Last week, the Hague-based Permanent Court of Arbitration (PCA) announced its decisions in respect to a number of maritime disputes between China and the Philippines in the South China Sea (SCS). In doing so, it marched head-first into the middle of one of the globe’s most sensitive geopolitical regions. While explicitly stating that the PCA’s authority does not extend to issues involving national sovereignty or the conduct of military activities, by refuting all Chinese claims to “historic rights” within the so-called Nine Dash Line, the 501-page decision has profound implications for the delicately balanced, uneasy coexistence of the United States and China in the East Pacific, and could catalyse an escalation of tensions in the region.
For the benefit of those approaching the case from a legal rather than geopolitical perspective, and before delving into the specifics of China-US relations in the SCS, it is worth taking a step back to discuss, in general terms, the role of military contingency planning and conventional deterrence in the contemporary relations between major powers (We are treating nuclear deterrence as separate and setting it aside for now, we will return to it presently).
The primary function of defensive military capabilities is not to defend against attack. Rather, the existence of adequate defences is designed to affect the risk-reward calculus of potential adversaries, deterring an attack from materialising in the first place. It is the role of a country’s strategic planners to assume that conflicts of interest will inevitably arise between states, and that if vulnerabilities exist in the country’s defences, the threat, if not the actual use, of military force will be used as leverage against it. To not take all appropriate action to identify and address such vulnerabilities is at best a dereliction of duty, and at worse can be thought to embolden unscrupulous actors, by reducing the risks of belligerent, aggressive behavior.
At the same time, a careful balance must be struck, as unconstrained military build-up can set off what is commonly referred to as a “security dilemma” dynamic. Increases in military capabilities perceived as being in excess of what’s required to guarantee one’s defensive interests can lead others to counterbalance by investing more in their own military. The resulting downward spiral is marked by wasteful arms racing, loss of trust and increased risk of escalating tensions leading to conflict.
Matters become significantly more complex when discussing interactions between major powers. For one, the geographic scope is greatly expanded as a function of two parallel processes. Internally, major powers define their interests more broadly, as both their influence and dependence on the outside world become deeper. At the same time, they typically accrue numerous external commitments, such as overseas military bases or mutual defence alliances with smaller states. With greater need to project power beyond their borders, it becomes harder for third parties to differentiate between offensive and defensive intent and posture.
Second, there is the issue of nuclear weapons. All countries currently in possession of sizeable nuclear arsenals have a guaranteed second-strike capability. Because of this, extreme care is taken by planners to avoid scenarios in which a possible confrontation between nuclear-armed states could quickly devolve into a choice between defeat or nuclear escalation. In short, successful conventional deterrence between great powers today should mean they and their allies are well-defended enough for nuclear weapons to never become part of the equation.
The South China Sea and A2AD
Let’s now return to the SCS. As China’s prodigious economic growth continues to provides it with the resources, self-confidence and ambition to play a more central role in international affairs, Chinese strategists are tasked with addressing China’s geographic vulnerability to an attack from the Pacific. In a lesson painfully learned during the Opium Wars which set off the “Century of Humiliation”, China found that the concentration of national economic activity to the country’s east, spread across the numerous large cities dotting its long coastline and reliant on water-borne trade, left the country woefully exposed to Britain’s naval superiority and “gunboat diplomacy”.
In a contemporary context, this only looms larger in the minds of Beijing’s leaders. Not only major urban centres remain vulnerable to direct attack from the sea, but the Chinese economy is more dependent than ever on the uninterrupted flow of maritime trade. More than 90% of the goods exported by China, valued at about 20% of national GDP, pass through ports such as Shanghai, Tianjin and Guangzhou, while as much as 80% of its oil imports and 30% of its natural gas imports have to pass through the Straits of Malacca and the SCS before reaching the mainland. Any disruption of these trade flows, for instance due to a blockade by a superior naval force, holds the potential to send shockwaves through the Chinese economy, leaving Beijing with a choice between acquiescing to military blackmail, or threatening nuclear escalation.
China has chosen to satisfy its deterrence requirements through the pursuit of an Anti-Access and Area Denial (A2AD) strategy. A2AD, in simple terms, involves the creation of a defensive perimeter, robust enough to keep even an opponent of superior capabilities at bay, or at least render them unable to operate within this perimeter without significant costs. Investments in the development of new weapon technologies, such as the infamous DF-21D “Aircraft Carrier-Killer” ballistic missile,  and the creation of a network of airfields and military bases, including on artificial islands raised explicitly for that purpose, are all part of the effort to establish this A2AD perimeter across the First Island Chain, with the Nine Dash Line serving as its southern border.
It should be made clear at this point that the characterisation of A2AD as a purely defensive doctrine is me affording China the benefit of the doubt, and is certainly not an opinion shared by everyone, particularly within the United States. Their concerns are not unfounded. The same A2AD capabilities that protect China against coercion could just as easily be utilised to disrupt non-Chinese maritime trade flowing through the SCS. Amounting to 5.3 trillion dollars yearly, or a full third of the world’s total, the potential repercussions of a disruption for the global economy have led the White House to declare in 2010 freedom of maritime navigation within the SCS as a “US national interest”. Furthermore, the A2AD perimeter defined by China surrounds, or borders, a number of countries who have long relied on the United States to guarantee their security, and are less than thrilled by the prospect of losing this aegis of protection.
Those concerns centre around the credibility of US guarantees of defence. In 1996, during a period of increased tensions between Taipei and Beijing, Chinese missile tests off the coast of Taiwan were scheduled to coincide with presidential elections on the island, in what many saw as a brazen attempt to intimidate the Taiwanese electorate away from voting for the incumbent Lee Teng-hu, who was deeply unpopular in Beijing. Those tactics proved unsuccessful, in no small part because the Clinton administration ordered two – out of the US’s total of ten – aircraft carrier battle groups (CVBGs) to the region, as a demonstration of American commitment to Taiwan’s defence. Were something similar to happen today, it is less certain that the White House would be willing to place a CVBG, comprised of roughly 7500 personnel and 10 billion dollars of military hardware, at risk on behalf of an ally against China’s improved A2AD capabilities, many of which (such as the aforementioned DF-21D missile) were developed as a direct response to the 1996 incident.
Implications of the Philippines v. China Judgement
Enter the PCA. The ruling, rendered under the authority of the UN Convention on the Law of the Sea (UNCLOS), covers a swath of issues, from fishing and resource extraction rights to duties of environmental preservation. While having to rule on the legal standing of many of the Spratlys under the definitions set by UNCLOS, the PCA stated explicitly that it did not intent to adjudicate competing sovereignty claims involving land features, or to settle competing maritime border claims, with the first falling outside the purview of UNCLOS, and China having opted out of the provisions allowing for the second.
Nevertheless, the decision refuting China’s claims of “historic rights” to the waters of the SCS, in essence strikes down the Nine Dash Line as illegal, and establishes as legal fact that most of the SCS constitutes international waters, where no restrictions or interference should exist on freedom of navigation. Coupled with two other aspects of the ruling – the determination that neither Scarborough Shoal nor any of the Spratly (Nánshā 南沙)islands give rise to exclusive territorial waters beyond the minimum 12 miles, and the reaffirmation that under UNCLOS artificial islands cannot give rise to any claim of territorial waters – it eliminates any possibility of China continuing to pursue the construction of its A2AD perimeter without finding itself in violation of international law.
China has already declared its intent to completely disregard the ruling, a rare outright dismissal of the current international multilateral order typically avoided by Beijing. Given the tremendous significance – political, strategic, but also historical – bestowed to the attainment of credible deterrent capabilities against attacks from the sea, this hardline position appears unlikely to change, and increasingly harsh responses to future challenges to the legitimacy of the Nine Dash Line should be expected. The immediate demonstration of defiance against the ruling, likely to materialise within the next few weeks, will provide indications on how hard China is willing to push back. Potential responses could include the declaration of an Air Defense Identification Zone (ADIZ) over the SCS (as was done for the East China Sea in 2013, or intensification of its land reclamation efforts on one or more disputed reefs.
The United States has stated on a number of occasions that it considers the result of the arbitration as legally binding for all parties. Furthermore, since October 2015, it has begun conducting three freedom of navigation operations (FONOP) in the South China Sea, sending warships to waters within 12 nautical miles of islands and rocks claimed by China, the Philippines and others without prior notification, to challenge what it sees as excessive maritime claims. Immediately following the PCA’s ruling, France declared its intentions to join in those efforts, demonstrating the potential of the ruling to greatly escalate tensions in the region, transforming its enforcement into a litmus test for the legitimacy of UNCLOS and the current international legal order as a whole.
A compromise acceptable to all sides remains distant, and the role the arbitration judgement will end up playing in its achievement won’t be known for some time. But as a new balance is being sought in the Asia Pacific, there are reasons for cautious optimism. While a lasting solution remains distant and tensions will inevitably flare up on occasion, both sides seem to fully appreciate the peril of their circumstances and actively work to avoid provoking confrontation. Presidents Xi Jinping and Barack Obama have both in recent years made reference to the “Thucydides Trap” – the 25-centuries-old notion that during shifts in the balance of power, the combination of growing entitlement by the rising power with the insecurities of the declining power, inevitably lead to war between them – and have declared their commitment that China and the United States will not fall prey to such historically predestined patterns.
 Available in full at https://pca-cpa.org/wp-content/uploads/sites/175/2016/07/PH-CN-20160712-Award.pdf, for the official press release summarising the ruling see https://pca-cpa.org/wp-content/uploads/sites/175/2016/07/PH-CN-20160712-Press-Release-No-11-English.pdf .
 The literature on Deterrence Theory is extensive and multifaceted, but anyone looking to explore the subject can do no better than The Psychology of Deterrence by Jervis, Lebow and Stein as a starting point.
 Charles Glaser’s Rational Theory of International Politics: The Logic of Competition and Cooperation provides a fascinating overview of the variations between types of security dilemmas and their effect on the behaviour of states.
 For an overview of the logic of mutually assured destruction see this paper by Henry Sokolski of the Strategic Studies Institute (http://www.strategicstudiesinstitute.army.mil/Pubs/display.cfm?pubid=585). Alternatively, watch Stanley Kubrick’s 1964 classic Dr. Strangelove or: How I Learned to Stop Worrying and Love the Bomb. The author humbly recommends the second option.
 The missile’s existence first became public in 2010 (http://www.washingtontimes.com/news/2010/dec/27/china-deploying-carrier-sinking-ballistic-missile/).
 According to Andrew Erickson, a specialist on the Chinese military at the U.S. Naval War College who has written a book on the subject (For more see http://www.andrewerickson.com/2013/09/chinas-carrier-killer-was-born-in-the-balkans-the-df-21d-is-chinas-answer-to-americas-carriers-with-an-unusual-origin-in-the-kosovo-war/).
 Importantly, FONOPs were designed to assert the “right of innocent passage” and deliberately as not to challenge claims of sovereignty. For more on the subject, see http://thediplomat.com/2016/01/return-of-the-fonop-us-navy-destroyer-asserts-freedom-of-navigation-in-paracel-islands/.
 For more on the potential role and motivation of the French involvement in the SCS, see http://thediplomat.com/2016/07/south-china-sea-the-french-are-coming/.
For more on the Thucydides Trap, see http://www.theatlantic.com/international/archive/2015/09/united-states-china-war-thucydides-trap/406756/.