JULY - DECEMBER Strategic Implications of the Possible

JULY - DECEMBER 2007 109

Strategic Implicationsof the Possible Construction

of the Thai Canal/vica Kinder'

Original paperUDC 327:626.1 (593)

Received in December 2007

Oil supplies coming from the Red Sea and the Persian Gulf toSouth East and East Asia are mostly shipped through

the Strait of Malacca. There has been a long-standing idea to dig a canalthrough Thailand's part of the Malay Peninsula, the so-called Thai Canal,which would create a new sea lane of communication. It would allow ships

to move between the Indian and Pacific Oceans without having to passthrough the Strait of Malacca. The Canal would not just relieve pressure

on the Strait in terms of maritime security, but would also cuttransportation costs significantly. Despite the economic advantages,

the possible construction and use of the Thai Canalcould pose certain political and security concerns.

trust, mutual benefit, effectiveness, coordination andequality in negotiation. Maritime security is of par-ticular strategic importance because this is essentiallya maritime region, so the unimpeded transit of goodsis vital for the prosperity of all countries concerned.Inevitably, it requires and will continue to requirecontinued bilateral and multilateral cooperation.

It is expected that in the 21st century two-thirds of the world's population will be concentratedin the western Pacific and East Indian Ocean area,which makes the need for efficient and effective tradeall the more necessary. At present, Asia buys roughlytwo-thirds of all the oil produced in the Persian Gulf,and by 2010 that rate will increase to approximately75 percent.' Oil supplies coming to South East andEast Asia are shipped from ports in the Red Sea orthe Persian Gulf. The sea lanes of communicationthere converge into the Arabian Sea, then passthrough the Gulf of Mannar and curve off the west-ern, southern and southeastern coast of Sri Lanka.This sea lane then turns northeast through the Bayof Bengal towards the Strait of Malacca.

Key words: Thai Canal, transportation, energy, security, cooperation.

1. Introduction

Southeast Asia is a region of strategic impor-tance to many countries from all continents becauseof its huge concentration of industrial, technologi-cal and military power, as well as globally importantsea lanes of communication. There is also a widespectrum of other stake-holders involved, primarilyvarious multinational corporations. Today, theeconomy in the South East Asia region maintains anunprecedented momentum of growth while a frame-work of open, mutually beneficial cooperation be-tween countries is taking shape in various forms. Asa result of enhanced multilateral security dialogueand cooperation, the overall security environmentremains stable. I Although some differences and con-tradiction of interests continue to exist, in generalthe countries ofthe region increasingly share the viewof a new political and security concept of mutual

• Deputy Chief of the Personnel Directorate of the General Staffof the Croatian Armed Forces.

110 CROATIAN INTERNATIONAL RELATIONS REVIEW

This is the most frequently used lane, circlingall the way around the Malay Peninsula. The alter-native lanes passing through Sunda and Lombok areeven longer, adding approximately up to four daysto the journey.

There has been a long-standing idea to dig acanal through Thailand's part of the Malay Penin-sula, the so-called Thai Canal, which would create anew sea lane of communication in South East Asia,similar to the Panama Canal in Central America orthe Suez Canal between Africa and the Middle East.It is also known as the Kra Canal or Kra IsthmusCanal, named after a narrow neck of the Malay Pe-ninsula which was identified as one of the most con-venient sites for a canal.' The canal is projected tobe wide enough to accommodate two ships. It wouldallow ships to move between the Indian and PacificOceans without having to pass through the Strait ofMalacca.

It is estimated that such a canal would shortenthe journey, for example, of a supertanker filled withoil heading for Japan from the Middle East by atleast 700 nautical miles (about five days' sailingtime).' At the same time, it is expected that the ThaiCanal would not just relieve pressure on the StraitofMalacca, but also cut transportation costs by mil-lions of US. dollars, which represents an importantissue for the energy sector.

Despite the unquestionable economic advan-tages, however, history has shown that both thePanama and Suez Canals were sometimes objects ofsome vital political and security concerns with widerinternational implications, occasionally even bring-ing states to the edge of war. Similarly, the possibleconstruction and use of the Thai Canal could alsopose certain political and security concerns.

2. Safety and Security Challengesin the Strait of Malacca

The Strait of Malacca is one of the busiest sealanes of communication in the world, with 30 per-cent of total world trade and almost 80,000 commer-cial ships passing through it each year.' It is esti-mated that one third of the world's trade and half ofthe world's oil supplies pass through the Strait ofMalacca, including some 80 percent of China's andJapan's oil supplies, which makes shipping in theStrait extremely crowded. Oil tanker traffic throughthe Strait of Malacca is projected to grow to 20 mil-lion barrels a day in 2020, compared to 10 millionbarrels a day only five years ago." On the other hand,the Strait is almost 1,000 kilometers long but just 25meters deep at its shallowest point, and it is narrow,presenting the potential for collision (the Philip

Channel, a natural bottleneck near Singapore, is only2,5 km wide).

Non-traditional threats in the region such asterrorism, separatism, extremism, piracy,transnational crimes and arms proliferation are grow-ing rampantly. Its strategic importance makes theStrait of Malacca an extremely attractive target forterrorist groups that are seeking to achieve large-scalepolitical success. For example, if a tanker sank orwere attacked, especially in the narrowest parts ofthe Strait, world trade and energy supplies would beaffected because other ships could be forced to takelong detours, thus holding up shipments for weeks.

Although the primary responsibility for theoverall safety and security in the Strait lies with thelittoral states, i.e. Indonesia, Malaysia and Singapore,a new trend of merging non-traditional threats, inthe sense that international terrorism, extremist forcesand pirates collude with and exploit one another,makes security a common issue to be dealt with byall countries concerned." Also, as the repercussionsof any maritime accident or attack in the Strait ofMalacca could go far beyond the region's bounda-ries, a wider approach in terms of the inclusion ofall interested countries is required not just with re-gard to maritime safety and security in the Strait ofMalacca, but also with regard to any effort aimed atcreating an alternative sea lane of communication,such as the possible construction of the Thai Canal.

3. Plans for Constructingthe Thai Canal through History

As the Malay Peninsula significantly enlargedthe shipping routes around Asia, a canal was pro-posed as early as 1677, when the Thai King Naraithe Great asked the French engineer de Lamar toexplore the possibility of constructing a canal to con-nect Songkhla with Marid, now Myanmar. However,it turned out to be too impractical with the technol-ogy of the time. In 1793 the idea was revived byRama I, the younger brother of King Chakri, whosuggested a canal to better protect the western coastwith military ships. Also in the early 18th century,the British East India Company became interestedin a canal. During the reign of King Rama IV, around1858, England applied for the King's permission todig the canal along the Ranong-Langsuan route,which is the shortest route. The King approved butthe funds ran out before the dig could be completed.In 1863, after Burma became a British colony, Eng-land surveyed the shortest route (with Victoria Pointopposite the Kra estuary as its southernmost point),but came to a standstill after not having enough toolsto dig through the mountain ridge. From 1866-1868,


France - after completing the Suez Canal - negoti-ated to dig the canal across the Malay Peninsula. KingRama IV did not approve for reasons of the King-dom's security. In 1882 the constructor of the SuezCanal, Ferdinand de Lesseps, visited the area but wasnot allowed to explore in detail by the Thai king.Finally, in 1897 Thailand and the British Empireagreed not to build a canal in the Malay Peninsula inorder to protect the regional dominance of the portof Singapore.

In the 20th century the idea was revived sev-eral times, this time moving the preferred route fur-ther to the south of Thailand (to connect Bandon Baynear Surat Thani with Phangnga). One study con-ducted in 1970 indicated that the optimum route isthe Satul-Songkla route. The latest proposed routeis across the Nakhon Si Thammarat and Trang prov-inces. Depending on the route chosen, a canal wouldbe 100-120 km long. It is expected to take up to 10years to complete and cost around 23 billion USD.

4. International Law with Regardto the Construction on and Use

of Artificial Waterways

Under international law, states are free to buildartificial waterways on their territory, including wa-terways that connect two seas and thus shorten thedistance between them (for example, the CorinthCanal built by Greece), and even to shorten the dis-tance between two distant parts of the world. Suchcanals fall under the exclusive jurisdiction of thecountry whose territory is concerned. Of course, sucha general rule does not prevent any country fromdetermining the special legal status of a canal by aninternational agreement, which is usually the casewhen a canal holds particular importance as a wa-terway and there are numerous countries, or at leastsome very influential countries, interested in its con-struction. For example, such circumstances led tothe construction and designation of special legal sta-tus to two very important artificial waterways in theworld - the Suez Canal and the Panama Canal. It isimportant to emphasize, however, that in both casesthere were some specific circumstances that weredecisive in determining special legal status - a canalwas built on a territory of an undeveloped countrythat had no expertise or funds to build a canal on itsown. Under such circumstances, a developed andinfluential country stepped in and used its influenceto enable its capital to obtain a concession and, fi-nally, to take control over the canal thus limiting theexclusive jurisdiction of the host country. On theother hand, an influential country would not justmanage to spread its influence but would also achieve

its particular political goals based on the existenceof a canal and its control over it.

The significant international importance ofsome artificial waterways, as well as the fact thatfreedom of passage through them is guaranteed byinternational agreements, led some to the conclusionthat such freedom of passage is a reflection of com-mon international law which would oblige countriesto respect such a freedom despite the obligationstaken on by the signing of the respective interna-tional agreement. For example, in the 1923 case ofthe ship "Wimbledon," the Permanent Court of In-ternational Justice in issuing its ruling on the free-dom of navigation through the Kiel Canal in Ger-many, basically based its decision on the internationallegal status of the Suez and Panama Canals: "Moreo-ver, they (the Suez and Panama canal regimes) aremerely illustrations of the general opinion accord-ing to which when an artificial waterway connect-ing two open seas has been permanently dedicatedto the use of the whole world, such waterway is as-similated to natural straits in the sense that even thepassage of a belligerent man-of-war does not com-promise the neutrality of the sovereign State underwhose jurisdiction the waters in question lie."! How-ever, such an opinion cannot be accepted becausethere is no rule in contemporary common interna-tional law which would impose such an obligationon any country, unless a country should specificallyobligate itself by signing some international agree-ment or by some kind of unilateral legally bindingact which provides for the full freedom of naviga-tion of other countries' ships, including warships."

It is also possible that international agreementsprevent a state from exercising its right to build acanal on its own territory. On 1 January 1946, anagreement was signed in Singapore between theUnited Kingdom, India and Thailand. By Article 7of that agreement, the Government of Thailandobliged itself not to allow the construction of a ca-nal across the Kra Isthmus, which would connect theGulf of Thailand and the South China Sea. Singa-pore was a British colony at the time. However, theagreement was cancelled in 1954 and Singaporegained its independence in 1965.

5. From Thailand's Perspective

The idea of the Thai Canal is revived with eachnew government that is formed in Thailand, mostlyas a part of efforts to solve economic difficulties inthe country." Common terms of reference includesovereignty over the canal and the utilization of Thailabor and construction materials. II There is an opin-ion among some that Thailand needs a new vision of


belonging to the global economic community bygaining new access to oil and financial resources. 12

It is expected that a canal would not only jump-startthe economy in the country as a whole, but wouldcreate prosperity particularly in the south by intro-ducing a new dynamism along the waterway. Thereis a hope that a canal will turn Thailand into a re-gional commercial and fmancial hub, even if onlyone-fourth of the ships currently passing through theStrait of Malacca used the Thai Canal. 13 Among theopinions in favor of constructing a canal, there is anotion that a canal would finally help Thailand real-ize and exercise its power over the sea because thecountry is on both the Indian and Pacific Oceans.Although such a project should facilitate the ThaiNavy's modernization programs to improve its ex-isting contingent of battleships, frigates and patrolboats, it is questionable whether the country couldafford it without relying on foreign military assist-ance. This also means that the Thai Navy's pivotalrole in providing maritime security both in the Gulfof Thailand and in the Andaman Sea is not very likelyto become a reality without reliance upon some othercountry's navy. While keeping in mind the tradition-ally strong bilateral ties between Thailand and theU.S., it should not come as a surprise if the U.S. Navyplays an important role on both sides of the canal.Of course, that would also bring into question theoverall feasibility of the Thai authorities' declareddesire for sovereignty over a canal.

China has offered Thailand a plan for the con-struction of a canal over ten years, employing roughly30,000 Chinese workers and costing between 20 and25 billion USD, including Chinese port facilities,refineries, warehouses and other infrastructure."Thailand's position with regard to China's offer, how-ever, is still non-committal because its acceptancewould contradict the basic Thai principles for theconstruction of a canal, i.e. no foreign funds andlabor, full control over the canal, etc.

From the internal security point of view, theissue of cutting a country in half by a canal appearsto have many opponents in Thailand. Actually, thereis heated debate across the nation, led primarily bythose who are concerned about the possible loss ofthe southern provinces of Yala, Pattani andNarathiwat to separatists after a geographical divi-sion of the country into two parts. There are occa-sionally even accusations that project supporters re-ceive money from Muslim countries. 15 On the otherhand, many believe that with sufficient economicdevelopment the separatist threat could be effectivelydealt with." Among those in Thailand who opposethe idea of the Thai Canal are local environmental-ists who are concerned about the impact of the canal

on the environment. There is also the issue of thesocial cost of relocating residents, depending on theroute decided upon. 17

For all these reasons the plan for constructingthe Thai Canal has remained in doubt, as in yearspast. 18 Meanwhile, another Thai project has gradu-ally emerged, aimed at making the need for a ThaiCanal obsolete but also intended to reduce transpor-tation costs and security risks for tankers in the Straitof Malacca. It is the idea of building a land bridgebetween the Gulf of Thailand and the Andaman Sea.The total distance would be 220 km and it wouldconsist of a four-lane highway, with 150 m in thecenter to carry railway tracks and pipelines. The ideaalso includes the set-up of a refinery on both sidesof the land bridge. 19 Two oil depots and one refmerywould be built, and a petrochemical industry estab-lished." The construction of a land bridge was actu-ally started in 1993 but as the location of the harborswasn't fixed the highway is currently the only com-pleted part of the project although it does not reachthe sea yet. As planned, the lanes of the highwaywere built 150 m apart to leave space for a railwayand, eventually, also a pipeline. The project, how-ever, has stalled mostly due to environmental con-cerns."

6. From the Perspective of theStrait of Malacca's Littoral States

Although there is no such official position inIndonesia, Malaysia and Singapore, there is strongpolitical opposition in these countries, particularlyin Singapore, to the idea of the possible construc-tion of the Thai Canal because it would inevitablycreate direct competition with the most importantports in the Strait of Malacca area, resulting in sig-nificant economic losses. If the Thai Canal projectdoes proceed, however, there are indications thatIndonesia and Malaysia would express interest ininvesting in the project."

Opposing the plan for constructing the ThaiCanal are particularly strong voices in Indonesia,Malaysia and Singapore that claim that maritimesecurity has vastly improved in the Strait ofMalaccaand that the threat of pirate attacks is no longer seri-ous. In support ofthis position is a network of bilat-eral arrangements between these countries, as wellas some new arrangements of a multilateral naturesuch as the permanent "Strait of Malacca Coordi-nated Patrols" carried out by their navies. More re-cently, these countries also launched a joint air pa-trol arrangement for the Strait ofMalacca, known asthe "Eyes in the Sky" patrols. Under this arrange-ment, surveillance aircrafts from the Strait's littoral


states would patrol the Strait and report any suspi-cious activities to ground enforcement units for fol-low-up response if necessary. The "Eyes in the Sky"patrol is an open arrangement so non-littoral statesconcerned are also welcome to take part. It is alsoargued that digging a canal would be a very expen-sive solution to a problem that doesn't seem that se-vere." There is also an opinion held by some that acanal would not be attractive for container ships,which travel quite fast, but only for slow oil tank-ers." However, the unofficial, prevailing opinion inIndonesia, Malaysia and Singapore is that Thailandwill never be able to build a canal across the MalayPeninsula under its self-proclaimed principles.

Still, according to some estimates, if built theThai Canal would divert half the shipping tonnagenow calling in at Singapore up north to Thailand,which would have a huge and permanent impact onSingapore's economy because its prosperity has al-ways primarily relied on its position as a maritimeport. Despite its relatively small territory and lackof natural resources, Singapore's strategic locationalong major sea lanes of communication has giventhe country a unique economic significance in South-east Asia." Situated at the crossroads of internationalmaritime and air routes, Singapore is the world's larg-est transit shipping port and second largest (afterHong Kong) port for containerized transshipmenttraffic." For these reasons, those who think that Sin-gapore should object if the construction of the canalcommences advocate that Singapore should get a bigstake in the project, in other words, that it shouldeither be offered a part of the project or given sub-stantial compensation. Finally, it must also be takeninto consideration that in Singapore there are invest-ments of more than 7,000 multinational corporationsfrom the U.S., Japan and many European countries,accounting for more than two-thirds of manufactur-ing output and direct export sales in almost all sec-tors of the economy. The economic interests and in-fluence of these multinational corporations shouldnot be underestimated, either in terms of opposingthe possible construction of the Thai Canal or advo-cating such an effort if and when accompanying eco-nomic factors become beneficial for them.

After his retirement, the former MalaysianPrime Minister Mahathir once said that the ThaiCanal would be good for the region, even thoughMalaysia's own port business, particularly in PortKlang, would suffer if it went ahead. Consequently,a counter-project aimed at easing the congestion ofthe Strait of Malacca has been initiated by Malay-sia. Actually, some say that lack of progress on theThai Canal project sped up its initiation. It is theTrans-Peninsula pipeline (TRANSPEN), about 300

kilometers in length, which would cut across Ma-laysia's northern states of Kedah, Perak andKelantan, avoiding Thailand by several kilometersjust below the border. Support facilities for deep-draught tankers at either end are also planned. Themain idea is to bypass the Strait of Malacca and di-vert some 20 per cent of oil flowing through the Strait.At the same time, the project is part of the Malaysiangovernment's effort to develop the country's north-ern region. Agreements for the construction of thepipeline have already been signed by Malaysian, In-donesian and Saudi Arabian companies. The com-pletion of the entire project is planned for 2014.

7. From China's Perspective

China's approach to bilateral and multilateralrelations, as well as to security issues, reflects a newflexibility and sophistication stemming from a de-sire to both protect and promote Chinese economicinterests and enhance China's security." On the otherhand, from the perspective of other Asian countries,making the best of China's development by expand-ing their cooperation with China has become theunanimous choice." China's offer to Thailand toconstruct the Thai Canal partially arises from Chi-na's recognition of other Asian countries' views onits own development in terms of their mutual coop-eration and interest.

According to the World Bank, in 2006 Chinabecame the world's fourth largest economy." At thesame time, China is the second largest consumer ofoil in the world and the third largest importer of oi1.30

As China's economy grows, oil consumption is ex-pected to grow at an average rate of 5.8 percent forthe next 10 years, which means that foreign oil isgradually becoming a center of gravity critical toChina's energy needs, while dependence on secureaccess to energy resources is becoming increasinglyimportant." At present, some 80 percent of China'scrude oil imports come from the Middle East andAfrica, transiting through the Strait of Malacca."Conversely, China has had little success in develop-ing reliable oil pipelines from Russia and CentralAsia. It is expected, therefore, that China will de-pend on the Middle East for the vast bulk of its grow-ing oil imports for the foreseeable future." It is avulnerability that the Chinese President Hu Jintaorefers to as the "Malacca Dilemma," meaning thatChina will for the foreseeable future continue to de-pend heavily on international sea lanes of communi-cation, including the Strait of Malacca, whose vul-nerability is perceived as a geopolitical risk becauseChina's current means of protecting sea lanes arequite limited." There is no urgency on China's part,


however, because its dependency on foreign energysupplies is still at a comparatively low level - be-tween 15 and 18 percent of total energy consump-tion - while output of China's crude oil can ensurenearly half of the oil supply." Still, in terms of plan-ning and working in the mid- and long-term, theChinese offer to Thailand to construct the Thai Ca-nal as an alternate way to ship oil is not surprising."

There is also an opinion among some thatChina wants to bypass the Strait ofMalacca becauseit is considered U.S.-influenced territory. From theChinese perspective, having the Thai Canal builtcould reduce the prospects of a possible U.S. em-bargo or blockade on oil supplies shipped throughthe Strait of Malacca in case of any conflict overTaiwan." Another similar Chinese opinion empha-sizes that the history of capitalism and its spread glo-bally has shown that it is often accompanied by cruelcompetition between states." The bottom line of bothopinions is that any substantial blockade of its for-eign energy supplies and/or trade-dependenteconomy could gravely imperil China.

Meanwhile, a lack of progress and the ques-tionable outcome of the Thai Canal project have ac-celerated China's efforts to conduct several otherprojects of strategic importance for its economy, fore.g. oil pipelines from Sittwe in Myanmar to theChinese Yunnan province, as well as from Gwadarin Pakistan to the Chinese Xinjiang province.

With regard to the U.S. 's concerns about Chi-na's plans to strengthen its maritime capabilities tohelp ensure the safe passage of its resources throughinternational waterways, the Chinese position is thata security boundary is the boundary of one's inter-ests. Wherever China's interests lie, they must befollowed by its respective capabilities to protect thoseinterests, both in regional and global terms. In an erawhen development is a core Chinese national inter-est, China would secure nothing if it did not have astrong navy." However, from the Chinese perspec-tive, a strong navy should not be considered in thetraditional, Western sense of a sea power - as one'sability to control the sea - but rather in the sense ofequality of sea rights and sea power, where the ap-plication of power cannot exceed sea rights. Fromsuch a perspective China's notion of sea power isfundamentally peaceful and its naval build-up is con-fined solely to the role of providing self-defense anddeterrence. The goal of a strong Chinese Navy is toprovide China with the ability to independently standup for its rights on an equal footing with others."

8. From Japan's and SouthKorea's Perspectives

The Japanese and South Korean economiesare heavily dependent on the passage of commercialtraffic through the Strait of Malacca, so transporta-tion costs represent an important issue for their en-ergy sectors and industries in general. Only Japan isover 90 percent dependent on oil imports, and ap-proximately 20 percent of its economy is dependenton foreign trade." By using the Thai Canal, approxi-mately 300,000 USD in crew and fuel costs wouldbe saved on the individual voyage of one oil super-tanker. Consequently, in 1990 Japanese companiesexpressed their readiness to support the constructionof the Thai Canal. 42 Also, the company which con-ducted the Kra Canal study in the mid-90s, i.e. PhuketPass Project Ltd., was partially financed by Japa-nese interests."

9. From India's Perspective

Over a period of several centuries, the IndianOcean was first controlled by Iberian countries andthen by the British Empire which forced India tobecome a British colony due to its failed sea power.In India there is an opinion that even today, if Indiacannot establish an effective national security shieldin the Indian Ocean as its geopolitical zone, then itwill never have a secure future. 44

The sea lanes of communication from the Ara-bian Sea pass through the Gulf of Mannar and curveoff the western, southern and southeastern coast ofSri Lanka. In order to achieve a better strategic posi-tion, India has begun the so-called Sethusamudramproject of deepening and widening the sea belt be-tween its shore and Sri Lanka. The aim is to createan unavoidable bypass that would divert sea trafficcoming from the Middle East through India's ownmaritime waters. The strategic importance of such abypass is related to India's ambitions for becomingthe Indian Ocean's predominant naval power andachieving important leverage in its relations withChina, Japan and the U.S.45

In recent years India has also strengthenedmilitary cooperation with Thailand and Indonesia,particularly through naval exercises focused on en-suring security on sea routes linking the Indian andPacific Oceans. Although India is not party to anysecurity arrangement for the Malacca Strait, the im-mediate purpose of the joint patrols is to preventsmuggling, piracy, drugs and arms trafficking, poach-ing and illegal immigration in the region. Apart fromthe economic value, India recognizes a growing ne-


cessity to ensure the security of the world's ship-ping.

If the Thai Canal were built, all ships destinedfor the Canal would have to pass through the chan-nel between India's Andaman and Nicobar islandchains, which would make that project fully com-plementary with the Sethusamudram project, to thebenefit of India's maritime interests. However, therisk of pollution from oil tankers around the Andamanand Nicobar islands could undermine India's plansto boost tourism there. Although the outcome of theChinese proposal to Thailand for constructing theThai Canal with Chinese funds and labor remainsquestionable, India has already achieved a lot withregard to its leverage with China by commencingthe Sethusamudram project.

10. From the United States'Perspective

Since World War II, the u.s. has been an im-portant political, military and economic stakeholdernot just in South East Asia, but worldwide. As such,the u.s. has enabled much of Asia's free trade byguaranteeing freedom of navigation throughoutAsia's major sea lanes of communication. Duringthat time, no nation has had the naval forces neces-sary to adequately protect its own long-haul com-mercial shipping in the region or the capacity to as-sume the responsibility of protecting the sea in thatpart of the world in general. Not only does it benefitthe u.s. to protect the vital interests of its close Asianallies, particularly Japan and South Korea, but theU.S. is bound by treaty to secure Japanese and SouthKorean sea lanes of communication for transit of theirgoods to market and for the flow of energy resourcesand raw materials." The defining characteristic ofthe current relationship between the U.S. even withother Asian countries, including China, is stronglylinked economies with robust trade.

At the same time, as the world's largest oilconsumer the U.S. is accelerating its realignment ofmilitary deployment to enhance its military capabil-ity in the Asia-Pacific region." Currently, the U.S.Navy's home port at Guam, with logistical supportfrom Diego Garcia or another location with imme-diate access to the Indian Ocean, makes it that mucheasier. By holding frequent joint military exercises,providing military assistance and enhancing coun-ter-terrorism cooperation, the U.S. has also achievedimportant tools for becoming involved in Asia-Pa-cific security affairs." Although the U.S. 's initiativeto deploy the Marine Corps and Special Forces tothe Strait of Malacca in the name of counter-terror-ism and eradicating piracy has suffered a setback due

to the strong opposition of Indonesia and Malaysia,the U.S. - in consideration of its own strategic inter-ests - most probably will not give up easily on theissue in the future." In a wider context, if the ThaiCanal were built the U.S. would gain faster accessfrom Guam to the Persian Gulf. It would also be ofparticular benefit with regard to a military base thatthe U.S. allegedly has been developing in Sri Lanka."

It is highly questionable, however, whether theUSA would in fact gain (or lose) more, perhaps notdirectly but indirectly, because of all the advantagesthe construction of the Thai Canal would bring toChina as a potential strategic rival to the U.S.51 Thereis an opinion among some in the U.S. that the Chi-nese offer to Thailand to construct the Thai Canal isonly part of the wider Chinese so-called "String ofPearls" strategy of forward bases and diplomatic tiesfor its enhanced energy security, from the MiddleEast to South China, as well as part of China's widerand long-term military plans." As a result, China'sinterest in constructing the canal has raised concernsat the Pentagon that its military build-up is not justaimed at the protection of Chinese economic inter-ests, as has been repeatedly stated by Chinese offi-cials, but that it is also aimed at a projection of forceoverseas and undermining the U.S. 's regional domi-nance." From the U.S. 's perspective, the analysis ofChina's military acquisitions and strategic thinkingsuggests that China is generating capabilities not justwith regard to the Taiwan Strait, but also for otherregional contingencies, such as possible conflictsover resources or territory. 54 For example, concernover critical sea lanes for energy imports has beenprompting China to pursue stronger maritime capa-bilities that would help it ensure the safe passage ofresources through international waterways. 55 Thereis an understanding in the U.S. that China's strategyand policy, as well as its strategic behavior, are largelyand will increasingly be affected by its reliance onforeign energy imports. For this reason, the expand-ing military capabilities of the People's LiberationArmy (PLA), from the U.S. 's perspective, could eas-ily become a major factor in changing East Asianmilitary balances, while improvements in China'sstrategic capabilities have ramifications far beyondthe Asia-Pacific region." It has to be clearly noted,however, that China's development of the so-calledstrategic geopolitical "pearls" has so far been non-confrontational, with no evidence of imperial orneocolonial ambition. 57

Within the wider context described above, ifthe Thai Canal were not in the interest of the U.S.because of the strategic benefits it could bring toChina, it is to be expected that bilateral relationsbetween the U.S. and its traditional ally Thailand


could also include (or already include) an "anti-ca-nal" dimension. The U.S. 's efforts against the con-struction of the Thai Canal under Chinese influencealso could be aimed at broadening and deepeningAmerican influence in some other ways that havewide appeal among other key states, particularly theStrait of Malacca's littoral states, i.e. Indonesia,Malaysia and Singapore, that are identified clearlyby the U.S. National Security Strategy as "friendsand allies."

11. Conclusion

Although the possible construction of the ThaiCanal would not produce such a significant shortcutas was the case with the Panama or Suez Canals,there should be no doubt that it would shorten theduration and reduce the costs of maritime transpor-tation of energy resources and raw materials fromthe Indian Ocean to the Pacific Ocean, as well asprovide safer and more secure navigation conditionscompared to those in the Strait of Malacca. How-ever, with the exception of Thailand and indirectlyCambodia, Laos, Myanmar and Vietnam, the Canalwould bring many more economic benefits to thecountries of East Asia than to the countries of SouthEast Asia. For this reason, the Strait of Malacca'slittoral states, particularly Singapore, are cautiousbecause the Canal could severely diminish their im-portance as transit points and thus affect their econo-mies. As all the countries mentioned are membersof the Association of Southeast Asian Nations(ASEAN), the possible construction of the Thai Ca-nal is an issue that should also receive consensusamong all these countries, in the sense that commoneconomic interest for the construction of the ThaiCanal has to be identified, regardless of the particu-lar interest of Thailand.

Although there is no doubt that according tointernational law countries are free to build artifi-cial waterways on their territory, including water-ways that connect two seas and shorten the distancebetween distant parts of the world, maintaining ex-clusive jurisdiction over such waterways, it does notseem very likely that Thailand would take such astep without prior coordination with other ASEANmember states. Simply, the unity of economic effortis too deeply rooted among the ASEAN memberstates. Furthermore, it is unlikely that any unilateralproject with serious economic implications will takeplace while the economy of South East Asia main-tains an unprecedented momentum of growth and theoverall security environment remains stable.

The security, political and international legalimplications ofthe possible construction of the Thai

Canal with another country's funds and labor alsomakes this a project that goes beyond the bilateralrelations of Thailand and any other country. The his-tory of the Panama and Suez Canals shows that de-spite the unquestionable economic advantages of acanal, one country's funding of its construction onthe territory of another country usually leads to thespread of significant influence by the first countryand to the achievement of its particular political andsecurity goals, as well as to the limitation of the hostcountry's sovereignty over the canal which, com-bined, could sooner or later create security and po-litical tensions and instability with wider interna-tional repercussions, sometimes even bringing statesto the edge of war. For these reasons, Thailand'sunimpeded sovereignty over the Canal would be themost appropriate solution, including its authority tocreate regulations with regard to the regime of pas-sage of warships or the possible complete demilita-rization of the canal and adjacent areas, etc.

In terms of Thailand's own internal security,the possible construction of the Thai Canal shouldprimarily meet all concerns raised. Currently, it seemsthat the required level of consensus on internal se-curity issues has still not been reached in Thailand,largely due to continuing debates about whether theCanal would facilitate the separation of southernprovinces or their re-integration with the rest of thecountry. With regard to safety and security risks cur-rently present in the Strait of Malacca that would beeliminated or diminished by the possible construc-tion of the Thai Canal, one of the unquestionableadvantages of the Thai Canal would be the elimina-tion of the threat of piracy. However, in the case ofterrorism or a maritime accident, a canal would byits definition still represent a chokepoint. As the re-percussions of any maritime accident or attack in theStrait of Malacca or in a possible Thai Canal couldgo far beyond the region's boundaries, it would alsorequire continued and concerted multilateral coop-eration.

Primarily because of Thailand's strong eco-nomic ties with other member states of ASEAN, en-gaging in direct bilateral contacts with Thailand withregard to the possible construction of the Thai Canalmay not be a sufficient effort because of all the vari-ous regional implications that such a project brings.With regard to possible further steps by China in re-lation to the Thai Canal project, it has to be notedthat China has already demonstrated a high level offlexibility in its recent relations with other countriesand international organizations, particularly in termsof open and peaceful regionalism that avoids exclud-ing or targeting any third party countries, includingthe U.S. As such, China's approach reflects a new


flexibility and sophistication, either because of theprotection and promotion of Chinese economic in-terests or the enhancement of China's security. Chi-na's initiative with regard to the Thai Canal projecttowards ASEAN within the 10+ 1 format, or togetherwith Japan and South Korea within the 10+3 formatcould be quite a logical move, one that would pro-vide the necessary impetus for breaking the currentstalemate with regard to China's offer to Thailand.

The best way to move things forward couldbe a promotion of economic cooperation and con-sultation based on a "win-win"-strategy, becauseexperience has shown that from the perspective ofother Asian countries, including those of ASEAN,making the best of China's development by expand-ing cooperation with China has already become thesecountries' choice. Although there is currently seri-ous political opposition to the idea of the possibleconstruction of the Thai Canal among the Strait ofMalacca's littoral states, there is still an interest inthese countries to invest in the Thai Canal. Based onthat, it is fair to say that economic factors could verylikely determine whether and when the Thai Canalis actually built. As a consequence of the expecta-tions for significant growth in oil tanker traffic inSouth East Asia by 2020, pluralism and the mutualcompatibility of sea lanes of communication, includ-ing both the Strait of Malacca and the possible ThaiCanal, could become a desirable solution to the prob-lem. Also, within ASEAN there are countries thatindividually have nothing to lose by the possibleconstruction of the Thai Canal, but could benefit from

1 "White Paper - China's National Defense in 2006", Interna-tional Symposium Course - China's Policies and Positions onMajor Security Issues, Beijing, October 15-November 30 2007:College of Defense Studies - National Defense University, Peo-ple's Liberation Army, pp 123.

2 Barnett, T. P. M. (2003), "Asia's Energy Future: The Military-Market Link", pp 5.

3 The Isthmus of Kra is the narrow land-bridge which connectsthe Malay Peninsula with the mainland of Asia. It is named afterthe city Kra Buri, in the Ranong province of Thailand, which islocated at the west side of the narrowest part of the peninsula.To the west of the Isthmus is the Andaman Sea and to the eastis the Gulf of Thailand. The Isthmus of Kra marks the boundarybetween two parts of the mountain chain which stretches fromTibet through all of the Malay Peninsula. The southern part iscalled the Phuket chain and the northern part is the Tenasserimchain, which continues for 400 km until the Three Pagodas Pass.The narrowest part between the estuary of the Kra River and thebay of Sawi near the city Chumphon (Kra Buri lies at the head ofthe Pakchan River estuary) has a width of 44km, and has amaximum altitude of 75m above sea level.

4 By using the Panama Canal, ships sailing between the eastand west coasts of the U.S., which otherwise would be obligedto round Cape Horn in South America, shorten their voyage byabout 15,000 km (8,000 nautical miles). Decreases in distanceof up to 6,500 km (3,500 nautical miles) also are made on voy-

it, because their proximity to the Canal could bringthem a new prosperity. These countries are prima-rily Cambodia, Laos, Myanmar and Vietnam.

Various multinational corporations as impor-tant stakeholders in the South East Asian economy,especially in Singapore, should playa particularlyimportant role in such developments. In the mean-time, alternative projects may fill some gaps in thenetwork of the transportation of energy resources,e.g. the Thai land bridge, TRANSPEN pipeline, someChinese-funded pipelines, etc.

China should engage in cooperative and part-nership efforts not just with the ASEAN countries,but it should also engage in talks with the U.S. Thereis no doubt that the U.S. has been enabling much offree trade in South East Asia for decades, by safe-guarding the freedom of navigation through majorsea lanes of communication. As a regional and glo-bal power the U.S. would definitely be interested inany new developments in the region that could af-fect the economic, political or security situation there.Also, for the U.S., the best strategy to achieving long-term security in East and South East Asia is to main-tain strong ties with these countries, including China.There should, therefore, be no attempt to excludethe U.S., even from talks on the possible construc-tion of the Thai Canal. The U.S. 's views on China'sso-called "String of Pearls" strategy and China'sconcerns over a possible U.S. embargo or blockadeon oil supplies shipped through the Strait of Mal aceaare just the examples of the lack of trust that has tobe minimized for the benefit of all. •

NOTESages between one coast of North America and ports on the otherside of South America. Ships sailing between Europe and EastAsia or Australia can reduce as much as 3,700 km (2,000 nau-tical miles) by using the canal.

5 Wang Zhongchun and Li Yaqiang (2007), "China-ASEAN Mari-time Security Cooperation Situation and Proposals", InternationalSymposium Course - World Security Environment, Beijing, Oc-tober 15-November 30 2007: College of Defense Studies - Na-tional Defense University, PLA, pp 139.

6 "China Builds up Strategic Sea Lanes" (published in "Wash-ington Times", 18 January 2005, written by Bill Gertz, quotingJuli MacDonald, Amy Donahue and Bethany Danyluk, "EnergyFutures in Asia," Booz Allen Hamilton report sponsored by theDirector of Net Assessment, 2004).

7 Wang and Li, see footnote 5, pp 140.

B http://www.worldcourts.com/pcij/eng/decisions/1923.08.17_wimbledon/.

9 Andrassy J., Bakoti B. and Vukas B. (1995), Medjunarodnopravo 1. Zagreb: Skolska knjiga, pp. 223. It is impossible to ruleout the possibility of a development of such rule in the future.For example, the Convention on the Law of the Sea obliged thetransit states to allow landlocked states to transit to sea acrosstheir territory.

10 .Thai Canal Plan to Save Millions" (published in "The Age",29 March 2005).


11 Preedi Phanomhyong, in 1935 while Minister of Interior, wasthe first Thai official who stated that when the canal is complete,Thailand must have the authority over the canal, so Thailandcan not depend on other countries to dig the canal. In 1986,when Japan and America proposed to be the project investor,Thai authorities disapproved of the project arguing that foreign-ers should not be the investors in the project.

12 http://www.worldnetdaily.com.

13 "Thai Sea Power and the Kra Isthmus Canal Project (pub-lished in "The Nation," 14 August 2006).

14 "China Builds up Strategic Sea Lanes" (published in "Wash-ington Times", 18 January 2005, written by Bill Gertz), see foot-note 6.

15 In 1960, the National Security Council of Thailand restrainedthe contract for security reasons and to avoid the southern sepa-ration problem. Also, in 1982, the study was canceled for na-tional security reasons.

16 http://www.worldnetdaily.com.

17 "Thai Sea Power and the Kra Isthmus Canal Project" (pub-lished in "The Nation," 14 August 2006).

18 Pehrson C. J. (2006), "String of Pearls: Meeting the Chal-lenge of China's Rising Power across the Asian Littoral", pp 4.

19 "Krabi-Khanom Land Bridge" (published in "Transport Jour-nal," 1-7 March 2004, translated and summarized by Wi sa rutBholsithi).

20 "Southern Landbridge - Final Evaluation Ready Next Year"(published in "Bangkok Post," 6 October 2003).

21 "The "Land Bridge" to replace the Kra Canal" (published in"Thasetthakij," 25-27 September 2003, translated and summa-rized by Wisarut Bholsithi).

22 Said by Kamnuan Chalopathump, Chairman of the Kra Ca-nal project, Thailand's Senate Committee.

23 Said by Jason Feer, energy market analyst with Argus MediaLtd in Singapore. For example, the terrain through which thecanal would pass largely consists of granite whose excavationis considered very costly.

24 Said by Kamnuan Chalopathump, the Chairman of the KraCanal project, Thailand's Senate Committee.

25 By 1825, the city of Singapore had become a major port inSouth East Asia. The opening of the Suez Canal in 1869 andthe invention of steamships launched an era of prosperity forSingapore as transit trade expanded throughout Southeast Asia.In the 20th century, the automobile industry's demand for rub-ber from Southeast Asia and the packaging industry's need fortin helped make Singapore one of the world's major ports.

26 EIU Yearbook 1990.

27 Medeiros E. and Taylor M. (2007), "China's New Diplomacy",International Symposium Course - China's Policies and Posi-tions on Major Security Issues, Beijing, October 15-November30 2007: College of Defense Studies - National Defense Uni-versity, PLA, pp 26.

28 Li Zhaoxing (2007), "Peace, Development and Cooperation- Banner for China's Diplomacy in the New Era", InternationalSymposium Course - China's Policies and Positions on MajorSecurity Issues, Beijing, October 15-November 30 2007: Col-lege of Defense Studies - National Defense University, PLA, pp37.

29 Office of the Secretary of Defense, United States of America,"Annual Report to Congress - Military Power of the People'sRepublic of China 2006," pp 1.

30 Spinetta L. (2006), "The Malacca Dilemma - countering Chi-na's "String of Pearls" with Land-based Airpower", pp 18. Chinarecently overtook Japan as the second biggest oil consumer inthe world (it uses about 5.36 million barrels a year, while Japan,the former number two, consumes around 5.34 million barrels).

31 Pehrson, see footnote 18, pp 5.

32 Wang and Li, see footnote 5, pp 140.

33 Blair B., Chen Y. and Hagt E. (2007), "The Oil Weapon: Mythof China's Vulnerability", International Symposium Course -World Security Environment, Beijing, October 15-November 302007: College of Defense Studies - National Defense Univer-sity, PLA, pp 178.

34 2003 speech to the Chinese Communist Party leadership.

35 Zhao Hongtu (2007), "New Characteristics of InternationalEnergy Security", International Symposium Course - World Se-curity Environment, Beijing, October 15-November 30 2007:College of Defense Studies - National Defense University, PLA,pp 172-173.

36 "A pro-canal article" (published in "Pacific News Service," 22July 2003).

37 Blair, Chen and Hagt, see footnote 33, pp 180.

38 Zhang Wenmu (2007), "Sea Power and China's StrategicChoices," International Symposium Course - China's Policiesand Positions on Major Security Issues, Beijing, October 15-November 30 2007: College of Defense Studies - NationalDefense University, PLA, pp 109.

39 Ibid., pp 110.

40 Ibid., pp 112.

41 Blair, Chen and Hagt, see footnote 33, pp 185.

42 "Malaysia backs canal go-ahead" (published in "The Bang-kok Post," 10 May 2002).

43 "Phuket Pass Project Ltd" (published in "The Bangkok Post,"22 January 2003).

44 Zhang, see footnote 38, pp 111.

45 "Geo-Strategic Implications of Sethusamudram" (publishedin "Daily Mirror: 6 October 2004, written by DharmeratnamSivaram).

46 Spinetta, see footnote 30, pp 24.

47 "White Paper - China's National Defense in 2006", see foot-note 1, pp 131.

48 Xu Sheng (2007), "The Current Asia-Pacific Security Situa-tion," International Symposium Course - World Security Envi-ronment, Beijing, October 15-November 30 2007: College ofDefense Studies - National Defense University, PLA, pp 43.

49 Ibid., pp 43.

50 "Millions of Chinese laborers on their way to Thailand?" (pub-lished in "Asia Today," 20 January 2004).

51 U.S.-China Commission, 2005 Report to Congress: "Globally,China is increasingly active in striving for energy security in waysthat portend direct competition for energy resources with theUnited States. This is producing a possibility of conflict betweentwo nations.".

52 Allegedly, other "pearls" include: naval base under construc-tion at the port of Gwadar, Pakistan; container port facility inChittagong, Bangladesh; deep water port in Sitwe, Myanmar;railway line from southern China to the coast of Cambodia; up-graded military facilities on Hainan Island; upgraded military air-strip on Woody Island in the Paracel archipelago; etc.

53 "US concerned at China's 'String of Pearls' Military Plan" (pub-lished in "Daily Times," 19 January 2005).

54 Office of the Secretary of Defense, USA, "Annual Report toCongress - Military Power of the People's Republic of China2007", pp 1.

55 Ibid., pp 9.

56 Ibid., pp 22.

57 Pehrson, see footnote 18, pp 3.

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