When the U.S. military vacated its Philippine bases in 1992, it left a power vacuum that enabled China to employ a gradualist approach to impose its diktat across the South China Sea. Until recently, China has operated from a militarily weak position and pursued a gray-zone strategy that avoided direct confrontation with the U.S. military. Unfortunately, the threat is metastasizing as China’s fishing fleets, coast guard, and navy grow and venture to distant seas.
A new approach is needed to arrest and potentially reverse Chinese encroachment on and cowing of Southeast Asian maritime states, one that recognizes the nature of the contest as an insurgency against the existing maritime rules-based order. This has utility in other contested maritime regions. Actualizing it requires institutional adjustments—the country-centered approach executed to date along independent military, economic, and diplomatic lines has not worked. Maritime contests are by nature regional, requiring U.S. actions to be similarly conceptualized and executed while navigating a mosaic of competing local interests. This necessitates a pragmatic approach blending naval, economic, and diplomatic instruments into a cohesive and adaptable framework. If applied effectively, this form of “naval statecraft” offers a way ahead to restore confidence in the rules-based maritime order without escalation to armed conflict.
Navies Are for More than Warfare
The U.S. Navy’s role in warfighting is well known. Less appreciated is its ability to shape the environment in which security, diplomacy, and economics interact. This is a role the Navy has performed throughout its history and, if applied in a deliberate fashion against U.S. competitors, affords a more effective approach to protecting and advancing the nation’s interests.
Yet the United States has mostly failed to apply lessons from its own direct experience to the competition with China, as the 2012 standoff at Scarborough Shoal in the South China Sea made painfully clear. In early April, the Philippine Navy ship Gregorio del Pilar entered Scarborough Shoal to evict Chinese fishermen poaching coral and giant clams. Soon afterward, a massive fleet of China Coast Guard cutters, maritime militia vessels, and civilian fishing boats arrived, blocking the Philippine authorities inside the shoal’s lagoon. A months-long standoff ensued, during which China combined its coercive naval presence with diplomacy and economic muscle to execute a naval statecraft of its own.
As negotiations dragged on, China applied economic pressure with a banana embargo affecting 14 percent of Philippine growers and costing $53 million in lost trade. By contrast, the United States relied exclusively on diplomatic tools. The U.S. military role remained relatively subdued throughout the crisis, despite the large number of Chinese paramilitary and commercial fishing vessels massed around the shoal while the Gregario del Pilar ran short of food and fuel. And aside from diplomatic protests of Chinese cyber attacks and embargoes, meaningful U.S. economic statecraft in support of the Philippines was not evident.1 Eventually, the United States brokered a deal with both sides agreeing to withdraw under the pretext of an approaching typhoon.2 However, the Chinese vessels did not all leave, and still retain effective control of the shoal, which is located in the Philippines’ exclusive economic zone (EEZ).
This event illustrates how naval forces can play a role in shaping politics ashore, especially when combined with economic and diplomatic tools. By contrast, episodic naval presence such as freedom of navigation operations disconnected from a sustained strategy has consistently failed. Especially against great power competitor China, success requires that national power be conceptualized in a new framework.
Boiling China’s South China Sea Frog
Events surrounding a Malaysian-chartered oil survey vessel provide key insights on how to actualize naval statecraft. Beginning in December 2019, China directed its ire at the Panamanian-flagged West Capella exploring for oil in Malaysia’s EEZ. China Coast Guard and maritime militia vessels harried the West Capella for months as she conducted deep-water surveys for Malaysia’s state-owned Petronas oil company. To respond to Chinese intimidation, the amphibious assault ship USS America (LHA-6) and her two escorts steamed to the scene in late April 2020, beginning months of U.S. military presence. In contrast to past behavior, the America Strike Group did not merely pass through the area but remained in the vicinity for several days. Following the America’s departure, the littoral combat ships Gabrielle Giffords (LCS-10) and Montgomery (LCS-8) began patrols nearby, thus sustaining the U.S. presence.3
In mid-May, Seventh Fleet Commander Vice Admiral William Merz asserted:
The U.S. supports the efforts of our allies and partners in the lawful pursuit of their economic interests. Routine presence operations, like Gabrielle Giffords’, reaffirm the U.S. will continue to fly and sail freely, in accordance with international law and maritime norms, regardless of excessive claims or current events.4
Nations in the region took notice—upholding economic rights with naval presence was a change from the longstanding U.S. talking point of “supporting freedom of navigation and overflight.” Soon U.S. Air Force bombers overflew the area, culminating in early July with the first sustained dual-carrier South China Sea operation since 2012.5 Amid all this, on 13 July, Secretary of State Michael Pompeo issued the first clear statement of the U.S. view on China’s claims: “They are unlawful.”6
Given the economic nature of the West Capella’s survey operations, such statements—adroitly matched with a naval presence—resonated in tangible ways. Soon after, Indonesia conducted large naval drills in the South China Sea. After years of pulling its punches, the Philippines began pressing its 2016 maritime arbitration win against China.7 In a rare move, Malaysia protested to the United Nations over China’s excessive claims.8 The Secretary’s July statement was well timed, and given Admiral Merz’s earlier statements, framed U.S. involvement in the region as upholding principles and rights welcomed by regional nations. Moreover, Association of Southeast Asian Nations (ASEAN) Study Center public opinion polls before and after this incident paint a positive picture for U.S. maritime engagement. Before West Capella, the United States led China in confidence and trust by 10 percentage points, but after the crisis the lead grew to 32 points.
Worry about China’s economic dominance was also driving unease in the region, resulting in more than 70 percent welcoming greater U.S. economic engagement—far greater than China’s 28 percent.9 Despite China’s large economic and military footprint, U.S. naval presence focused on bolstering a maritime rules-based order and, specifically, the economic and security interests of regional states resonated far more than periodic assertions of the Navy’s own right to freedom of navigation.
Given the way things progressed, one would be forgiven for thinking events were carefully planned. In fact, they were not. Rather, a disparate team of policy-makers and military leaders in Washington, Yokosuka, and Hawaii acted in a complementary fashion. Had the Secretary delivered his statement earlier in April, it would have seemed the later naval presence was intended to intimidate China and not uphold shared interests. A common understanding of the strategic environment enabled this team to flip the script on China. The way this crisis played out is a model for naval statecraft that can be replicated to achieve future successes.
Naval Statecraft for the Long Game
To prevail over China’s maritime insurgency, the United States must offer regional countries a better value proposition, backed by a naval presence that can be sustained for years. The focus of naval statecraft, then, must be on the states in maritime dispute with China: Brunei, Indonesia, Malaysia, the Philippines, and Vietnam. Using the language of the U.S. Government Counterinsurgency Guide, this requires investing in both adversary-centric and population-centric actions.10 This is an adaptable and pliable approach suitable for similar maritime contests from the South Pacific to the Gulf of Guinea.
Providing a compelling value proposition will be a critical element of sustaining long-term naval statecraft. In Malaysia, oil revenue contributes significantly to the government’s bottom line and domestic politics. Petronas’ taxes and dividends accounted for 35 percent of total government revenue in 2019.11 In Vietnam, the seafood industry employs 1.6 million people, and the country is emerging as a regional oil and natural gas producer, contingent on its exploitation of oil reserves in its EEZ.12 In the Philippines, economic development associated with the benefits of maritime security ensconced in the Mutual Defense Treaty with the United States could prove most welcome. Fishing plays a significant part in the local economy, employing more than 1 million Filipinos and accounting for a sizable portion of gross domestic product.13 But these fishing communities are threatened by Chinese encroachment into claimant EEZs. At the same time, China is the Philippines’ leading trade partner at approximately $60 billion in 2019, but Manila’s trade with certain free market allies (the United States, Japan, Singapore, and South Korea) is comparable at $65 billion.14 This situation is common to the other claimants and provides a context for allied economic statecraft.
For naval statecraft to be sustainable, it must be strategically effective, economically viable, and politically supported in both U.S. and allied capitals. This means providing tangible benefits to the U.S. electorate and claimant nations alike. A 2016 RAND Corporation research project provides important insights. Tasked by the U.S. Air Force to investigate the implications for trade if U.S. military forward presence were measurably reduced, RAND found a strong correlation between mutual trade and security agreements that reduced the cost of trade. Specifically, a 50 percent reduction of overseas security commitments (e.g., troops overseas and agreements) would result in an 18 percent drop in bilateral trade or, according to 2015 trade data, a loss of $490 billion to the U.S. gross domestic product. Moreover, the corollary also held in the opposite direction—doubling security agreements saw a 34 percent increase in trade, while doubling military personnel in a given country saw a 15 percent increase in trade.15
Moreover, for smaller waterfront communities, Navy port visits can be injections of a relatively large amount of cash. For example, a typical five-day U.S. aircraft carrier port visit with approximately 5,000 sailors can bring local communities upward of $2 million in port services and discretionary spending. Such visits build goodwill and prompt invitations to return, both critical elements to sustaining forward naval presence.
Now consider China-centric naval statecraft tools. As the 2012 Scarborough Shoal and 2020 West Capella crises highlight, naval presence is a prerequisite for effective regional maritime diplomacy. Implementing a coherent regional maritime counterinsurgency requires the U.S. embassies in the claimant states to work together. This likely means elevating the U.S. ASEAN mission in Jakarta to a regional role directing diplomatic efforts and coordinating the planning and execution of future naval activities. Regional diplomacy should also work to align maritime claims and build consensus on acceptable maritime behaviors among the Southeast Asian claimants, effectively forming a de facto code of conduct that addresses illegal fishing and maritime policing.16 This will be critical to preventing China from playing the Southeast Asian claimants against each other.
Diplomacy and naval presence are two pillars, and economic statecraft is the critical third pillar. Economics play heavily in the people-centric aspect of naval statecraft. Caught between the giants of great power competition, Southeast Asian nations have faced a dilemma for decades. On one hand, they could lose economic access to their EEZs if they acquiesce to China’s naval encroachment; on the other, they depend on China for trade and potential benefits from Beijing’s Belt and Road Initiative.17 As with naval presence, the United States must have an economic presence for naval statecraft to be comprehensive and successful. The prospect of a more active U.S. economic role that does not force a choice on the claimants is one reason the 2019 State Department’s Free and Open Indo-Pacific strategy was well received in Asia.18
Much remains to be done in the economic arena. To increase U.S. efforts in maritime economic statecraft, underused mechanisms, such as the Development Finance Corporation and the U.S. Agency for International Development, will need to prioritize investments toward increasing trade with the United States and economic development in coastal communities. Done right, this can create a virtuous cycle, beginning with port visits that kickstart economic development, which in turn engenders greater trade with the United States.
Applying West Capella Lessons in Decisive Theaters
China’s gray-zone successes provide a template for Russian and Iranian copycats. Together with a globalizing Chinese navy and fishing fleet, these adversaries are adding arenas in which U.S. naval forces must compete. As with China, Russia and Iran assume a U.S. inability to remain militarily present, vulnerability to gray-zone tactics, and a statecraft splintered along independent economic, military, and diplomatic channels. In the great power competition playing out with China and Russia, the South China Sea and eastern Mediterranean hold important strategic value and are the two “decisive theaters” that should receive top priority for U.S. efforts.19
Nevertheless, with the lesson of the West Capella in mind, naval statecraft could and should be adapted for use in other maritime regions as well. Places to consider include the militarily important South Pacific islands astride vital sea and air lanes; and the Gulf of Guinea, from which China imports nearly 10 percent of its petroleum and in which it permits its fishing fleet to operate illegally. Beijing is also believed to be seeking a naval base in Equatorial Guinea.
China’s intention to dominate the South China Sea is not likely to change no matter what the United States does, but a more forceful posture from the other claimant states may have an effect on Beijing. For these states, whoever controls the South China Sea also holds sway over their security and economic growth. Therefore, the U.S. regional approach must integrate naval, economic, and diplomatic efforts. Incorporating lessons from the West Capella crisis, naval statecraft can prevent the disaster of ceding the commons of maritime Asia, while clearly demonstrating U.S. interests in a way that mitigates the chance of a Chinese miscalculation that could lead to unintended conflict.
To this end, fielding a persistent and meaningful naval presence in the South China Sea that ensures claimant states’ maritime security and economic rights is critical. Only then can diplomacy and economic statecraft be effective. In time, the claimant nations with their own maritime capacity can hold back the tide of China’s maritime insurgency. Once proved in the South China Sea, naval statecraft should be applied broadly, and must be prepared to evolve as U.S. competitors adapt.
1. Floyd Whaley, “U.S. Reaffirms Defense of Philippines in Standoff with China,” The New York Times, 1 May 2012.
2. Michael Green, Kathleen Hicks, Zack Cooper, John Schaus, and Jake Douglas, “Counter-Coercion Series: Scarborough Shoal Standoff,” Center for Strategic and International Studies, Asia Maritime Transparency Initiative, 22 May 2017; Permanent Court of Arbitration, The South China Sea Arbitration (The Republic of Philippines v. The People’s Republic of China), pca-cpa.org/en/cases/7/; and Sam LaGrone, “Confusion Continues to Surround U.S. South China Sea Freedom of Navigation Operation,” USNI News, 6 November 2015.
3. Dan Straub and Hunter Stires, “Littoral Combat Ships for Maritime COIN,” U.S. Naval Institute Proceedings 147, no. 1 (January 2021).
4. Blake Herzinger, “Learning in the South China Sea: The U.S. Response to the West Capella Standoff,” War on the Rocks, 18 May 2020.
5. Diana Stancy Correll, “Nimitz, Reagan Carrier Strike Groups Pick Up Dual-Carrier Exercises in South China Sea Again,” Navy Times, 17 July 2020.
6. Press statement by Michael A. Pompeo, U.S. Secretary of State, “U.S. Position on Maritime Claims in the South China Seas,” Department of State, 13 July 2020.
7. Renato Cruz de Castro, “After Four Years, The Philippines Acknowledges the 2016 Arbitral Tribunal Award!” Asia Maritime Transparency Initiative, 27 July 2020.
8. Radio Free Asia, “Indonesian Navy Conducts Major Exercise amid South China Sea Tensions,” 22 July 2020; Republic of the Philippines, Department of Foreign Affairs, “Statement of Secretary of Foreign Affairs Teodoro L. Locsin Jr. on the 4th Anniversary of the Issuance of the Award in the South China Sea Arbitration,” 12 July 2020; and Permanent Mission of Malaysia to the United Nations, Note Verbale “with reference to the Note Verbale CML/14/2019 dated 12 December 2019 by the Permanent Mission of the People’s Republic of China to the United Nations to the Secretary-General,” 29 July 2020.
9. Sharon Sean, Hoang Thi Ha, Melinda Martinus, and Pham Thi Phuong Thao, “The State of Southeast Asia: 2021 Survey Report,” ASEAN Studies Center, 10 February 2021.
10. Henrietta Fore, Robert Gates, and Condoleezza Rice, U.S. Government Counterinsurgency Guide, U.S. Government Interagency Counterinsurgency Initiative, 13 January 2009.
11. “Country Analysis Executive Summary: Malaysia,” U.S. Energy Information Administration, 25 January 2021, 3.
12. “Vietnam: Analysis,” U.S. Energy Information Administration, February 2017; and Nguyen Tan Uyên, “Fisheries Country Profile: Vietnam,” Southeast Asian Fisheries Development Center, 23 January 2022.
13. Philippine Statistics Authority, “The Philippine Marine Fishery Resources,” Republic of the Philippines, 2016. Note: The last available data covered the years 1985–98, with fishing averaging 3.6 percent of GDP. Given the importance of fish in the Philippines diet and numbers employed in the fishing sector, it is highly likely that fishing remains a large segment of the domestic economy.
14. Jason Hung, “China’s Swift Power Grows in the Philippines,” The Diplomat, 26 February 2021.
15. Daniel Egel, Adam R. Grissom, John P. Godges, Jennifer Kavanagh, and Howard J. Shatz, “Estimating the Value of Overseas Security Commitments,” RAND Corporation, 2016, x-xi, 51, 63, and 86–87.
16. The Code of Conduct (CoC) refers to an effort that began with a 1997 joint statement by the heads of state from China and the ten Association of Southeast Asian Nations (ASEAN) to commit to peaceful and durable solutions to disputes. The parties in 2012 reaffirmed a dedication to the principles of the 1982 U.N. Convention on the Law of the Sea (UNCLOS). However, in recent years China has tried to include draft language in the CoC that would contravene UNCLOS, notably freedom of navigation and economic severity in a coastal state’s exclusive economic zone.
17. The Belt and Road Initiative (BRI) is estimated to be valued at trillions of dollars in infrastructure and development projects along maritime and land routes to China. Chinese leader Xi Jinping unveiled the then “One Belt, One Road” initiative during a state visit to Kazakhstan in September 2013. Later the name was changed because it seemed to imply emphasis on serving China’s interests. The World Bank estimates BRI invested $500 billion in 50 developing countries from 2013 to 2018. The Maritime Silk Road refers to a series of port investments spanning the Indian Ocean and ending in Europe.
18. U.S. Department of State, A Free and Open Indo-Pacific: Advancing a Shared Vision, 4 November 2019.
19. CAPT Brent Sadler, USN (Ret.), “Decisive Theaters: Navy Must Pick the Right Fights in Great-Power Competition,” The Heritage Foundation, 8 October 2020.