China courts Philippines in energy quest
ISN, Switzerland - Mar 2, 2005
http://www.isn.ethz.ch/news/sw/details.cfm?id=10864

ISN SECURITY WATCH (02/03/05) - China has extended military assistance to the Philippines for the first time in years, boosting bilateral relations between the two countries as China seeks a stronger foothold in the region.

The two sides signed off on the military assistance deal at a meeting in Beijing on Wednesday, where Filipino Foreign Secretary Alberto Romulo ratified the November 2004 memorandum of understanding on defense cooperation with China.

Chinese Prime Minster Wen Jiabao urged improved cooperation between the two countries, while Romulo said the Philippines welcomed “China’s increasing role in regional and international affairs”, news agencies reported.

China promised the Philippines US$1.2 million in military equipment.

Observers are viewing the deal as part of China’s efforts to increase its influence in Southeast Asia, which has traditionally been dominated by the US.

In another significant development on Wednesday, both countries settled the long-standing dispute over the oil- and mineral-rich Spratly Islands (also known as Nansha) in the South China Sea, and agreed to turn the region into an area of “cooperation, peace, and development […] instead of a flash point”.

Experts also observed the latest developments as part of China’s quest for energy security. China is the world's second largest consumer of oil, after the US. China also accounts for 40 per cent of the world’s crude oil consumption growth since 2000.

The Spratly Islands consist of more than 100 small islands containing vast gas and oil deposits. The islands are partially claimed by the Philippines, Brunei, and Indonesia, and fully claimed by Vietnam, Taiwan, and China.

In November 2002, all the claimants had signed a "declaration on the conduct of parties in the South China Sea", which has somewhat eased the tensions, but fell short of a legally binding code of conduct.

Nearly 50 of the small islands are occupied by military forces from the various nations, with the exception of Brunei. In 1988, more than 70 Vietnamese troops died during a skirmish with Chinese naval forces at Johnson Reef.

However, China has expressed its willingness to discuss the exploration of the islands’ oil and gas reserves on the basis of mutual respect, equality, and reciprocity.

Oil companies in China and the Philippines recently signed an agreement on energy exploration in the Spratly Islands, in which both sides agreed to research ocean earthquakes and evaluate oil resources in disputed waters, sparking concern from the other claimants.

Vietnam warned that the joint study could violate the 2002 code of conduct. But Chinese and Filipino officials say the conflict has been resolved.

"The disputes and conflicts are all over now and this refers to [other] countries which claim the South China Sea territory,” China’s Xinhua news agency quoted Romulo as saying.