MGT 618
“Tiny Islands, Big Trouble”
Barry Bland
California Intercontinental University
MGT 618 – International Business
Overview
It is no surprise that the South China Sea has brought nations to the brink of war. The
bone of contention is over the Spratly, Paracel, and the Pinnacle Islands and two submerged
ridges and banks. “Otherwise called the Macclesfield bank and Scarborough Shoal respectively”
(Griffin and Pustay, 2015). This waterway is a vital lifeline in international commerce, primarily
because it provides one-tenth of the world's commercial fishing. The size of this waterway stems
from the straits of Taiwan through the channels of Malacca. “Brunei, China, Japan, Malaysia,
Taiwan, the Philippines, and Vietnam all claim the islands and reefs belong to them” (Griffin
and Pustay, 2015). Without some form of resolution, trade relations bound to suffer, and possible
political conflicts may arise. “The disputed land mass is approximately ten square miles of land,
covering about 1.4 million square miles of the South China Sea” (Griffin and Pustay, 2015).
Although the size of the Island is small, it misjudges its economic, strategic, and political
significance. “Under the 1982 United Nations Convention on the Law of the Sea (UNCLOS), a
nation’s territorial waters consist of those within 12 nautical miles of its coastal shores. These
territorial waters are part of its sovereign territory, although foreign vessels permitted innocent
passage through them” (Griffin and Pustay, 2015). The UNCLOS also states that a sovereign
nation may operate at least two hundred nautical miles from its coastal shores, and the grant is
known as the exclusive economic zone (EEZ). The EEZ also mandates that a sovereign nation
may have no control of natural resources like rocks (primarily because they cannot sustain
, human life or habitation), under Article 121 (3) of UNICLOS. Interestingly enough, all the
nations at loggerheads, do not necessarily meet the requirement. However, any sovereign nation
may control all other resources in the exclusive economic zone (EEZ).
The Paracel Islands were under French control as part of its Indochina territory at one
point. However, the French handed the Islands over to South Vietnam in 1954. The Chinese navy
took ownership of Vietnam in 1974. Chinese aggression is evident in its dealings with Vietnam.
In 2012, the Vietnamese National Assembly levied its claims over the Paracel and Spratly Islands
through the United Nations, and swiftly those claims were thwarted by China claiming
"indisputable sovereignty" over the above-described Islands. In late September 2012, the tension
between China and Vietnam escalated, leading to severe and dangerous events. The Vietnamese
government claimed that the Chinese navy assaulted its fishermen who took refuge on the
Islands as a result of bad weather. Besides, the Vietnamese government also wanted the United
Nations to intervene in stopping one CNOOC oil company, which a Chinese government-
operated company, from conducting drilling activities on the above-described Islands. This paper
will discuss in detail, issues, and claims of the Pinnacle Islands with the parties involved. Also,
this paper will examine available conflict resolutions, political risks, and possible risk reduction
or elimination, types of risk companies, may potentially face.
Pinnacle Island
Most of the aggression over the small islands have come from China. In recent years, the
Chinese Communist Party has boycotted Japanese goods as a result of over the disputed islands.
In 2012, the Chinese government sent several warships to guard the Pinnacle islands. It wanted
to send a message to the disputing nations because of its newly elected communist leaders, a
show of force, indicating that the old guards are gone, and the guards are here to stay for good.
“Small islands can indeed have big long-term geopolitical consequences. With a new Cold War
perhaps on the horizon, these ongoing disputes may still serve the U.S. interests in balancing the
“Tiny Islands, Big Trouble”
Barry Bland
California Intercontinental University
MGT 618 – International Business
Overview
It is no surprise that the South China Sea has brought nations to the brink of war. The
bone of contention is over the Spratly, Paracel, and the Pinnacle Islands and two submerged
ridges and banks. “Otherwise called the Macclesfield bank and Scarborough Shoal respectively”
(Griffin and Pustay, 2015). This waterway is a vital lifeline in international commerce, primarily
because it provides one-tenth of the world's commercial fishing. The size of this waterway stems
from the straits of Taiwan through the channels of Malacca. “Brunei, China, Japan, Malaysia,
Taiwan, the Philippines, and Vietnam all claim the islands and reefs belong to them” (Griffin
and Pustay, 2015). Without some form of resolution, trade relations bound to suffer, and possible
political conflicts may arise. “The disputed land mass is approximately ten square miles of land,
covering about 1.4 million square miles of the South China Sea” (Griffin and Pustay, 2015).
Although the size of the Island is small, it misjudges its economic, strategic, and political
significance. “Under the 1982 United Nations Convention on the Law of the Sea (UNCLOS), a
nation’s territorial waters consist of those within 12 nautical miles of its coastal shores. These
territorial waters are part of its sovereign territory, although foreign vessels permitted innocent
passage through them” (Griffin and Pustay, 2015). The UNCLOS also states that a sovereign
nation may operate at least two hundred nautical miles from its coastal shores, and the grant is
known as the exclusive economic zone (EEZ). The EEZ also mandates that a sovereign nation
may have no control of natural resources like rocks (primarily because they cannot sustain
, human life or habitation), under Article 121 (3) of UNICLOS. Interestingly enough, all the
nations at loggerheads, do not necessarily meet the requirement. However, any sovereign nation
may control all other resources in the exclusive economic zone (EEZ).
The Paracel Islands were under French control as part of its Indochina territory at one
point. However, the French handed the Islands over to South Vietnam in 1954. The Chinese navy
took ownership of Vietnam in 1974. Chinese aggression is evident in its dealings with Vietnam.
In 2012, the Vietnamese National Assembly levied its claims over the Paracel and Spratly Islands
through the United Nations, and swiftly those claims were thwarted by China claiming
"indisputable sovereignty" over the above-described Islands. In late September 2012, the tension
between China and Vietnam escalated, leading to severe and dangerous events. The Vietnamese
government claimed that the Chinese navy assaulted its fishermen who took refuge on the
Islands as a result of bad weather. Besides, the Vietnamese government also wanted the United
Nations to intervene in stopping one CNOOC oil company, which a Chinese government-
operated company, from conducting drilling activities on the above-described Islands. This paper
will discuss in detail, issues, and claims of the Pinnacle Islands with the parties involved. Also,
this paper will examine available conflict resolutions, political risks, and possible risk reduction
or elimination, types of risk companies, may potentially face.
Pinnacle Island
Most of the aggression over the small islands have come from China. In recent years, the
Chinese Communist Party has boycotted Japanese goods as a result of over the disputed islands.
In 2012, the Chinese government sent several warships to guard the Pinnacle islands. It wanted
to send a message to the disputing nations because of its newly elected communist leaders, a
show of force, indicating that the old guards are gone, and the guards are here to stay for good.
“Small islands can indeed have big long-term geopolitical consequences. With a new Cold War
perhaps on the horizon, these ongoing disputes may still serve the U.S. interests in balancing the
