Taiwan Drills May Elevate Asia Sea Tensions as APEC to Meet

Steps by Taiwan to raise its profile in East Asia’s maritime-boundary disputes threaten to escalate tensions just as the region’s leaders prepare to gather for an annual summit.

Taiwan’s coast guard plans five days of live-fire drills starting tomorrow on Taiping, one of the largest South China Sea islands, over Vietnam’s objections. Separately, President Ma Ying-jeou, whose popularity has sunk since his January re- election, unveiled a peace proposal in the East China Sea, where ire has flared between mainland China and Japan in recent weeks.

The Taiwanese moves inject a fresh element to conflicts over areas rich in oil, gas and fish that have intensified in the run-up to leadership contests in China, South Korea and Japan later this year. Along with Hong Kong, where activists sailed to Japanese-claimed islands this month, Taiwan backs Chinese claims against those of American allies Japan and the Philippines, even as it depends on the U.S. for security.

“Legislators saw that Taiwan was left out of international talks and agreements, and asked the government to show the world that Taiwan has control over this territory,” said Samuel C. Y. Ku, a professor at the Institute of China and Asia-Pacific Studies in Taiwan. “As long as you have sovereignty you have the authority to get oil resources. If you don’t have sovereignty, then you have nothing.”

Taiwan delivered 40-millimeter anti-aircraft guns and 120- millimeter mortars to Taiping earlier this month to bolster its defenses. Vietnam’s foreign ministry last week called on Taiwan to immediately cancel the live-fire exercises.

APEC Summit

Investors have yet to signal concern that the tensions will affect the outlook for the region’s economies or corporate earnings. Japan’s Nikkei 225 Stock Average is up 3.3 percent so far this month, South Korea’s Kospi has risen 1.3 percent and Taiwan’s Taiex has gained 1.4 percent -- all exceeding the MSCI Asia Pacific Index, which is down 0.3 percent.

The disputes also haven’t prevented China, Japan and South Korea from beginning talks on a preferential trade agreement in November, according to a statement on the website of China’s commerce ministry.

Taiwan’s drill is “routine” and isn’t intended to increase tensions, Foreign Ministry spokesman Steve Hsia said.

The island “is actively doing its thing to tell all the major players, ‘Look guys, I am here,’” Henry Bensurto, a Philippine official involved in South China Sea policy, said last week. “What it’s trying to do now is not consistent with playing a very positive role.”

Flag Assault

The maritime spats may spill into the 21-member Asia- Pacific Economic Cooperation summit, where Taiwan will also be represented. Philippine President Benigno Aquino and Chinese President Hu Jintao may discuss the disputes at the meeting in Vladivostok, Russia, Foreign Affairs Undersecretary Laura del Rosario said.

Japan this week demanded an investigation after assailants in Beijing blocked a car carrying its envoy and snatched a Japanese flag off the vehicle. The incident followed competing visits to islands in the East China Sea, known as Diaoyu in Chinese and Senkaku in Japanese.

“It’s best if Japan and mainland China could join with the Republic of China,” Hsia said, referring to the official name for Taiwan. “It’s in the interest of all the parties concerned to put all the disputes aside and sit down and talk” about exploring resources, he said.

Ship Collision

Taiwan imports more than 99 percent of its energy, with the cost increasing 30 percent in 2010 to $45 billion, according to the most recent data posted on the Bureau of Energy’s website. Domestic natural gas production fell by about 80 percent over the past two decades, the bureau’s statistics show.

Ma, whose approval rating fell to a low of 15 percent in July, vowed last month to never “concede a single inch” of territory to Japan after a Taiwanese coast guard vessel escorting activists with Chinese flags collided with a Japanese ship near disputed islands.

China’s Foreign Ministry spokesman Liu Weimin praised the Taiwanese activists as “compatriots” carrying out a duty to defend the islands. Hsia said that Taiwan isn’t cooperating with China over the islands.

‘Tread Carefully’

“Taiwan is going to tread carefully in these disputes,” said Gary Li, head of marine and aviation forecasting at London- based Exclusive Analysis Ltd. “It doesn’t want to be seen as an ‘ally’ of Beijing, but nonetheless it can’t have escaped Taipei that any military moves they conduct, nationalists on the mainland would interpret as some form of ‘solidarity.’”

China and fellow claimants don’t officially recognize Taiwan’s government and therefore have left it out of talks on a code of conduct in the waters, said Ian Storey, a senior fellow at the Institute of Southeast Asian Studies in Singapore.

Chiang Kai-Shek’s administration, which moved to Taiwan after losing the mainland to the Communists, drew China’s U- shaped map of the South China Sea that both Vietnam and the Philippines reject as a basis for joint development. Brunei and Malaysia also claim some of the Spratly archipelago.

Taiping, also known as Itu Aba, is the largest island in the Spratlys at 0.5 square kilometers (0.19 square mile), about the size of the Vatican City. Chiang claimed the island in 1946 and the Taipei government later established a military garrison there.

U.S. Talks

The U.S. has avoided commenting on Taiwan’s recent moves after criticizing China earlier this month for establishing a garrison on the biggest island in the Paracels, an island chain also claimed by Vietnam. While the U.S. recognized Beijing as the sole legal government of China in 1979, it is bound by law to help Taiwan maintain its defense.

Americans have held unofficial talks with Taiwan on the territorial disputes, Assistant Secretary of State Kurt Campbell said at a forum in June.

“It would be fair to say that they have been very, very careful both in their public diplomacy and in their private interactions on this issue,” he said in response to a question about the possibility that Taiwan may cooperate with China in the South China Sea. “I’ll leave it at that.”

To contact the reporter on this story: Daniel Ten Kate in Bangkok at dtenkate@bloomberg.net

To contact the editor responsible for this story: Peter Hirschberg at phirschberg@bloomberg.net

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.