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As expected, the Permanent Court of Arbitration in The Hague ruled against China’s expansive territorial claims in the South China Sea. Manila was exultant. Beijing responded angrily.

Territorial disputes pose a perennial international problem. Great powers, including the United States, typically refuse to be bound by the decisions of others when they believe important interests to be at stake.

The Asia-Pacific region offers particular challenges. The existing territorial and juridical order was established at a time when China was unable to effectively assert its claims or defend its territory. Understandably, Beijing is dissatisfied with the status quo.

Nor is Beijing the first rising power to challenge a system seemingly biased against it. The young American republic responded truculently in border disputes with both Great Britain and Mexico, even invading the latter and seizing half of that country.

In recent years China has challenged territorial claims of Japan, the Philippines and Vietnam, physically augmented territories under its control and added military facilities, including airstrips.

The Philippines lacks an effective military and turned to the arbitration panel for support. The decision reaffirmed the position of the Philippines and nearby states, which will embolden them to take a tougher position against China.

Unsurprisingly, Beijing rejected the ruling and promised “to protect its territorial sovereignty and maritime rights and interests.” China also won’t be inclined to step back.

The U.S. insists it takes no position in the ongoing disputes, but Washington has clashed with China over the former’s right to collect intelligence. It would only take one drunk ship captain or one over-aggressive aircraft pilot to set the stage for conflict. If war erupts in the region, America’s alliance with Japan and ambiguous commitment to Manila could drag the U.S. into combat with nuclear-armed China.

All parties have an obligation to dampen tensions. They should start by recognizing that none of the disputed claims are worth war.

The resources in surrounding waters could be substantial but still would pale compared with the cost of conflict. Joint development would yield most of the commercial gains without risking war.

In peacetime, navigation would continue largely unimpeded. In wartime, navigation would depend upon on the capabilities of the respective navies.

China’s claims may be extravagant, but it is in a position today to insist that they not be summarily dismissed. Which explains why calls on the U.S. to confront China are misguided.

China’s stake in securing its coast is vital and the waters beyond substantial. America’s interests are more diffuse and distant: Dominating China’s borders might be theoretically desirable but isn’t necessary to protect American security.

Navigational freedom is important but not directly threatened. Peaceful dispute resolution by others is welcome but not obviously a matter for the U.S. military.

Of course, there is a common presumption in Washington that the sight of a few American ships would deter aggressive action by China. Alas, Beijing is not likely to respond by abandoning interests viewed as essential.

Rather, it would do what the U.S. almost certainly would do if similarly provoked: increase military outlays. This is a game America cannot afford to win.

Although the U.S. will remain wealthier and more powerful than China for years to come, the former cannot forever afford to maintain military forces strong enough to have a reasonable certainty of defeating China in the latter’s home waters. Once the entitlement tsunami begins to overwhelm the federal budget, Americans are unlikely to back higher taxes to maintain the Filipino flag atop Scarborough Reef and Japanese control over the Senkaku Islands. In contrast, Chinese citizens likely would spend and risk whatever is necessary to ensure the disputed territories remain Chinese.

The best outcome would be for events to take their natural course, that is, China’s neighbors rearm and coordinate to counter Beijing’s aggressiveness. The participation of both India and Japan would make a serious regional coalition possible.

Only mutually agreed solutions, not disputed legal rulings, can settle the region’s territorial disputes. In fact, China peacefully resolved 17 of 23 previous border disputes.

Overall the parties should “seek common ground while reserving differences,” as Wu Shicun of the National Institute for South China Sea Studies put it. The U.S. and its friends should demonstrate that China’s interests would be respected by adapting to changed circumstances.

The tribunal decision may prove to be a Pyrrhic victory for America’s allies. U.S. interests in the territorial issues remain modest, as should its involvement in the controversy. Ultimately, interested countries must negotiate to find a resolution to the region’s many dangerous territorial disputes.

Doug Bandow is a senior fellow at the Cato Institute think tank and author of “Foreign Follies: America’s New Global Empire.”

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