"If we had to pick a memorable, although unlikely, place for the onset
of major hostilities in the South China Sea, we could find no better
site than a small barren unhospitable rock with the name
MISCHIEF."
...the Warfighter editorial staff

THE BATTLE FOR MISCHIEF REEF


Chinese Territorial Assertions:
The Case of the Mischief Reef

Author: By B.Raman, Institute For Topical Studies, Chennai.
Date: 14 January 1999

China has on-going disputes with Vietnam, the Philippines, Malaysia and Brunei regarding conflicting claims of sovereignty over different islands in the Spratly group in the South China Sea, but its assertion of its claim over the Mischief Reef at the expense of the Philippines is an educative case study of how China doggedly pursues its irredentist territorial claims - by stealth, if possible, and by other means, including force, if necessary.

The Spratly group consists of 12 main islands and 390 islets, banks, reefs, shoals and cays, of which only 33 permanently rise above the sea and only seven of these have an area of more than 0.5 sq.kms. The islands and other features lie in an area of about 400 nautical miles from East to West and about 500 nautical miles from North to South. The sea areas contained by these features constitute about 38 per cent of the South China Sea.

According to legal experts, the 33 features, which are permanently above the sea, would be entitled, under international law, to have 12 nautical miles of territorial sea, while 26 of these could have Exclusive Economic Zone and continental shelf claims. None of the other features could have any such entitlement since they are not permanently above the sea.

Widely conflicting estimates of huge oil and gas deposits in the area, which could make it as rich as the Kuwait region , are yet to be proved by exploration. Amongst those to have made such claims are the Chinese Ministry for Geology and Mineral Resources (oil and gas reserves of 17.7 billion tonnes as against Kuwait's 13 billion tonnes), some scientists of the Russian Research Institute of Geology of Foreign Countries (at least 10 billion tonnes) , Ji Guoxing, Director of the Asia-Pacific Department of the Shanghai Institute For International Studies (10 billion tonnes of oil and 25 billion cubic metres of gas) and the book (author anonymous)" Can China's Armed Forces Win The Next War?" ( 35 billion tonnes) .

Amongst the skeptics doubting these estimates is E.F.Durkee, General Manager of the E.F.Durkee and Associates of Manila, who had worked as technical adviser to the Crestone Energy Corporation of the US during its negotiations with Beijing in 1992 on exploration rights.

Durkee wrote in the "Far Eastern Economic Review" of March 9,1995, as follows: " Though media and politicians love to talk about oil in the Spratlys, there is not one shred of evidence to support the claim. Other than a small amount of gas and a few barrels of condensate produced at Sampaquita 1 and 3A in 1976 in the Reed Bank within Philippine territory, there have been no reported hydrocarbons ever produced from the Spratly islands area. If the objective is gas and oil, the Spratlys are hardly worth the risk of war."

Many analysts are agreed that prospects of oil and gas are not the main motive for the Chinese policy with regard to the Spratlys. A more important factor is China's irredentist impulse and its desire to prevent any sea-borne threat to South China from the South China Sea. Its irredentist motives are evident from its description of the islands as historically having belonged to China and its description of the South China Sea as "China's historical waters."

Its readiness to use force to protect its rights was reflected in the debate on the passage of the "Law of the People's Republic of China on the Territorial Sea and Contiguous Zone" in the National People's Congress in February,1992. During the debate, the Chinese authorities reiterated China's historic claim over the entire Spratly group and underlined China's right to use force to evict any "trespassers".

China has been pursuing a policy of calculated ambiguity. It has never spelt out in detail what exactly it claims - only some islands or all the islands, the South China Sea itself as its territorial waters, does it look upon the Spratlys as an archipelago belonging to it ? If so, what happens to the air and sea navigation rights of other countries ?

The absence of clear-cut answers to these vital questions has added to the concerns of not only the regional countries, but also others outside the region.

Before 1994, China followed a two-pronged policy in the assertion of its claims. In asserting its claims vis-à-vis Vietnam, it used polemics, often accompanied or followed by ground action to enforce its claims. Vis-à-vis the Philippines, Malaysia and Brunei, it restricted itself mostly to verbal reiteration of its claims without any ground action to the detriment of these countries.

This was the period ( particularly in the 1980s), when the Philippines still had close military relations with the US with the latter enjoying base facilities in the Philippines, China was developing its economy for which it was dependent on investment flows from the overseas Chinese of the region , it was trying to strengthen its relations with the ASEAN countries and allay their fears of China and the prevailing atmosphere in the US was still strongly distrustful of China.

The Chinese leadership was still scrupulously adhering to Deng Xiao-Ping's 1989 advice to "fear no one, antagonise no one, avoid excessively provocative statements or actions, assume a low profile and don't take the lead."

The post-1994 period has seen a more confident China aware of its growing economic and military strength and willing to use that strength in pursuit of its geopolitical objectives. This confidence has been bolstered by the toning down of the anti-China reflexes of the US Administration - though not yet of the Congress - and by the recent weakening of the economies of the ASEAN countries and its impact on their military capability.

This new-found confidence has been reflected in the Chinese readiness to advance their claims vis-à-vis the Philippines by ground action too, if necessary, unmindful of adverse international reactions.

In the last week of January,1995, the Captain of a Filipino fishing boat reported to the Manila authorities that some Chinese, who had occupied the Mischief Reef claimed by the Philippines, had detained him and his boat when he went there for fishing and released them after a week.

Subsequently, the Mayor of the Pag-asa island confirmed the presence of the Chinese and reported that when he went there , as ordered by Manila, for verification, his boat was driven away by some Chinese ships stationed there.

On February 2,1995, the Filipino Government sent a naval ship and an aircraft for verification. Thereafter, the then President Fidel Ramos announced on February 5,1995, that the Chinese had illegally occupied the Reef and described their action as inconsistent with international law and principles of good relations. He also announced that Manila was lodging a protest with Beijing.

Reacting to Manila's allegations, Chen Jian, a spokesman of the Chinese Foreign Ministry, said: " Structures had been built on the Reef by China to ensure the safety and lives as well as the production operations of the fishermen who work in the waters of the Nansha ( Spratly) Islands. The Chinese side never detained nor arrested any Filipino ship nor established any military base on the Meiji (Mischief) Reef."

Nguyen Manh Cam, the Vietnamese Foreign Minister, was on a visit to Manila when Ramos announced the Chinese occupation of the Reef. Without specifically referring to the Reef, a joint Filipino-Vietnamese statement on February 6,1995, urged restraint and the Vietnamese Minister told Manila pressmen that the dispute should be settled peacefully and that "no one should do anything to make the situation more complex."

Roberto Romulo, the then Filipino Foreign Secretary, said: " Whoever resorts to force or aggression in that area is the first one who loses all moral and legal right to make a claim."

The Chinese action created alarm amongst the ASEAN member-countries because this was the first time that China had unilaterally changed the status quo at the expense of a claimant other than Vietnam and covertly established its presence in waters and in an area claimed by the Philippines as falling within its Exclusive Economic Zone.

The Mischief Reef, which the Philippines calls the Panganiban Reef, is 150 miles West of Palawan, the Philippines' nearest land mass, and 620 miles South-East of China. The Pag-asa island of the Spratly group, which is under the administrative control of the Philippines since 1973, is 135 kms to the North-West of the Reef.

On February 15,1995, Ramos ordered the strengthening of Filipino military forces in the remaining areas claimed by his country and the intensification of aerial surveillance over the area.

After a meeting of his National Security Council the same day, he said that the Philippines would exhaust all diplomatic options and added: " As part of this diplomatic effort, the Philippines has put forward as an interim measure the concept of stewardship. Each disputed island should be placed under the stewardship, meaning the primary responsibility, of the claimant country closest to it geographically, on the understanding that the steward country accommodates the other claimants' need for shelter, anchorage and other peaceful pursuits."

In an apparent attempt to project the issue as a multilateral problem, Ramos said that "the issue is of concern to all countries interested in the long-term stability of the South China Sea and the East Asian region as a whole."

According to him, by building military structures on the Reef, China had unilaterally changed the status quo and confronted the Philippines with a fait accompli. He also revealed that in response to Manila's protest, Beijing had claimed that the occupation of the Reef was " ordered by low-level functionaries acting without the knowledge and consent of the Chinese Government."

This gave rise to speculation that the PLA (Navy) might have acted on its own without the knowledge of the political leadership, but this was proved wrong by a statement of Qian Qichen, the then Chinese Foreign Minister, on March 10,1995, which clearly showed that the political leadership approved of the occupation.

He said: " Ours is not a military activity and will pose no threat to other countries. Chinese fishermen have been traditionally fishing in the region and shelters have been built to protect them. China has had sovereignty over the islands since ancient times and there were no disputes. Just in the late 70s, some countries made claims over the islands. China has shown restraint and is willing to develop the region in a co-operative way, setting aside disputes."

A team of Filipino officials led by Rodolfo Severino, Under Secretary in the Foreign Office, was sent by Ramos to Beijing for talks with the Chinese authorities on March 22,1995. On his way, Severino went to Singapore for meeting his ASEAN counterparts. They issued a joint statement expressing " their serious concern over recent developments which affect peace and stability in the South China Sea."

The Beijing talks failed. Severino said after the talks: " The Chinese continued to maintain their position that these structures are wind shelters for their fishermen. We believe that this has set back the moves towards confidence-building since 1990."

Commenting on the failure, Ramos said on March 23,1995: " They (the Chinese) are saying , we are a big country and if we are trying to send some additional ships, that is for our coastal defence. But, maybe, that should not just be taken as a simple explanation. Maybe, it could be used for South China Sea intervention. But, I hope they stay within what they are telling us."

After the failure of the Beijing talks, the Filipino Navy removed the markers on a number of reefs, atolls and other features in the Philippines' Exclusive Economic Zone which had been put up by the Chinese though they had not set up any physical presence on those features. It also started intercepting Chinese fishing boats intruding into the Filipino zone.

Reacting to this, a spokesman of the Chinese Foreign Office, warned at Beijing:

" This action will do no good to a settlement of the issue nor will it harm China's sovereignty." In an interview to the "Far Eastern Economic Review" of April 6,1995, Ramos said: " I will not hesitate to take the necessary protective measures for our territory."

At the instance of China, a meeting of Chinese and ASEAN Foreign Office officials was held at Hangzhou in China on April 3-4, 1995, to discuss measures for reducing tension. Rodolfo Severino, who represented the Philippines, claimed after the meeting that Chinese officials said for the first time that they were planning to modify their claims to ownership , not of the entire sea, but only of the islands, reefs and other physical features in the sea.

He then pointed out: " Under international law, a country can claim sovereignty over the waters 200 kms from its land. The territorial claims around one reef, for instance, would still overlap with our territorial boundary and some of them would come very, very close to Palawan."

Qian Qichen, who was in Europe at the time of the Hangzhou meeting, told pressmen at Bratislava on April 4,1995, that China wanted to end the controversy and called for common use of the islands. He added: " China's standpoint is that we want to abandon the controversy and manage the islands together. China has built on these islands civilian structures with no military character at all. They were built only to accommodate the work of our fishermen."

Prime Minister Goh Chok Tong of Singapore was in China on a bilateral visit in May,1995. According to the Singapore authorities, he had raised with the then Chinese Prime Minister Li Peng on May 11,1995, the question of sovereignty and navigation in the South China Sea and they had discussed whether sovereignty covered not only sea lanes, but also the air space.

While the Singapore officials did not indicate what was the Chinese response, the Xinhua news agency quoted Shen, a spokesman of the Chinese Foreign Ministry,as stating as follows on May 18,1995: " On the issue of the navigation rights in the South China Sea, the Chinese Government holds a definite and clear-cut position, namely, China's action to safeguard its sovereignty over the Nansha (Spratly) Islands and the relevant maritime rights and interests will not affect navigation through and the freedom and safety of flights over the international waterway of the South China Sea in keeping with the international laws."

There was fresh tension on May 13,1995, when the Filipino Defence Ministry officials arranged a visit to the vicinity of the Mischief Reef on board a naval vessel for a party of 38 local and foreign journalists. The aim was to show them that contrary to its stand that there were no military structures on the Reef, China was actually constructing military-like fortifications on the Reef similar to those which it had constructed in the past on the Johnson and Subi reefs.

When the Filipino naval ship was 10 kms from the Mischief Reef, two Chinese frigates from the direction of the Johnson Reef , about 100 kms to the West, blocked its passage.

On May 15,1995, Guan Deng-Min, the new Chinese Ambassador to the Philippines, handed over to Ramos a letter from President Jiang Zemin proposing that China and the Philippines jointly develop some of the Spratly islands and undertake projects such as research, environment protection, rescue operations, disaster prevention and fisheries. A Manila Foreign Office spokesman said that Ramos told the Ambassador that talks on any such projects should include other claimants too.

Apparently, Jiang's conciliatory letter had been sent from Beijing before the incident of May 13,1995, because on May 16,1995, Beijing reacted strongly to Manila's action in taking journalists to the vicinity of the Mischief Reef. A Chinese Foreign Ministry spokesman warned that " any similar action could result in serious consequences. We advise the other side not to misinterpret China's restraint, but , instead, to return to the correct path of negotiations to resolve the dispute."

When the Mischief Reef dispute came to the fore in February, 1995, the Clinton Administration reacted cautiously and confined itself to a reiteration of its long-standing policy on the South China Sea. The State Department said: " The US strongly opposes the threat or use of military force to assert any nation's claim. The US takes no position on the legal merits of the competing claims and is willing to assist in the peaceful resolution of the dispute."

On instructions from Manila, the Filipino Embassy in Washington contacted many Congressmen and lobbied for a stronger expression of US support. In response to this, in March,1995, Benjamin Gilman, Chairman of the House International Relations Committee, tabled a resolution warning China against using force or intimidation in the Spratly area.

The resolution added that the " right of free passage through the South China Sea is in the national security interests of the US" and called on Clinton to review the defence requirements of the " democratic claimants." Gilman said: " In order to avoid a future confrontation that we might lose, we had better shore up the defences of our democratic friends and allies in the region."

In a slightly stronger reaction on May 10,1995, the State Department said: " The US would view with serious concern any maritime claim or restriction on maritime activity in the South China Sea that was not consistent with international law."

Later, while talking to pressmen at Tokyo , Joseph Nye, then US Assistant Secretary of Defence for International Security, said : " If military action occurred in the Spratlys and this interfered with the freedom of the seas, then we would be prepared to escort and make sure that navigation continues." The Spratly islands are strewn across sea routes through which 25 per cent of the world's shipping passes, including oil supertankers for Taiwan, Japan and South Korea.

A Pentagon study explained the US position as follows: " The US takes no position on the legal merits of the competing claims. Our strategic interest in maintaining the lines of communication linking South-East Asia, North-East Asia and the Indian Ocean makes it essential that we resist any maritime claims beyond those permitted by the Law of the Sea Convention."

The dispute became the subject of intense discussions by various experts in the US, including a series of panel discussions organised by the Congressionally-funded US Institute of Peace. The views of the experts could be summed up as follows:

(a).Energy requirement was not China's principal motive. The need to make foreigners recognise its sovereignty was a more important factor. Even if China did not need the oil and gas of the South China Sea, its position may not change.

(b).In Chinese perception, control over the South China Sea would constitute effective forward defence against intrusions that had historically come from the Southern seas. They view the South China Sea as a necessary component of an inner defence zone against military intervention from the South-East. The thrust of China's rapid reaction ground forces is primarily towards Southern China.

( c ). The Chinese policy enjoyed the support of the political leadership and was not the result of rogue action by the PLA as believed by some.

(d).China's continued dependence on foreign investment flows would rule out any adventurist action to enforce its claims in the near future.

(e).In Chinese perception, time was on their side and re-unification of Taiwan was a more important priority and they could, therefore, afford to wait.

There were two significant developments in July,1995. Before the meeting of the ASEAN Regional Forum (ARF) at Brunei, Ali Alatas, the Indonesian Foreign Minister, visited Beijing on July 19,1995, to discuss the South China Sea developments. This was the first visit by an Indonesian Foreign Minister to China since the two countries restored diplomatic relations in 1990 .

Towards the end of July,1995, a contingent of US navy commandos arrived at Puerto Princesa, the headquarters of the Philippines Western Military Command, to train Filipino troops stationed in the Spratly group islands under its control. A joint study was undertaken of Manila's defence requirements in the light of the new situation in the South China Sea and as to what extent the US could meet them.

A proposal was mooted by a group of Filipino Congressmen, including Jose de Venecia, the Speaker of the House of Representatives, that the Philippines should again invite US naval ships in the region to come to the Subic Bay for repairs and re-fitting. The Ramos Government did not, however, accept it.

These indications of a possible revival of active military co-operation between the US and the Philippines seemed to have had a sobering effect on Beijing. The ASEAN Foreign Ministers, who had gathered at Brunei for the ARF meeting from July 28 to August 1,1995, were pleasantly surprised to find Qian Qichen giving indications of less rigidity.

Firstly, he expressed China's readiness to discuss the issue with all the ASEAN claimants , thereby reversing its previous insistence that it would discuss this only bilaterally with each claimant.

Secondly, while reiterating China's claim of "indisputable sovereignty" over the Spratlys, he indicated that China would be willing to recognise international laws, including the 1982 UN Convention on the Law of the Seas, as a basis for settling the differences. At the same time, he opposed the involvement of non-ASEAN outside powers in the negotiations.

Commenting on this, Domingo Siazon, the then Filipino Foreign Secretary, said: " I would not call it a concession. However, I think China is now having a position of opening the door to a possible political compromise. That was not the case when claims were based only on historical rights."

Ali Alatas said: " On the basis of the UN Law of the Seas, there is no more guessing how you draw lines for an Exclusive Economic Zone or a continental shelf. There are no more disputes over what are considered the lines of an archipelago state."

A US State Department spokesman said: " The tone of China referring to international law and the Law of the Seas gives greater possibility of trying to find a diplomatic solution, even though China hasn't changed its fundamental position on its sovereignty claims."

In a further positive development, Manila and Beijing announced on August 10,1995, that they had reached a "Code of Conduct" for resolving their dispute peacefully. They stated that while joint review committees would be set up under the Code to review possibilities for joint development and management of the islands, China would be setting up a panel to review "legal rights" to the islands.

However, China declined to sign the protocol to the Agreement on the Creation of a Nuclear Weapons Free Zone in South-East Asia which was concluded at the ASEAN summit at Bangkok in the second week of December,1995..

Its objection was to the inclusion of the Exclusive Economic Zone/continental shelf claim areas of the Philippines, Malaysia, Brunei and Vietnam in the Treaty area. China thereby made it apparent that its agreement to discuss the Spratly issue with the ASEAN members on the basis of the Law of the Seas and other international laws should not lead to an assumption that it had accepted or would accept the claims of these four ASEAN countries.

The matter rested there during 1996 and 1997, without any significant forward movement in resolving the dispute. In 1996, China was preoccupied with its confrontation with Taiwan and its sequel. This and the various controversies regarding possible flow of Chinese political contributions during the US elections of 1996 revived the distrust of China in the US.

However, since the middle of 1997, China has managed to improve its image in the US and Clinton's visit to China last year marked the implicit recognition by the Clinton administration of China's political primacy in this region. The weakening of the economies of the ASEAN countries and its impact on their military capability and political stability , the emergence of signs of differences amongst the ASEAN member-countries on various issues and the preoccupation of the usually China-hostile conservative members of the US Congress with the impeachment of Clinton constitute the setting against which one has to see the renewed activism of China in the South China Sea since October,1998.

In the last week of October,1998, a Filipino military surveillance aircraft reportedly noticed many Chinese ships, including four naval supply ships, off the Mischief Reef , with about 100 workers busy constructing what the Filipino authorities suspected was a landing strip for aircraft.

Rejecting Manila's allegations of construction of new military structures on the Reef, Beijing claimed that it was only replacing the temporary shelters for fishermen constructed in 1995 with permanent ones.

President Joseph Estrada announced on November 10,1998,that he was sending additional forces into the area to monitor the Chinese activities and instructed the Navy and the Air Force "to block exit and entry points" to the disputed area without getting involved in a military confrontation.

A spokesman of the Philippines Government announced on November 30,1998, that their Navy had seized six Chinese fishing boats in Filipino waters and arrested 20 fishermen. Manila rejected a Chinese demand for the release of the fishermen and said they would be prosecuted for trespassing into Filipino territorial waters.

During a tour of the East Asian region in the beginning of December,1998, Admiral Joseph Prueher, Commander of the US forces in the Pacific, said that the US was closely watching the developments and added: " If nations feel like they have a strong card to play, they will try to do it, when they think they can get away with it. This is perhaps what China is trying to do in the Mischief Reef."

Apart from this, in contrast to 1995, there has hardly been any strong reaction either from the US or from other ASEAN countries preoccupied with their economic and social problems. Dr. Mahatir Mohammad of Malaysia has apparently not forgiven Estrada for sympathising with Anwar Ibrahim, his sacked Deputy Prime Minister. China had contributed to Thailand's rescue package in 1997 and hence Bangkok was not in a position to react. Anyhow, even in 1995, Bangkok avoided strong reactions.

Singapore seems to be skeptical of the allegations of Manila and declines to see Beijing's fresh activity as encouraged by the preoccupation of the ASEAN countries with their economic woes.

Thus, the only important foreign personality who has strongly come out against Beijing so far is US Congressman Dana Rohrabacher, a senior member of the House International Relations Committee. After flying over the area in a Filipino aircraft on December 10,1998, he described the fresh Chinese activities in the Reef as alarming and sinister and strongly condemned the silence of the Clinton Administration on the development.

Latest reports indicate that China has gone back on its 1995 promise to discuss the dispute with all the ASEAN claimants and has reverted to its original stand that it would discuss only bilaterally with each claimant. It seems to be even dragging its feet on its 1995 proposals for joint development of the disputed islands.

Expressing the frustration of the Manila authorities, Blas Ople, Chairman of the Philippines Senate Foreign Relations Committee, said in an interview to the "Newsweek" of December 21,1998: " Great powers, very often, probe for soft spots. They determine whether they can make some gains at very little or negligible cost. Throughout history, that is how great powers have conducted themselves. China is no different."

China cautions against Philippine-US war games near Spratlys

[8/4/99] BACOLOD, Philippines - China on Tuesday cautioned against the holding of joint Philippines-US military exercises near the disputed Spratly islands, AFP reported.

Chinese ambassador to the Philippines Fu Ying said Washington should maintain its policy of neutrality regarding the conflicting claims over the South China Sea chain.

"In the light of this policy, I think the US will be very careful where they do military exercises and usually, countries would be very careful to stay away from disputed areas," she said in a news conference.

"I hope this sensitivity to the disputed area will be respected," said Fu, who was visiting the central city of Bacolod as a guest of the local Filipino-Chinese chamber of commerce.

Philippine military chief General Angelo Reyes announced last week that American and Filipino troops will hold joint exercises in the western island of Palawan, the closest major Philippine island to the disputed Spratlys chain.

However, Reyes said this was not connected to the simmering disputes over the Spratlys, insisting "we would not want to deliver any political message."

He said the exercises in Palawan, scheduled in February and March, were "not near the disputed areas" and had "no relation whatsoever to the Spratlys."

The maneuvers will be the first major joint military exercise between the Philippines and the United States in four years, signalling the warming defense relations between the two allies.

Joint military exercises resumed after the Philippine senate ratified an agreement covering the legal status of US forces participating in the exercises when they commit crimes in the country.

The Philippines and China, along with Brunei, Malaysia, Taiwan and Vietnam, have laid partial or entire claims to the Spratlys which guard vital shipping lanes and are believed to sit atop vast mineral deposits.

A dispute over Chinese construction on Philippine-claimed Mischief Reef and the sinking of two Chinese fishing boats in collisions with Filipino navy warships have strained bilateral ties.

Fearing China, Manila Turns to U.S.

[7/5/99] WASHINGTON - Eight years after the Philippines ordered a shutdown of American military bases on its soil, Filipino concern over Chinese actions in the South China Sea is leading to a partial revitalization of U.S.-Philippines military ties.

At issue is Chinese construction on Mischief Reef, about 150 miles from Philippine territory and 800 miles from China. Manila is worried that Chinese construction there could be used to assist military operations.

Neither the United States nor the Philippines is talking about reviving the sprawling U.S. bases that were once the centerpiece of a military relationship that reached a high point in 1944 when U.S. forces helped liberate the islands from Japan. Since 1951, the two countries have been bound together by a defense treaty.

Nowadays, a more modest - and more politically sustainable - arrangement is contemplated, involving joint military exercises and periodic visits to Filipino ports by large U.S. military vessels. American officials declined to speculate about the possibility that the evolving relationship with the Philippines could one day bring the United States into a conflict with China.

In any case, the shift in sentiment in the Philippines toward its one-time colonizer has been dramatic. In 1991, when the Philippines Senate rejected a proposed treaty governing the U.S. bases, then-Senators Joseph Estrada and Orlando Mercado were among those voting against it. Months later, the U.S. military abandoned the bases.

Today, Estrada is president and Mercado is defense secretary. Both are enthusiastic proponents of renewed military ties with the United States. In late May, the Philippines Senate voted 23-5 to approve a so-called Visiting Forces Agreement, which lays the legal groundwork for the return of American servicemen. Plans are under way for joint exercises early next year.

In rejecting church and Communist opposition to the proposal, Mercado said, ``Our country is weak, is extremely vulnerable to external threats and needs this alliance (with the United States) in order to protect our national interest.''

Just how far the United States will be willing to go to defend its ally is a matter of debate. Outgoing Filipino Ambassador Raul Rabe said in an interview that the United States pledged before the May vote to extend its defense perimeter into the South China Sea.

U.S. officials say the administration has merely reaffirmed long-standing policy of pledging to consult with the Philippines if either party's territory is attacked - consistent with the defense treaty's language.

The officials, who asked not to be identified, also seemed intent on not raising the rhetorical temperature - perhaps with a view toward someday mediating the territorial dispute between the Philippines and China, a role it could not play if it aligns itself too closely with the Filipino position. The South China Sea is but one of many territorial disputes in the region.

``We're not going to give them (the Philippines) a blank check,'' one official said. He also noted the United States has made clear its neutrality in the South China Sea dispute and he cited approvingly China's assertion that it will not interfere with freedom of navigation there. No significant U.S. weapons sales to the Philippines are contemplated, he added.

If China is alarmed by the resurrection of the U.S.-Philippines military ties, it is not saying so publicly. China's ambassador to Manila, Fu Ying, told the Far Eastern Economic Review: ``We see the proposed Visiting Forces Agreement as a matter between the Philippines and the U.S.''

Rep. Dana Rohrabacher, R-Calif., a member of the House International Relations Committee, is alarmed by what he calls ``a massive military buildup'' by China in the region.

China, he said, ``is claiming the entire area of the South China Sea.... This is a blueprint for war on the part of Beijing.'' [AP]


JH8 Chinese Maritime Air Force Jet

Spratly Islands

From: GlobalSecurity.org

The South China Sea is defined by the International Hydrographic Bureau as the body of water stretching in a Southwest to Northeast direction, whose southern border is 3 degrees South latitude between South Sumatra and Kalimantan (Karimata Straits), and whose northern border is the Strait of Taiwan from the northern tip of Taiwan to the Fukien coast of China. The South China Sea region is the world's second busiest international sea lane. More than half of the world's supertanker traffic passes through the region's waters. In addition, the South China Sea region contains oil and gas resources strategically located near large energy-consuming countries.

The South China Sea encompasses a portion of the Pacific Ocean stretching roughly from Singapore and the Strait of Malacca in the southwest, to the Strait of Taiwan (between Taiwan and China) in the northeast. The area includes more than 200 small islands, rocks, and reefs, with the majority located in the Paracel and Spratly Island chains. The Spratlys links the Pacific Ocean and the Indian Ocean. All its islands are coral, low and small, about 5 to 6 meters above water, spread over 160,000 to 180,000 square kilometers of sea zone (or 12 times that of the Paracels), with a total land area of 10 square kilometers only. The Paracels also has a total land area of 10 square kilometers spread over a sea zone of 15,000 to 16,000 square kilometers.

Many of these islands are partially submerged islets, rocks, and reefs that are little more than shipping hazards not suitable for habitation. The islands are important, however, for strategic and political reasons, because ownership claims to them are used to bolster claims to the surrounding sea and its resources.

The South China Sea is rich in natural resources such as oil and natural gas. These resources have garnered attention throughout the Asia-Pacific region. Until recently, East Asia's economic growth rates had been among the highest in the world, and despite the current economic crisis, economic growth prospects in the long-term remain among the best in the world. This economic growth will be accompanied by an increasing demand for energy. Over the next 20 years, oil consumption among developing Asian countries is expected to rise by 4% annually on average, with about half of this increase coming from China. If this growth rate is maintained, oil demand for these nations will reach 25 million barrels per day - more than double current consumption levels -- by 2020.

Almost of all of this additional Asian oil demand, as well as Japan's oil needs, will need to be imported from the Middle East and Africa, and to pass through the strategic Strait of Malacca into the South China Sea. Countries in the Asia-Pacific region depend on seaborne trade to fuel their economic growth, and this has led to the sea's transformation into one of the world's busiest shipping lanes. Over half of the world's merchant fleet (by tonnage) sails through the South China Sea every year. The economic potential and geopolitical importance of the South China Sea region has resulted in jockeying between the surrounding nations to claim this sea and its resources for themselves.

Military skirmishes have occurred numerous times in the past two decades. The most serious occurred in 1976, when China invaded and captured the Paracel Islands from Vietnam, and in 1988, when Chinese and Vietnamese navies clashed at Johnson Reef in the Spratly Islands, sinking several Vietnamese boats and killing over 70 sailors.

The disputed areas often involve oil and gas resources:

  • Indonesia's ownership of the gas-rich Natuna Island group was undisputed until China released an official map indicating that the Natunas were in Chinese-claimed waters.

  • The Philippines' Malampaya and Camago natural gas and condensate fields are in Chinese-claimed waters.

  • Many of Malaysia's natural gas fields located offshore Sarawak also fall under the Chinese claim.

  • Vietnam and China have overlapping claims to undeveloped blocks off the Vietnamese coast. A block referred to by the Chinese as Wan' Bei-21 (WAB-21) west of the Spratly Islands is claimed by the Vietnamese in their blocks 133, 134, and 135. In addition, Vietnam's Dai Hung (Big Bear) oil field is at the boundary of waters claimed by the Chinese.

  • Maritime boundaries in the gas-rich Gulf of Thailand portion of the South China Sea have not been clearly defined. Several companies have been signed exploration agreements but have been unable to drill in a disputed zone between Cambodia and Thailand.

Most of these claims are historical, but they are also based upon internationally accepted principles extending territorial claims offshore onto a country's continental shelf, as well as the 1982 United Nations Convention on the Law of the Sea.

The 1982 convention created a number of guidelines concerning the status of islands, the continental shelf, enclosed seas, and territorial limits. Three of the most relevant to the South China Sea are:

  1. Article 3, which establishes that "every state has the right to establish the breadth of its territorial sea up to a limit not exceeding 12 nautical miles";

  2. Articles 55 - 75 define the concept of an Exclusive Economic Zone (EEZ), which is an area up to 200 nautical miles beyond and adjacent to the territorial sea. The EEZ gives coastal states "sovereign rights for the purpose of exploring and exploiting, conserving and managing the natural resources, whether living or non-living, of the waters superjacent to" (above) "the seabed and of the seabed and its subsoil..."

  3. Article 121, which states that rocks that cannot sustain human habitation or economic life of their own shall have no exclusive economic zone or continental shelf.

The establishment of the EEZ created the potential for overlapping claims in semi-enclosed seas such as the South China Sea. These claims could be extended by any nation which could establish a settlement on the islands in the region. South China Sea claimants have clashed as they tried to establish outposts on the islands (mostly military) in order to be in conformity with Article 121 in pressing their claims.

In mid-1991, fresh from diplomatic success in helping to end the Cambodian civil war, Indonesia took the initiative in seeking to open multilateral negotiations on competitive South China Sea claims, especially those claims involving jurisdictional disputes over the Spratly Islands. Indonesia has taken a leading role in diplomatic initiatives and cooperative agreements to resolve South China Sea issues, particularly through the ASEAN (Association of Southeast Asian Nations) forum, which has called for the peaceful arbitration of territorial claims. ASEAN includes all South China Sea nations except for China and Taiwan, and has held a number of working groups with China and Taiwan on related issues that have the potential to foster the cooperation and friendship needed to resolve the more contentious issues in the region. Indonesia hosted the first of these workshops in 1990. The ASEAN foreign ministers have reiterated the invitations to all parties directly concerned to subscribe to the principles of the ASEAN Declaration on the South China Sea.

In late 1998 the presidents of China and the Philippines agreed to form a committee of experts to advise on confidence-building measures.

In late November 1999 officials of ASEAN agreed to draft a regional code of conduct to prevent conflicts over the Spratly Islands in advance of the ASEAN summit in Manila. The Philippines, which drafted much of the proposed code, sought to align ASEAN's members in a common stance against what it saw as Chinese expansionism in the Spratlys. China agreed to hold talks with ASEAN member nations on the newly formulated draft code of conduct. But China, which claims the entire South China Sea, signalled it was not ready to agree to the ASEAN draft. Vietnam wanted the code to cover the Paracels while Malaysia did not want the code to refer to all of the South China Sea. China, which is not an ASEAN member and claims all of the islands, opposed inclusion of the Paracels in the code. Australia pressed for the proposed code to include a moratorium on the occupation of reefs and atolls or building on them.

In January 2000 photographs of Mischief Reef in the Spratly Islands were shown to the foreign ministers of the other eight ASEAN countries by Philippine foreign minister, Domingo Siazon. The photographic evidence showed that China had expanded installations on the reef since 1995, when it first started building what it said were shelters for fishermen. There are now four sites on the reef with installations that could be connected to form a fortress, like Gibraltar, or a five-star hotel for fishermen.

Southeast Asian countries, concerned that Beijing might be strengthening its claim to much of the South China Sea, called for restraint and strict observance of international law in a high-level meeting with China in January 2000.

On 04 November 2002 the Governments of the Member States of ASEAN and the Government of the People's Republic of China signed the "Declaration on the Conduct of Parties in the South China Sea." The Parties undertook to exercise self-restraint in the conduct of activities in the South China Sea that would complicate or escalate disputes and affect peace and stability including, among others, refraining from action of inhabiting on the presently uninhabited islands, reefs, shoals, cays, and other features and to handle their differences in a constructive manner.

China and the Philippines have discussed possible joint exploration for petroleum in the disputed Spratly Islands in the South China Sea. The speaker of the Philippine House of Representatives, Jose de Venecia, said the chairman of China's parliament, Wu Bannguo, made the proposal 31 August 2003 during talks in Manila. China also pledged to increase investment in the Philippines. Chinese Foreign Minister Li Zhaoxing vowed to increase investments in the Philippines to match the growing Philippine investment in China. The two ministers also discussed the territorial disputes in the South China Sea.

In September 2003 representatives of the Philippines, China and other claimant countries of the Spratly Islands signed a declaration of peace to promote the development of the resources in the disputed islands. The declaration was signed at the Asian Association of Parliaments for Peace (AAPP) conference in the Philippines.

In March 2005, the national oil companies of China, the Philippines, and Vietnam signed a joint accord to conduct marine seismic experiments in the Spratly Islands for economic purposes.

Suggested confidence-building measures among claimant countries include joint research and development in the Spratlys. Among the suggestions to enhance the development of the Spratly Islands include the creation of a marine park; establishment of a South China Sea Institute for Marine Resources Management, conducting a joint survey and assessment of the mineral and hydrocarbon potential and implementation of maritime safety and surveillance measures.

SOUTH CHINA SEA TERRITORIAL ISSUES

     [Click on photo]
Competing territorial claims over the South China Sea and its resources are numerous, with the most contentious revolving around the Spratly Islands and Paracel Islands (the Xisha and the Nansha in Chinese; the Hoang Sa and Truong Sa in Vietnamese). The Spratlys are claimed in total by China, Vietnam, and Taiwan, whereas Malaysia laid claim to parts of the continental shelf underlying the southernmost islands in the chain. Indeed, ownership of virtually all of the South China Sea is contested. The disputed islands in the South China Sea assumed importance only after it was disclosed that they were near the potential sites of substantial offshore oil deposits.

In 1939 the Japanese military government announced its decision to take possession of the Spratlys. France protested on 04 April 1939 when Japan announced it had placed the Spratlys "under its jurisdiction." In 1941 Japan forcibly took over the islands as part of its World War II strategy. During the War, France defended the Spratlys from Japanese military forces. In 1949 Vietnam "inherited" from France all former French rights over the Paracel Islands and the Spratlys Islands. Vietnam emphasizes "actual exercise of sovereignty over mere geographic contiguity" as a basic ground for its claim. In the 1951 "San Francisco Peace Treaty" Japan relinquished all titles and claims to the Paracel Islands and the Spratlys Islands. From 1956 to 1963, Vietnamese naval troops built "sovereignty steles" in the Spratlys.

The most proactive claimant in the region is China. In 1909 it seized some islands in Xisha (the Paracels). In 1946 it seized Itu Aba (in the Spratlys) and Phu Lan Island (in the Paracels). In 1950's China seized additional Hoang Sa (Paracels) islands, which it forcibly repeated in 1974. Vietnam claims that these acts were unlawful and that the United States in 1974 conspired with China for the take-over of the Paracels.

In January 1974, Chinese military units seized islands in the Paracels occupied by South Vietnamese armed forces, and Beijing claimed sovereignty over the Spratlys. Following their conquest of South Vietnam in the spring of 1975, units of the People's Army of Vietnam (PAVN) nevertheless moved to occupy the Spratly Islands previously held by the Saigon regime. In 1978 Vietnam and the Philippines agreed to negotiate but failed to settle their conflicting claims to the Spratly Islands. Foreign Minister Thach, during a late-1982 visit to Indonesia, took a conciliatory position in discussing Vietnam's and Indonesia's competing claims to the Natuna Islands, and in 1984 Hanoi made a similar gesture to Malaysia in order to help resolve their conflicting claims over Amboyna Cay.

In a 1988 incident, possibly related to Cambodia because it potentially strengthened China's position at a future bargaining table, the ongoing dispute between China and Vietnam over sovereignty to the Spratly Islands erupted into an unprecedented exchange of hostilities. The situation was reduced to an exchange of accusations following the armed encounter. Vietnam's repeated calls for China to settle the dispute diplomatically won rare support for Vietnam from the international community, but elicited little response from Beijing. A conciliatory mood developed on both sides of the Sino- Vietnamese border in 1989, partly because Vietnam's proposal to withdraw completely from Cambodia responded to a basic Chinese condition for improved relations.

Mischief Reef is part of the Spratly Islands. Mischief Reef was discovered by Henry Spratly in 1791 and named by the German Sailor Heribert Mischief, one of his crew. China has sent naval vessels into the area and has constructed crude buildings on some of the islands. Beijing maintains that the shacks are there solely to serve Chinese fishing boats. Manila describes the buildings as "military-type" structures. According to reconnaissance photos by the Philippine Air Force, these structures do not look like fishermen's sanctuaries. They seem to have radar systems which are not normally associated with the protection of fishermen.

Itu Aba Island is used by Taiwan, ROC fishermen as a rest stop. Itu Aba Island is located at the northwest end of the northern part of the Spratly Archipelago near the Cheng Ho Reefs (Tizard Bank). In 1938 the Indochina Meteorological Service set up a weather station on Itu-Aba island which remained under French control from 1938 to 1941. When World War II erupted in 1941 Japan took control of said weather station.

On 08 June 1956 Taiwan sent troops to occupy Thai Binh Island (Itu Aba - Peace Island), the largest island in the Spratlys. Vietnam claims that "as late as December 1973, the Far Eastern Economic Review of Hongkong reported that a marker still stood there with the inscription: 'France - Ile Itu Aba et Dependences - 10 Aout 1933." The northwestern part of the Tizard Bank consists of Itu Aba in the west, Center Cay in the center, and on the east side Sand Cay, all claimed by Taiwan since 1955.

Since the end of World War Two, the ROC navy has guarded the island for over fifty years; they have a major responsibility to ensure the security of the South China Sea. A Taiwan, ROC garrison is stationed on Itu Aba on a permanent basis, making the building of roads and military installations an important task. As a result, the island now has well-built roads, and the soldiers keep it as clean as a well-kept park.

The the Kalayaan Islands, as Filipinos call some of the Spratlys, lie in a shallow section of the South China Sea west of the Philippine archipelago. Kalayaan is a rich fishing area that had been identified as a potential source of petroleum deposits. Tomas Cloma, a Manila lawyer, visited the islands in 1956, claimed them for himself, named them Kalayaan (Freedomland), then asked the Philippine government to make them a protectorate.

Vietnam brands as erroneous the Philippine theory that the Spratly Islands were "res nullius" when Tomas Cloma "pretended to 'discover' the Vietnamese Truong Sa islands in 1956". Manila regularly tried to extract from the United States a declaration that it would defend the Philippines' claim to the Kalayaans as part of the Mutual Defense Treaty between the Republic of the Philippines and the United States of America, but the United States just as regularly refused so to interpret that treaty.

The Philippine government first put forth informal claims to Kalayaan in the mid-1950s. Philippine troops were sent to three of the islands in the Kalayaans in 1968, taking advantage of the war situation in the Republic of Vietnam. In 1974, the Philippine government declared that it had garrisoned five of the islands. In 1978 Marcos made formal claims by declaring that fifty-seven of the islands were part of Palawan Province by virtue of their presence on the continental margin of the archipelago. The Philippine military continued to garrison marines on several islands.

Layang Layang (Swallow's Reef, although there are no swallows present) is a small reef in the Spratly Islands, and is currently operated and managed by the government of Malaysia. Swallow Reef is the only reef in Swallow Atoll, which is exposed to the sea. The island is long and narrow, stretching from the northeast to the southwest. It is small in area, around 0.1 square kilometers.

The amazing fact about Swallow Reef is that this tiny, exposed islet was practically man-made! It was built by the Malaysian government, which collected sand and connected two isolated reefs by filling the channel between them. The Malaysian government opted to build an airstrip, dive resort and military installation on this reef since in 1983. Seventy soldiers live on this island and the dive resort is open to any visiting scuba divers. Swallow Reef is fast hecoming another of Malaysia's premier dive destination.




Implications for U.S. Policy Toward the South China Sea

[From: USIP.org]

Given the complexities of the South China Sea dispute and the difficulty of evaluating the legal and historical legitimacy of competing claims, what are the implications for U.S. policy toward the South China Sea? In view of the possible options that have already been presented for jump-starting political negotiations among the claimants, what role, if any, might the United States play in supporting a peaceful settlement?

A coherent and effective U.S. policy toward the South China Sea must include two objectives: (1) to help the disputants to generate the political will to engage in a negotiating process, and (2) to maintain the credibility of the U.S. intent to deter any one (or group of) claimants from unilaterally asserting a solution by force of arms.

The immediate U.S. interests in the South China Sea disputes include maintaining peace and stability in the South China Sea, maintaining freedom of navigation, and upholding international law, including the UN Convention on the Law of the Sea. These points were emphasized in a May 10, 1995, statement by the U.S. Department of State on the Spratly Islands and the South China Sea. While maintaining its neutral position on the legal merits of the various territorial claims, the United States expressed concern over destabilizing unilateral actions in the region, declared that maintaining freedom of navigation is in the fundamental interest of the United States, and strongly urged that the disputants peacefully resolve the dispute among themselves consistent with international law, including the UN Convention on the Law of the Sea.

The initial reactions of Chinese government press spokesmen to the U.S. statement were negative, but Foreign Minister Qian Qichen's statements the following August at the ASEAN Regional Forum (ARF) meeting in Brunei ostensibly committed the PRC to a path consistent with what the U.S. government had recommended. This pattern suggests that repeated U.S. expressions of interest in seeing an expeditious and peaceful settlement of the South China Sea dispute might help deter unilateral actions by the claimants and maximize the possibility for a negotiated solution, rather than waiting for all sides to continue to harden their respective positions. At the same time, the United States might underscore its neutrality and avoid mediating the dispute on behalf of any single party.

The National People's Congress (NPC) ratified the UN Convention on the Law of the Sea in May 1996, a move that specialists hailed as a major step forward in clarifying the rules under which China will consider its claim, as only islands and rocks above water at high tide generate maritime zones. Simultaneously, the NPC declared straight baselines from which Chinese claims to an EEZ and continental shelf will presumably be measured, including some baselines surrounding the Paracel Islands that deviate from conventional practice, in which only archepelagic states may draw baselines enclosing groups of islands. As part of its interest in upholding the generally accepted interpretations of the Law of the Sea, it is likely that the United States will dispute the Chinese baselines around the Paracels or any other future baseline claims that do not conform to conventional international practice (as has also been the case with Vietnam's expansive baseline claims).

Many specialists believe a leading U.S. role in trying to resolve the Spratly Islands dispute is likely to complicate matters by adding another contentious issue to the already-overloaded agenda of U.S.-Chinese relations. Such a role would also be perceived by China as interference by a nonclaimant in an attempt to internationalize the issue. At the same time, the fact that China responded at the ARF meeting in Brunei to the major U.S. concerns highlighted in its May 10, 1995, statement on the Spratly Islands suggests that the United States may be able to indirectly influence the claimants to be active in constructive directions while also taking actions to diminish the possibility that intimidation tactics might be used as part of a negotiation process.

The U.S. naval presence in the region is essential in implementing the second aspect of U.S. policy toward the South China Sea by deterring the use of military force by any of the disputants. A regular U.S. naval presence in the South China Sea area underscores the nation's interest in stability and reinforces the prevailing interpretation that a significant part of the South China Sea outside of the immediate area of the Spratly Islands is categorized as high seas, where no party exercises territorial jurisdiction.

In the event of destabilizing unilateral actions by any party to the Spratly Islands dispute, the U.S. Navy has an interest in playing its balancing role in the Asia-Pacific area by undertaking an augmented presence in international waters proportional to the severity of any unilateral provocation. Such a response would underscore the U.S. commitment to seeing the dispute resolved nonviolently, while avoiding taking sides in or becoming a party to the conflict. The recent U.S. naval response to Chinese missile exercises in the Taiwan Straits show that a stepped-up U.S. military presence in response to aggressive unilateral actions may be important in reassuring Asian allies that the United States maintains the political will to deter aggressive or destabilizing unilateral actions that threaten the status quo in Asia.

Some analysts have suggested that the United States support greater transparency in the South China Sea by using satellite reconnaissance to actively monitor and make public reports on activities in the area. Another possibility--if such information were made available to a nongovernmental mediator respected by all sides in the Spratly Islands dispute--would be to find a way to provide technical support for South China Sea "proximity" negotiations by using satellite imagery similar to that provided by the Defense Mapping Agency for the Bosnian proximity talks.

The likelihood is slim that direct U.S. intervention will be useful or accepted in resolving the Spratly Islands dispute. After all, there is a range of mechanisms that might be used to bring about a peaceful settlement of the issue without U.S. involvement. The most constructive role for the United States may be in urging the parties to muster the political will necessary to find peaceful solutions while continuing to discourage a military resolution of future disputes. Most important, the United States might support preventive diplomacy by the parties involved by underscoring positive precedents such as the decision by Great Britain and Argentina to enter into negotiations over Falkland Islands boundaries without prejudice to the claims made by the disputants themselves. A steady U.S. policy of "active neutrality"--combined with a "forward-leaning" posture to deter potentially destabilizing military aggression and stepped-up support for an expeditious and peaceful resolution of the parties' conflicting claims consistent with the Law of the Sea--is the surest sign of support for preventive diplomacy that the United States can offer to deter potential conflict in the South China Sea.

Bulk of agreement reached on Spratlys code

[1999-11-29] SINGAPORE - Chinese Premier Zhu Rongji said on Monday the bulk of an agreement on a proposed code of conduct on disputed islands in the South China Sea has been reached but disagreements remain.

Zhu, who is on a state visit to Singapore, said the disagreements were both among members of the Association of South East Asian Nations and with China.

``In principle all the parties concerned have expressed their support to such a code of conduct. Actually we have reached an agreement on the bulk of the code of conduct,'' Zhu told reporters after a meeting with Prime Minister Goh Chok Tong.

Zhu said the code of conduct was a very serious and important matter to China and it would not rush to sign an agreement.

``It is important that after signing it is carried out, therefore we need to have full consultation in order to achieve unanimous agreement,'' he said through an interpreter.

A Chinese foreign ministry spokesman said on Friday in Manila that ``major differences'' existed between it and other claimants, adding that rival claimants had put up ``new obstacles'' to the signing of the plan to defuse tensions in the area.

At the centre of the dispute is a cluster of isles, reefs and rocky outcrops -- called the Spratly islands -- which are potentially rich in oil and straddle strategically important sealanes.

The Spratlys are claimed wholly or in part by China, Vietnam, Taiwan, the Philippines, Malaysia and Brunei. Adjacent to the Spratlys is another island group, the Paracels, which are disputed by Vietnam and Brunei.

ASEAN groups Singapore, Malaysia, Thailand, Myanmar, Laos, Cambodia, Vietnam, the Philippines, Indonesia and Brunei.

Zhu said his bilateral talks with Goh focused on improving already strong diplomatic and economic relations. Goh will make a state visit to China next year.

The spokesman said Zhu has called for deepening economic and trade relations by inviting more investment from Singapore in central and western China.

He said the two sides looked to strengthen cooperation in the financial sector to guard against risks and explore listing of Chinese companies in Singapore.

A Chinese embassy official in Singapore said bilateral trade had grown to $8.15 billion in 1998 from $2.82 billion in 1990.