The End of the Vanguard Bank Standoff Does Not Resolve the Confrontation’s Root Cause

The standoff at Vanguard Bank between Vietnam and China ended as quickly as it began. In late October it was announced that the Japanese survey rig Hakuryu-5 had completed its operations in bloc 06-01 under contract with Rosneft Vietnam. A day later, China announced that the Haiyang Dizhi 8 had completed its work and would be returning to China.

The juxtaposition of these two events seemed to suggest that a deal had been reached in private. A recent visit by the writer to Hanoi in early November provided an opportunity to discuss this possibility with senior Vietnamese officials including one former ambassador to China.

Prior to my visit I was informed by a usually reliable source that sometime in late September or early October, after the Haiyang Dizhi 8 left Vanguard Bank to replenish at nearby Fiery Cross Reef, that China has sent a communication to Vietnam.

This communication offered a quid pro quo: If Vietnam stopped oil exploration by Rosneft Vietnam at the Red Orchid 06-01 block, the Haiyang Dizhi 8 would not re-enter Vietnam’s Exclusive Economic Zone (EEZ).

The Haiyang Dizhi 8 did return to Vietnamese waters and proceeded to conduct a seismic search pattern as it traveled up Vietnam’s central coast. This action suggested that Vietnam either turned down the Chinese offer or ignored it.

In early November Vietnamese officials in Hanoi were adamant that there had been no negotiations with China on a quid pro quo deal. The Japanese rig Hakuryu-5 was on contract to Rosneft Vietnam since May. During the standoff it was announced in July that its operations had been extended to September. Many analysts viewed this as a calculated act of defiance by Vietnam. The decision to halt further oil exploration in late October may have been a commercial decision.

The end of the standoff at Vanguard Bank has not eliminated the root cause of this latest confrontation.

China has become ever more aggressive in asserting its claims to sovereignty over all the land features and adjacent waters embraced by its nine dotted line claim to the South China Sea.

China’s input into the Single Draft Negotiating Text of a South China Sea Code of Conduct (COC) reveals that with respect to cooperation on the marine economy, including oil and gas exploration, cooperation is to be carried out by the littoral states “and shall not be conducted in cooperation with companies from countries outside the region.” This is the basis of China’s attempt to pressure Rosneft Vietnam to cease operations in block 06-01.

In other words, China reserves the right to re-intervene in Vietnam’s EEZ to halt oil exploration by foreign oil companies from outside the region.

The end of the standoff at Vanguard Bank also has not resolved a heated debate inside Vietnam about whether the response by its leaders was adequate.

‘Name and shame’ and legal action?

Critics argue that Vietnam should “name and shame” China directly in international forums rather than skirting around the issue. Critics also argue that Vietnam should take legal action against China under the United Nations Convention on the Law of the Sea (UNCLOS), following the precedent set by the Philippines.

With the end of the Vanguard Bank standoff, Vietnam’s maritime dispute with China in the South China Sea has now reverted to “legal and diplomatic processes.” Two current developments bear analysis: negotiations on the Single Draft Negotiating Text and the on-going debate in Vietnam about whether or not to take legal action against China.

Vietnam hosted the 30th ASEAN-China Joint Working Group on the  implementation of the Declaration on Conduct of Parties (DOC) in the South China Sea and the 18th ASEAN-China Senior Officials’ Meeting (SOM) on the implementation of the DOC in the South China Sea in Da Lat from 13-15 October.

China and Vietnam clashed at these meetings.

Vietnam’s representative reported “on the complex developments in the East Sea, particularly the serious violation of Vietnam’s sovereignty and jurisdiction, and highlighted the country’s stance and viewpoints on international law and the 1982 UNCLOS… China’s violations have been adversely affecting regional peace and security and hindering COC negotiations, according to a Vietnam News Agency on Oct. 15.

China’s media gave a completely different picture.  China’s Ministry of Foreign Affairs said on Oct. 16 that “All parties agreed that the situation in the South China Sea is generally stable… The meeting had a full exchange of views on the second reading of the COC text, reviewed and confirmed new maritime practical cooperation projects, and updated the DOC implementation plan for 2016-2021.”

Vietnam blocked China’s attempt to label the 18th ASEAN-China SOM as the second of three readings of the Single Draft Negotiating Text. Vietnam proposed several measures to improve the working style in the next round of COC negotiations, such as focusing on policy issues and enhancing the role of senior officials in instructing and orientating negotiations at the working group level.

On Nov. 6, Vietnam’s Deputy Minister of Foreign Affairs, Le Hoai Trung, gave a keynote address to the 11th international conference on the South China Sea sponsored by the Diplomatic Academy of Vietnam, the Vietnam Lawyers’ Association and the Foundation for East Sea Studies held in Hanoi.

Trung noted that Vietnam preferred negotiations to settle its maritime dispute with China but there were other options on the table.

“We know that these measures include fact-finding, mediation, conciliation, negotiation, arbitration and litigation measures. The UN Charter and UNCLOS 1982 have sufficient mechanisms for us to apply those measures,” he said in what appears to be the first time that Vietnam has officially endorsed taking legal action against China.

Vietnam included these measures in its input into the confidential ASEAN-China Single Draft Negotiating Text that was adopted in August 2018.

Vietnam is now the Chair of the Association of Southeast Asian Nations (ASEAN) for 2020. It remains to be seen what initiatives it will adopt to advance negotiations on an effective and binding South China Sea Code of Conduct. It also remains to be seen whether China will be circumspect in its handling of South China Sea issues now that Vietnam is ASEAN Chair.

Carl Thayer is emeritus professor at The University of New South Wales, Canberra.



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