Vietnam Prepares Suit Against China in Spat Over Oil Rig

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Nguyen Tan Dung, Vietnam's prime minister

Vietnam has prepared evidence for a legal suit challenging China’s claim to waters off the Vietnamese coast and is considering the best time to file it, Prime Minister Nguyen Tan Dung said yesterday in an interview.

“We are prepared and ready for legal action,” Dung said, sitting in the prime minister’s compound in Hanoi in front of a bronze bust of Ho Chi Minh, the founder of communist Vietnam. “We are considering the most appropriate timing to take this measure.”

Dung, 64, spoke four days after a Vietnamese fishing boat sank in a collision with a Chinese ship in an area near the disputed Paracel Islands where China has placed an oil rig. A legal filing would follow a case against China submitted by the Philippines to a United Nations’ court over contested shoals off its coast.

Dung, who faces pressure from citizens calling for a strong response to China’s oil rig maneuver, risks damaging economic ties with his bigger communist neighbor if he chooses to go down the legal route. A suit by Vietnam, though, would add to pressure on China to submit to arbitration in the South China Sea where it is asserting control in a push to gain greater access to the area’s oil, gas and fish.

If open conflict were to erupt in the South China Sea, “there will be no victor,” Dung warned, saying that two-thirds of global maritime trade passes through shipping lanes in the area. “Everyone will lose,” he said. “The whole world economy will be hurt and damaged immeasurably.”

Trade vs Sovereignty

Dung faces a difficult choice, having to weigh the economic cost of antagonizing Vietnam’s largest trading partner against stepping up pressure for China to defend its claims before an international court. Trade with China rose to $50.2 billion last year and accounts for about 15 percent of Vietnam’s global trade, according to Vietnam’s General Statistics Office. The two countries aim to boost that flow to $60 billion in 2015, according to an April 14 statement from Vietnam’s government.

The sea dispute with China “has caused some impact in a few sectors of the Vietnamese economy,” Dung said. “However, we have taken suitable measures to respond.”

Dung reiterated the government’s forecast that the economy will expand 5.8 percent this year, quickening from 5.42 percent in 2013. The benchmark VN Index (VNINDEX) has advanced 11 percent this year, having trimmed gains from its March 24 peak amid the rising tensions with China.

In a meeting this past week in Hanoi with U.S. Senator Ben Cardin, a member of the Senate Foreign Relations Committee, Dung called for a “stronger voice” from the U.S. against China.

‘Fine Line’

“We expect the U.S. to make more concrete, more effective contributions to regional peace and stability,” Dung said without elaborating. “The U.S. is a global power and a power in the Asia-Pacific region.”

U.S. Defense Secretary Chuck Hagel today said recent Chinese actions in parts of the South China Sea were destabilizing the region, citing the oil rig in disputed waters near the Paracel Islands off the coast of Vietnam as one example.

While China has said it wants a “sea of peace, friendship and cooperation,” in recent months it “has undertaken destabilizing, unilateral actions asserting its claims in the South China Sea,” Hagel said in prepared remarks at an annual security conference inSingapore.

Vietnam demands China withdraw the oil rig and the armies of both countries must show restraint in the dispute, Vietnam Defense Minister General Phung Quang Thanh said in a speech today at the conference.

Japanese Prime Minister Shinzo Abe yesterday pledged support for Vietnam and the Philippines in their maritime disputes with China. Speaking in Singapore, Abe said his country would help to “thoroughly maintain freedom of navigation and freedom of overflight.”

Vietnam, which fought a border war with China in 1979, has to “walk a very fine line,” Alexander Vuving, a security analyst at the Asia-Pacific Center for Security Studies in Hawaii, said by phone. “In Eastern culture, Vietnam and China are neighbors, and using legal measures has the symbolic meaning of, ‘We are no longer good neighbors.’”

China’s Map

China’s “nine-dash line”, first published in the 1940s, extends hundreds of miles south to the equatorial waters off the coast of Borneo. It claims sovereignty over more than 100 islets, atolls and reefs that form the Paracel and Spratly Islands, and jurisdiction over the seabed and subsoil.

The Philippines and Vietnam have led opposition to the map. Under the 1982 Law of the Sea, which China ratified in 1996, a country can exploit oil, gas and other “non-living resources” on its continental shelf or an area stretching 200 nautical miles from land known as an exclusive economic zone.

China’s President Xi Jinping is using his nation’s expanding naval reach to back its claims in the South China Sea, which Vietnam refers to as the East Sea. China’s success in assuming control of the Scarborough Shoal in 2012, an area previously overseen by the Philippines, highlighted the potential consequences for nations from Vietnam to Japan of China asserting its territorial claims.

‘Defend Ourselves’

Chinese aircraft flew close to Japanese planes in disputed airspace in the East China Sea, just days before the Vietnamese boat sinking. In mid-May, violent anti-China protests erupted in Vietnam, targeting businesses thought to be Chinese. Vietnam said three Chinese nationals were killed in the rioting.

Vietnam and China blamed each other for the boat collision. Qin Gang, a Chinese Foreign Ministry spokesman, said May 27 that Vietnam’s attempts to disrupt its oil rig operations were “in in vain and it will in the very end hurt the interests of the Vietnamese side itself.”

Dung said Vietnam would use “all possible peaceful measures” to defend its sovereignty. “Vietnam will only take military actions when we are forced to defend ourselves,” he said.

To contact Bloomberg News staff for this story: John Boudreau in Hanoi at jboudreau3@bloomberg.net; K. Oanh Ha in Hanoi atoha3@bloomberg.net; Nguyen Dieu Tu Uyen in Hanoi atuyen1@bloomberg.net

To contact the editors responsible for this story: Peter Hirschberg atphirschberg@bloomberg.net Dick Schumacher

Bloomberg - USA

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