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​Although the dollar continues to be the dominant global currency, Russia and China could dent this dominance. In the aftermath of global financial exclusion, Russia has had to make some strategic adaptations. The West’s sanctions had crippling consequences, and the Kremlin scrambled to find alternatives. In light of these developments, China became an important ally, and the Yuan—its currency—has taken on a more prominent role. It is telling that in Russia, the yuan has surpassed the United States Dollar (USD) in trading volume, a feat achieved a year after the Ukraine conflict, which triggered a series of sanctions against Moscow. As Russia and China band together, one wonders what other shifts will take place and how they will shape the future. Change is afoot, and the Russian market bears witness. The month of February saw a watershed moment as the yuan surged past the dollar in monthly trading volume for the first time. The momentum continued into March as the gap between the two currencies widened, showcasing the growing sway of the yuan. It’s an impressive feat, considering that the yuan’s trading volume on the Russian market was once quite insignificant. The winds of change blew through Russia’s financial system as the year progressed. Additional sanctions had taken their toll on the few remaining banks that still held power to make cross-border transactions in the currencies of countries that had been deemed “unfriendly” by the Kremlin. One such bank was Raiffeisen Bank International AG, whose Russian branch played a significant role in facilitating international payments within the country. However, the lender found itself under the watchful eye of both European and US authorities, which only added to the pressure. These events spurred the Kremlin and Russian companies to shift their foreign-trade transactions to currencies of countries that had not imposed sanctions.Converging coalitionsThe bond between Russia and China is growing stronger, with both nations seeking to bolster their positions on the global stage. Their alliance has spread across various spheres: military, economic, and political. With relations between Russia and the West crumbling, China has emerged as a key partner for Russia, providing it with the necessary support to counter economic and political pressure. On the other hand, China is keen on expanding its global reach, especially in the Eurasian region, and sees Russia as an important ally in this regard. President Xi Jinping’s recent visit to Moscow and his pledge to expand cooperation are likely to take this partnership to greater heights. Trade and investment ties are set to grow stronger, with both nations seeking to reduce their dependence on Western economies. Russia’s focus on infrastructure development and mega projects is also likely to benefit from China’s expertise in these areas. Energy is another significant area of collaboration, with Russia being a leading exporter of oil and gas and China being the world’s largest importer of these resources. Technology is also an essential domain, with both countries investing heavily in research and development to remain competitive in the global economy. While the alliance between Russia and China will likely have far-reaching geopolitical consequences, it is a complicated relationship with both nations pursuing their interests, even as they work towards common goals. As a result of Western sanctions, Russia has shifted its foreign trade transactions away from the dollar and euro to currencies of non-restricted countries. By doing so, the Kremlin and Russian companies hope to decrease their dependence on the Western financial system and explore new avenues for conducting their trade and economic activities. This shift in strategy reflects Russia’s determination to maintain its economic stability despite restrictions on its access to the global financial system. It also underlines the growing importance of alternative currencies in global trade as countries strive to minimise the impact of sanctions and safeguard their economic interests.Structural overhaulsThe Russian Finance Ministry was not immune to the winds of change either. Earlier this year, it made the switch from the dollar to the yuan for its market operations. It even went a step further by devising a new structure for the national wealth fund, earmarking 60 percent of its assets for the yuan. The Bank of Russia joined the chorus, urging its people and businesses to consider moving their assets to the rouble or other currencies considered “friendly.” This would help mitigate the risk of having their funds blocked or frozen. As the world undergoes a seismic geopolitical shift, it seems Russia is moving in tandem, searching for ways to secure its economic future. However, the dollar still reigns supreme in the Russian market. Even with all the changes taking place, it remains the most widely used currency, ceding its throne only occasionally to the yuan. This underscores the enduring dominance of the dollar, which has played a significant role in Russia’s financial landscape for years. However, as the world continues to evolve, one wonders how long it can hold on to its crown.

한국어로 읽기 Leer en español In Deutsch lesen Gap اقرأ بالعربية Lire en français Читать на русском Moscow and Beijing likely worked together to sow disinformation globally that was propagated locally by political parties in the lead-up to Solomon Islands’ national and provincial elections on 17 April 2024. Both countries’ propaganda systems accused the United States, without evidence, of using its foreign aid and networks across the country to interfere in voting and of preparing to foment riots and orchestrate regime change in response to an unsatisfactory election result. This campaign adds to a growing body of evidence showing that China’s and Russia’s ‘no limits’ partnership extends to coordinating their disinformation campaigns in the Indo-Pacific. The narratives haven’t gained widespread attention or media coverage in Solomon Islands. Australia, the United States and other Pacific partners should nonetheless be concerned, as Russia and China can be expected to learn from this campaign and will likely use the lessons to further improve their influence operations in the region. Individually, China and Russia are adept and expert at pushing disinformation to disrupt other nations but, by coordinating their efforts, they have a force-multiplier effect. The campaign consisted of an alleged ‘leaked’ letter, articles published on authoritarian state-controlled media outlets and a fringe journal publication, which were then shared and amplified on social media platforms. A fortnight before election day, an unknown author by the name of Richard Anderson published an explosive article in CovertAction Magazine alleging that the US was seeking regime change in Solomon Islands. The US-based magazine was co-founded in 1978 by the late Philip Agee, a former CIA officer who after his retirement became a vocal critic of the agency and of US policy and had reported links with Soviet and Cuban intelligence. The magazine was set up ‘on the initiative of the KGB’, the Soviet Union’s main intelligence agency, according to a book by KGB defector Vasili Mitrokhin and British intelligence historian Christopher Andrew. Anderson had no previous history of writing for CovertAction Magazine. A week after that article was published, Russian state-controlled media agency Sputnik further fuelled the allegations, writing that the US was ‘plotting [an] electoral coup’. This article cited an anonymous source who had ‘intimate familiarity’ with the activities of USAID, the main United States foreign aid and international development agency. This mirrored how Anderson is described in his CovertAction Magazine bio, though Sputnik’s article did not explicitly mention him or his article. Sputnik’s claims were amplified four days later by the Chinese state-controlled tabloid newspaper the Global Times, which did directly reference Anderson’s article and has the potential to legitimise these narratives to an audience the Chinese Communist Party (CCP) is actively targeting. During the same period, a poorly fabricated letter from an unconfirmed (and potentially non-existent) IFES project consultant was circulated among Solomon Islanders by an unknown source claiming that the US was seeking a ‘democratic transition by violent means in necessary circumstances.’ The text in this letter mirrored language used by Sputnik’s alleged anonymous source. Figure 1: Paragraph from Sputnik article (top) and a screenshot of the alleged IFES letter (bottom).     To be clear, there is no evidence that the US, or any other country, is supporting violent riots or interfering in Solomon Islands. Ann Marie Yastishock, US Ambassador to Papua New Guinea, Solomon Islands, and Vanuatu, has strongly refuted these allegations. This is not the first time the CCP-controlled media has spread disinformation in Solomon Islands or accused the US of seeking to instigate riots in the country. Following the 2021 Honiara riots, the CCP falsely accused Australia, the US and Taiwan of organising the riots, fomenting unrest and discrediting the relationship between Solomon Islands and China. In contrast, Russian media outlets also covered the 2021 Honiara riots but didn’t promote any explicit accusations of US or foreign interference. This time, China and Russia have been in lockstep. In the lead-up to the April elections, Russian state media was more direct and damning in its reporting with the release of Sputnik’s original article and in the subsequent coordination and dissemination of false narratives alongside Chinese state media. While Sputnik published only one follow-up article to the initial investigation, China’s Global Times was more prolific and varied, with six articles alleging US meddling in Solomon Islands. Of these six articles, four explicitly referenced Sputnik’s claims and two referenced US influence operations in more general terms. The indications of Russia-China propaganda coordination in this campaign were further supported by China’s Ministry of Foreign Affairs (MFA) post on 19 April 2024 titled ‘The Hypocrisy and Facts of the United States Foreign Aid’. The post on their website claims the US is giving aid to Solomon Islands, among other countries, only because it sees it as a political threat. This was the first article ever published by the MFA to smear USAID. Moscow, however, has consistently campaigned against USAID since it ejected the US agency from Russia in 2012 for ‘meddling in politics’. Russian media has pushed a consistent narrative that the organisation is a US imperialist tool of regime change, accusing it of fomenting civil unrest and coup attempts as far afield as Belarus, Cuba, Georgia and Mexico. However, this latest attack against USAID appears to be the first where Russia’s narratives are working to the benefit of CCP interests. It’s been clear since at least 2018 that Russian and Chinese state media are converging on media narratives that serve their governments’ strategic and political interests. According to leaked documents from Russian state broadcaster VGTRK, Russian and Chinese propaganda entities also signed an agreement to ‘further cooperate in the field of information exchange, promoting objective, comprehensive and accurate coverage of the most important world events’. While previous ASPI research has demonstrated Russian and Chinese state-coordinated narratives on the Russia-Ukraine conflict, the repeated re-airing of Sputnik’s conspiratorial claims of interference in Solomon Islands’ elections in Global Times articles indicates this propaganda cooperation is now a global initiative. There was also some evidence of amplification by inauthentic accounts on social media of these narratives, but they were limited and it is unclear whether they were state linked. For example, one X account with the handle @jv79628 shared the original Sputnik investigation. The account posts links almost exclusively from Sputnik, Global Times, Australian website Pearls and Irritations and videos with artificial intelligence-generated voices from the pro-CCP YouTube channel Chinese Revival, which may be linked to the Shadow Play network previously uncovered by ASPI. Other accounts sharing the original Sputnik report, such as @de22580171, pose as pro-Russian US citizens. They share articles mostly from Sputnik or Russia Today. At the time of publication of this report, Russia’s and China’s state media articles, and the accusations contained in them, have had minimal reach into online Pacific communities. In the public Solomon Islands Facebook groups ASPI viewed, online discourse remains more focussed on the emergence of new coalitions and the election of a new Prime Minister than on discussion of foreign influence or interference. According to Meta’s social monitoring tool, CrowdTangle, none of the articles from the Global Times have been shared in open and public Solomon Islands Facebook groups. However, Sputnik’s first article may have been more successful in reinforcing anti-Western sentiments in outgoing Prime Minister Manasseh Sogavare’s O.U.R. Party, who are strong contenders to be part of the coalition that forms the next government. That article was posted on the O.U.R. Party Solomon Islands Facebook page, which is run by the party, on 10 April. It was reshared to several public Facebook groups in Solomon Islands, including news aggregation sites and local island forum pages. This is significant because it is the first time a news article has been posted on the O.U.R. Party Solomon Islands Facebook page, which typically shares positive images of the party’s activities and political campaigns. As of 1 May 2024, the post (below) has had over 180 interactions, which is higher than the average number of interactions a typical post has on this page. Figure 2: Screenshot of Sputnik article posted in O.U.R Party Solomon Islands Facebook page.     Sogavare, a founding member of the O.U.R. Party, has made similar remarks about ‘foreign forces’ previously. According to an article published in the Solomon Star, when US Ambassador Yastishock visited Solomon Islands in late March to present her letter of credentials to Governor-General John Oti, Sogavare claimed foreign forces were ‘intervening in the national general election’ and ‘may fund some political parties and plan to stage another riot during the election to disrupt the electoral process and undermine social stability’. Despite the low online interaction so far, the barrage of US regime change allegations lays the foundation for future narratives that may resurface if Solomon Islands experiences future unrest. Beijing and Moscow can be expected to learn from these disinformation efforts, leaving the US, Australia and their Pacific partners no room for complacency about the threat the regimes pose, nor the need for effective strategic communication. The Russian and Chinese governments are seeking to destabilise the Pacific’s information environment by using disinformation campaigns and influence operations to undermine traditional partnerships. In this digital age, leaders of governments and civil society across the region need to consistently confront and counter baseless lies pushed by authoritarian state media, such as accusations that the governments of Australia and the US are instigating riots. If they fail to do so, partnerships with, and trust in, democratic countries are at risk of deteriorating, which can reduce the development benefits provided to Pacific Island Countries by Western partners. Australia, the US, and other close Pacific partners, such as Japan, New Zealand and the European Union, must take a stronger stance against false and misleading information that is starting to circulate in the region as a result of authoritarian state-backed disinformation campaigns. These nations must also better support and encourage local media and governments to take further steps to identify and combat false information online. This includes providing more training packages and opportunities for dialogue on media-government communication procedures to tackle disinformation and misinformation. Countering the effects of disinformation requires ongoing efforts to call out false statements, educate the public, and build country-wide resilience in the information environment. Greater transparency and public awareness campaigns from the region’s partners can also help to ‘prebunk’—or anticipate and delegitimise—disinformation and alleviate concerns about malign activity.

한국어로 읽기Leer en españolIn Deutsch lesen Gap اقرأ بالعربيةLire en françaisЧитать на русском In March and April, Vietnamese Foreign Minister Bui Thanh Son’s nearly back-to-back visits to the U.S. and China highlighted Vietnam’s increasing penchant for delicate diplomacy with major powers amid the U.S.-China strategic competition in the Indo-Pacific and Vietnam’s territorial tussles with China especially in the South China Sea (SCS), which Vietnam calls the East Sea. Much of the (perceived) disorder in the Indo-Pacific hails from the SCS, and one of Vietnam’s principal challenges is fostering order on its maritime borders. Therefore, Vietnam—historically distrustful of major powers—has been diversifying its relations by seeking security and defense ties with Indo-Pacific partners like the European Union (EU), India, and Japan, as well as with Russia, a country that poses an “existential threat” to the transatlantic allies. At the same time, Southeast Asia is battling disunity within the region for resolving disputes in the SCS, for instance. The regional multilateralism embodied by the Association of Southeast Asian Nations (ASEAN) seems to lack teeth even as China ‘controls’ some of its members using its financial and economic heft. So clearly, efforts beyond Vietnam’s “bamboo diplomacy” that deepen international solidarity are required. In a similar vein, Europe’s reluctant rapprochement with China in recent times amid the EU calling China a strategic challenge but continuing to look for economic engagement is reminiscent of Vietnam and much of Asia’s predicament vis-à-vis China. Moreover, like in Southeast Asia, not every member-country of the EU is embracing the Indo-Pacific construct, led by the U.S. Or even if a member does, like France or Germany, it does not spell the end of a productive relationship with China. Nonetheless, it is clear that the EU has started to take a greater interest in the growing geopolitical situation in the Indo-Pacific, even as the disunity over the extent of the Indo-Pacific priorities, including China, is as apparent. In such a scenario, is it possible for the EU and Vietnam, and by extension ASEAN, to have greater convergence, if not congruence, in their policies? Revisiting Vietnam’s Lack of an Indo-Pacific Tilt The Indo-Pacific, the maritime space and littoral between the western Indian and Pacific Oceans, has become the world’s most geopolitically critical region. In this region, much of the focus and debate among the EU’s more proactive members, such as France, the Netherlands, and Germany, is in response to Chinese unilateralism, trade dependency, and unchecked Sino-U.S. contestation. Several of these EU members have come to understand each other’s positions on the Indo-Pacific. Gradually, there is a realization that it is not just about what the EU and its members seek to accomplish in the region but just as much the perspectives and priorities of key Indo-Pacific resident actors—and their views on European strategies and contributions. Vietnam is one such country that is worthy of greater European strategic attention. Vietnam is known for its “bamboo diplomacy”—a reference to the bamboo plant’s strong roots, sturdy stems, and flexible branches—balancing ties with the two big powers, the U.S. and China. In the words of Foreign Minister Bui Thanh Son, Vietnam’s foreign policy caters to “independence, self-reliance, peace, friendship and cooperation, and multilateralization and diversification of external relations and proactive international integration.” However, Hanoi has never officially and fully embraced the term “Indo-Pacific” nor the U.S.-led Indo-Pacific construct although it does recognize that some aspects of the Free and Open Indo-Pacific tenet advocated by the U.S. and its allies are compatible with its national interests. For instance, the order in the Asia-Pacific, a term that Hanoi prefers to use, should be rule-based. This speaks to one of Vietnam’s most important foreign policy priorities: finding peace and stability in the SCS disputes with China and other claimants. However, the order that Vietnam seeks is in more than just the security domain. The goal of development has been the highest priority since Doi Moi (renovation) in 1986. Economic growth is considered the backbone of national security and regime legitimacy. Hanoi’s development of foreign relations can be said to be grounded in its national development experience, with the stress on economic priority leading to national stability and international standing. Vietnam chooses to engage in the Indo-Pacific construct on its terms. Vietnam and EU Convergence On both economic and security fronts, Vietnam and the EU can find converged interests that align closer to each other. Even as Hanoi has not officially adopted the term “Indo-Pacific,” the EU’s Indo-Pacific strategy, if implemented well, could address both Vietnam’s economic and security needs. Despite its security and military power limitations in the Indo-Pacific, the EU can still play a crucial role in effectively addressing these needs, which are vital for the EU’s strategic interests as well. The two already have a Framework Participation Agreement. Vietnam is also part of the EU’s Enhancing Security In and With Asia (ESIWA) project, which covers crisis management and cyber security. This also aligns with the EU’s Indo-Pacific Strategy, where Vietnam is considered a “solid” partner. Notably, both the EU and Vietnam face (potential) economic coercion from China. As China is now Vietnam’s largest trading partner, sudden trade restrictions hindering Vietnamese exports to China would dramatically hurt the Vietnamese economy. In this vein, Hanoi welcomed the EU-Vietnam Free Trade Agreement (EVFTA), hoping it would give opportunities to diversify its trading partners and thus mitigate the risks of economic coercion from China. On the other hand, the EU and its member-states are also trying to increase economic resilience by diversifying trading partners as they wrestle with economic overdependence on China. So, strategically, Brussels presents an excellent opportunity for Hanoi and vice versa. However, challenges remain. For example, all the EU member-states are still to ratify the Investment Protection Agreement signed along with the EVFTA. Even though this is usually a time-consuming procedure, the imperative to reap benefits as soon as possible has taken a setback amid a challenging geopolitical landscape. Nonetheless, the two sides are concerned about more than just traditional economic development; they are concerned about sustainable development and green transition. For instance, under the EU’s Global Gateway framework, the EU and Vietnam have signed the Just Energy Transition Partnership (JETP), which looks to provide a multi-projects credit facility worth €500 million. This is supposed to be the EU’s primary focus in Vietnam now. Yet, Hanoi’s cautious approach for fear of falling into any potential debt trap could stymie smooth cooperation. Projects involving vast sums of money, such as the JETP, are also practically challenging to push at the moment as officials are afraid to be the targets of the Communist Party of Vietnam’s anti-corruption campaigns. Vietnam would also be keen for ASEAN and the EU as blocs to reinvigorate multilateralism and shore up security cooperation, particularly in the SCS disputes. ASEAN states, in general, are looking to the EU as a non-threatening balancing power to reduce the impact of the China-U.S. strategic competition. Among the potential areas of cooperation between the EU and Vietnam within the ASEAN are regional climate action measures, food security, digitalization, and tech innovation. The two sides must also use their partnership to realize an ASEAN-EU FTA. EU as a Security Balancer? The EU and Vietnam also share their commitment to upholding the rules-based order—an essential component of security cooperation because of the region’s strategic importance. However, improving communication and understanding of maritime incidents more effectively is challenging. The SCS territorial conflict is simmering, particularly between China and the Philippines. In 2016, an arbitration tribunal constituted under the United Nations Convention on the Law of the Sea (UNCLOS) overwhelmingly ruled in favor of the Philippines, which China rejected. However, the ruling bolstered Vietnam’s claims, which were not openly welcomed by other ASEAN states besides the Philippines. In the absence of an agreement for a code of conduct (CoC) between China and ASEAN, which has been dragging on for years, China’s violations of international law in the SCS, including the latest against Vietnam in the Gulf of Tonkin, have increased. Against this scenario, Vietnam and the Philippines have signed maritime security deals. At the same time, Vietnam would be reluctant to do anything more drastic, such as support the Philippines in its attempt to draft a “separate” CoC for fear of Chinese retaliation. While Vietnam is less discussed in major global media than the Philippines on the issue, Hanoi is actively using diplomatic means to internationalize the problem, bringing in more players to address complex territorial disputes to safeguard its sovereignty and promote regional peace. In this context, winning the support of the EU and its member-states would be strategically important for Vietnam. The Vietnamese side can facilitate this by providing foreign entities, including the EU, with more transparent and timely information when incidents occur. Naturally, using a media strategy like the Philippines might sensationalize the issue, which might be different from what Hanoi prefers as it walks a tightrope to balance its complex relations with China. However, Hanoi can at least offer foreign diplomats transparent and detailed information in a timely fashion to help them verify and assess the situation on the ground. This will speed up the EU’s and other potential like-minded states’ response to sea incidents and foster ways forward for more multilaterally agreeable forms of modus vivendi in the South China Sea. Ultimately, such a modus should serve China too. EU No Longer a Bystander The EU’s recent stance on the SCS issue has been its respect for a rule-based order and freedom of navigation, strong opposition to unilateral actions, and supporting the ASEAN-led “effective, substantive and legally binding” CoC while mentioning China but not singling it out. This is a change from the EU’s pre-Indo-Pacific embrace when it was a more divided, neutral house. The EU’s heavy dependence on maritime trade through the SCS mandates that the EU can no longer stand as a bystander. However, ASEAN claimant states, particularly Vietnam, would perhaps expect a sharper or clearer position, which the EU has indeed been moving toward. For example, in March 2024, the EU released a statement expressing concerns about the incidents involving “repeated dangerous maneuvers” by the Chinese Coast Guard and Maritime Militia in the SCS. This tilts to the U.S. line, even as the U.S. has been more vocal in directly criticizing China on the SCS, by calling China’s claims “completely unlawful” even before the current events. One could argue that despite the U.S. and its allies having been vocal, this has yet to lead to a concrete resolution of the conflict. However, if the EU cannot send clear signals on the issue, the division among like-minded countries will be seen as weak and exploitable in China’s eyes. Importantly, this is true not just for the SCS disputes but also for China’s coercive activities in general. Therefore, given the convergent non-confrontational, inclusivity-, and economic interests-oriented attitudes of both Vietnam and the EU toward the Asia-Pacific/Indo-Pacific region, both sides are primed to embrace the other’s strategic outlook and up their game in the face of a challenging China and efforts to foster order.

한국어로 읽기Leer en españolIn Deutsch lesen Gap اقرأ بالعربيةLire en françaisЧитать на русском “This article was originally published here by the International Crisis Group”Tensions between China and the Philippines are increasing the risk of armed conflict in the South China Sea. In this excerpt from the Watch List 2024 – Spring Update, Crisis Group looks at how the EU can support regional diplomacy to mitigate maritime disputes. Rising maritime tensions between China and the Philippines have highlighted the risk of armed conflict in the South China Sea and the dangers it would pose to global trade. Several countries are implicated in the set of complex sovereignty disputes in the sea, which stem from rival claims to various features and the maritime entitlements they generate, but recent incidents involving Beijing and Manila have triggered the greatest concern. The Philippines controls nine outposts in the Spratlys, a contested group of land and maritime features at the heart of the South China Sea. A submerged reef known as Second Thomas Shoal has become a dangerous flashpoint, with Chinese boats continually trying to block Manila’s efforts to resupply the BRP Sierra Madre, a rusting ship housing a handful of soldiers that a former Philippine government purposely grounded in 1999 in a bid to assert sovereignty over the atoll. China, which also claims the shoal, first started interfering with these missions in 2014, but relations between the two countries in the maritime domain have never been as volatile as during the last seven months. Chinese boats have regularly rammed the Philippine supply vessels or doused them with water cannons, occasionally wounding the sailors on board. Manila has a Mutual Defence Treaty with Washington, making this burgeoning maritime dispute part of the geopolitical competition between the U.S and China. In effect, the South China Sea has become a zone where conflict risks are rife – and where Washington and Beijing could be drawn into direct confrontation. Considering these developments, the EU and its member states should: • Seek greater diplomatic engagement with both Beijing and Manila to keep tensions in check. They should also expand their diplomatic presence across South East Asia and, where relevant, establish reliable channels through which they could communicate with high-level authorities in China and other claimant states should disputes at sea escalate; • Work to promote respect for international law, particularly the law of the sea, as a source of neutral rules for dispute resolution and conflict prevention, for example by organising public events, roundtables and dialogues in Manila and elsewhere. While this measure may not bridge the divides between Manila and Beijing, it could at least help establish a level of mutual support and understanding among the other South China Sea claimant states; and • Strengthen coast guard cooperation with the Philippines, focusing on building capacity in areas such as environmental protection, safety and search-and-rescue procedures. Troubled Waters The sovereignty disputes that underpin the tensions between China and the Philippines in the South China Sea go back decades. But it was Beijing’s manoeuvres to take control of Mischief Reef (in the east of the Spratlys) from Manila in 1995 that altered the perceived balance of power between the two states and in the region, setting off the territorial dispute that has now taken a turn for the worse. China’s assertiveness in the sea has grown in the past few years, along with its military capabilities. The brewing territorial dispute made headlines in 2012 when Beijing in effect took control of Scarborough Shoal, an atoll 220km west of the Philippine mainland but within Manila’s exclusive economic zone (EEZ), after a maritime altercation. The incident prompted then-President Benigno Aquino to file a case challenging China’s territorial claims under the UN Convention on the Law of the Sea (UNCLOS). On 12 July 2016, the presiding arbitral tribunal ruled in favour of Manila, dismissing China’s claim to all the waters within its “nine-dash line”, which constitute almost the entire South China Sea. But it was a Pyrrhic victory. Beijing not only rejected the adjudication and the subsequent ruling, but it had also already undercut efforts to settle the dispute through legal channels by building and fortifying seven artificial islands in the Spratlys while the case was winding its way through the system. This move fundamentally changed the status quo, enabling Beijing to post permanent garrisons in the area for the first time. By many accounts, China has thus ensured itself control of the sea in any situation below the threshold of armed conflict. A short lull in the maritime dispute appeared to follow. After coming to power in 2016, Aquino’s successor, Rodrigo Duterte, pursued a pragmatic policy toward Beijing. Duterte downplayed the tribunal’s decision and cast sovereignty issues aside, hoping to benefit from Beijing’s economic largesse in exchange. Yet his ambitious gambit did not pay off. Tensions at sea continued in the form of regular standoffs between the country’s coast guard and Chinese vessels. Filipino fisherfolk struggled to reach their traditional fishing grounds, and Manila could not exploit the precious oil and gas reserves within its EEZ to which it is entitled under international law. In March 2021, Chinese ships massed around Whitsun Reef, an unoccupied feature in the sea, ringing alarm bells in Manila, where senior officials voiced public criticism of China’s behaviour for the first time in years. By the end of the Duterte administration, the Philippines had revived its ties with the U.S. and become more assertive still, filing several diplomatic protests with the Chinese government. Elected in 2022, President Ferdinand Marcos, Jr., Duterte’s successor, was initially disposed toward friendly relations with Beijing, but the relationship soured only a few months into his presidency. Although China remains the Philippines’ top trading partner, Marcos, Jr.’s meetings with President Xi Jinping did not achieve the desired results: Beijing neither agreed to make major new investments nor curtailed its “grey zone” tactics in the South China Sea, understood as coercive actions that remain below the threshold of armed conflict. These rebuffs have helped push Marcos, Jr. toward strengthening ties with Washington, and the Biden administration has, on several occasions, publicly committed that the countries’ Mutual Defence Treaty would be deemed triggered in the event of an armed attack on Philippine warships, aircraft or public vessels. In perhaps the most significant recent development, after a series of high-level visits by U.S. officials to Manila, the two countries agreed to scale up implementation of their Enhanced Defense Cooperation Agreement, which gives U.S. troops rotational expanded access to Philippine military bases, and which China perceives as a provocation, especially given these bases’ proximity not just to the South China Sea but also to Taiwan. Manila has also received defence and diplomatic support from a host of other countries, particularly Japan and Australia. Despite the dispute it has with Vietnam over parts of the South China Sea, it has engaged, more quietly, with Hanoi, and acquired maritime defence equipment from India, thus expanding its circle of partners. Joint naval exercises with various countries have included large-scale ones with the U.S. in April, which involved the deployment of missiles that can reach targets almost 1,600km away – something that was sure to draw Beijing’s attention – and took place just after Manila wound up its first-ever trilateral presidential summit with Washington and Tokyo. In the meantime, the Marcos, Jr. administration has pursued what it calls a “transparency initiative”, publicising information about maritime incidents by inviting journalists to join its coast guard ships or posting video recordings of events almost as they are happening. Dramatic footage of Chinese vessels blocking, ramming or attacking its resupply missions to Second Thomas Shoal with water cannons has generated widespread condemnation in the Philippines and abroad. Many consider these tactics to be bullying. For its part, and despite the 2016 ruling, Beijing asserts that Manila is intruding into its waters and maintains that it is demonstrating maximum restraint. China has also recently referred to a so-called gentleman’s agreement under former President Duterte that it says foresaw preserving a status quo in the South China Sea, with Manila ostensibly agreeing to supply only humanitarian goods and no construction materials to the BRP Sierra Madre; Manila denies that there was any such arrangement. Given the Philippines’ determination to continue resupplying its troops on the BRP Sierra Madre, Second Thomas Shoal will likely remain a flashpoint. Due to the constraints imposed at sea by the Chinese maritime militia and coast guard, Manila is starting to look into other means of provisioning its outpost, some of which are likely to irk Beijing even more, such as airdrops or closer U.S. naval escorts. In September 2023, a U.S. plane was in the shoal’s vicinity during a resupply mission, while a U.S. warship passed through waters nearby in December. But the shoal is not the only possible source of tension. Chinese vessels, both official and non-official, sail through many areas where Philippine fisherfolk traditionally work, while other features, such as Scarborough Shoal, are also points of friction. A large-scale encounter or accident at sea could be especially dangerous. Should a Filipino or Chinese national die during such a confrontation, it could stir nationalist sentiments in Manila and Beijing and heighten threat perceptions on both sides. In case of loss of life on the Philippine side, Manila would expect its U.S. ally to assist under the Mutual Defence Treaty, especially given the recent exchanges with Washington on that topic, although the U.S. has not said precisely how it would come to the Philippines’ aid. How such a dangerous situation would evolve depends in large part on Manila’s political decision to invoke the treaty and the choices Washington makes about how to fulfill its commitments. In principle, Beijing and Manila remain open to negotiations. But the bilateral consultative mechanism, a confidence-building measure designed in 2017 to manage maritime issues between the two countries, among other things, has generated no results of note. Meanwhile, efforts to create a Code of Conduct, which aims to reduce tensions at sea by setting up norms and rules between claimants and has been under discussion between China and the Association of Southeast Asian Nations (ASEAN) for over two decades, have stagnated. Why the Sea Matters The South China Sea is a vital waterway through which around one third of global shipping passes. Peace and stability in the sea are a prerequisite for safe trade and are demonstrably in the interest of the EU and its member states. At over 40 per cent, the share of the EU’s trade with the rest of the world transiting the sea is even higher than the global average. Instability in the area would deal a major blow to the European economy; even a slight disturbance of shipping routes could result in higher transport costs, shipping delays and acute product shortages. Should there be an escalation that pits China against the U.S. in a direct conflict, the consequences could be catastrophic and global. European positions toward South China Sea disputes have traditionally highlighted the importance of all parties respecting international law and the need for peaceful resolution, while being careful not to take sides. But over the last few years, China’s assertiveness and expanding military capabilities have driven a greater sense of urgency and something of a shift in European thinking. First, the EU and several of its member states have developed “Indo-Pacific” strategies, designed to guide and promote cooperation with countries throughout the region. Secondly, Brussels has increased its diplomatic support for the Philippine position following maritime altercations, offering supportive statements in December 2023 and March 2024. Brussels and several European capitals now back Manila in regularly underlining the importance of UNCLOS and maritime law in the South China Sea context. Meanwhile, Europe’s presence in the region is growing, if slowly and in part symbolically. In 2021, the EU appointed a special envoy for the Indo-Pacific for the first time, while European Commission President Ursula Von der Leyen visited Manila in July 2023, the first trip to the Philippines by someone holding that office and an opportunity to express, at the highest level, the EU’s readiness to strengthen cooperation with the government in maritime security, among other areas. A German frigate entered the South China Sea in 2021, and French and Italian ships made port calls in Manila in 2023. In March 2024, the EU and the Philippines agreed to resume negotiations over a free trade agreement, while a month later France announced talks regarding a Visiting Forces Agreement with the Philippines. While EU interest in the region is rising, European stances on the South China Sea are complex, with member states harbouring different views on maritime disputes in the region and, more broadly, on big-power competition. Some, such as France – which is the only EU member state to have overseas territories in the region (and which has significant EEZ interests there) – see themselves as having stakes higher than others and are keen to participate in the region’s discussions on security. Others, such as Greece and Hungary, are less concerned with maritime flare-ups so far away and tend to ascribe greater importance to maintaining good relations with Beijing. What the EU and Its Member States Can Do As the EU and its most powerful member states are drawn deeper into the South China Sea, they should raise their diplomatic game in the region – both to ensure awareness of mounting tensions and to look for ways to manage corresponding risks. As a practical matter, Brussels could leverage its status as an ASEAN Strategic Partner to seek more participation in that bloc’s security mechanisms and regional forums; the EU and member states could seek higher levels of engagement with regional powers such as Japan, Australia, and South Korea on matters concerning the South China Sea; and Europe could post more diplomats to the region, including permanent defence attachés who speak the language of naval diplomacy. Of particular importance will be maintaining strong lines of communication with Beijing, where Europe is seen as still having some distance from the U.S.-China strategic rivalry, which works to its diplomatic advantage. While to some extent this communication will be traditional bilateral statecraft, it may also mean looking for new opportunities and new channels for dialogue. For example, some member states could also seek to follow the precedent set by France and China in establishing a coordination and deconfliction mechanism between their militaries. Brussels should also continue raising the South China Sea in its engagement with Beijing as it did during the EU-China summit in 2023. Maintaining these channels will become both more difficult and more important if and when the EU and member states expand their operational presence in the region – for example, if they decide to establish a calibrated maritime presence in the South China Sea, as proposed by the EU envoy to the Indo-Pacific. Such a move is still deemed unlikely for now. As for public diplomacy, Brussels and EU member states should consider practical ways to promote principles of the law of the sea in the region, making the case that broader regional support for and adherence to these principles would provide neutral ground for peacefully avoiding and resolving disputes. While it is hard to see this approach appealing to Beijing, which has rebuffed the UNCLOS tribunal’s decision, there could still be benefits in forging closer cooperation among other claimant states. Convenings in Manila and other regional capitals could cover topics related to the continuing disputes but also to cross-cutting themes of regional interest such as fisheries. With negotiations over a regional Code of Conduct stuck, like-minded countries in the region could use these occasions to at least develop common positions on discrete issues that might be addressed by the Code or that could foster regional confidence-building in the South China Sea. Finally, in the realm of capacity building, European governments should continue to strengthen coast guard cooperation with South China Sea claimant states, helping them develop tools and protocols that might be used where appropriate to avoid confrontation and conflict. Since Aquino’s administration, Manila has tried to boost its coast guard capabilities. Given that many of the other claimant states’ vessels in the South China Sea are coast guard ships, and find themselves embroiled in maritime confrontations, a common approach on rules of engagement could help avoid misunderstandings at sea. Building on the EU’s integrated coast guard system, the EU could host or sponsor joint workshops to develop operating principles for the region’s law enforcement vessels and exchange best practices with Philippine authorities. Brussels could also fund agencies such as the UN Office on Drugs and Crime to strengthen coast guard expertise on issues such as environmental protection, safety and search-and-rescue procedures. European member states could also participate in joint activities with the Philippine and other ASEAN coast guards to strengthen fisheries control and maritime border protection and deter piracy or smuggling.