```

[Senate Hearing 112-610]
[From the U.S. Government Publishing Office]

                                                        S. Hrg. 112-610

 
      MARITIME TERRITORIAL DISPUTES AND SOVEREIGNTY ISSUES IN ASIA

=======================================================================

                                HEARING

                               BEFORE THE

                      SUBCOMMITTEE ON EAST ASIAN 
                          AND PACIFIC AFFAIRS

                                 OF THE

                     COMMITTEE ON FOREIGN RELATIONS
                          UNITED STATES SENATE

                      ONE HUNDRED TWELFTH CONGRESS

                             SECOND SESSION

                               __________

                           SEPTEMBER 20, 2012

                               __________

       Printed for the use of the Committee on Foreign Relations

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                COMMITTEE ON FOREIGN RELATIONS         

             JOHN F. KERRY, Massachusetts, Chairman        
BARBARA BOXER, California            RICHARD G. LUGAR, Indiana
ROBERT MENENDEZ, New Jersey          BOB CORKER, Tennessee
BENJAMIN L. CARDIN, Maryland         JAMES E. RISCH, Idaho
ROBERT P. CASEY, Jr., Pennsylvania   MARCO RUBIO, Florida
JIM WEBB, Virginia                   JAMES M. INHOFE, Oklahoma
JEANNE SHAHEEN, New Hampshire        JIM DeMINT, South Carolina
CHRISTOPHER A. COONS, Delaware       JOHNNY ISAKSON, Georgia
RICHARD J. DURBIN, Illinois          JOHN BARRASSO, Wyoming
TOM UDALL, New Mexico                MIKE LEE, Utah
               William C. Danvers, Staff Director        
        Kenneth A. Myers, Jr., Republican Staff Director        

                         ------------          

         SUBCOMMITTEE ON EAST ASIAN AND PACIFIC AFFAIRS        

                  JIM WEBB, Virginia, Chairman        

BARBARA BOXER, California            JAMES M. INHOFE, Oklahoma
ROBERT P. CASEY, Jr., Pennsylvania   JAMES E. RISCH, Idaho
JEANNE SHAHEEN, New Hampshire        JOHN BARRASSO, Wyoming
CHRISTOPHER A. COONS, Delaware       MARCO RUBIO, Florida

                              (ii)        

  
?

                            C O N T E N T S

                              ----------                              
                                                                   Page

Campbell, Hon. Kurt, Assistant Secretary of State for East Asian 
  and Pacific Affairs, U.S. Department of State, Washington, DC..     6
    Prepared statement...........................................    10
    Response to question submitted for the record by Senator 
      James M. Inhofe............................................    21
Webb, Hon. Jim, U.S. Senator from Virginia, opening statement....     1
Lugar, Hon. Richard G., U.S. Senator from Indiana, opening 
  statement......................................................     6

              Additional Material Submitted for the Record

Inhofe, Hon. James M., U.S. Senator from Oklahoma, ranking member 
  of the subcommittee, prepared statement........................     5

                                 (iii)

  

      MARITIME TERRITORIAL DISPUTES AND SOVEREIGNTY ISSUES IN ASIA

                              ----------                              

                      THURSDAY, SEPTEMBER 20, 2012

                               U.S. Senate,
    Subcommittee on East Asian and Pacific Affairs,
                            Committee on Foreign Relations,
                                                    Washington, DC.
    The committee met, pursuant to notice, at 2:10 p.m., in 
room SD-419, Dirksen Senate Office Building, Hon. Jim Webb 
(chairman of the subcommittee) presiding.
    Present: Senators Webb, Lugar, and Risch.

              OPENING STATEMENT OF HON. JIM WEBB, 
                   U.S. SENATOR FROM VIRGINIA

    Senator Webb. Good afternoon. The hearing will come to 
order. Let me make a comment at the beginning that the Senate 
is in the middle of a vote. We may have other Senators come to 
the hearing during the course of it, but I am going to go ahead 
and begin.
    I would also like to point out that Senator Inhofe will not 
be at this hearing, but he has a statement that will be 
inserted into the record--a written statement at the end of my 
opening statement.
    Today the East Asia and Pacific Affairs Subcommittee will 
consider the impact of recent and ongoing maritime territorial 
disputes in Asia, one of the most critical issues of strategic 
importance for the United States and for the entire Pacific 
region.
    I have written and spoken about this issue for many years, 
since long before I entered the Senate. It was the subject of 
the first substantive hearing I held as chairman of this 
subcommittee in July 2009. And it probably will be the subject 
of the last substantive hearing that I am holding as chairman 
of this subcommittee.
    Unfortunately, since that time, the disagreements over 
sovereignty and the potential for conflict have only increased. 
In addition to the much publicized pivot into East Asia, it is 
imperative that the United States policy be based on a clear 
set of principles that everyone here at home and in the region 
can understand, and from which our enduring relationships can 
continue to grow.
    Throughout my entire professional life, I have worked to 
emphasize the importance of a strong United States presence in 
East and Pacific Asia. To state the obvious, the United States 
has strong, enduring, vital interests in East Asia, and East 
Asia would be a far more volatile place if the United States 
were to recede from the region.
    Since World War II, our country has proved to be the 
essential guarantor of stability in this region, even as the 
power cycle shifted from Japan, to the Soviet Union, and most 
recently to China. Economically and politically, all of East 
Asia and the Pacific has benefited from the stability that has 
been made possible by our involvement in this region.
    I reiterate this point in order to emphasize that neither 
this hearing, nor any other comments and writings that have 
been made over the years by me have intended to diminish or 
discourage the evolution of our larger relations with China. 
The great value that the United States has added to the complex 
historical mix of East Asia transcends any one country.
    The concerns that are raised today would have been raised 
just as quickly if they were directed at Japan during the 1930s 
or the Soviet Union when I was a Department of Defense 
executive in the 1980s. The United States does not seek 
hegemony in this region, nor does it seek containment.
    Its vital interest is stability, which allows countries of 
all different populations and sizes the opportunity to resolve 
their differences without fear of intimidation or the tragic 
consequences of war. And history teaches us that when stability 
is lost in East Asia, violence replaces it.
    A strong presence of the United States in the Pacific-Asia 
region since World War II has been invaluable in the economic 
development and growth of more mature political systems 
throughout the region. This was true even in our frequently 
misunderstood effort in Vietnam as Minister Mentor Lee Kuan Yew 
of Singapore commented in his memoir ``From Third World to 
First,'' and I quote, ``Although American intervention failed 
in Vietnam, it brought time for the rest of Southeast Asia. 
America's action enabled non-Communist Southeast Asia to put 
their houses in order. Had there been no U.S. intervention, the 
will of these countries to resist would have melted, and 
Southeast Asia would have most likely gone Communist. The 
prosperous emerging market economies of ASEAN were nurtured 
during the Vietnam war years.''
    During the cold war, American policy encouraged a stronger 
relationship with China partly as a way to counter Soviet 
influence in East Asia. When massive American investment in 
China, coupled with the abrupt fall of the Soviet Union, helped 
enable a rapid and continuing power shift in favor of China, at 
the same time that American concerns in Pacific-Asia were 
placed on the backburner due to the manner in which our 
attention was distracted by the volatility of events in Iraq, 
Afghanistan, and the Muslim world.
    In April 2001, following the collision of a Chinese fighter 
with a U.S. reconnaissance aircraft in international airspace, 
I warned of this development in an article in the Wall Street 
Journal, noting that China, ``has engaged in a massive 
modernization program fueled largely by purchases of Russian 
weaponry and bolstered by the acquisition of American 
technology, which was having an impact on sovereignty claims in 
the East China Sea and the South China Sea.'' I warned in that 
article that China, ``has laid physical claim to the disputed 
Paracel and Spratly Island groups, thus potentially straddling 
one of the most vital sea-lanes in the world, has made repeated 
naval excursions into Japanese territorial waters, a cause for 
long-term concern as China still claims Japan's Senkaku 
Islands, and has never accepted the legitimacy of Okinawa's 
1972 reversion to Japan.''
    In 2006 in the final debate of my campaign for the U.S. 
Senate, I was allowed to ask my opponent one question. I asked 
him what he thought we should do about the sovereignty disputes 
in the Senkaku Islands. For a region in relative peace compared 
to the rest of the world, East Asia has a significant number of 
open territorial disputes, mostly with maritime borders. China 
and Japan both claim the Senkaku Islands in the East China Sea. 
China, Vietnam, the Philippines, Brunei, Malaysia, and Taiwan 
all claim sovereignty over all or part of the Spratly Islands, 
also in the South China Sea. Japan and Korea have sovereignty 
over the Liancourt Islands, also known as Takeshima by Japan 
and Dokdo by Korea. Japan and Russia claim the Kuril Islands.
    These are open, active disputes. They involve not only 
claims to the land features, but also claims to surrounding 
waters. And as all of these Asian nations have grown more 
prosperous, their sovereignty claims have become more fierce.
    It is the policy and the desire of the United States to 
pursue harmonious relations with each of these countries. We 
also recognize that these countries have long and complicated 
histories with each other, which impact these claims. We take 
no sides in the resolution of such historical disputes, but we 
should not refrain from using our influence to discourage the 
use of military force or the unilateral expansion of claims of 
sovereignty. And it should be within the creative energy of our 
leadership to seek proper venues for the resolution of these 
disputes, particularly in the area of the South China Sea.
    What we have been witnessing over the past several years is 
not simply a series of tactical disputes. They are an 
accumulation of tactical incidents designed to pursue a larger 
strategic agenda. Virtually every country in the region 
understands that. It is the duty of the United States to 
respond carefully and fully to it.
    In the past week, our most important ally in Asia, Japan, 
has come to the brink of open conflict with our largest 
creditor, China, over claims to the Senkaku Islands.
    This latest incident represents years of growing tension. 
In 2008, Japan and China agreed to develop oil and gas 
resources in waters near the Senkaku Islands in an effort to 
focus on the benefits of economic cooperation. This cooperation 
was cut short in 2010 when a Chinese fishing captain rammed a 
Japanese Coast Guard vessel near the islands.
    Last week, Japan's Government announced that it would 
purchase land from the Senkaku Islands from its private 
Japanese owner in an attempt to prevent the Governor of Tokyo 
from purchasing this land and perhaps using it to stoke further 
controversy. A move that the Japanese Government expected to 
relieve tensions was met with widespread misunderstanding, 
including a blast by China.
    Last Friday, China sent six maritime surveillance ships 
into waters around the islands, the largest-ever intrusion by 
China into this area. Anti-Japanese protests in China have 
reached a new height. These protests, abetted by the Chinese 
Government, have damaged Japanese-owned businesses and caused 
considerable harm.
    On Tuesday following a meeting with Secretary of Defense 
Panetta in Beijing, China's Defense Minister stated that China 
reserves the right to act further against Japan in this 
dispute, which can only be read as a threat of the use of 
military force.
    This threat has direct consequences for the United States. 
In 2004, the Bush administration stated clearly that the 
Japanese-United States security treaty obligations extended to 
the Senkaku Islands, which, according to accepted principles of 
international law, are under the administrative control of 
Japan. Secretary Clinton reiterated this position in 2010 
following the incident with the Chinese fishing boat. Given the 
recent incursion by China into waters around the Senkaku 
Islands, it is vital that we continue to state clearly our 
obligations under the security treaty.
    For several years, China has also demonstrated an increased 
willingness to use force in the South China Sea. Its claims in 
this area are based upon a roughly defined nine-dashed line, 
the so-called cow's tongue, encircling the South China Sea. In 
2009, Chinese vessels harassed a United States maritime 
surveillance ship, the USNS Impeccable, and then a Chinese 
submarine collided with a sonar cable of the guided missile 
destroyer USS John S. McCain while it was operating in the 
South China Sea. Last year on three separate occasions in 
March, May, and June, China interfered with the maritime 
surveillance activities of Vietnamese and Filipino ships by 
cutting their cables.
    Following those incidents, I introduced a Senate resolution 
deploring the use of force by China, and reaffirming United 
States support for the peaceful resolution of maritime 
territorial disputes. This resolution passed the Senate 
unanimously. This year in April, tensions on Scarborough Shoal, 
an area less than 200 miles from the Philippines' coast, 
escalated as a Philippine Coast Guard vessel investigated 
illegal fishing by China. In response, Chinese maritime 
enforcement ships, backed by PLA naval vessels, roped off the 
mouth of the lagoon, denying access to the territory. China 
also retaliated through trade measures by blocking Filipino 
banana 
exports.
    In June, Filipino ships withdrew from the standoff due to 
weather concerns, but Chinese ships remained and are there 
today.
    In July, the Chinese Government began implementing a 
decision to assert administrative control over this entire 
region, establish a prefectural level government called Sansha 
on Woody Island located in the Paracel Islands chain, and 
appointed 45 legislators, a standing committee, a mayor, and a 
vice mayor.
    Woody Island, also called Yongxing, has no indigenous 
population, no natural water supply. The jurisdiction of this 
new prefecture extends to more than 200 islets and over 2 
million square kilometers of water. In other words, virtually 
the entire South China Sea.
    This political shift has been matched by economic and 
military expansion. In late June, the China National Offshore 
Oil Corporation opened bidding on oil blocks that fall within 
Vietnam's Exclusive Economic Zone and overlap with oil blocks 
that Vietnam itself is developing, some in partnership with 
United States firms. Within days of establishing the Sansha 
prefecture, China's central military commission announced that 
it would deploy a garrison of soldiers to guard the area and 
conduct regular combat readiness patrols in the South China 
Sea.
    Other countries in the South China Sea have been actively 
working to reinforce their claims in the face of such 
developments. In June, Vietnam passed a new maritime law that 
restates Vietnam's claim to the Paracel Islands and Spratly 
Islands. The Philippines has been working through the United 
Nations Commission on the limits of the Continental Shelf to 
delimit its expanded Continental Shelf and clearly define its 
maritime borders.
    All countries are seeking to benefit from the resources in 
the region, claiming mineral development rights or fishing 
rights. However, China's actions this past year go a step 
further in attempting to expand administrative and physical 
control over the areas in the South China Sea previously out of 
its international recognized jurisdiction.
    These incidents have coincidentally been occurring near the 
anniversary of Japan's September 18, 1931, invasion of 
Manchuria. Historian Barbara Tuchman noted that the failure of 
the international community, and particularly the League of 
Nations, to respond to the Mukden incident at that time, 
``breed the acid of appeasement that opened the decade of 
dissent to war in Asia and beyond.'' The precedent for Munich 
was set in Manchuria, in China, lived through the consequences 
of the international community's failure to address the 
unilateral actions taken against its territory.
    One hopes the present Government of China will appreciate 
the usefulness of international involvement in finding 
solutions to the increasingly more hostile sovereignty issues 
in Northeast Asia and in the South China Sea. All of East Asia 
is watching the United States response to these recent actions 
in the South China Sea and East China Sea, particularly the 
countries of ASEAN, with whom we have shared expanding 
relations, and Japan, and the Philippines, two countries with 
whom we share the solemn commitment of being treaty allies.
    To discuss these issues today, I would like to welcome 
Assistant Secretary of State Kurt Campbell. Prior to his 
confirmation in June 2009, Assistant Secretary Campbell was CEO 
and cofounder of the Center for a New American Security, and 
concurrently served as the director of the Aspen Strategy 
Group.
    He has served in several capacities in government, 
including as Deputy Assistant Secretary of Defense for Asia and 
the Pacific, a director on the National Security Council staff, 
Deputy Special Counselor to the President for NAFTA in the 
White House, and White House fellow at the Department of 
Treasury.
    [The prepared statement of Senator Inhofe follows:]

            Prepared Statement of Senator James M. Inhofe, 
                   Ranking Member of the Subcommittee

    I want to thank Chairman Webb for holding this hearing on the 
rising tensions involving overlapping maritime claims in the South 
China Sea by Communist China, Brunei, Malaysia, Philippines, Taiwan, 
and Vietnam. This hearing will also include testimony about the 
conflicting maritime claims in the East China Sea by China and Taiwan 
with Japan, and the disturbingly rekindled dispute between South Korea 
and Japan over the set of islets there.
    For me, the number of incidents over the past 2 years by the 
Communist Chinese military in these seas leads me to focus my comments 
on China's destabilizing and harmful actions. Actions, that left 
unanswered and unchecked by the peace-seeking nations in the region and 
world, could lead to open conflict.
    Along with Chairman Webb, I introduced and passed last year in the 
Senate, S. Res. 217, a resolution that condemned China's calculated 
acts of naval harassment in the South China Sea. The Senate resolution 
noted that since China declared much of the South China Sea as its 
Exclusive Economic Zone, it has repeatedly threatened the other 
countries (nine in all) in the region who have overlapping claims to 
this 1.35 million square miles of water.
    Not even the 2002 Declaration on the Conduct of Parties in the 
South China Sea, signed by China and the 10-member Association of 
Southeast Asian Nations, has helped in reaching a peaceful resolution 
to this dispute. The added fact that China is a 1996 signatory to the 
deeply flawed Law of the Sea Treaty (LOST)--which mandates negotiated 
settlements of maritime disputes--clearly reveals China's willingness 
to disregard its own treaty obligations, and is a testament to the 
infectiveness of the LOST treaty itself, which I strongly oppose the 
U.S. ratifying.
    Since passage of our resolution, China has continued its 
threatening and aggressive administrative and military actions, with 
the latest being its proclaimed jurisdiction over the Paracel Islands--
more than 200 miles southeast of Hainan, mainland China's southernmost 
territory. On June 21, 2012, the Communist leadership established a new 
prefecture there, naming it Sansha, with its headquarters on Woody 
Island. And most disturbingly, at the end of July, its People's 
Liberation Army announced it would deploy a garrison of soldiers there 
to guard the islands and conduct ``combat ready'' patrols.
    Simply put, Communist China needs to receive a clear message from 
the U.S. and other peace-seeking nations that China's continued 
harassment, and expansive administrative and military actions in this 
region, and specifically in the South China Sea, will no longer be 
tolerated.
    I look forward to hearing testimony from Assistant Secretary Kurt 
Campbell today on concrete steps our Nation will be taking, along with 
our allies, to ``come about'' and tack away from our present course of 
diplomacy, and maneuver toward a new, robust one.

    Senator Webb. Before Secretary Campbell begins his 
comments, I would like to welcome Senator Lugar, the former 
chairman and ranking Republican on the full committee. And we 
are very pleased to have you at the hearing today, Senator 
Lugar.

          OPENING STATEMENT OF HON. RICHARD G. LUGAR,
                   U.S. SENATOR FROM INDIANA

    Senator Lugar. I thank you, Mr. Chairman, and you have 
certainly set the stage for a very important hearing with a 
very important witness. I simply want to take the opportunity 
to thank you and to congratulate you, Secretary Campbell, on 
your vigorous and tenacious work in East Asia throughout the 
past 3 years of time and your service before that. It has been 
extremely helpful not only with regard to the current issues 
that the chairman has outlined, but a whole host of issues 
which may arise in your testimony and our questions today. 
Welcome to the committee.
    Thank you, Mr. Chairman, for calling the hearing.
    Senator Webb. Thank you, Senator Lugar. And welcome, 
Secretary Campbell.

 STATEMENT OF HON. KURT CAMPBELL, ASSISTANT SECRETARY OF STATE 
 FOR EAST ASIAN AND PACIFIC AFFAIRS, U.S. DEPARTMENT OF STATE, 
                         WASHINGTON, DC

    Mr. Campbell. First of all, Senators, thank you very much 
for holding this hearing today. I cannot imagine a more 
important or more delicate set of questions for us to 
undertake.
    I would like to put my full testimony on the record and 
just open with a few comments.
    Let me first say that I want to commend both of you for the 
strong bipartisan support that you have given for decades to 
our engagement in the Asia-Pacific region. Sometimes we have 
not always agreed as parties or as people, but I think we are 
united in our quest to see a strong, enduring American role in 
Asia for decades and decades to come.
    I travel a lot through the region, and almost more than any 
other issue I hear is a concern about what happens in Congress 
in the years ahead. Will there be people like Senator Lugar and 
Senator Webb who will care about the region? I try to assure 
them that there will be, but frankly you both leave enormously 
large shoes and military boots to fill. And so I want to thank 
you for your service and your support going forward.
    I would just like to take a couple of moments to talk a 
little bit about the overarching strategy because I think it is 
important, and then I will turn to the specific questions that 
Senator Webb, I think, has very effectively laid out.
    I think our approach has been built on a bipartisan 
approach, but it has some new elements over the course of the 
last several years. And this has been articulated clearly by 
the President, and I think acted on very strongly by Secretary 
Clinton and Secretary Gates, and Secretary Panetta as well.
    At the heart of our effort in the Asia-Pacific region are 
our strong alliances, and we have sought to take steps to 
strengthen these alliances across the board. More needs to be 
done, particularly in Southeast Asia, but I believe we have 
done important things with Australia, Japan, and South Korea.
    But it cannot end there. We must take steps to deepen ties 
with new and emerging partners. Those include friends in 
Southeast Asia, a much more vigorous relationship with New 
Zealand than we have enjoyed in the past, and we are 
increasingly taking steps to draw India into the Asia-Pacific 
region. And as part of that is a recognition, as Senator Webb 
clearly articulated, that we need to work closely with a China 
that is emerging as a dominant player, not only in the Asia-
Pacific region, but in the world. This is clearly an enormous 
proposition, very challenging, but it is incredibly important 
for this and the next generation of Americans going
 forward.
    When Asians look at the United States, they expect us to 
play a role in a variety of fields, none more important than 
economic statecraft. And with your strong support, both of you 
and others, we have been able to take steps to build on that 
bipartisan tradition.
    Last year, we passed the Korea Free Trade Agreement. We are 
already seeing the benefits there, and we are taking steps to 
work toward advancing a very high quality trade agreement, the 
Trans-Pacific Partnership. And we will be looking to take steps 
to further our commercial diplomacy in Asia. At the 
encouragement of Senator Webb, Secretary Clinton held the 
largest-ever meeting of American business leaders, ministers, 
and heads of state in Cambodia in July after the ASEAN Regional 
Forum to articulate that we have a role to play, and that 
American products and services can play a huge role in the 
prosperity of Asia and the building of a strong and durable 
middle class.
    We are also attempting to articulate a comprehensive 
defense strategy, diversifying our capabilities around the 
Asia-Pacific region, taking steps to strengthen our military 
ties through training and new arrangements for joint 
facilities, and exploring new opportunities for cooperation, 
such as in the area of disaster relief.
    We have noted the helpful role that Senator Webb and others 
have played to help us think deeply about the relationship that 
we have with Okinawa and Guam going forward. I look forward to 
ensuring that our defense and security relationships remain 
strong, and as we speak, Secretary Panetta is in the region 
advancing those goals.
    And last, we also believe fundamentally that a new wrinkle 
in our strategy has got to be engaging multilateral 
institutions more effectively, such as the ASEAN Regional 
Forum. We joined the East Asian summit. We are working more 
closely with defense partners in a number of institutions.
    This is increasingly going to be the focus of our 
diplomatic efforts. These are all young institutions, new 
institutions without deep roots, but strengthening them and 
encouraging partners like ASEAN to have the confidence to stand 
up on issues of mutual import is at the center of our strategy 
going forward. We want to see a series of institutions take 
root--APEC, the East Asia Summit, the ASEAN Regional Forum, and 
military institutions.
    Now all of this work has to be animated by our values, the 
advancement of the cause of freedom, democracy, and rule of 
law. And I have to say, I do not think there are two people who 
have done more for making what happened yesterday possible than 
you two. I have been in a number of meetings where each of you 
took us to the woodshed about needing to try harder--to work 
harder, on issues associated with Burma. And yesterday was a 
day to celebrate with Aung San Suu Kyi's receipt of the 
Congressional Gold Medal. That does not mean our work is over. 
We have a lot more to do, as she indicated yesterday. But at 
least we have been able to get this far with your strong 
support, and I want to underscore our continuing commitment to 
support the process of reform. We look forward to the visit of 
President Thein Sein next week. We are going to engage with him 
closely in New York.
    So this is a region that we believe is the cockpit of the 
global economy. With slowdowns in Europe, the United States 
still climbing out of economic difficulties, we recognize how 
important the maintenance of peace and stability is at this 
time. We acknowledge that recent disputes in the South China 
Sea, the East China Sea, and the Sea of Japan have sent 
reverberations throughout the region.
    Our consistent and systematic diplomacy has been, both in 
public and behind closed doors, that we want to see cooler 
heads to prevail in the current set of challenges.
    The South China Sea, as Senator Webb indicated, is a vital 
throughway for global commerce and energy. Almost half the 
world's merchant tonnage flows through there, about a third by 
value, and over 15 million barrels of oil a day.
    Now if you look at these disputes and tensions, as Senator 
Webb has indicated in greater detail and more elaborately and 
profoundly, the tensions have ebbed and flowed over time. But 
with rare exceptions, countries have chosen peace and 
diplomacy. And so even during this period of the last 30 years 
where they have been accentuated, we must recognize that this 
has also been the best 30 years of peace and prosperity in 
Asia's history. There has been an understanding in capitals 
about how important it is to keep a lid on tensions.
    We view the 2002 ASEAN-China Declaration on the Conduct of 
Parties in the South China Sea as an important effort at 
maintaining peace and stability and sustaining dialogue among 
the key partners. It unequivocally signaled the willingness to 
approach disputes multilaterally.
    I just want to quote quickly, Senator, what Secretary 
Clinton said in her important intervention at the ASEAN 
Regional Forum this year. ``None of us can fail to be concerned 
by the increase in tensions, the uptick in confrontational 
rhetoric, and disagreements over resource exploitation. We have 
seen worrisome instances of economic coercion and the 
problematic use of military and government vessels in 
connection with disputes among fishermen. There have been a 
variety of national measures taken that create friction and 
further complicate efforts to resolve disputes.
    Recent incidents in Scarborough Reef, including 
confrontational behavior like the use of barriers to deny 
access and regional disputes over oil and natural gas 
exploration blocks underscore the need for agreement among all 
parties on rules of the road and the establishment of clear 
procedures for addressing disagreements.
    The United States supports firmly a binding code that is 
based on international law and agreements, including the Law of 
the Sea Convention and the Treaty of Amity and Cooperation, a 
code that creates a rules-based framework for regulating 
conduct in the South China Sea, including preventing and 
resolving disputes. Recent tensions lend further urgency to 
this effort.''
    I want to underscore that we have been involved in a 
sustained interactive process over the course of the last 
several months, involved with every party involved in these 
disputes, to underscore our strategic interests in the peaceful 
handling of these disputes. We are very clear and firm about 
our opposition to the use of coercion, intimidation, and 
threats of force. And we encourage in all instances diplomatic, 
peaceful approaches.
    We have called on parties to clarify and pursue claims 
consistent with international law as reflected in the Law of 
the Sea. As you know, Secretary Clinton has strongly supported, 
as has our government, our ratification of that agreement.
    Our close allies have been clear on recent incidents with 
ASEAN, with China, and others. We are very actively engaged 
currently as we lead into the East Asia Summit and in all our 
multilateral platforms. We have seen signs of renewed diplomacy 
between ASEAN and China on issues associated with the South 
China Sea. We welcome that dialogue, and we think this is the 
appropriate way forward.
    There are many other elements of this that are important. I 
think we recognize the significance of the topic. We want to 
handle it carefully. We have sought to promote dialogue among 
the key partners. We have tried to be clear about our 
principled approach, and we have made crystal clear to all 
involved that the United States is going to continue to play a 
strong central role in the diplomacy and the security 
activities of the Asia-Pacific region for decades to come.
    I will stop here. Thank you very much.
    [The prepared statement of Mr. Campbell follows:]

    Prepared Statement of Assistant Secretary of State Kurt Campbell

    Chairman Webb, members of the subcommittee, thank you for the 
opportunity to testify today on these critically important issues.
    Before I begin, I would like to take this opportunity to thank you, 
Chairman Webb, for your leadership on this issue and for your work to 
enhance our engagement with the Asia-Pacific region, particularly 
Southeast Asia. Your strong voice on this committee and in the Senate 
to draw attention to East Asian and Pacific issues is greatly 
appreciated. You and your subcommittee have played a fundamental role 
in sustaining the rich bipartisan tradition of engaging the Asia-
Pacific and advancing U.S. interests in the region. Working together, 
it is as important as ever to demonstrate without question the enduring 
nature of this bipartisan commitment.
    The United States is and will remain a Pacific power, bound to the 
Asia-Pacific region by virtue of our geography, history, alliances, 
economic ties and people. Much of the history of the 21st century will 
undoubtedly be written in this dynamic region, which today accounts for 
more than half the world's GDP and nearly half of its trade, is a key 
driver of innovation, and houses some of the fastest growing economies 
in the world. The Asia-Pacific holds vast opportunity, but still faces 
tremendous challenges that, if not addressed, will pose significant 
risk to the future of the region and America's interests as well.
    The United States is intensifying its focus on the Asia-Pacific, 
recognizing that greater strategic investment in the region will be 
essential to both seize opportunities and address challenges. We are 
taking steps to strengthen our alliances with Japan, the Republic of 
Korea, Australia, Thailand and the Philippines. We are deepening 
partnerships with new and emerging partners, like Singapore, India, 
Indonesia, New Zealand, Malaysia, and Vietnam and taking steps to 
strengthen unofficial relations with Taiwan. As Secretary Clinton noted 
in her recent visit to Beijing, we are also working tirelessly to build 
a positive, cooperative, and comprehensive relationship with China and 
write a new, constructive answer to the age-old question of what 
happens when an established power and an emerging power meet.
    Beyond our bilateral relationships, a critical evolution in 
American strategy in the Asia-Pacific has been an unprecedented 
commitment to engaging the region's multilateral institutions--
principally, ASEAN, the Pacific Island Forum and APEC--and supporting 
their evolution into more effective, solutions-oriented bodies. We have 
taken systematic steps to elevate our economic statecraft in the region 
to help fuel the U.S. recovery, as exemplified by July's U.S.-ASEAN 
Business Forum, which brought together the largest grouping of U.S. and 
ASEAN governments and business leaders ever to discuss shared 
opportunities. We are expanding our economic ties to the region and 
refocusing our efforts to build a level playing field so that American 
companies can compete and win. In addition, as you know, we have 
embarked upon a comprehensive defense strategy to develop a force 
posture in the region that can better respond to nontraditional 
security threats, protect allies and partners, and ultimately defend 
U.S. national interests. Finally, we remain steadfast in our commitment 
to advance freedom, democracy, and the rule of law. Senator Webb, your 
efforts with respect to Burma have played an essential role in this 
regard. Each element of this strategy is mutually reinforcing and meant 
to positively affect the Asia-Pacific strategic environment and to 
advance peace, prosperity, and security.
    As the United States pivots to the Asia-Pacific region, the recent 
spate of disputes in the South China Sea, the East China Sea, and the 
Sea of Japan are sending reverberations throughout the region, 
threatening instabilities that could undermine U.S. interests.
    Let me begin by noting recent developments in the South China Sea. 
The South China Sea is a vital throughway for global commerce and 
energy. Half the world's merchant tonnage flows through the South China 
Sea and over 15 million barrels of oil per day transited the Strait of 
Malacca last year. We cannot afford to allow disputes in the South 
China Sea to endanger the global economy, our recovery, or regional 
security; diplomatic approaches must prevail.
    Brunei, China, Indonesia, Malaysia, the Philippines, Taiwan, and 
Vietnam each claim sovereignty over parts of the South China Sea, 
including its land features. The parties vary widely in their claims, 
as well as the intensity and manner in which they assert them.
    Despite the fact that tensions in the South China Sea have ebbed 
and flowed for decades, the most important feature of these disputes is 
that, with rare exceptions, countries have chosen the path of peace, 
diplomacy, and shared prosperity to address them. Even following 
heightened tensions in the 1990s, including the events at Mischief Reef 
in 1995, ASEAN and China resolved to reach agreement on a Declaration 
on the Conduct of Parties in the South China Sea. While nonbinding, the 
2002 Declaration was an important milestone, built upon the 1992 ASEAN 
Declaration on the South China Sea and unequivocally signaling a 
willingness among the parties to approach disputes multilaterally. In 
the 2002 Declaration, ASEAN and China committed to respect freedom of 
navigation and over-flight in the South China Sea in accordance with 
international law, as reflected in the 1982 Law of the Sea Convention, 
and to resolve their disputes through peaceful means, without resorting 
to the threat or use of force. They also committed to exercise self-
restraint in the conduct of activities that would complicate or 
escalate disputes and affect peace and stability including steps to 
inhabit presently uninhabited land features.
    Nevertheless, the region entered into a new period of heightened 
tensions beginning in 2007, stemming in part from the combination of an 
increasingly intense demand for natural resources, including 
hydrocarbons, and rapidly improving capabilities to extract resources 
in deep water. Additionally, fishing stocks in coastal and inland areas 
have significantly declined due to overfishing and environmentally 
harmful techniques, pushing fishing fleets further offshore into the 
South China Sea.
    Complex domestic political dynamics in each of these countries are 
also a significant factor in efforts to build lasting and peaceful 
solutions. The separate incidents this year involving the Philippines, 
Vietnam, and China, underscore this deeply complex environment.
    U.S. policy toward the South China Sea has been both consistent and 
well coordinated. Our strategy strives to set a context for peaceful 
approaches to disputes in the region, with the long-term goal of 
supporting a rules-based order, undergirded by agreements and strong 
institutions, that can support the management and, ultimately, 
resolution of the disputes. In order to promote a stable environment in 
the region, the United States has clearly articulated our principles 
and interests in accordance with longstanding policy. As Secretary 
Clinton has made clear, as a Pacific nation and resident power, the 
United States has a national interest in the maintenance of peace and 
stability; respect for international law; unimpeded lawful commerce; 
and freedom of navigation in the South China Sea. The United States 
does not take a position on the competing sovereignty claims over land 
features in the South China Sea, and we continue to encourage all 
parties to take steps to address these disputes diplomatically and in a 
collaborative manner. We oppose the use of coercion, intimidation, 
threats, or force by any claimant to advance its claims. We believe 
that claimants should explore every diplomatic and other peaceful means 
for dispute resolution, including the use of arbitration or other 
international legal mechanisms. In order to decrease the risk of 
misunderstanding and miscalculation, we continue to urge all parties to 
clarify and pursue their territorial and maritime claims in terms 
consistent with international law, including the 1982 Law of the Sea 
Convention.
    For our part, we can strengthen our hand in engaging disputes in 
the South China Sea by joining the Law of the Sea Convention. As the 
Secretary emphasized when she testified before the full committee in 
May, ``[O]ur navigational rights and our ability to challenge other 
countries' behavior should stand on the firmest and most persuasive 
legal footing available, including in critical areas such as the South 
China Sea. . . . [A]s a party to the convention, we would have greater 
credibility in invoking the convention's rules and a greater ability to 
enforce them.''
    Over the past several months, we have closely watched incidents and 
activities by multiple parties that have raised tensions in the region. 
We have maintained close, direct dialogue with the Philippines, 
Vietnam, China, other ASEAN members, and ASEAN as a whole, facilitated 
by our mission and Resident Ambassador to ASEAN located in Jakarta. In 
the past several years, we have substantially increased the level and 
frequency of our engagements with ASEAN which has significantly 
improved our ability to address tensions. We have also sustained 
substantial dialogue with other countries that have critical interests 
in the region, including India, Japan, Australia, Russia, as well as 
the European Union, to explore how we can work together to foster a 
peaceful, stable environment. In multilateral channels, we remain 
committed to advancing a collaborative and diplomatic course of action 
in ASEAN-based meetings, particularly the ASEAN Regional Forum and the 
East Asia Summit.
    We have also coordinated closely with our colleagues at the 
Department of Defense to ensure that our South China Sea diplomacy is 
supported by an effective and well-calibrated defense strategy.
    A consistent and critical element of our approach has been 
exercising U.S. leadership and maintaining public engagement when 
necessary to underscore the importance of peaceful and diplomatic 
approaches to disputes. Most recently, the United States released a 
statement on August 3 which reaffirmed U.S. interests, raised concerns 
about recent incidents, and urged the parties involved to take 
necessary steps to lower tensions. The statement was eagerly welcomed 
by key ASEAN states, contributing to a cooler political environment and 
helping to set the stage for progress on ASEAN-China Code of Conduct 
discussions.
    We support ASEAN and China's efforts to develop an effective Code 
of Conduct, as called for in the 2002 ASEAN-China Declaration. History 
has shown that a region united by rules and norms enjoys greater peace 
and stability, and a Code of Conduct can be an important element of the 
emerging rules-based order in the region. While it is up to the parties 
to agree to the terms of a Code of Conduct, we believe that it should 
be based on the widely accepted and universal principles of the U.N. 
Charter, the international law of the sea, as reflected in the Law of 
the Sea Convention, the Treaty of Amity and Cooperation, and the 2002 
Declaration on Conduct. An effective Code of Conduct would also create 
a rules-based framework for managing and regulating the conduct of 
parties in the South China Sea, including preventing and managing 
disputes.
    We also encourage relevant parties to explore new cooperative 
arrangements for managing the exploitation of resources in the South 
China Sea. For example, as Secretary Clinton discussed at the ASEAN 
Regional Forum this July in Cambodia, this could include equitable 
joint exploration and exploitation arrangements for hydrocarbon 
resources in areas of unresolved claims. Joint exploration would not 
only allow claimants to reap material benefits, but could also help to 
build the habits of cooperation and collaboration that will ultimately 
be needed to resolve these disputes.
    I would now like to say a word about other maritime disputes that 
are currently roiling the region, different but equally complex 
situations, where territorial disputes over the Senkaku Islands and 
Liancourt Rocks (known to the Japanese as Takeshima, and Korea as 
Dokdo) have flared up in recent months. In both cases, as with the 
South China Sea disputes, the United States has reiterated its long-
held position that it does not take a position on the ultimate 
sovereignty of the land features in question, and that the claimants 
should address their differences peacefully. The United States has an 
interest in peaceful relations among all of our Northeast Asian 
partners and allies, and has nothing to gain from seeing the situation 
escalate.
    Given the intense level of commerce and people-to-people ties among 
these three great Northeast Asian nations of China, Japan, and the 
Republic of Korea, and the extraordinary potential costs of conflict, 
we are hopeful that all involved will make sincere efforts to settle 
their disputes amicably. These economies account for a fifth of global 
GDP and if not appropriately managed these tensions can pose risk to 
the necessary foundation of global economic recovery: security and 
stability. As Secretary Clinton said when meeting with the APEC nations 
in Vladivostok this month, now is the time for everyone to make efforts 
to reduce tensions and strengthen diplomatic involvement. We have made 
this point both publicly and privately to all of the countries 
involved.
    The United States has no better or closer allies than Japan and the 
Republic of Korea (ROK). For more than half a century, our alliances 
with both countries have undergirded peace and stability in the Asia-
Pacific and have provided a context for regional and global economic 
growth and prosperity. As the United States increases its strategic 
investments in the Asia-Pacific, our close and enduring ties with the 
ROK and Japan will remain the fulcrum of this pivot, and tensions 
between our closest allies damage our strategic interests.
    Over the past several years, the U.S.-Japan-ROK trilateral 
relationship has become an increasingly important engine for promoting 
our mutual national security goals both in the region and around the 
world. From our cooperative efforts to put a stop to North Korea's 
nuclear ambitions and promote the human rights of its people, to our 
coordinated actions to address Iran's nuclear program, to our efforts 
to address maritime piracy off the Horn of Africa, to our shared work 
to promote democracy and good governance in Burma and around the world, 
the United States, Japan, and South Korea enjoy an active and growing 
partnership on a global scale.
    A key pillar of this trilateral partnership is the ROK-Japan 
relationship. The United States welcomes both countries' efforts to 
strengthen their political, economic, security, and people-to-people 
ties, as well as to address in a constructive and future-oriented 
manner the differences between them. As we enter the second decade of 
the Asia-Pacific century, we have every hope and expectation--and we 
will do what is necessary to ensure--that the ties and cooperation 
between and among the United States, Japan, and the ROK will continue 
to strengthen in every way.
    A stable and productive Japan-China relationship is also in the 
strategic interest of the United States and the region as a whole. We 
have been concerned by the rising tensions in Sino-Japanese relations 
over the Senkaku Islands, the violence of anti-Japanese protests in 
China, and the potential for miscalculation or accidents in the East 
China Sea that could lead to even greater tension. We have consistently 
urged both sides to take steps to defuse the situation and resolve 
their differences peacefully.
    In conclusion, Mr. Chairman, I would underscore that the United 
States is deeply engaged in the region--diplomatically, economically, 
and militarily--all of which support our interests and advance peaceful 
progress.
    Thank you for giving me the opportunity to testify today. I am 
pleased to answer your questions.

    Senator Webb. Thank you very much, Secretary Campbell. Your 
full written statement will be included in the record at this 
point. And also to reiterate that Senator Inhofe's opening 
statement will be in the record immediately at the end of my 
opening remarks.
    Let me begin first by thanking you for appearing here 
today. This is not only a very busy time in terms of our 
foreign policy, but this is a delicate ongoing subject. And I 
think it is one that we need to hear more about, but also I 
would like to express my own appreciation for the work that has 
been undertaken by people in the State Department, including 
Secretary of State Clinton over the past 2 months to try to 
resolve some of these issues and to continue the type of 
dialogue that we need.
    With respect to--well, no, let me just agree with you. 
Yesterday was a really incredible day. And I have said many 
times that that came about, in my view, largely because of the 
courage of two people. One is Aung San Suu Kyi, who we 
recognized, and the other is someone who I was glad to hear you 
mention, and I was very glad to hear her mentioned more than 
once yesterday, and that is President Thein Sein. Two people of 
completely different backgrounds in every sense of the word, 
who came together after 2010 and showed the type of leadership 
that the only way that this country could move forward the way 
that it has is for those two have shown the type of courage and 
leadership that they showed. So he's coming--Thein Sein is 
coming next week. I hope that the leadership in our country can 
help to recognize through the contributions that he made, 
working alongside Aung San Suu Kyi to bring this moment about.
    And since I made such a long opening statement, Senator 
Lugar, I am going to yield to you for your questions.
    Senator Lugar. Thank you. Let me just start, Mr. Secretary, 
with this basic question. Since 2010, the United States 
repeatedly stated at ASEAN forums and elsewhere that freedom of 
navigation and peaceful settlement of disputes in the South 
China Sea is a U.S. interest. Yet, in the intervening time, 
disputes seem no closer to resolution. In fact, there could be 
an argument there appear to be even more of them being 
articulated by the parties.
    So I would ask, is the position we enunciated in 2010 
sufficient? And what other leverage or role do you see as 
advisable for the United States to take now? And would this be 
done at the current summit as planned or through other forums?
    Mr. Campbell. Thank you very much, Senator. Let me try to 
answer that. I think as you clearly articulated, Secretary 
Clinton laid out in 2010 our position at the ASEAN Regional 
Forum in Vietnam. Last year in Bali, that position was further 
articulated. And this year she reiterated our position, but 
also elaborated on a couple of key variables, which we think 
are important.
    At the basis of everything that we have done, however, are 
those specific principles that you underscore: freedom of 
navigation and the insistence on the peaceful resolution of 
disputes.
    I would simply say that, in fact, the disputes that you 
refer to, Senator, have gone on for decades. Some of them get a 
lot of attention. Others do not. Some countries have been very 
vocal about their concerns. Others have been less so. We 
believe a clear enunciation of our position has been helpful in 
encouraging the parties toward a dialogue, and we will continue 
to stress our interest in seeing progress toward a Code of 
Conduct.
    These issues are now discussed at the ASEAN Regional Forum 
and the East Asia Summit in a way that they were not just a few 
years ago. Secretary Clinton just got back from a long trip 
that included stops in Southeast Asia, and she has met 
virtually every ASEAN leader in the last 3 or 4 weeks. And we 
have heard the same thing, that a strong, steady, persistent 
role of the United States is in the interest of ASEAN.
    They have encouraged us to engage on these issues, but to 
do it carefully. And frankly, they believe that in the current 
environment it will be important for ASEAN to play a critical 
role in diplomacy. We support that effort as well.
    I think we have a strong foundation, and we need to make 
sure that we articulate it and that our actions are animated by 
those overall principles, Senator.
    Senator Lugar. Well, I think it is an important--it is in 
the historical context that you mention these disputes have 
been there for quite a while. One thing that is different is 
the United States much more intense participation in ASEAN, and 
the fact that we have literally been out there, and you and 
others have been visiting the countries intensively so that 
that interest is not superficial. You are on the ground. And 
that has certainly fortified the countries that are involved, 
and may have led also to many visits by their Foreign Ministers 
and others to the United States, who have given new hope.
    I have tried to encourage Members of Congress to become 
much more vocal and interested in all this. But I think your 
statement essentially is that you have a policy enunciated in 
2010, and it still holds. It is just that all the activity now 
and all the actors are interacting with us are much more vocal 
and much more obvious.
    Let me center on a specific country, and that is, is there 
a common understanding now of the United States obligations 
under the United States-Philippine Mutual Defense Treaty in 
Manila and in Washington? And how do these understandings 
relate to the South China Sea? And are we perfectly clear on 
this both in our dialogue with the Philippines as well as 
ourselves?
    When President Aquino came to the United States recently, 
it was obvious from his conversation that he was much more 
intensively interested in Subic Bay and in a lot of other 
things that have been rather dormant or off the charts for 
quite a while. There was a revitalization of our overall 
Department of Defense in the Philippines in a way we had not 
seen for quite a while. Can you relate the Philippine situation 
to the ASEAN overall?
    Mr. Campbell. I will. Thank you, Senator Lugar. Let me just 
add one other point to the previous discussion, which I think 
is important. Many of the incidents that we saw over the past 
several decades have involved fishing issues. But in a series 
of op-ed pieces that Senator Webb and others have written over 
the last several years, obviously the new dimension is 
resources. These are all countries that import an enormous 
share of their hydrocarbons, and they look at studies and other 
kinds of research that suggest in many of these areas, there 
may be large reservoirs of natural gas, oil, and petroleum.
    One of the things that Secretary Clinton has brought up in 
many of our discussions is whether it is possible to advance 
agreements, understandings, or contracts for exploration and 
exploitation of natural resources in a situation in which 
sovereignty is unresolved.
    Now that is very difficult, very challenging. We recognize 
that. It has been done between countries in Southeast Asia 
before, and we are interested to see whether that model can be 
applied in other circumstances. There is some wariness 
understandably, but clearly that is one potential for the kind 
of creative diplomacy that Senator Webb and you have called for 
in the past.
    Specifically, on the Philippines, first of all, let me 
thank you for your strong support of this relationship. I 
believe we are entering a period of renaissance with the 
Philippines. I believe that this is a partnership that has not 
received enough attention for decades. And I am thrilled to see 
renewed support across the board, for people-to-people, 
economic, and commercial ties. We are strongly involved in 
efforts to tackle corruption, to promote trade, education, you 
name it.
    This is very important for the United States, and there is 
a critical defense component to it that we are working on in 
terms of our strategic dialogues. More will be clear in the 
months and years to come. This is a country that we share a 
unique history with and a very strong security alliance.
    Secretary Clinton has stated our alliance has kept both of 
our countries secure for more than 60 years, and it has been a 
bulwark of peace and stability in Asia. Our alliance is rooted 
not just in a deep history of shared democratic values, but in 
a wide range of mutual concerns.
    Now we stand by and fully honor our MDT commitments, and we 
have taken steps in recent months to significantly strengthen 
our bilateral relationship across the board through many new 
dialogues and high-level diplomacy. We were thrilled with the 
visit of President Aquino.
    We are cooperating much more effectively on maritime domain 
awareness. We are shifting some of our military collaboration, 
which in the past has been primarily involved in critical 
issues in Mindanao, and we are focused more on naval 
coordination and cooperation. We have recently inaugurated the 
National Coast Watch System, and we are looking to articulate a 
number of new areas for diplomacy. Behind the scenes, our 
diplomacy with the Philippines in the last several months has 
been extraordinarily intense, and we will continue with that 
process.
    We have seen in recent weeks closer dialogue and 
interaction between the Philippines and China. We support that 
and we want that to continue.
    Senator Lugar. Thank you.
    Senator Webb. Thank you, Senator Lugar.
    Secretary Campbell, I mentioned in my opening statement the 
Chinese Government having established a prefectural level of 
government which they call Sansha on Woody Island, in which 
they have appointed 45 legislators, a standing committee, a 
mayor, a vice mayor, and claimed the jurisdiction to more than 
200 islets or 2 million square kilometers of water.
    Two questions just to clarify administration policy. First, 
did the State Department have any advance warning that this 
prefecture would be established?
    Mr. Campbell. Senator, to the best of my knowledge, the 
answer to that is ``No.'' Even though some have suggested that 
this was established long ago, the first articulation of it in 
the spring was in the media, and the military dimension in late 
July, early August was also unanticipated.
    I think as you know, the Department of State, in a policy 
carefully coordinated with the White House and the Defense 
Department, issued a statement on August 3 that reaffirmed our 
interest. It raised concerns with this and other activities, 
and it urged all parties to lower tensions.
    I will say, Senator, that that statement has been broadly 
welcomed, oftentimes quietly by ASEAN interlocutors. We believe 
that any steps that introduce a military dimension to these 
very complex territorial matters is unhelpful.
    Senator Webb. Thank you. And for the record, let me say 
that I got the same answer from Admiral Locklear, commander in 
chief of PACOM, during an open line telephone conversation on 
July 28. He had just been in China and had no advance warning 
that this was going to take place.
    What is the administration position on the creation of this 
prefectural level government? Would you consider this to be an 
escalation from China's past actions in terms of asserting 
territorial claims?
    Mr. Campbell. I would say, Senator, that the statement on
 August 3 stands and speaks for itself. We have made clear to 
all parties to refrain from provocative actions. Some of these 
issues are extraordinarily hard to deal with in this 
environment given heightened nationalism and swirling 
demonstrations. We want cooler heads to prevail, and we want 
the action to shift from military interactions to the field of 
diplomacy.
    Senator Webb. Thank you. In 2004, the Bush administration 
stated that the U.S.-Japan Security Treaty obligations extended 
to the Senkakus. Deputy Secretary Armitage made a comment, 
``There is no question for the United States that the Japan-
U.S. Security Treaty obligation extends to the Senkakus.'' 
Secretary Clinton, as I mentioned in my opening comments, 
reiterated this position in 2010. I assume this is still our 
official position on the U.S.-Japan Security Treaty.
    Mr. Campbell. Yes, Senator. I believe the first time this 
was articulated as U.S. position was actually in 1997, much 
more forcefully, clearly, and firmly, by Deputy Secretary 
Armitage, by Secretary Clinton again in 2010, and 3 days ago by 
Secretary Panetta in Tokyo.
    Senator Webb. Last week, the Japanese Government announced 
its intention to purchase land on the Senkaku Islands. And 
again, as I mentioned in my opening statement, I think there 
has been some misinterpretation internationally about what 
their intention was as opposed to sovereignty, administration, 
and land ownership on top of something.
    Has the administration given a view on the legal impact of 
this type of a purchase in whether it actually affects 
sovereignty?
    Mr. Campbell. Senator, we have not. We have stated very
 clearly that we want this issue to be resolved peacefully 
through dialogue between Japan and China. Secretary Panetta and 
Secretary Clinton have stated this very clearly. We are 
concerned, as you indicated, by recent demonstrations, and 
frankly by the potential for the partnership between Japan and 
China to fray substantially in this environment. That is not in 
our strategic interest, and clearly would undermine peace and 
stability in the Asia-Pacific region as a whole. We very much 
want a process of reengagement dialogue to continue and to 
build between Tokyo and Beijing.
    Our position is clear. We do not take a position on the 
ultimate sovereignty of these islands. We do acknowledge 
clearly through the process that you have set out, Senator, 
that Japan maintains effective administrative control. And 
third, that as such, the Senkaku Islands fall clearly under 
article 5 of the Security Treaty.
    But in the current environment, we want to focus more on 
issues associated with the maintenance of peace and stability, 
and less on the particular details of this very complex and 
challenging matter.
    Senator Webb. Does the administration have any official 
indication from China that it recognizes the sovereignty of 
Japan over the Ryukyus?
    Mr. Campbell. No.
    Senator Webb. With respect to the Chinese National Offshore 
Oil Corporation's open bidding on oil blocks that are generally 
recognized to fall within Vietnam's Exclusive Economic Zone, 
and actually some of them, as I mentioned in my opening 
statement, overlap with oil blocks that Vietnam itself is 
developing, some of them in partnership with American farms. 
Has the administration expressed any concerns over this 
attempt? Do we have a position on it?
    Mr. Campbell. As you well understand, Senator, it is a very 
complex matter, and let me try to state clearly a few facts.
    As you know, the United States does not have state-owned 
oil companies. And as private firms in the United States, 
energy companies have to make their own decisions based on 
their own commercial interests. We oppose any efforts at 
political, economic, or military harassment or coercion of 
international energy firms.
    Secretary Clinton has stated clearly that we support 
equitable joint exploration and exploration in areas of 
unresolved territorial sovereignty. This set of circumstances 
also involves Vietnam's new maritime law, and we are assessing 
how this new maritime law impacts our own national interests.
    We recognize that there is a very delicate set of issues 
involved here. And we have encouraged clear communication 
between Vietnam and China on these matters.
    Senator Webb. Well, just to be absolutely clear, and there 
is little in your statement that I would disagree with, we do 
support the validity of internationally accepted Exclusive 
Economic Zones, those that are set out under basically agreed-
upon international law.
    Mr. Campbell. That is true, Senator. But there are elements 
of the establishment of those parameters that require a level 
of knowledge of legal history and precedence that frankly I do 
not possess. Those are some of the issues that are set out in 
the Law of the Sea. That is one of the reasons why we think 
that this is such an important instrument for dealing with 
these matters, and one of the reasons why we would like to see 
efforts toward a Code of Conduct.
    Senator Webb. Assuming that the Exclusive Economic Zones 
that we are speaking of are recognized under generally accepted 
principles of international law, we would, I assume, have some 
difficulty with the recent activities of China. I am not asking 
for an answer, but I would appreciate a statement of the 
position of the State Department perhaps for the record.
    Mr. Campbell. All I would say, Senator, is Secretary 
Clinton's statement at the ASEAN Regional Forum and our August 
3 statement made very clear that activities that interrupt or 
raise concerns about legitimate commerce are antithetical to 
the maintenance of peace and stability in the South China Sea 
and, by extension, the Asia-Pacific region.
    Senator Webb. Thank you.
    Senator.
    Senator Lugar. Thank you, Mr. Chairman. I just wanted to 
ask a question about Vietnam. The delegation that came to visit 
me a while back indicated in their judgment, that Chinese 
claims in the South China Sea seem to extend almost, if not to 
their coast, that there was no area that appeared to be theirs. 
This was a group of people in their foreign ministry perhaps 
who were not specifically versed on the questions we are 
discussing today.
    But how would you describe the Vietnam plight as you have 
talked to those leaders? How do they take a look at it?
    Mr. Campbell. Well, Senator, we have had hundreds of hours 
of conversations, interactions with all the key players. I have 
been struck by a certain quality to all of the interactions and 
a commonality, that in private, the diplomats of all of these 
nations indicate that they are under enormous pressure, that 
there are huge domestic issues that they are dealing with. All 
feel on the defensive, and all feel that they are responding to 
activities that have been driven elsewhere. Many feel that they 
do not have a full picture of what is going on, and all are 
concerned.
    In that environment, we think the most important role the 
United States can play is to urge everyone to be cautious, to 
stand down, and to shift the focus back to venues where 
diplomacy and dialogue in a multilateral forum is the order of 
the day. That set of interactions would apply to Vietnam as 
well.
    Senator Lugar. Well, is the Vietnam situation one in which 
this diplomacy almost inevitably would have to be international 
or multinational? In other words, if the Vietnamese were to 
have dialogue with the Chinese, they would appear to be at a 
disadvantage just in terms of the size of the parties that are 
there quite apart from the number of ships or other devices. So 
what hope would there be for a country like this, with respect 
to diplomacy?
    Mr. Campbell. Thank you, Senator Lugar. I would simply 
point out that in Senator Webb's opening statement, he did go 
through all the areas where we have lingering problems that 
have persisted for decades. But the truth is there are also 
areas where we have had very successful, very careful, and very 
quiet diplomacy on maritime border issues between other 
countries in Southeast Asia. There is precedent for being able 
to make adjustments, and to ensure that redlines and other 
concerns are sensitized.
    In the current environment, some of these issues are 
extraordinarily difficult to solve. They are probably best 
managed for a period of time, and our particular role in the 
current set of circumstances is to reestablish dialogue, 
rebuild trust, and to remind everyone of the larger endeavor at 
work here. The world cannot afford a crisis in Asia that would 
have untold consequences for our economy, for the economies of 
Asia and Europe and the rest of the world.
    It is a moment where great care is needed. That means 
rapid, fast movements are to be discouraged. Careful, 
extraordinarily well-thought-out approaches are the order of 
the day.
    Senator Lugar. Before I ask my last question, I just want 
to note that possibly this will be the final hearing that 
Senator Webb will chair. And I just want to add my voice to 
many who have pointed out how his leadership in this area, as 
well as on the full committee, has been remarkable, exemplary, 
and we have appreciated it very much.
    Having said that, let me ask the final question, and that 
is, essentially what risks are there during all of these 
negotiations for American ships, American craft that are in the 
area, presumably on normal missions, commercial or military as 
the case may be. While the negotiations are proceeding, are we 
likely to get into harm's way without knowing it, or how would 
you describe the tactical situation for our craft?
    Mr. Campbell. Thank you. We have for decades been very 
active in our naval activities and our overflight activities 
across Asia, and that includes in the South China Sea. Those 
activities will continue, and they are part of a global policy 
to support the maintenance of freedom of navigation, which is 
at the core of our strategic interests in the South China Sea 
and Asia as a whole.
    I believe that all players recognize the importance of 
freedom of navigation and the freedom of the seas. We have seen 
incidents in the past that have involved tensions between our 
vessels and the vessels of the People's Republic of China. One 
of the greatest challenges we face in Asia is the risk of 
inadvertence or accidents--local commanders, things operating 
too closely in proximity. That is one of the reasons why we are 
seeking much greater dialogue and discussion.
    Institutions like the Incidents at Sea Agreement that we 
maintained with the former Soviet Union. We have a similar 
dialogue with China, but we would like that to be amplified. We 
need more interactions that would prevent misunderstandings or 
accidents, and that is a critical component of the 21st century 
relationship that the United States and China are building.
    We are going to be operating much more regularly in 
proximity. Maintaining that peace and stability which we all 
recognize is the heart and blood of the global economy, is 
increasingly in the interest of not just the United States, but 
China as well.
    Senator Lugar. Thank you again for your important 
testimony.
    Mr. Campbell. Thank you very much, Senator.
    Senator Webb. Thank you, Senator Lugar, and thank you for 
those comments as well. I mean, you are listening to someone 
who is one of the most revered members of this committee in the 
history of the Senate, and whose reputation was established in 
a very great way before I ever got here.
    Thank you, sir, for all of the work you have done for our 
country.
    Secretary Campbell, I am going to just seize for a moment 
on something that you said because I think it is the key reason 
that I asked to have this hearing. And that is that it is very 
important that we take care in the way that we address these 
issues in East Asia, and very aware of the potential volatility 
in this region. And I also think that it is important that we 
communicate this concern very clearly to the Government of 
China because it is the activities that have been taking place 
over the last 2 years particularly that have caused us the kind 
of concern that brought about this hearing, particularly the 
situation with the establishment of this prefectural level 
government and the inclusion of a military garrison.
    They are just beyond the normal debates about sovereignty, 
and the other issues that we would discuss if we go in other 
places around the Pacific rim. It is really a step that 
requires us to have some form and continuing response. And you 
mentioned the August 3 statement. I thought that was a very 
useful statement for us.
    But I just think it is so important that we communicate to 
China on a number of fronts that it is in every country's 
interest in this region, including theirs, that we try to work 
to find multilateral solutions. And that includes other areas 
that we have worked on since I have been on the committee, such 
as the Mekong River, by the way, where as you well know, we 
have 70 million people at risk at the lower end of the Mekong 
River because of decisions that had been made up river on 
hydroelectric dams on the main stem. And China does not 
recognize downstream water rights, and it will not enter into 
multilateral discussions about the health of the Mekong system.
    So the more that we can do our part to show the validity of 
the multilateral process and to encourage all of the countries 
in the region to understand that this is the best way for it, 
the better off we will be.
    Senator Risch.
    Senator Risch. No questions at this time.
    Senator Webb. OK. Secretary Campbell, thank you very much 
for coming today. This has been, I think, a very useful hearing 
for all of us.
    I have one point that I want to make sure we get 
clarification on from you, and that is the question about the 
administration position with respect to these overlapping 
grants, oil blocks, and what under international--our 
recognition of international law, what our position is on that. 
They could potentially affect ongoing CFIUS review of Nexen or 
a Canadian firm. But more importantly, I would like to 
understand more fully what the administration position is on 
that.
    Thank you very much.
    Mr. Campbell. All right, thank you. I will get the answer 
to you, Senator.
    [The submitted written response from Assistant Secretary 
Campbell to the question above follows:]

    The administration's position on territorial disputes and 
sovereignty issues has been clearly stated by Secretary Clinton on a 
number of occasions, including in her discussions with China, Vietnam, 
ASEAN members, and other countries in the region. The United States has 
a national interest in the maintenance of peace and stability, respect 
for international law, unimpeded lawful commerce, and freedom of 
navigation in the South China Sea. The United States opposes the use of 
coercion, intimidation, threats, or force by any claimant to advance 
its claims. The policy of the United States is not to take sides on 
competing claims over land features in the South China Sea. We 
encourage all parties to pursue their territorial claims and 
accompanying rights to maritime space in accordance with international 
law, including as reflected in the 1982 Law of the Sea Convention. The 
United States calls on all parties to clarify their claims in the South 
China Sea in terms consistent with customary international law, 
including as reflected in the Law of the Sea Convention, and believes 
that the parties should exercise self-restraint in the conduct of 
activities that would complicate or escalate disputes and affect peace 
and stability. We continue to encourage all parties to take steps to 
manage their differences in a peaceful and constructive manner.

    Senator Webb. Thank you. And this hearing is closed.
    [Whereupon, at 3:10 p.m., the hearing was adjourned.]
                              ----------                              

              Additional Material Submitted for the Record

  Response of Assistant Secretary Kurt Campbell to Question Submitted 
                       by Senator James M. Inhofe

    Question. The tension between Japan and China over the Diaoyutai/
Senkaku 
Islands in the East China Sea is escalating. President Ma of Taiwan 
recently proposed an ``East China Sea Peace Initiative,'' calling on 
all parties concerned to show restraint, set aside controversies, and 
settle the dispute in a peaceful manner.

   Please comment on this initiative. Specifically, does the 
        administration welcome such an initiative?

    Answer. On August 5, President Ma Ying-jeou proposed an East China 
Sea Peace Initiative, reiterating Taiwan's territorial claims to the 
Senkaku Islands and calling on all parties to resolve disputes 
peacefully based on the United Nations Charter and relevant provisions 
in international law.
    U.S. policy on the Senkaku Islands is longstanding and has not 
changed. The United States does not take a position on the question of 
the ultimate sovereignty of the Senkaku Islands. We expect the 
claimants to the Senkakus to resolve the issue through peaceful means 
and among themselves. We welcome any collaborative and diplomatic 
solution that resolves this issue without coercion, without 
intimidation, without threats, and without the use of force.

                                  
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