North Korea has been rattling its sabers once again, even producing some videos that threaten attacks on US forces using "powerful weapons of mass destruction" and show an invasion of Seoul where thousands of American citizens are taken hostage. American senators are already up in arms about how a "major war" is brewing on the Korean peninsula.
But as usual, American lawmakers are completely missing the point. The real war will not be launched by the hungry, demoralized troops of North Korea, but rather the warships of China, Taiwan, the Philippines, Vietnam, Malaysia, Brunei, and Indonesia. And unlike a North Korean invasion that could likely be thwarted in days, a war in the South China Sea would have far bigger implications.
Let us explain.
The South China Sea contains approximately 150 uninhabited islands off the southern coast of China. It is important for two main reasons:
- It is the second most-used sea lane in the world, as it is the shortest sea route between the Middle East and Asia. If there were conflicts in the South China Sea, it would cause half of the world's fleet to detour around Indonesia.
- There are billions of barrels of oil and trillions of cubic feet of natural gas that could be trapped beneath the ocean floor.
Its importance also means that the countries in the area are all vying for a piece of the action, sometimes even leading to armed confrontations: In May of 2011, Chinese patrol boats harassed a Vietnamese oil exploration ship, disrupting a seismic exploration program being done by PetroVietnam.
In a time where big oil and gas deposits are becoming harder to come by, the oil and gas wealth of the South China Sea becomes even more attractive. Unlike North Korea, China is absolutely unafraid to project its economic and military might upon its neighbors.
But the Southeast Asians are no pushovers either – they will take every advantage they can to push China out of their waters.
So isn't it a matter of time before someone takes this game of chicken too far and leads into a full-scale war? But more important, where does this lead for energy investments?
Additional Links and Reads
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