LONDON — There have been reports in the Indian media that New Delhi is planning to withdraw from joint oil exploration with Hanoi in the South China Sea.
Although no formal announcement has been made yet to this effect, Indian officials have been suggesting that oil Block 128 has not shown promising results, so commercially it makes sense to withdraw.
At a time when the South China Sea is the focal point of regional turmoil in East Asia, India's decision will have repercussions far beyond the mere technicalities of hydrocarbon production.
Even if there may be no oil in this joint effort, the way it is being announced is bound to be interpreted that India has no stomach for challenging China in its backyard. Hanoi has already suggested that New Delhi's decision is a response to pressure from China.
It was just last year that New Delhi had asserted its rights in the international waters of South China Sea, signaling a deepening of its engagement with Vietnam. The Indian external affairs minister had snubbed China, making it clear that India's ONGC Videsh Ltd. (OVL) would continue to explore for oil and natural gas in two Vietnamese blocks of the South China Sea.
Asking countries "outside the region" to stay away from the South China Sea, China had issued a demarche to India, underlining that Beijing's permission should be sought for exploration in Blocks 127 and 128 and that, without it, OVL's activities would be considered illegal.
Vietnam, meanwhile, had underlined the 1982 United Nations Convention on the Law of the Sea to claim its sovereign rights over the two blocks being explored. India decided to go by Vietnam's claims and ignore China's objections.
New Delhi's bold move was aimed at asserting India's legal claims in the international waters of the South China Sea as well as strengthening its relationship with Vietnam. Both moves unsettled China, which views India's growing engagement in East Asia with suspicion.
India's decision to explore hydrocarbons with Vietnam had come after an unidentified Chinese warship had demanded that the INS Airavat, an amphibious assault vessel, identify itself and explain its presence in the South China Sea after the vessel left Vietnamese waters. The Indian warship was completing a scheduled port call in Vietnam and was in international waters.
Though the Indian Navy denied that a Chinese warship had confronted its assault vessel, as reported by London's Financial Times, it did not completely deny the factual basis of the report.
If the display of backbone in pursuing joint oil exploration with Vietnam, despite Chinese objections, had helped India — strengthening relations with Vietnam and forcing others to acknowledge it as a credible player in the region — the unceremonious announcement of withdrawal will not only disappoint Hanoi but also call into question the whole idea of India as a regional balancer in the Indo-Pacific. Smaller states in East and Southeast Asia have been looking to New Delhi to help offset China's rise.
Unless managed carefully, India's credibility will come into question.
To control the damage to its reputation from this sudden volte-face, India should make it clear to Hanoi that, despite this decision, it will continue to expand strategic ties with Vietnam.
After all, both nations have stakes in ensuring sea-lane security, as well as shared concerns about Chinese access to the Indian Ocean and the South China Sea.
As the South China Sea becomes a flashpoint, Hanoi has been busy courting its erstwhile rival, the United States, and the U.S. has been asking India to "engage east and act east as well."
Solidarity among major powers with regard to South China Sea disputes is essential in forcing China to moderate its maximalist position on this issue.
China is too big and too powerful to be ignored by the regional states. But the states in China's vicinity are now seeking to expand their strategic space by reaching out to other regional and global powers.
Smaller states in the region are now looking to India to act as a balancer in view of China's growing influence and America's anticipated retrenchment from the region in the near future.
Larger states see India as an attractive engine for regional growth.
To live up to its full potential and meet the region's expectations, India must do a more convincing job of emerging as a credible strategic partner in the region.
It is dangerous for international relations to allow an impression to develop that New Delhi can be browbeaten into submission. If China can operate in India's backyard and systematically expand its influence, then there is no reason why India should feel diffident about operating in areas that China considers its own sphere of influence.
India's diffidence in foreign policy remains the reason why, despite pursuing a "Look East" policy for the last two decades, it continues to be a marginal player in East Asian geopolitics.