Could Japan and China—the number two and three largest economies in the world—really get into a punch-out over five tiny islands covering less than four square miles? According to the International Crisis Group, maybe: “All the trends are in the wrong direction, and prospects of resolution are diminishing.” [1]

That the two Asian superpowers could actually come to blows seems unthinkable, but a devil’s brew of suspicion, anger, ham-handed diplomacy, and a growing US military presence has escalated a minor dispute into something that could turn very ugly if someone makes a misstep.

And so far, the choreography in the region has ranged from clumsy to provocative.

A few examples:

On the anniversary of Japan’s brutal 1931 attack on China, Tokyo purchased a handful of islands in the East China Sea—known as the Senkaku in Japan and the Diaoyu in China—whose ownership is in dispute. In response, China accused Japan of “stealing” the islands [2], and anti-Japanese demonstrations and riots broke out in 80 Chinese cities [3]. Several major Japanese companies, including Toyota, Honda, and Panasonic were forced to shut down for several days.

Amidst this tension, Washington announced that it will deploy a second anti-ballistic missile system (ABM) in Japan [4], supposedly to guard against North Korea, but which the Chinese charge is aimed at neutralizing their modest nuclear missile force.

“The joint missile defense system objectively encourages Japan to keep an aggressive position on the Diaoyu Islands dispute,” charges Shi Yinhong [5], a professor of international studies at Beijing’s Renmin University. Tao Wenzhao, deputy director of United States studies at China’s Academy of Social Science, adds, “It is highly inappropriate and counter-constructive for the U.S. to make such a move at this highly sensitive time.”

Timing-wise, the island purchase and the ABM announcement seem almost consciously provocative, but Tokyo and Washington are hardly the only capitals guilty of inept diplomacy in the Pacific.

Two years ago China declared the South China Sea a “core interest area,” which means Beijing essentially claimed sovereignty over 80 percent of one of the most heavily trafficked waterways in the world. China also insisted that several island groups—the Spratleys, Parcels, and Macclesfield Bank—were Chinese territory, and it backed this assertion up with ships and even a small garrison.

Some in China have gone as far as to claim sovereignty over the Ryukyu chain, which includes Okinawa, an island hosting several major US bases, with a population of 1.4 million Japanese citizens. Japan took control of the island group in 1879, but several hundred years earlier the independent Ryukyu Kingdom had paid tribute to China.

On top of all this, the Obama administration last year announced an Asian “pivot” and beefed up its military footprint in the region, including plans to send 2,500 Marines to Australia—the first time US troops have been deployed on the sub-continent since the end of World War II.

Not to be outdone, China launched its first aircraft carrier, introduced a new stealth fighter, and is apparently upgrading its intercontinental ballistic missile (ICBM) [6], the Dongfeng-41. According to the Pentagon, China has 55 to 65 ICBMs and 240 nuclear warheads. In comparison, the US has over 1,000 ICBMs, 1,737 strategic warheads, and over 5,000 nuclear weapons.

Feeling a little nervous? You should be. The tensions are real even though it is hard to imagine countries in the area letting things get out of hand. But when you combine overheated rhetoric with gunboat face-offs, a clumsy move, a misinterpreted act, or plain stupidity could spark something that might be difficult to contain.

So who is to blame for all this sturm und drang?

Depending on your perspective, the crisis is either triggered by the US and Japan trying to smother a rising rival in a resurgent China, or by Beijing’s aggressiveness in the region creating dangerous tensions. Actually, it is a little of both and a lot more complex than it appears. First, China, Japan and the US are not the only actors in this drama. Taiwan, the Philippines, Vietnam, Malaysia, Brunei, Russia and South Korea all have pieces on the board.

South Korea, for instance, is locked in a fight with Japan over the Dokdo Islands (called Takeshima by the Japanese). Taiwan and China have a grievance with the Philippines over the Seaborough Shoal, and Vietnam, Malaysia and Brunei have overlapping claims on a host of islands, shoals, reefs and tiny coral atolls. Japan and Russia are at loggerheads over the Kuril Island chain that Moscow occupied in 1945.

Nor are issues in the South China Sea the same as those in the East China Sea. In the south the disputes are mainly economic: fishing rights and energy reserves. In the East, imperial history and the echo of World War II play an important role. For example, the Senkaku/Diaoyu and Dokdo/Takeshima islands were seized by Japan in its early imperial days, and neither China nor Korea have forgotten or forgiven Japanese occupation of their countries.

Countries like the Philippines, Vietnam, Malaysia and Brunei view the Chinese as heavy-handed bullies who throw their weight around and routinely arrest their nationals for fishing in disputed waters. They would like Beijing to negotiate boundary issues with them as a group through the Association of Southeast Asian Nations (ASEAN), while China insists on talking with them individually. This standoff has allowed the U.S. to reassert itself in the region by presenting itself as a “fair broker” (and thus enraging China).

China, on the other hand, sees the US as surrounding it with potentially hostile allies, shifting yet more aircraft carrier battle groups into the region, and drawing up plans to spend $352 billion modernizing its nuclear weapons arsenal [7]. What China doesn’t want is an arms race with the US, which already out-spends the Chinese five-to-one on defense. But the new US ABM system in Japan will force China to respond.

While China’s economy is in better shape than that of the US, its growth rate has plunged further than Beijing had hoped, and increased military spending will come at the expense of economic stimulation, energy efficiency, and infrastructure improvement. The Chinese smell a whiff of the Cold War, when the Americans hobbled the Soviet economy by forcing it to divert many of its resources to defense in order to keep up with the US.

So if the Chinese are feeling a little paranoid these days, one can hardly blame them.

There are a number of ways the current atmosphere of tension in the Pacific can be defused.

First, China should back down from its insistence that it will only negotiate boundary and access issues country by country. It is perfectly valid for smaller countries to collectivize their negotiating strategies, and ASEAN would be the obvious vehicle through which to work. That would have the added benefit of strengthening a regional organization, which can then be used to deal with other issues, from trade to terrorism.

Second, while the US is a Pacific power, it is not a western Pacific power. Putting warships in Beijing’s home waters is asking for trouble, and feeds a strong nationalist current in China. There should be a gradual de-militarization of the region, and a reduction in the number of US bases. And the US has to recognize that ABMs are trouble. They have soured the atmosphere for military reductions in Europe, and they will fuel a military buildup in Asia. The ABM Treaty produced sensible policy until the Bush Administration unilaterally withdrew from it. It should be revived and adhered to.

Third, provocations like China’s bluster over Okinawa, Japan’s purchase of the Senkaku/Diaoyu Islands, Washington sending 2,500 Marines to Australia, and general chest-beating via gunboats needs to stop.

On one level it is unthinkable that Japan and China would actually come to blows, a conflict that could draw in the US though its mutual support treaty with Tokyo. China is Japan’s number-one trading partner, and Japan is China’s number-two partner (the US is Beijing’s first). Polls indicate that the average Chinese and the average American have favorable views of one another. A study by the Committee of 100, a Chinese-American group, found that 55 percent of Americans and 59 percent of Chinese had favorable views of one another [8].

It is a different matter with Japan and China, which makes the tension between the two countries much more dangerous. Some 70 percent of Japanese had an “unfavorable” view of Beijing, and those figures are matched in China. The islands crisis has brought out a powerful current of nationalism in both countries. It was the right-wing mayor of Tokyo, Shintaro Ishimara, who kicked off the crisis by trying to buy the islands. Rightwing politicians from the Liberal Democratic Party (LDP) have since seized the dispute to bludgeon the current government, and the LDP is likely to win the next election.

Passions are running high, distorted by bitter memories of the past, and fed by fear and political opportunism. “There is a real possibility that if diplomacy fails, there will be a war,” says Kazuhiko Toyo, a former career Japanese diplomat [9].

One hopes this is smoke, not fire

Conn Hallinan