Known as Senkaku in Japan and Diaoyu in China, there isn’t much on these five uninhabited islands between China, Taiwan, and Japan besides goats and strife. Recent disputes over the islands amid rising nationalism and unstable internal politics in both China and Japan, however, have put relations between the two countries in their worst state in years and resulted in Chinese patrol boats and Japanese Coast Guard vessels deployed to the archipelago.

Japan unilaterally annexed the islands in 1895 and they have belonged to a series of families for decades until they were leased to the Japanese government in 2002. China began to claim the islands in 1971 after a U.N. study showed potential for oil nearby. As no oil has yet been found, the dispute simmered until April 2012 when Tokyo Governor Shintaro Ishihara announced negotiations to buy four of the islands to ensure that they remain under Japanese sovereignty. Chinese activists responded by landing on the islands on August 15, only to be detained and deported by Japan, which allowed Japanese nationals to occupy the island despite first warning them against it.

China gave diplomatic support to their activists, denouncing their detention and demanding their unconditional release. On August 19, China lodged an official complaint with Tokyo and, in an uncharacteristic move, allowed thousands to protest in nearly 100 cities, resulting in demonstrators vandalizing Japanese-owned businesses. China has also cancelled a celebration marking 40 years of diplomatic relations between the two countries. Twelve Chinese fishing patrol and surveillance ships, the largest marine patrol in Chinese history according to the People’s Daily, has been sent to the archipelago, currently guarded by the Japanese Coast Guard. With tensions high and the dangerous mix of protesters and patrols from both sides, US Secretary of Defense Leon Panetta warned that the territorial dispute could lead to a “violent conflict.”

Domestic politics has had more to do with the escalation than international relations. Neither government can afford to appear weak, with the ruling party in Japan suffering from waning public support that may force it to call early elections this year, and the Chinese government preparing for the 2012 Communist Party congress to approve a once-in-a-decade leadership transition after a string of scandals. The dispute also coincides with the September 18 anniversary of Japan’s invasion and occupation of Manchuria, which typically draws unrest. This is also not the first time the islands have sparked dispute. In September 2010, a Chinese trawler collided with Japanese Coast Guard vessels near the islands and  Japanese authorities detained the Chinese captain for two weeks, causing China to halt rare earth exports to Japan and suspend political and cultural exchanges.

Yet despite tensions, an outright military confrontation is extremely unlikely. Neither country wants war, and neither does the United States, which would be obliged by treaties to come to Japan’s aid if the islands were attacked. That does not mean that the crisis will be resolved completely peacefully, however, as the volatile combination of activists, fishing boats, and military and law enforcement ships could result in violence, as might protests in China. Chinese hackers are also believed to be behind a string of attacks on Japanese websites.

The economic fallout looks to be even more serious. China and Japan are the second and third largest economies in the world after the United States and are entirely reliant on each other for trade. China was Japan’s largest trading partner last year and Japan was China’s second largest after the US. Japan is also China’s largest outside investor and China is important for Japanese tourism. Trade between the two countries is so vital that OECD Secretary General Angel Gurria warned that the dispute threatens the entire world economy.

Due to these risks, both China and Japan have taken steps to reign back tensions. The Chinese patrol vessels are likely more concerned with controlling activists and fishing boats to prevent clashes than countering the Japanese Coast Guard. The Japanese government has been cautious about responding to China and the Chinese government has begun taking steps to end the protests and prosecute rioters to restore calm. The United States is also exerting pressure on both sides to encourage restraint.

About the Author

Alex Olesker

Alex Olesker is a Technology Research Analyst at Crucial Point LLC that specializes in science, technology, and security. He has experience working with law enforcement, private intelligence, multi-national corporations, and academia, and has written and lectured on terrorism, international security, infrastructure protection, investigations, intelligence, policing, cybersecurity, and analytics. Alex graduated from Georgetown University's Edmund A. Walsh School of Foreign Service.