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Brunei is often overlooked in South China Sea dispute. But Brunei has a plan.

by Oliver Ward

As the South China Sea dispute brings Southeast Asia to crisis point, one silent, often overlooked claimant is turning the situation to its advantage. The small nation of Brunei Darussalam is rarely mentioned among the biggest payers of the dispute. But, it holds a valid claim to 200 square nautical miles of the region.

Brunei prefers to whisper while other nations shout

Brunei’s claims originated in 1984, when it established an Exclusive Economic Zone (EEC) of 200 nautical miles over its continental shelf. Parts of the same region are also claimed by Malaysia, China, Taiwan and Vietnam and it includes Bombay Castle, Louisa Reef and Owen Shoal.

In 2003, Brunei protested China’s research in its waters and in 2009, Malaysia and Brunei came to an agreement over the collaboration in the exploration and exploitation for hydrocarbons in the territory. But, while other nations asserted their claims in loud international gestures, Brunei took a much quieter approach.

After this agreement, Brunei has done very little to assert its claim over the territory. They occasionally stop Vietnamese fishing boats in the sea tracts, but, there have been almost no incidents of instability or contestation in the region. Brunei does not even maintain a military presence in the disputed territory.

Why does Brunei occupy the role of a silent claimant?

Brunei does not need to shout and posture up. The reason is mutual dependence. Brunei needs China far too much to risk angering them over territorial claims. Oil resources account for 60% of Brunei’s GDP and 95% of exports. Tumbling oil prices have left Brunei searching to diversify its economy. It needs China to help it do this.

Between 2003 and 2013, exports to China increased from US$34 million to US$1.7 billion. This was due to projects like the Guangxi Beibu Gulf International Port Group Co. helped develop and manage Brunei’s major port and the establishment of the Guangxi-Brunei economic corridor. The economic corridor has led to over US$500 million in joint investment projects between Brunei and China. The opening of the Chinese market for Brunei allows them to diversify their economy by exporting biotech and halal products to China.

On the other side, China also needs Brunei. The Chinese rely on Brunei’s oil. Chinese firm, Zhejiang Hengyi Group, has plans to construct a refinery in Brunei by 2019. The refinery will have the capacity to produce 148,000 barrels of oil a day when it is fully operational.

The region is more valuable as a method of securing trade and investment

The mutual dependency means Brunei have little need to make noise. Beijing is unlikely to bring a military presence to Brunei’s waters and the territory is far more valuable to Brunei as leverage, to promote investment and trade into the country than as a geographical territory.

China is using a tactic of chequebook diplomacy to avoid another tribunal at all costs. They intend to solve the competing claims in bilateral negotiations, which will mean big investment projects and high-value trade deals. Brunei already has oil reserves of 1.5 billion barrels and an agreement with Malaysia to exploit the 15 trillion cubic feet of natural gas beneath the sea bed. Therefore, the territory in the South China Sea is not as valuable as the deals with China it can secure in exchange for keeping quiet.

As Brunei heads towards its Wawasan Brunei 2035 economy overhaul, it needs investment in areas outside oil. The nation knows screaming its claim from the rooftops will get it nowhere with so many big players in the arena. But, whispering its claim in China’s ear will hopefully reap the rewards.