While most consider the Middle-East a hot-bed of geopolitical risk (prone to flare at any moment), it seems hot money flows and territorial disputes are rapidly turning the South China Sea into a powder-keg. As Japan vs China is off the front pages for a moment (and US and South Korea engage in joint naval exercises) it seems Taiwan and the Philippines are escalating rapidly following the death of a Taiwanese fisherman last week after Filipino military fired on his vessel in supposedly disputed territory between Taipei and Manila. The situation is evolving rapidly as the Philippines' un-apology (though they sent their condolences) may prompt Taiwan to send F-16 fighters, Kidd-class destroyers, and three or more warships, according to The Liberty Times. The threat of escalation is premised on a formal apology coming within 72 hours. As Stratfor notes, Taiwan's territorial 'claims' are "outrageously ambitious" but the various island nations all appear set on rattling sabres as mainland China stiffens its resolve against Japan over the Senkakus.

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