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Chinese Oil Rig Again Angers Hanoi

Chinese Oil Rig Again Angers Hanoi

Chinese oil rig Haiyang Shiyou 981 is seen surrounded by China Coast Guard ships in the East Vietnam Sea, May 14, 2014. (Reuters)

Beijing is back to salami-slicing again, as it moved an offshore oil drilling rig on January 16 near the entrance to the Gulf of Tonkin, about 21 nautical miles east of the median line between Vietnam and China. But this is no ordinary rig—it is the same $1 billion deepwater rig known as Haiyang Shiyou 981 which caused Vietnam and China to experience their worst diplomatic breakdown in decades when China parked it for 10 weeks in waters claimed by Vietnam in mid-2014.

Back then, Beijing’s movement of the rig into disputed waters within Vietnam’s exclusive economic zone led to widespread protests nationwide and rioting outside of Ho Chi Minh City. At that time, the rig was surrounded by over 100 Chinese vessels, including military ships, some of which rammed or fired their water cannons at Vietnamese ships encroaching near the Chinese rig.

On Monday, Hanoi warned Beijing against drilling in “undelineated” waters in the East Sea (South China Sea), although this time around the rig’s location is in waters where both countries’ continental shelves overlap and jurisdiction is unclear. The following day, Ministry of Foreign Affairs spokesperson Le Hai Binh demanded Beijing remove the oil rig from its current position, adding “Vietnam will defend its rights and legitimate interests over the sea area as per international law, including the 1982 United Nations Convention on Law of the Sea and relevant international realities”. Vietnam and China previously reached an agreement to inform each other and reach consensus before undertaking any activities in the overlapping maritime area.

Meanwhile, tensions between Vietnamese fishermen and Chinese boats continue in the central province of Quang Ngai. Over the past two weeks, two attacks against Vietnamese fishing boats have been blamed on Chinese armored vessels, causing around $13,500 worth of damage. Vietnamese officials are also concerned, along with Philippine officials, over recent test flights by China using a newly-constructed runway on an artificial island in the disputed Spratly archipelago.

This week, behind closed doors, Vietnam’s ruling Communist Party meets to determine the country’s new leadership—with key ramifications for how Vietnam interacts diplomatically and economically with Asia’s two largest powers, China and the United States, and how Hanoi responds to Chinese aggression in future. The latest congress, held every five years, will end on January 28 with the announcement of the general secretary, the prime minister, the president, the chairman of the National Assembly and other top functionaries.

Despite the secrecy surrounding the event, political pundits are declaring the leadership has already been decided prior to the start of the congress, with General Secretary Nguyen Phu Trong, 71, expected to keep his job for another two and one-half years, half the requisite five-year term as a concession to his rival, Prime Minister Nguyen Tan Dung, 66.

Rumor has it one of Dung’s people will be granted the post of National Assembly chairman, while Prime Minister Dung will be ousted and replaced with a neutral candidate. Dung had hoped for Trong’s post of general secretary, but is now expected to retire. The post of president will likely go to a supporter of Trong.

Many Vietnamese citizens view the struggle for power as one of two competing factions—those on the side of reform and opening-up choosing to back Dung, who has been credited with championing economic reforms, welcoming greater American involvement and standing up to Chinese aggression in the East Sea. The other faction is represented by Trong and believed to lean toward greater Chinese involvement and be less critical of China.

However, the possible ouster of Dung may not mean an end to economic reform as the new leadership is expected to continue its backing of the Trans-Pacific Partnership with the United States and the free trade agreement with the European Union. Trong’s visit to the U.S. last July was a positive one and the first official visit by a leader of the Vietnam Communist Party. With Trong expected to retain Vietnam’s most powerful position,, and a new president forthcoming in the U.S., Beijing may reckon now is the time to test the new leadership of Vietnam and step up its salami-slicing tactics vis-à-vis Vietnam.

Vietnam can expect more movements of the Haiyang Shiyou 981 drilling rig, as well as more test flights and harassment from Chinese maritime vessels—and more freedom of navigation exercises in the South China Sea by U.S. military forces. While the South China Sea will see quite a lot of activity this year, none of these actions will be significant enough on their own to spark a war, but will likely keep tensions elevated for the near future.



Gary Sands

Gary Sands is a Senior Analyst at Wikistrat, a crowdsourced consultancy, and a Director at Highway West Capital Advisors, a venture capital, project finance and political risk advisory. He has contributed a number of op-eds for Forbes, U.S. News and World Report, Newsweek, Washington Times, The Diplomat, The National Interest, International Policy Digest, Asia Times, EurasiaNet, Eurasia Review, Indo-Pacific Review, the South China Morning Post, and the Global Times. He was previously employed in lending and advisory roles at Shell Capital, ABB Structured Finance, and the U.S. Overseas Private Investment Corporation. He earned his Masters of Business Administration in International Business from the George Washington University in Washington, D.C. and a Bachelor of Science in Finance at the University of Connecticut in Storrs, Connecticut. He spent six years in Shanghai from 2006-2012, four years in Rio de Janeiro, and is currently based in Ho Chi Minh City, Vietnam. Twitter@ForeignDevil666