. I'm delighted to have the honor to chair this first panel, the significance of the South China Sea dispute. We've got a great lineup of panelists here. The goal of this panel is to put the South China Sea in context. We'll look at the big picture from a geo-strategic, geopolitical point of view, take a look at the economics that impact the waters and try to put some of the economics, at least at the beginning, ahead of sovereignty and disputes. We've got a highly capable lineup here this morning. I'm really pleased that we could get my friend and colleague Patrick Cronin here. Patrick, as you know, is a senior advisor and senior director of the Asia-Pacific Security program at the Center for a New American Security. Patrick has been a leader of think tanks and institutes that think strategically around this town, including here at CSIS. So it's good to have you back in the halls of CSIS, Patrick. Next we have Alexander Medelica. He is the senior economist and presidential management fellow in the Office of International and Integrated Energy Analysis at the US Energy Information Administration, or the EIA. And for all of us who work on the South China Sea, we've all read his reports. He actually was the leader of the team that wrote the reports on what energy resources are under these waters in the South China Sea. So really good to have Alexander here with us today. And finally, last but not least, my colleague, Murray Hebert, who's our deputy director of the Cemetery Chair at CSIS. Murray's here, and he's going to talk a little bit about protein and fish and fisheries and the economics of those things that swim under the waters and what they mean to the debate. So we'll kick off them and ask the panelists to each do about 10 minutes. No more than 10 minutes, please. And then we will open up to a question and answer. So Patrick, would you do the honor to kick us off? Well, Ernie, thank you very much. What a tribute to the work that you and Murray are doing here that CSIS is doing, and also a tribute to how important these issues are to have this distinguished and large audience come out for this session. Strategically, given Asia's rise over this century and over the recent past, we can say that the South China Sea is where rising Asia is increasingly invested, contested, and congested. So not to be flipped, but the point is that if you're dealing with trillions of dollars of trade going through the sea lines of communication, including narrow choke points, including more than a trillion dollars for the United States, and there's a great photograph showing sea line shipping traffic. If you haven't seen it, in fact, it'll be on the cover of a forthcoming study that we'll release in a couple of days at CNAS on the Asia Power Web. It's just incredible how thick the shipping traffic is. And I know you've got it on your great maps that you've put up, Bernie, as well. So there's a lot at stake for the economy of the region, for Asia's rise, for the United States, and for really global trade that makes it strategically significant and salient, especially since countries are first and foremost concerned about their economy. It's increasingly contested, however, not just because of the six claimant states, but because of the failure to achieve, agreed upon rules of the road, mechanisms for how everything from law enforcement, Coast Guard activities, to military right of passage will be conducted in the South China Sea, and, in fact, globally, perhaps. But this is where it's coming together in many ways for the worse at the moment. It's a reason why Prime Minister Abe of Japan and Prime Minister Singh of India have called talked about the confluence of two seas, the throat that joins the Great Indian Ocean and the Great Pacific Ocean, the Strait of Malacca, and it's really the South China Sea that is right in the middle. And then it's increasingly congested, not just with the shipping traffic, but increasingly with civilian law enforcement and Coast Guard capabilities that are being built up and increasing military capabilities. So there's not quite a full-fledged arms race going on in East Asia, but more countries are buying submarines, more countries are buying Coast Guard vessels, and buying intelligence for maritime domain awareness, for understanding the picture of what's going on in this region, among other capabilities. So this strategic significance of the South China Sea is a special concern because it really is a barometer for the rise of China and relations with the rising China. So amidst all this importance. So this is why the geography of this region matters so much. And China, for both objective and I think subjective reasons, is increasingly concerned about being able to assert authority and control over its claims, over its sea lines of communication, over its defense. And this, because of China's size alone and because of the rapidity of its rise, is of concern because it's an uncertain future. It's a potential, it's a latent coercive power on the part of China vis-a-vis mostly smaller countries on the periphery, including claimant states that are in very much hotly contested disputes. And whether China suddenly expands its core interest to further include more territory offshore, as embedded in say the nine dashed line, is a concern that leaders and officials have in the region. Even while it's not necessarily true that China is moving in that direction, but because it's unsettled and not likely to be resolved soon, it's going to continue to be a point of contention and allow opportunity for tension and even accidents. This therefore spills over into the military planning sphere in a very big way because if you're the Chinese military and you're looking to push other militaries off your shores a thousand nautical miles or more beyond the first island chain and you're building capabilities to have a counter intervention force or anti-access area denial capability, the United States is in turn creating capabilities to counter technologies that could prevent it from projecting power forward, not just in the South China Sea but globally because its security guarantees helped underline right stability in much of the world, but especially in East Asian, that's been the case really since most of the post-World War II period. And that's now being called into question as you look out over the next couple of decades about America's ability to do that. Even more in question is the military capability of those Southeast Asian nations, those maritime Southeast Asian nations to have their own counter intervention force, to have their own anti-access and area denial capabilities. Can they build cost-effective, non-threatening defenses capabilities that allow them to maintain law and order, Coast Guard protection, but also a modicum of defense that can reassure them that they can also support their own claims without undue coercion from larger countries? And can they meanwhile work out rules of the road of diplomacy and build on the trade that already exists with China and many others to help ameliorate those tensions that could lead to further suspicion, distrust and even miscalculation? So these tensions are significant because it's really a litmus test for China's future relations with the region. This is one of the big concerns here. And here, the domestic debate in China is of concern too because the leadership of China, as we'll see in California this weekend perhaps with the first of many summit meetings no doubt between Obama and Xi, which I think are meant to set a more positive constructive tone for an uncertain major relationship that affects so many in the world and especially in this region. Despite that tone, which may be good, there's still gonna be underlying concern and anxiety as we've seen with the reports about cyber espionage and as we see about concerns over maritime cooperation. These are issues that are not easily resolved and they're being driven in part by Chinese nationalist fervor because this is China's time. China doesn't wanna put up with nonsense anymore. China is a capable country. China is a wealthy country. It's built up its coast. It deserves to be able to exert its rights and absolutely, but what we don't agree with in the United States in particular is the right to use coercion to stake those claims. That is we wanna see peacefully, peaceful resolution of these disputes. We wanna see common international rules of the road if possible and these are the things we should be striving together to achieve and I think they'll be talked about at the summit meeting and that could open up and be a catalyst for further cooperation. I hope it is. But it is noteworthy that the Chinese use not just the PLA Navy, but they're using their civilian law enforcement vessels very much in tandem even with civilian fishery fleets to demonstrate claims to assert administrative control and even to coerce smaller neighboring countries and that's one of these gray area tensions that we're really trying to deal with. The maritime disputes are in South China Sea are also fueling other disputes and vice versa and I've written about how there's unfortunately a very bad dynamic between the East and South China Seas as well where the suspicions grow in one body water and they have a negative impact on the other one, it seems to me. I think the opposite could be true. We could get up with a virtuous cycle of if we can come up with some kind of set of confidence-building measures, risk reduction measures, transparency measures in one body of water, we may then be able to sell that to the other body of water. So here, the enlargement of these issues to think beyond the South China Sea is an opportunity potentially to try to convert this spillover from being negative to being a positive momentum issue. I think it's finally important for the regional institutions in what the failure to reach not just a binding code of conduct which is a bit of a holy grail search but to achieve even unanimity at ASEAN meetings over the concerns on these kinds of disputes like the Scarborough Shoal issue last year when China essentially pushed the Philippines out of the way and we can point fingers around but the point at the end of the day there was a failure for ASEAN to sort of rally around a common set of rules as they could even today around the arbitration case, for instance, to try to find some kind of objective binding international settlement about is the nine-dash line that China claims based on international law or is it really a claim that has little basis in contemporary international law, for instance. So there are things that can be done here if ASEAN were to come together, China, of course, prefers to resolve these disputes or deal with these disputes bilaterally with other claimant states that they're in dispute with but it's in the interest of the region and of the international community to find a common multilateral framework and that's where enlarging ASEAN, still ASEAN-centered but thinking about things like the East Asia Summit to include outside maritime powers that rely so heavily on these sea lines of communication, this becomes a very welcome initiative and I think the Indonesians have put forward something for exactly that kind of forward-looking initiative. I wanna stop there and turn over the rest of the panel. Thank you very much, Patrick, I appreciate that. Let's turn now to Alexander to talk a little bit about the energy and resources outlook in the region. Okay, let me ask our staff, can we put a map of the South China Sea up while Alexander speaks? Go ahead and I think they'll try to get it up for you. All right, well, I'll try to explain the most complicated geographical dispute in the world without the use of geography. The job of an economist is probably first and foremost not to confuse people so if you all leave this discussion slightly less confused, I will consider that a victory for myself. So when we hear about the South China Sea and the popular press, we tend to hear terms like it's the next Persian Gulf. There are vast resources, the potential to really transform the Asian energy sphere. And I'd like and, more over, all these vast resources are located in the disputed island chains, the Spratlys and the Paracels. So I'd like to take a few moments to talk about these claims and what's really going on to the best of our knowledge. Our work at the Energy Information Administration, we came up with an estimate of proved and probable reserves in the South China Sea. So those are reserves, energy resources that are both technologically feasible to get out of the ground and economically viable. It makes business sense to spend the money to get them out and send them to market. We came up with an estimate of approximately 11 billion barrels of oil and 190 trillion cubic feet of natural gas, proved and probable reserves. Those are reserves that are either definitely there that they've been discovered or probable in that they haven't been discovered, but there's a very strong evidence to suggest that they will be there. Now, that sounds like a lot of energy and it is. It's approximately the same amount of oil as you'd find in Mexico or neighbors to the South. It's about as much gas as in all of Europe, except for Russia, which happens to have a large amount of natural gas. But really to understand what that number means, you have to look at it in the context of consumption, what these countries and what this region is consuming, how much do they actually use? China consumes nine million barrels of oil a day. That's about three billion a year. Consumes about five trillion cubic feet of gas a year. If you add up all the countries surrounding the South China Sea, you get a number of approximately five billion barrels of oil a year, about 10 trillion cubic feet of natural gas. That means that assuming you can get all the resources that we know with a fair amount of confidence are there right now, that's enough to power the South China Sea region for a whole two years worth of oil. Wow, and a whole 20 years, about two decades worth of natural gas. Again, significant? Yes, but compare that to the hundreds of billions of barrels of oil in countries like Saudi Arabia and Venezuela and proved reserves. Compare that to the staggering amount of natural gas in countries like Iran and Russia, which have a quadrillion cubic feet. That's 1,000 trillion cubic feet in natural gas reserves. You start to really see that the South China Sea is not in fact a major New Persian Gulf, but rather an important significant regional player in terms of natural gas and really much less so in terms of oil. So let's talk about where those resources are and how they're being produced and what's going on in these different regions, if I can get this to work. So a lot of people tend to think that the reserves are mostly in the contested areas, as we've discussed before, in the Spratly Island chains and in the Paracel Island chains. In fact, if you actually do a field-by-field analysis, you discover that the vast majority of proved and probable reserves are not in these heavily contested areas. In fact, if we go by the presentation we saw this morning, where they actually took a look at the real, what they call the real disputed areas, there's virtually no proved and probable natural gas and oil reserves there, very, very small amount. The real reserve areas lie in historic oil-producing areas here, Indonesia and Brunei. These are very mature fields that've been producing for many, many years. Got a lot going on in here in the Pearl River Basin, Pearl River Mouth Basin, excuse me, in China, where companies like the CNAC, the Chinese National Offshore Oil Corporation, are investing a lot of money and investing in a lot of foreign technology to be able to go further deep water. But again, when we say deep water, we really mean out to here. You have prospective areas off the coast of Vietnam that may have some potential for a good investment, but there's a fair number of technological challenges and it's very expensive to get the oil out of there. The real success story in terms of production has been here, away from the South China Sea in the Gulf of Thailand, where you've seen a lot of cooperation between Malaysia and Thailand without either country formally recognizing the other's claims to the Gulf of Thailand. They nonetheless have engaged in joint development and really made it the success story. The biggest producing fields in the most successful oil and gas production is in that area. So what does that really tell us? It tells us that when you're looking at this dispute, the energy resources there are expensive and not necessarily related to the islands. There's a lot of challenges in getting them to market. So as I've discussed previously, this is more of a natural gas story than an oil story. That means you can't just drill the oil and pump it straight into the markets. You have to build expensive subsea pipelines to get it to gas processing centers, generally speaking on shore. The South China Sea has a fairly complex geology. It has submarine valleys that make it expensive to build pipelines. It faces CO2 bubbles in its fields and it has monsoons, typhoons, a lot of adverse weather conditions. So you have to account for things like, you can't just have rigid drilling platforms. You have to make your platforms kind of like an earthquake proofing a building. They have to sway in the ocean or in the sea. So it's fairly expensive to produce and it's a good investment for particularly mid-sized-level companies. You have fields there producing say 20,000 barrels of oil a day, 50,000 maybe. That's a great field. If I owned a field like that, I would be able to retire early. But when you compare it to a country like China, the millions of barrels of oil in crude oil and products, you start to see that these fields are really drops in the bucket compared to the massive energy needs these countries have. And so you're not gonna be able to rely on the South China Sea, even if you control a large portion of it to meet your energy needs, you're really gonna still have to go outside the sea and import supplies. And that kind of leads me to my final point for this presentation, is that one of the real areas of the South China Sea where we can say it's like a Persian Gulf is it's important to trade. It has one third of the world's oil pass through the Strait of Malacca, which oh, we don't actually have here, that's a shame, but you can kind of see it here, is about a third of the world's oil passes through that narrow point every day or every year. And about half of the world's natural gas, liquefied natural gas trade, mostly going to places like South Korea and Japan and China. With such massive quantities of trade, that's really where the resources are. They're not necessarily in the disputed islands, but they're in the thousands and thousands of ships that pass through this area and supply markets in Hong Kong go on to Japan and South Korea. And that's where we see the real movements of natural resources in the area. Now I'm gonna end with one final note about undiscovered resources. So a lot of people would ask, well, you've been looking at proved and probable reserves. What about the stuff that we haven't seen yet that could be out there? And the US Geological Survey does a great job, it's a US government organization that does a great job of compiling the available, the best available geologic evidence to say that these hydrocarbons aren't discovered yet, but geologic evidence of the sea suggests that they might be there. With their studies, and their most recent study exclusively on this area came out in about 2010, you get another maybe 10 billion barrels of oil. So again, not that much, two years worth of supply for the region as a whole, and another 100 trillion cubic feet of gas, maybe two. So these are large amounts, very significant, enough to fuel parts of these countries, but not world astonishing. Now, a lot of these undiscovered resources are again located in the relatively uncontested areas, the only exception being around this area in the contested Reed Bank area, there is a fair amount of significant oil and gas deposits. And when I say significant, I mean one billion barrels of oil, maybe 25 trillion cubic feet. Now, for a country like China, this isn't really that much, but for a smaller country in the region, like the Philippines, in terms of their energy consumption needs, that is a significant amount of oil and therefore regionally very significant for them. These countries all have domestically, increasing domestic production, and over the years it's gonna get higher, and the rate at which their energy consumption increases is higher than the rate that we're gonna see production from the South China Sea increase. That means that the South China Sea will continue to play a role as regional supplier, but you're not gonna see South China Sea oil coming to ports in Europe and the United States. It's gonna stay in the region and it's gonna be complimented by increasing amounts of trade through the channels in the sea. And with that, I'd like to hope that you've come away a little bit more nuanced approach to what's going on in the sea, and I look forward to your questions. Thank you. Thank you very much, Alexander. That was really helpful. I hadn't thought about the fact that there might be, I think what you said was there's more energy on the seas than might be under them with the trade. So that was very interesting. Let me now turn to Murray Hebert. Murray. Thanks, Ernie. I'm gonna talk about the dynamics of fisheries in the South China Sea and the role the fisheries play in the dispute. A lot of the discussion at conferences like this always focuses on issues of sovereignty, but part of this panel is trying to look at the economics. And one of the things that differentiates fisheries maybe from oil and gas is that in fact, fisheries is a big deal to all the disputing countries and all the countries surrounding the South China Sea. I'll say up front, I'm not a fisheries expert. Maybe I was picked to do this panel because I'm a vegetarian and therefore I don't have a fish in the fight. But what I've done is a little bit of research on what is known about the fish in the South China Sea. You know, the coastal waters of Southeast Asia, China are among the most productive in terms of seafood in the world. Southeast Asia, which obviously includes countries beyond the South China Sea, is responsible for producing somewhere in the order of 21 million tons of fish products a year. It's about a quarter of the global production. China, as an individual country, is the largest single producer and it harvests around 13 million tons in 2009. The most recent figures I could find, but that's out of a total of 80 billion is really pretty significant. And if you look at how big the South China Sea is, how large the coastline is and how large the exclusive economic zone that's claimed as exclusive economic zone is in the area of about 20 million square kilometers. It's a huge area that is contributing fish. And you know, in a lot of the countries, the GDP, the gross domestic product is fish make up about 10% of that amount. And it's fish are a huge part of the agricultural exports of these countries. For a country like Vietnam, for example, it's half of Vietnam's agricultural exports, which are growing really quickly. On top of that, fish, seafood is also very important to food security within the region. Somewhere in the order of 20% of animal protein consumed by people in the region comes from seafood. In some countries, like Indonesia, it's actually 50%. So as the population expands, as the population gets more wealthy, there's increasing demands for seafood in the diet. And the result of the increased fishing means that fish stocks have been depleted, depending on which estimates you follow somewhere between five and 30% of their pre-unexploited levels. And as it's harder and harder to catch fish, fishermen move increasingly far from their shores. You have Chinese fishermen that come way down into the southern reaches of areas claimed by the Philippines and Vietnam, and you have Vietnamese and Filipino, Chinese fishermen coming to those areas, and then you have Vietnamese and Philippines fishermen in the area of the Spratlys. And the movement of these fishermen causes many incidents each year. A couple of months ago, actually a month ago, Carl and Ronaldo and I, and maybe some others in the room that I haven't seen yet, were in Quang Ngai in central Vietnam, and we got taken out to an island there where we met the fishermen who had his, in late March, had had his boat, the roof of his boat burnt by a Chinese flare, he said. We also met fishermen that had been going to the Spratlys, excuse me, to the Paracels since the late 70s and early 80s and could talk at length about incidents they'd had with the Chinese enforcement agencies. And the Chinese and Filipinos and Indonesians also do their own arresting of wandering fishermen that they think don't have a right to be in the region, but it's resulting in ramming of fishing boats and firing of flares and other weapons trying to warn fishermen to go home. Each year, since 1999, China has instituted a 10-week fishing ban from around mid-May to mid-August, south, excuse me, north of the 12th parallel, where, in which it forbids fishermen, foreign and domestic from fishing during this period, ostensibly to allow maritime resources to be replenished. And those that are caught fishing during that time often have their fishing equipment confiscated. Vietnam rejects China's unilateral ban on fishing, saying that it violates its sovereignty over the Paracels and its jurisdiction over its own EEZ. The Philippines also rejects much of China's fishing ban, although it has its own fishing ban that it has had long implemented in Scarborough Shoal, which, as we've heard earlier, China took over last year. And over the last 10 or 15 years, you've seen China really boosting its maritime policing capabilities. It has somewhere between six, eight, or so different policing authorities, the largest probably being the South Sea Region Fisheries Administration Bureau of the Ministry of Agriculture's Department of Fisheries. And China probably has been the most vigorous in defending its territory and trying to push out fishermen that come from other countries. It also uses sometimes its policing vessels to accompany fishermen, Chinese fishermen, as they go out into disputed territories. And as I mentioned, as it gets harder and harder for Filipino and Vietnamese fishermen to find much fish to catch in the areas right off its coast, they move further and further out. And so that's resulting in the confrontations that we read about in the newspapers. So far, there's been little attention paid to negotiating some kind of fishery cooperation in the South China Sea, and it's really this laissez-faire approach that results in the frictions and tensions that have been the ultimate seeds for much of the confrontation and accidents that have resulted. But fisheries cooperation in the end could be probably a lot lower risk to countries in undertaking an effort at trying to figure out how to jointly explore oil and gas development, and it could potentially build a foundation for other forms of cooperation leading, going forward. Vietnam and China implemented in 2004 a fishing agreement in the Gulf of Tonkin in the far north just south of China, and they just east of Vietnam, that could potentially serve as a model for other fishing agreements going forward. That's maybe jumping ahead to tomorrow's discussion where we're going to talk about some possible ideas for resolving the conflict. So with that, Ernie, I'll turn it over to you. Okay, thank you all for your excellent presentations. I'd like to take the prerogative of the chair to start with a question, and that goes, I think, to Patrick and Alexander together, which is in terms of resolving disputes proactively through joint development. Alexander, you, I think, mentioned the example of the Thai-Malaysian cooperation in the Gulf of Thailand. Do either of you see models that are viable to take that sort of cooperation out into the disputed areas in the South China Sea? And if so, how? Well, I guess my whole point is that you might not have to. In terms of joint development, what we do start to see is a lot of national oil companies in the region investing in foreign expertise, whether through production sharing agreements or just kind of buying the technology for use in particularly deep water areas. So we see a lot of technologies that were employed successfully in the Gulf of Mexico, fairly significant oil developer, a developing region, being applied to the South China Sea. But that's really national oil company, so one country going out and looking for foreign international companies to help it along. Other than the Malaysia and Thailand joint development area, the JDA, you don't really see much evidence of this happening elsewhere in the sea. And to some extent, that's okay. If the disputed areas are the ones with the least amount of resources, why bother? But the problem is without that kind of cooperation, we're not gonna have the ability to conduct more thorough, rigorous seismic testing and get more accurate geologic and geographic information about what's really there. So you might be shooting yourself in the foot, there might be more resources out there and you're definitely not going to find those and develop those without the cooperation between several countries. And if it's any indication, the Malaysia, Thailand area is one of the most rich producing areas in the region. So if nothing else, that should serve as an indication that they might be doing something right. If you look at it from the other end of the perspective of military confidence billing measures or reassurance, there are obviously lots of precedents in history for trying to reduce incidents at sea, trying to improve maritime safety, cooperation, search and rescue cooperation, other kinds of military exchanges that allow for transparency. There's less when you get then to the paramilitary or the Coast Guard where there's room for much more discussion on how countries enforce their own domestic laws, the procedures they're going to use. So even though it didn't happen in the South China Sea, the fact that Taiwanese fishermen was killed by the Philippines Coast Guard, that tragedy should become a positive example of how to build cooperation so that that kind of thing does not happen as a matter of course and trying to build those. When you get to fisheries and economic agreements and oil and energy, you've got even more actors involved. So this gets very complex, but there are a lot of models out there across the board commercially on civilian law enforcement even, but fewer there, and then with the military to military that could build overarching overlapping set of institutions mechanisms to reduce escalation, to reduce accidents, and to be able to tamp them down should they occur. Let me open the floor to questions, and again, please just identify yourself and your organization, Professor Emerson. Yeah, thank you, Don Emerson, Stanford University. If I may take what I infer from Patrick's remarks, the notion that for whatever reason, ASEAN is not up alone to making significant headway on the security issues. I mean, you suggested other venues specifically the EAS. I wonder if one could apply that reasoning to the two sectors that we're dealing with in the rest of the panel. That is to say, what is the record if indeed one exists of ASEAN in attempting itself or through plus arrangements, whether it's ASEAN plus one or plus three and so forth, to work out a modus vivendi at least in terms of fishing and energy. Alexander and Murray, you wanna take a shot at that? ASEAN has started to talk about fishing agreement. It's fairly general, it doesn't really set parameters and a regulatory framework, but ASEAN, and that probably could be a form that could be used to talk about increased, how you divide the sea when there's overlapping claims. And so I think that ASEAN does have a vehicle, but it's a very weak one so far, but it could be enhanced for sure. In terms of energy, it's sort of the same story. One of the interesting proposals that ASEAN had was a sort of ASEAN energy grid that would connect different countries together through the use of shared pipelines. And it's not really, it hasn't really gotten off the ground in any meaningful sense, but you could imagine a scenario in which pipelines are carrying South China Sea natural gas from country to country and building up that kind of interdependency would may increase the likelihood of cooperation and joint development of these areas. So that's a potential there, but we haven't seen anything other than sparse bilateral and negotiations that often does not don't go anywhere. Okay, the gentleman here in the front. I'm Renato DeCastro from the Philippines, Idaho. I'm Renato DeCastro from the Philippines. I'd like to address my question to Dr. Cronin. You talk about the growing military tension in the region. Yeah, you might have confidence building measure, but that will not solve those problems. It might manage it because you still have the tension there. Tension rise for fact that you have a very expansive maritime plane and other countries simply will not give in. So my question is, what will be the take the role of the United States? Given the fact that the United States has the largest naval force in that part of the world, plus of course US alliance. So where do you factor in the United States? Well, thank you for the question. Certainly you're right that this is not a resolution for all time and I didn't mean to suggest that. In fact, because we cannot expect resolution, definitive resolution of these many different types of overlapping disputes, that's exactly why countries in the region, not just the United States need to focus on measures to reduce the risk of accident escalation. But answering your question, the United States policy I believe right now as we rebalance rebalancing and hopefully we're not losing focus on Asia Pacific or any, but there are some of us worried that we might. I think that the answer to that is the United States needs to balance reassuring our allies and partners with good firm security commitments and cooperation to help build their capacity. And at the same time, strategic reassurance, including especially with China, where we try to prevent unnecessary arms racing, where we try to reduce suspicions, where we try to find those risk reduction in accident avoidance kind of measures, even while there's competition, even while there is deterrence and dissuasion going on. So it is a balancing act. It's not a black and white issue. It's a matter of the United States trying to play a positive stabilizing role, not because the military issue should be in the lead, but because we need it as the undergirding insurance policy to continue the prosperity for all in a rules-based system that we can all sign up to and we can all know how we resolve disputes when they happen. That's the ideal. Now the reality is much messier than that, much more difficult. And we see Asia follow sequestration and concerns about the U.S. budget. We see them, on the one hand, we're declining power from day to day. On the other hand, we're militarizing the region if you read some of the Chinese press. We have to be in the middle of those two. We're not there to create problems. The United States needs to be there to help underwrite solutions, define solutions. So we're the stabilizing power. That's the role we want to be. We want a rules-based system. We want there to be a region free from coercion and to maximize prosperity and freedom. And that's the objective of these alliances, but we don't want to be entrapped in small conflicts, not of our making. And we don't want, on the other hand, to see friendly countries and especially allies coerced by large powers. So that's why this is a very tricky set of diplomatic, economic, and military engagement policies that we have to pursue in tandem with others. Dr. DeCastro, I'd like to add. I mean, I think it's important. I think the Americans are getting signals from ASEAN. And ASEAN leaders. And ASEAN leaders are starting to gain confidence themselves and voice on an issue that I think is important. I think one theme that has popped out over the past couple weeks, Vietnamese Prime Minister, Nguyen Tinh Cong, just talked a couple days ago at the Shangri-La Dialogue about the concept of strategic trust. And I thought, that really rung in my ear because just a week before that, Indonesian Foreign Minister, Marty Nadelegao, was here at CSIS and talked about strategic trust also. And I think this is something that the United States is trying to interpret along the lines of what Dr. Cronan just mentioned. To put it more simply, this is sort of the, and using Grim's fairy tales analogies, this is the the three bears, you have to, not too hot, not too cold, you've got to get it just the Goldilocks, right, thank you. My kids would really be upset. Couldn't pull the Goldilocks analogy out. But I think that's important. And I think the message for US policymakers that we've been trying to impart from CSIS is that treaty alliances are the core. They're the pillars of our engagement in Asia. Those are important. But they are advised and improved on by this development of regional architecture. And the regional architecture creates a framework whereby you can start to build strategic trust and a web of decision-making and rules-making that includes equity or buy-in from all the countries, hopefully including China, right? You have to have the big guy making in the region, making the rules and then playing by the rules. So I think this is what we're trying to invest in now. And in the meantime, mitigate the opportunity for conflict and mistakes, but through some really effective mechanisms that we're gonna discuss here over the next couple of days. Dr. Thare. Thank you, Carl Thare from the Australian Defense Force Academy. Two quick questions. Alexander, could you comment on the Vietnam-Malaysia joint development of oil, which was missing, I think, from your presentation? And two, to anybody on the panel or in the room that this morning I woke up to quotes being sent to me that the Malaysian Prime Minister, Najib, has promoted joint development, particularly with China, as a way of preventing the intervention by external powers. And I was wondering if anybody could clarify that or are you aware of it? And what does that mean? Is it a change of Malaysian policy and who were the external powers? Were they oil companies or states that he was referring to? Okay, so heads up. I'm gonna look for some of the Malaysian experts in the room and Alexander, you'll take the first question, please. Sure. So the question was on Vietnamese-Malaysian cooperation. It's not as extensive as the Thailand-Malaysian development, but it is significant. The companies jointly operate several of the fields, sort of in between the two countries. I think they produce somewhere in the magnitude of 100,000 barrels of oil a day. And I don't remember exactly how much gas, but so significant numbers. It's profitable for all those companies there and they're certainly gonna continue doing that business. There's not much more I can say on that. On the panel, talk about the Malaysia question. Do you have any information on that? I don't. I have nothing new. I mean, it's been passed, right? So this statement is an interesting novel statement. Why would Naji have to make the statement since in fact this has been ongoing cooperation, but I defer to others who may be following this question. Anyone in the audience wanna comment on the Prime Minister of Malaysia's statement? No. Well, Carl, I know there's a very interesting person here from the Prime Minister's office in town, so we'll reach out to him and get you an answer by lunch. I have a question here in the front. Mr. Tui. Thank you. I'm Chun Chung Tui from Diplomatic Archive of Vietnam. I have a question for American panelists here. How significant is the South China Sea for US in terms of strategically, economically, and diplomatically? Well, I thought I'd tried to outline why it's strategically significant and I was obviously speaking from an American perspective even while trying to take into account the perspectives of others in the region. It is economically important because ASEAN has become in itself a vital economic partner for the United States, one that we're increasingly building ties. I'm the former Assistant Secretary, Kurt Campbell, who set up the Asia Group, is out literally doing business now with nothing but trying to help American businesses break in mostly to Southeast Asian ASEAN. That's not just South China Sea, but obviously because of the sea lines of communication, South China Sea is central to ASEAN in that engagement. So therefore the diplomatic engagement that we've seen under the Obama administration in the last four years where we've stepped up diplomacy in the region, including joining East Asia Summit and attending all the meetings that are offered in the region, especially under ASEAN auspices that we're invited to, we need to maintain that and sustain that. That's very important for the United States to do that. And I think that's recognized on both sides of the aisle in Washington. I hope it's sustained and followed through militarily. It's hard to say that the region itself on the South China Sea is the center of the military security issues for the United States, which are global. But the rebalancing to Asia Pacific includes the military component, as we've heard from Admiral Locklear, as we've heard from Secretary Hagel, as we've heard from their predecessors in senior defense positions. And that's because of the need for the United States to reassure allies and partners in a rising dynamic region at a time when China's rising. And yet at the same time to ensure that we can manage a constructive relationship overall with China and show that we're there not to force countries to choose sides between China and the United States, but rather that great powers can figure out rules of the road to manage things to figure out even while we compete and have some suspicions and some distrust and have cyber hacking and other problems that we don't know how to resolve quickly, we think overall keeping a strong posture of presence and engagement militarily too, is a way to build capacity in this region so that it can realize its full potential. Might just add on the, Dr. Tui also asked about the economics and Alexander did talk about the shipment of oil and gas, which was really obviously very critical to the economies of China, Korea, Japan, et cetera. And but beyond that, there's also the global supply chain, which is well and alive in Asia, the movement of parts for electronics and other equipment that move between Southeast Asia and China, some of it moves by airplane obviously, but the South China Sea is also very critical for that. And so it is absolutely, the South China Sea is economically also very important to the US for that reason. Thank you, Mr. Chairman. You looked at the models for joint development earlier, and I would like to bring attention to another concept, models of joint conservation and protection of the marine environment in the South China Sea. In this panel, we talk about energy, we talk about fisheries, but maybe in the future, there's a need to include environmentalists to talk about how to protect marine environment and joint conservation and protection of that important body of water. Now I have two questions addressed to Mr. Matelisa and Mr. Hebert. The first one, I'm not a vegetarian, so I can take your share of the fish, bluefin tuna, I'm a seafood lover, I'm not a vegetarian. But my question is, is it possible to propose to combine or expand the regional fisheries management organization in the western Pacific to include the South China Sea? Because in the South China Sea, there's no such RFMO, but it's very important to deal with IUU fishing issue, the depletion of fishery resources and so on, joint conservation protection, including we are seeing more disputes coming from the fishing vessel from different parties in the region. So in that kind of concept, joint conservation development of fishery resources in the South China Sea, in terms of disputes, we are able to use the arbitration process or article in the WCPFC, I'm talking about Western Pacific Fisheries Management Commission. So that would be very important, we think about how to deal with those disputes in that South China Sea. Second question, I'd like to address to Mr. Matelisa, in March 2005, there was a tripartite agreement among the three national oil companies, the Philippines, Vietnam and China. And then the second stage is stopped in end 2008. So how do you assess any kind of information finding you've got from the result of the first phase of research, joint study in the disputed contested area and the oil and gas fund in that area? If no, how come we are seeing more action taken by the parties in the country to develop oil and gas in the contested area? Thank you. Thank you very much. I think the second question was about the JMSU, the joint maritime seismic understanding. Murray, you wanna start? On the fisheries, I think that's an excellent model you suggested the regional fisheries agreement in the West Pacific. I think that could have some models that could be applied, it could be expanded, no doubt. I think what it needs, though, is right now, it doesn't have quite the profile of the hydrocarbons that Alex is talking about. And I think it needs somebody, some leader to start to drive this. But I do think that that would be an excellent model to look at and I think it'd be an excellent proposal for somebody to make. I don't know if it can go in some regional architecture like the East Asia Summit or what, but it would provide, ensure that you would have more fish for guys like you that need to eat these things and down the road. I'm not sure exactly how to answer the question, than to say, if you wanna evaluate the success of joint cooperation in seismic activity or geologic investigation, suppose one metric would be has the amount of resources you think is under that area increased since your last assessment of the area. One of the problems is that there is not much good data and there's a lot of contradicting reports, particularly among different claimants to the disputed areas, that all tend to say different things and there's no real independent auditing or evaluation mechanism to test whether those claims are accurate. So we tend to use US geological survey data which the United States considers to be the gold standard in assessing, synthesizing geologic information from across the world. And to that degree, again, from their studies and you can find them online, they're freely available. They don't suggest particularly large quantities of oil and natural gas, conventional oil and natural gas resources in the Spratly, sorry, in the Paracel Islands, much at all and only marginally more in the Spratly Islands. So more cooperation to get better sizing data would be great. I think it would be very useful, but at least from the best available information we have today, the picture doesn't look particularly promising. I'd like to just build on this for a moment because I think the JMSU is an important case study in regional cooperation and joint development. I think if you look at the politics and the trust that were around the JMSU, from the beginning, this is the joint maritime seismic understanding, from the beginning, the foundation of trust between countries for that plan was on a rocky foundation. So in a way, I think if you take Hanoi's perspective, for instance, that was never going to work. It was sort of foist upon the Vietnamese and the deal was done between some individuals in the Philippines and China that didn't have national support and didn't have a lot of transparency. So I think this is important because as a lesson learned, joint development has to be built on trust and transparency and related to the domestic politics of each of the countries. So this makes joint development complicated, tricky, but it's gonna take real leadership to develop. And we're gonna get into this across our discussions today, but I've made a note because we've done some work on the JMSU here at CSIS. We probably need to do some more as a follow-up to this conference. Thank you for the good question. A two-finger, please. Same person, he's got a two-finger follow-up. Just one second. I think I would like to bring your attention to the 2002 Declaration on Countdown with the Party based upon that you had that kind of development in 2005, thank you. Good point. The gentleman in the back here. By the, oh, I'm sorry, I had Ambassador Quechua first. Sorry, Ambassador. I know you just, I know you flew in from Alaska, especially for this conference. First, let me congratulate you, Ernie, and CSIS for conducting this third forum on the South China Sea. And I also commend the panelists for their excellent presentations. My question is to Dr. Cronin. The US has consistently maintained that they would like to see freedom of navigation respected by all countries. Some months ago, Chinese authorities announced that they would, that they reserve the right to board any vessels that pass through the South China Sea. I don't recall having seen any statement from the US with regard to that statement made by the Chinese authorities. In the Scarborough Shoal incident last year, the Chinese placed a barrier on the month of the Scarborough Shoal preventing our vessels, including the fishing vessels, from entering the Scarborough Shoal, which is part in our, of course, contention part of the Philippine exclusive economic zone. Of course, we did not take any action against that, but it seems that that freedom of navigation principle has been violated. And so I wonder what the US position is with regard to that. Well, Mr. Ambassador, I'm sure you have discussions with US officials all the time on related issues, so I'm not sure how much I want to tread into this, but I mean, several general things need to be said. One of them is that I share your concern, Mr. Ambassador, about China's use of coercive power and possible unilateralism to press its claims. And as recently as this weekend, I think Admiral Locklear restated part of US policy, which is not to accept this unilateral use of coercion or coercive power to settle disputes or to make their claims. So we're deeply concerned and we were deeply involved as a government in helping to support the Philippines in building its capacity to maintain coastal defenses, its military capacity. These are steps that should continue, but on the other hand, we also all have a shared interest in making sure these things don't escalate into a conflict. So we're looking for ways, obviously, to create acceptable multilateral rules of the road so that there's not this unilateral coercive use of force. And we need the Philippines as an ally dealing with these issues and supported by Vietnam and supported by, frankly, all ASEAN and supported by outside countries like India and Japan, which depends so heavily on these maritime sea lines of communication to ensure that China is not allowed to essentially get away with unilateralism on this issue. That being said, every country has a responsibility to make sure we're being restrained in how we go about exercising our defense and our law enforcement, especially when you've got known disputes and known disputed areas. Anyway, I'm with you on this. I think more work needs to be done on the maritime security dimensions of this. It's going to take a lot of work and a lot of leadership, as Ernie Bauer said, not just on the joint opportunities, but frankly, on these risk reduction measures and common rules of the road. Okay, I'm gonna go to the admiral because he outranks the next questioner. And then over here. Thank you very much. Retired by Southern Canada from Japan. My question is related to the last question by Ambassador to Patrick. In 2009, there was a so-called impeccable incident in the South China Sea. And very recently, there was a report that Admiral Leclerc said that he recognized that very recently, the Chinese Navy naval activity found in EEZ of the United States. I'm not sure exactly, but where are they and what are their purpose to do and what kind of activity they did. And okay, so what's the problem? And also I'd like to know about the U.S. response to that, the Chinese action. Thank you. Can you set up your statement? Yes, Admiral, Canada, thank you very much for the question, which gets to a different issue of freedom of navigation, which I didn't really address from the Philippine ambassador. And that's really this military passage through the exclusive economic zones of other countries. And the United States maintains, along with the majority of countries, that the right of innocent passage includes military vessels. Obviously China is concerned about spying on their submarine bases and high non. Among other things, when the U.S. naval ships, like Impeccable, are conducting right of innocent passage, but with sensors and arrays that might happen to pick up submarine traffic in the South China Sea. What the Chinese now are saying is that, by the way, we're intruding, or not intruding, is that word, but we are passing through your exclusive economic zones, whether that's around territories like Guam, or whether it's maybe in the Caribbean and now or in the future. This is something that we lived with on a regular basis through the Cold War with the Soviet Union. We're not in the Cold War, China's not the Soviet Union, but at the same time, you're dealing with large growing maritime capabilities where there's a great interest in knowing what the other's up to. I think this issue, and I'm looking forward to sessions next month and in the future with you and others to talk about things like theater, anti-submarine warfare, growing exercising and training that the region should be conducting. Prime Minister Abe has spoken eloquently about the democratic diamonds of India, Australia, the United States, and while that sounds like containment to Chinese, to me it sounds like a rules-based system for making sure that there's good maritime domain awareness when there are growing potential threats to sea lines of communication. And China's gonna be investigating these things, so they're gonna be using their increased maritime power to investigate, and I think that's fine as long as we can come up with agreed rules of the road. Stanley Kober, whenever I go to these meetings, I hear about the importance of our alliances. One alliance that is never mentioned is the Southeast Asia Treaty Organization. This is not the first time we have rebalanced Asia. What are the lessons of that experience for the current rebalancing? Anybody wanna take a swing at this one? Stanley, we could have a Cold War discussion for a long time. It's a serious question. One lesson is to avoid protracted ground wars anywhere because it was Vietnam that not only led to much of the downfall of the US position in Southeast Asia before, not so much CEDO. CEDO was an unnatural alliance. That's why it was really, it was crafted in the Cold War in an ideological setting of East-West Tussle. But it was that protracted ground war that caused the region to see America retreating with drawing which created a great deal of anxiety. ASEAN came together to fill that vacuum with an economic political grouping that has become incredibly successful despite all of its limitations that we've talked about in dealing with big security issues, for instance, which is a relatively new sphere. We're not talking about alliances with ASEAN. We're talking about the United States recognizing its comprehensive interests, economically, militarily, politically, are increasingly tethered to a rising Asia which is centered on East Asia in its ASEAN countries that are at the center of this great power of relations in this region. So I think the lessons are not to get pulled into a ground war, not to get pulled into war at all, but to make sure that we can find common rules of the road, win-win situations if you will, economically and politically. And that takes work. It takes government effort. It takes private sector effort. It doesn't just happen. And it's people like the people in this room and people at CSIS and this program who are trying to come up with constructive ideas for how to inch these things forward and avert really bad things from derailing it. Lady right here. Reporter from the Voice of America. I have a question here. Everybody is talking about the joint possibility of joint development in the South China Sea. So I have a question here. If all the countries involved in these disputes do agree with a joint development? So what is the US role now since everybody do not need US? So will US be excluded as an external force? External power. Thank you. Well, I'll go ahead and start on this one. I think, no, I don't think the United States would be excluded at all. I mean, we're actually, if you look at actual development and economics in the South China Sea and I think Alexander made a really good point earlier that a lot of the energy and the development or the energy and resources are on the seas, riding over those seas. And American companies are intimately engaged in both the development of hydrocarbons, gas and oil exploration. And we're also involved in the shipping and production of oil that's shipped over the seas. So I think there's no question but that the Americans are gonna be involved in development, in this joint development in the South China Sea, in a commercial sense. Absolutely just, it's happened already in its de facto. I think we'll be part of these discussions. I think that you're raising an interesting question which is, are these waters the waters that actually gonna connect the countries of the East Asia Summit or are they gonna divide these countries? And I think what we've made the case for here this morning is that there's a compelling case if you look at the economics that these waters absolutely must connect the countries and they do connect the countries now. The question is, how do you accommodate or think about a rising China who has decided to take a sovereign, a very sovereign view of most of that water? And how do you convince China to get the benefits of the economic development, shared economic development in a way that doesn't challenge or threaten security which could spill if there were conflicts, if there were ever God forbid war around South China Sea related issues. The impact on the economy and the economies, I think this is what this panel was trying to say, of all of our countries, everybody in the globe. I mean, we could see the impact of flooding in Thailand for instance, impacted Japan and Europe and American supply chains to a degree that would shock people. But can you imagine war in the South China Sea? This would substantially disrupt global commerce. So I think this is the way I think about it. There's no talking about the Americans not being included in joint development is it's just a non-starter and it's already a foregone conclusion, I think. We are involved. I don't know, it would welcome other. Just one different point that I'd like to add to what I agree with everything Ernie Bauer just said, but if you look within the region, rather than the region as a whole, you have to be very impressed by the inter-Asian economic, political and even developing military and security ties. So we have a report coming out this next week on the emerging Asia power web that looks at it's not the United States that's involved. Asian countries are taking upon themselves to build security relations, cross servicing agreements, joint exercises and training, research and development exercises on top of very firm and growing economic relations. So for them to have local bilateral, trilateral, economic joint development agreements very much fit with the trends in this region. So that's why the United States has to not disengage from this region but has to sustain this high level of engagement. So we keep up with some of the important trends but we're not involved in everything. This is largely Asian driven development. Thank you, Davis, Robins, Boland, Mooring. I was the legal advisor to the Department of State in the early 1980s when the law of the C Convention was finalized and just as a historical note, the freedom of navigation in the exclusive economic zone and the right of innocent passage through international straits which obviously includes submarines underwater, there is no way that the United States would have, even though we have not ratified the law of the C Convention, we would not have ever gone from the three mile limit to the 12 mile limit unless we were certain the law of the C Convention would be read the way it should be read. That's a great point. Anyone want to care to comment on it? Thank you for that intervention, that was very helpful. Gentlemen in the center here. The microphone's on its way to you. Steven Piper, just to follow up, you're talking about international cooperation, international rules of the road, maritime security working together with allies. Is there any chance that the United States will participate in UNCLUS, will ratify it? Because that seems to be, we are us and the rest of you follow the international law. Yeah, I'd like to start on this one. We have been absolutely clear at CSIS that the Senate, we believe the Senate should immediately ratify that treaty and join our chairman and CEO, John Hamry, has spoken on this often and has put op-eds in the Wall Street Journal and other papers that some of us up here helped write. So we strongly believe that. I'd be welcome other views of the, will we pass it? Is there a prospect for that? Well, if CSIS recommends it, there's a chance. I hope we got that down on social media. Actually, lady here, I'll come back to you in a second. My name is Jeanine Nguyen with Voice of Vietnamese Americans. I'd like to especially thank Marie Herbert for your topic, I thank you very much. And I come back to follow up with the questions that Dr. Chen Chun Tui raised. And I'd like to ask Dr. Patrick Cronin about the strategic points of it. And since our President Obama is meeting up with President Xi next week, would you specifically point out the global strategy vision, strategic vision that both the US and China can share? Especially in the interconnected water of Indo-Pacific Ocean? And with your expertise, Dr. Cronin, would you go further into the ARC space, cyberspace and also nuclear proliferation, significant aspect of the South China Sea? Thank you. Thank you, Jeannie. Did you say you were with the Vietnamese vegetarians of America? And with the Vietnamese fisheries too. But I'm with Voice of Vietnamese Americans and we encompass everything. Thank you. Well, thanks for your questions. I think as a student of Summit Diplomacy, a long time student of Summit Diplomacy, we have to be realistic about what summits can achieve. They're mostly about atmospherics and that can be very good, especially when you have tension between great powers. So you have in Xi Jinping, obviously, a new leader of China, a leader about whom some very interesting things are being said. I think I read George Schultz in the Wall Street Journal today talking about how he really expects this summit to be quite interesting because Xi Jinping is bringing in some fresh voices and ideas. I hope that's the case. And I think it's important for President Obama to not only listen to him and to find what opportunity there is for cooperation, what opportunity there is for a joint vision that would be good for the whole region, not just good for China and the United States, but also to raise some very frank differences that exist. And obviously, Tom Donilon, we now learn that Tom Donilon will be leaving shortly, the position of national security sort of advisor to the president. But he's been the spokesman really for the president and the administration to raise sensitive problems that we've had on cyber espionage, for instance. I think similarly, we've had a lot of questions and tensions over the last several years with China over the maritime claims, over maritime disputes, over maritime rules of the road, if you will. And at least even while setting the tone and being frank, I think it's possible for the two leaders to build on some of the previous security and economic dialogue that's occurred over the last several years in the maritime space. And this obviously very much centered on South, but also the East China Seas, where we want not only bilateral maritime cooperation on how to reduce risk, accident, improve transparency, improve agreement on rules of the road, but we want to see China do this with its neighbors in the region. So while we're all waiting for a binding code of conduct, but not holding our breath, it's very important to fill in this space with practical steps that can be taken with Vietnam, with the Philippines, with all of ASEAN, with Japan, with every country in the region. So that's what I'm hoping can at least be catalyzed by a summit meeting, but the details are gonna have to be worked out by experts, by officials, by painstaking diplomacy, military and diplomatic diplomacy, even commercial diplomacy in the years to come. So we need institutions like ASEAN working with outside powers, the plus mechanism, to bring these people together and keep the high focus on the agenda. What's most important? What can we achieve? What's realistic? I just wanna underline this because I think it's really important. I think one of the key messages that will come out of this conference is, we just urge the Chinese colleagues not to try to, I mean, they've gone to extreme measures to try to keep the discussion of the South China Sea and maritime security out of the discussions at the East Asia Summit and the ASEAN discussions, and it doesn't make sense. Come in and talk about it, put it on the table, and that's what I think everyone's talking about when Winten Zong Zong talks about strategic trust, when Marty Nauta-Lagawa talks about strategic trust, you can't build strategic trust, I can't say it, unless you talk to each other and you understand the other party's positions together in a group, not just bilaterally, but together as a group, and I think we'll look back in history and find out that China will, I believe, will embrace this, these opportunities to discuss these issues and it will mature its position, which will enhance security for China and all of the rest of everybody around the Indo-Pacific. Andre, I see you poised there to jump in. Please go ahead. Thank you. Well, my question, I like her strategic broad question, I wanna ask a narrower specific question, and that is, first of all, I'm Andre Sauvageau, the chief representative for a company in Detroit called Interstate Traveller Company. We wanna get our high rail into Vietnam and a lot of other countries too, but anyway. Andre, no commercials. Yeah, no commercials, well, I just, identification. Anyway, the question I have is, and it follows on from Dr. Cronin's, I think, excellent discussion of how we're trying to, the Obama administration trying to reduce the potential for violence, don't approve adjudicating these differences through violence and you mentioned specifically, Dr., that are commendable support for improving the Philippines defense forces, so they can sort of take care of their own coastal waters. So, my question is then, why not lift the agronistic embargo against the export of lethal weapons to Vietnam? Which again, would just be in the same spirit of what you mentioned doing with the Philippines. Anyway, that's the question. Well, thank you for that. You know, it's not the first time we've raised now issues for Congress to deal with, as well as the executive branch and someone who's not in government at the moment, I don't feel like I can change the policy quickly, but there are some good reasons to say why we shouldn't necessarily sell lethal arms to Vietnam, and that's because it would be definitely a red flag with China. Vietnam has no shortage of arms suppliers. It's got a very close relationship with Russia in particular, and while I'd love everybody to buy American, the reality is that there's no shortage of arms supply. I will be in Vietnam in a couple of weeks, and I'll certainly be talking about these in other issues, because we do have a growing strategic dialogue with Vietnam, and that's very important. That's where it's the human capacity and the business potential that I think really needs to grow, and it's not necessarily in the offensive military arms area that should be the lead edge of that kind of cooperation. And I know you weren't suggesting that, but I think that we have a warming relationship with Vietnam, and I think we need to see it improve. Okay, a question behind the camera. Can I add something to that? This is just on a related note. A lot of the countries, as I mentioned previously, there are a lot of challenges to developing resources in the sea. Pretty much all the countries and all the companies, the national oil companies, with the possible exception of CNOC don't really have the capacity right now to develop the South China Sea's resources on their own. So you're going to need foreign companies to come in. You're gonna need foreign expertise, foreign oil service firms like Slumbershade to come in, and without that, you're not gonna be able to, particularly if you're not China, you're not gonna be able to develop your country's resources, and certainly those firms are much less likely to come in when they see all these disputes and when they see that the atmosphere between their home countries and the countries in the South China Sea is so tense. Good point, thank you very much. The gentleman behind the camera, we found you, finally. Thank you, Mr. Chairman. I am a lawyer from Canada, and for my personal interest, before I ask my question, I want to support the answer of Mr. Patrick Conan to the question addressed by the lady from the VOA. The United States that have the right and the obligation to get involved in this dispute in the Southeast Asia Sea, because I remind you that the United States have already signed an international treaty in 1973 to protect the integrity of Vietnam. I remind you, in 1973, there is an international conference in Paris on Vietnam, and after the conference, nine countries have signed a final act, in the final act provision two and four, these nine countries, including China, accept to protect the integrity of Vietnam. Now, the United States and China have the right and the obligation to solve, to find a solution for this problem. Now, my question is addressed to Mr. Medlitza. You minimize the reserve of oil in this region. I have read in different articles by Professor Gavir John and Chi Kim Lo in 1989 that the oil reserve evaluated by China is 196 billion of barrel of oil in 1989. Why do you minimize it? Is it because you don't want the state to get involved in this dispute? Thank you. We employ a large variety of sources, industry publications, trade press, and we try to look at the holistic picture, we try to do a field by field analysis. Looking field by field, what's in there? What can we reasonably expect? The reasonable probability to be there in order to make calculations about reserves. Chinese have actually released several different studies with reserve estimates for the South China Sea, and those studies are, well, they don't match up. There are different numbers each time and no independent auditors have confirmed the Chinese numbers. So while we recognize that as a source, we just don't have the evidence to suggest that the oil, particularly the oil, that those estimates are saying is there really is. I mean, it's just not in the field, so where is it? Okay, thank you for that. Chris. Thank you very much, Ernie. Great discussion as always. I can see Bonnie Glazer and Crystal Amara sitting over there. We were all out at Shangri-La this weekend, so feel free to jump in if I'm mischaracterizing something. But perhaps the major theme, in addition to, will the Americans have the money to actually carry out the pivot down the road, was what are we gonna do about the increasingly aggressive or slash coercive Chinese use of paramilitary force, and in some cases implicit military force. Question came up again and again. Bonnie asked the question absolutely explicitly to the deputy chief of the Chinese general staff, and the answer basically was, huh, what are you talking about? Those are our islands, we're not doing anything. It's your problem. And, you know, they just simply refused to engage on the issue of either contention or that coercion force are pretty damn close. What can we do about that? And on the Philippines question, and this Crystal Amara, please jump in, just put out a really excellent book on all this, available on Amazon, no doubt. Pointed out that the Chinese have already, in effect, taken over the Philippines fishing ground. So the idea of, well, we've gotta build up there for, it's already gone. That was the gist of the hallway discussion and the speeches. Last point, the Vietnamese sent their prime minister and gave the keynote speech on Friday night, and it was an enormous condemnation of Chinese activities done very cleverly, sort of the ASEAN way. He didn't go China, China, China. He listed all the 400 really bad things that are happening and everybody in the room goes, oh, we know who he's talking about. So it was done very cleverly, but also really to the point. So it's on everybody's minds, but they won't engage. Okay, let me ask Chris and Bonnie if they want a two finger under this one, Chris. I just wanna say that in their way, did I pay Chris Nelson to plug my book for me? That's good because I'm taking notes and all those who advertised are gonna have to see me after class. All our publications are free, by the way. That did it. The only thing that I would add is that I actually posed a question on the same issue to Secretary of Defense Hegel. And I mean, also really didn't receive an adequate response other than there are mechanisms that can be used. But this is really a challenge, I think, for the U.S. and for the region. If the operations that are being conducted are primarily by the civilian and government vessels, which of course the Chinese outnumber every other country in the region, the United States doesn't have a sort of ready toolbox to respond. If we are dealing with a naval challenge, with a clear military challenge, then we have the seventh fleet, obviously. That's not something we wanna see. It's better to have the militaries in the background. But we don't have Coast Guard operations that are taking place with these governments in the South China Sea. So it is a challenge as to how to respond, particularly when we look at incidents like the Scarborough Shoal. I think nobody has mentioned now what's going on in Second Thomas Shoal, where these government vessels are being used to potentially alter the status quo. Okay, that's a good segue to Peter Dutton who had his hand up. And he is a Navy lawyer, so maybe he can elucidate. That's right, thanks. Well, thank you very much for a really stimulating panel. I appreciate it very much. I thought it would be worth just a comment on a couple of threads we've touched on a couple of times. And that first we talked about the freedom of navigation in the South China Sea. And what are the U.S. interests? Obviously the U.S. interests are in the freedom of navigation for the full participation of all countries in the global system. As you pointed out, we're interconnected. And our wealth, like everyone else's wealth, depends on this interconnected freedom of navigation. So I think it's been described as a vital interest if I remember correctly by the administration. But it's an American interest like the interest of all countries, right? In the vital interest in this freedom of navigation. The second point is, in the South China Sea, the American perspective is this is not a zone of innocent passage, but a zone of high seas freedoms, right? This is really important because this is not a zone of territorial waters or other sovereign waters. At most it's a zone of exclusive economic zones, right? So, and that may be the case. This is yet to be determined. Maybe the arbitral panel will help us figure this out. But in any case, it's not a zone of sovereign waters. Except around, perhaps, the small features. So that means that all countries are free to undertake military activities in support of the freedom of navigation that supports the global system that enriches us all, right? So you can see the logic trail there. And then finally, there was a question, I think it was Admiral Caneta asked about Chinese actions in the American exclusive economic zone off Guam and Hawaii. And I would add to that Japan as well. I mean, the submarines, I think, have been more or less identified as Chinese off the coast of Japan outside of 12 miles, right? So that's a freedom of military activities in the exclusive economic zone of another country. And so what the American response, as I have observed it, has been, is to say that we welcome the Chinese acceptance of this perspective because it demonstrates their acceptance of the mutuality of participation in an open global system, right? That's a really big development and a really big point I thought worth making. So thanks very much. That's an excellent point. Thank you very much. Well, you have time for maybe one or two more questions. Okay, Professor here. And then. Thank you, Adela, in response to Peter's response. And I would like to mention one point related to the issue raised by Emerald Canada, the freedom navigation in the exclusive economic zone of the United States. I think we have to know that the Pacific Ocean is big enough both for the United States, China and Taiwan. And I think Taiwan's exclusive economic zone, China's exclusive economic zones and U.S. economic zones are big enough for all country to exercise the right freedom of passage in that body of water. But under condition that these kind of activities are not related to military activities which has intention to threat or affect the coastal state security. And that comes to the difficult interpretation. Can you take, is that a threat to the national security? That's the response. And the other one is about the U.S. accession to the enclose. I have been following closely about this issue. And the positive development is that it's coming. Now, U.S. midterm election is not coming. Presidential elections is not coming. So in this coming year, Secretary Kerry and Defense Secretary, I think they are in support of U.S. accession to that. So it's a positive and I read the report. They are considering seriously for U.S. accession to that very important constitution for the ocean. Finally, the last point about U.S. involvement. Don't forget about in 1992, there was agreement between China and U.S. question oil agreement to exploit oil in the Wengar Bank 21. In that case, that's joint development between U.S. and the United States. But at that time, because of the action taken by the Vietnamese government to stop that kind of the joint development, and that's the beginning of this kind of dispute in 1994, 1995. But right now we are seeing a lot of U.S. oil companies involvement in the joint or your exploration, exploitation activities in the United States, in the South China Sea. So United States is not out. Thank you. Anyone want to comment on that? Okay. The other gentleman at the table. My name is Wu Xun from China National Institute for South China Sea Studies. I would like to take this opportunity to thank Chairman and our three panelists for your fascinating presentations. So my question is for Patrick with regard to South China Sea dispute. As we know, U.S. has reiterated that U.S. takes no sides among the climate states with regard to South China Sea. So from your perspective, do you think United States has changed its official stance to the South China Sea issue? But from Chinese perspective, the fact is different like U.S. previously stated that takes no sides. Given the U.S., you know, involved in the South China Sea currently, you know, so deeply involved in the South China Sea issue, so I would like to hear your comment on this issue. Thank you. Well, the question is to whether an evolving U.S. policy toward maritime disputes has changed significantly or in any significant way really from the policy of impartiality regarding specific sovereignty disputes. And I think that's where taking sides is a loaded phrase, unfortunately, because if you take no sides on the sovereignty and the boundaries, absolutely, United States is not going to take sides. We don't draw boundaries. That's not up for the United States. We need international rules to agree on how you do that. But we do take sides when we have political alliances and when we have security alliances. And we do take sides when we get actively involved in engaging the region, including through ASEAN-centered processes or engaging China in bilateral dialogue. We take sides in that sense of trying to improve relations with China. So we have to balance, therefore, these different interests on how we can maintain the freedom and navigation on which our economy and the global economy depends that we heard from Peter Dutton from the use of coercion or the fear of coercion that many states have, especially around the South China Sea, and especially in light of a rising China naturally. Even if China is the most benign intentions in the world, your neighbors are going to be concerned about how that rising power could be used to their detriment, especially since there are not fixed rules of the road, there's not a fixed architecture, and there's not likely to be any time soon. So the United States does play a stabilizing role and tries to come in and find ways where diplomacy can fill the vacuum and keep militaries apart. And the questions we heard earlier, the very good interventions on paramilitary forces, civilian law enforcement vessels, and as I mentioned earlier in my remarks, even fishery, commercial fishery vessels are being used in coercive ways sometimes, not necessarily driven by the government, sometimes independent of the government, but nonetheless from a specific country. And we have to find common rules to make sure these things do not escalate, do not impede the freedom of navigation, they do not lead to deeper strategic distrust, but rather the opposite, they become catalysts for trust. So it's a great question you're asking, it's a legitimate question. I'd say one way in one respect it has changed, US policy has changed, we've become more active in Southeast Asia, I think that's undeniable. And as we heard from Stanley Cobb earlier, it's not the first time we've been actively involved in Southeast Asia, but it's first time we've been actively involved comprehensively where economics and politics matter so much in Southeast Asia, and that's really because of the rise of ASEAN countries and the rise of Asia generally. Okay, we have time for one or two more questions, Don Emerson and then Christian. Yeah, I wanna try to recapture my memory of the remarkable silence following the presentation of Greg polling, not to get too far out of this particular box, but to suggest that insofar as this is an academic exercise with the adjective not meaning useless, would it be fair to say that most of the people in this room, but definitely not all, have a stake in clarity. I'm raising a very broad question that I hope we can return to later today and perhaps even tomorrow, and that is the possibly diminishing utility of ambiguity, which we all know from a diplomat's perspective is often extremely useful. But at the same time, if I can turn that around, the possible dangers of clarity. Now, when Peter told us that from an American perspective, the South China Sea really is still essentially about freedom of navigation, the high seas and so forth, and then without referencing Greg's map, referred to a South China Sea in which the EEZs would actually be demarcated, would it be fair to say that that is an example of clarity, a sort of Greg polling style clarity that could actually be inimical to the national interest of the United States? A second argument with regard to the dangers of clarity would be that a clarification of the boundaries would sharpen the disputes across them and would trigger what we all don't want, which is a further move toward the precipice. I don't think you were recommending that we we apprehend Greg for sedition, but no. I think, no, I think the, it's important here to underline the point that Greg made at the end of his presentation, which is, I think fundamentally, you cannot move to resolve disputes unless the countries put their actual claims on the table in a legal format. You cannot have legal resolution unless they do that. So, at some point, you can't avoid clarity in my view, at least in a legal forum, or you don't get at least some sort of a resolution to be able to move forward on that, but that's my view. Anyone else wanna? Well, if you're a student at Stanford University and you take a course with Don Emerson, you definitely benefit from the clarity of his strategic thinking, of his expertise on Southeast Asia. No, but seriously, we benefit from clarifying information, for instance, over which land features deserve any easy, potentially, and which ones don't. I mean, there could be clarity that comes from that, but you're really referring to, I think, the strategic policy of ambiguity that here, US will not, no country will want, it's not just diplomats, will want, even though you referred to diplomats, Don, I think will want to say, this is a blank check, this is exactly the rigid answer. We've seen some clarity recently in diplomatic statements from officials in the region which seem to say, my way or the highway, and that's clarity we don't want, because it's like the nine dashed line being clarified. If the nine dashed line were clarified is not appropriate, therefore we've gotta get into another level of detail of what exactly are the boundaries? How do countries come together and just determine them? Then yes, that kind of clarity is good. So there's not a yes or no answer to this question, but I think we're moving toward much more information in the need for more clarity. Is a shift in Beijing, is a shift in Beijing away from the ambiguous refusal to specify the nine dashed line towards an acknowledgement that their claim is really based on the land features, which at least opens the door, keeping in mind that they rejected under Article 298, the whole question of arbitration, at least opens the door to moving the issue under the realm of international law, and that has a lot to do with somehow developing a sense that the rise of China is really contributing to the global good. Could I just add something to that? Just in terms of clarity, there was a question a while back about why Chinese estimates are so much higher than the estimates that the Energy Information Administration put out. It's the same idea. Oftentimes it might be a question of methodology or just access to different data sources, but when you don't have that kind of acknowledgement of this is the probability we're taking of this resource, these are the reserve production ratios we're using. When you don't have access to that, you open yourself up to charges of saying, well, prove it, prove the number. So in our work, we really do try to keep a consistent methodology. And that's one of the things that's historically been lacking from an analysis of the South China Sea is just whether it's aligned demarcation of the sea or the types of resources or what resources are we talking about? We haven't really talked about, for example, shale or natural gas hydrates yet. Not that I'm saying I necessarily want to. But the point is when people have varying definitions and uses of things related to resources, it opens yourself up to not just strategic ambiguity, but really ambiguity about what you're actually looking at. Christian, I think we're going to have to close. I think the ending this panel on the question of strategic ambiguity versus clarity is absolutely appropriate. And I'd like to ask you to join me in thanking this panel for their excellent time.