Chapter 4:
special report
indian ocean
the Growing struggle For Dominance
The Indian Ocean is rapidly emerging as a zone of ‘great power’ competition, with China and India set to be the main contenders. While this rivalry is unlikely to produce a decisive winner, countries with coasts on the Indian Ocean stand to reap significant geopolitical and economic benefits, as the ‘great powers’ seek to woo China and India. The main risk we forecast is for Sino-Indian rivalry to lead to competing alliances and a rise in tensions in the region, jeopardising global stability. Global geopolitical and economic cycles have traditionally centred on key maritime zones, and the early 21 st century is unlikely to be different. For a long time, the Western world was centred on the Mediterranean Sea. The discovery of the Americas and the subsequent rise of the United States in the 19 th and 20 th centuries made the Atlantic Ocean the world’s most important maritime zone. Thereafter, the rise of Japan, the Asian ‘Tiger’ economies, and later China, led to talk of an ‘Asian century’ or a ‘Pacific century’. More recently, the emergence of India as an economic giant, and the growing integration of the Middle East and Africa with the global economy, have prompted discussion of the increasing geopolitical importance of the Indian Ocean. Indeed, some Chinese and Indian strategists reportedly regard control of these waters as the key to their global power status. In particular, China and India are both seeking to gain a strategic advantage over each other, and the US is expected to ensure that neither Beijing nor New Delhi gains a decisive advantage.
demand for Middle Eastern oil, means the route is now much more important to them than 20 or 30 years ago. Other major Asian economies dependent on this trade route include Japan, South Korea, Taiwan, Thailand and Vietnam. Furthermore, three major global maritime choke points (the Bab el-Mandeb Strait at the Gulf of Aden, the Strait of Hormuz at the Gulf of Oman, and the Strait of Malacca) all feed into the Indian Ocean. a new ‘Great’ Game?
the indian ocean
Source: BMI
The Geopolitical Significance Of The indian ocean
There are several major reasons why the Indian Ocean is becoming more important to the global balance of power, which we discuss below. East-West trade route: The main East-West trade route traverses the northern rim of the Indian Ocean. Although this has been the case for centuries, China and India’s growing trade with the rest of the world, not to mention their increasing
Business Monitor international ltd
Africa-Asia trade route: The growing integration of Africa into the global economy has given the Indian Ocean added importance, since it is the main nexus between Africa and ‘Chindia’. China and India are investing heavily in Africa and, to some extent, are competing for influence there, along with several other major or emerging powers. International piracy: The waters off the coast of Somalia have emerged as a hotbed of pirate activity in recent years, and the waters between Indonesia and Malaysia are also a piracy hotspot. The need to combat piracy has prompted an international military response, one that requires a long-term Indian Ocean presence on the part of the major powers. ‘Arc of Islamist activities’: The northern rim of the Indian
www.businessmonitor.com
29
cHina Q3 2010
Ocean captures a belt of states vulnerable to radical Islamist influence or activities, running from Somalia and Yemen to Iran, Pakistan, India, Bangladesh and Indonesia. Although Islamism in these countries is not directly interconnected, instability there could affect global shipping security, as shown by the rise of piracy off the coast of Somalia. Eurasian air power projection: Bases in the Indian Ocean assist in air power projection over Eurasia. The US has long used its base in Diego Garcia, in the centre of the Indian Ocean, to attack targets in the Middle East and Afghanistan. Global naval power: Whichever power (if any) gains naval dominance of the Indian Ocean would dramatically increase its global naval power, even if it did not control the Atlantic or Pacific oceans. China and India are both seeking to expand their naval capabilities, with a focus on the Indian Ocean, in their bids to become major world powers. Antarctic dynamics: Finally, the Indian Ocean could factor into future geopolitical competition in the Antarctic. Just as the Arctic is currently receiving increased attention from the ‘great powers’, due to global climate change, the same interest may soon befall Antarctica.
china: seeking a ‘string of pearls’
China is actively seeking to expand its global naval power. At present, the People’s Liberation Army Navy (PLAN) still lacks full blue-water (ie ocean-going) capability, but its leaders have ambitious plans for the coming decades. While its initial focus will be on securing hegemony over the South China Sea, the Indian Ocean is also becoming a priority, owing to its importance for Chinese trade. Chinese naval planners are particularly keen to safeguard the route to the Middle East (China’s energy lifeline), and have consequently been seeking to establish a ‘string of pearls’ along this route. The phrase ‘string of pearls’ appears to have originated in the US and refers to ports along the trade route that Chinese companies have been developing, ostensibly for commercial use, but which could also have military purposes. Kyaukpyu and Sittwe in Myanmar, Chittagong in Bangladesh, Hambantota in Sri Lanka, and Gwadar in Pakistan, have emerged as the main ports that China is expanding to accommodate its interests. Other Indian Ocean countries that are attracting Chinese interest include the Maldives, Mauritius, and the Seychelles. Lifelines
the Malacca strait & its alternatives
Who are the Main players?
We see three broad categories of countries involved in the struggle for dominance in the Indian Ocean, outlined below. The big players: These countries will seek dominance or influence across the entirety of the Indian Ocean. Realistically, only China, India and the US have the resources and willpower to compete on this level. Regional players: These countries will seek influence mainly in the part of the Indian Ocean that is most relevant to their interests. They include Australia, France, Indonesia, Iran, Israel, Japan, Malaysia, Russia, South Africa, South Korea and the United Kingdom. Passive players: These countries will not be in a position to exert influence. Instead, they will be courted by the larger powers as part of strategic plans. These states include Bangladesh, Djibouti, Madagascar, Maldives, Mauritius, Mozambique, Myanmar, Oman, the Seychelles, Somalia, Sri Lanka, and Yemen. Remote islands and overseas territories in the Indian Ocean could also become important.
Source: BMI
Of the ‘string of pearls’ countries, Myanmar could potentially be the most important, because it provides China’s landlocked inner provinces, such as Yunnan, with access to the Indian Ocean, bypassing the Malacca Strait. Malacca is one of the
Business Monitor international ltd
30
www.businessmonitor.com
speciaL report
busiest maritime routes in the world, since virtually all seaborne trade to and from Asia and Europe/the Middle East must pass through it. Strategic planners in Asian capitals have long feared that the Strait could become blocked due to a terror attack or subject to greater piracy. Chinese military leaders even fear that the US could block Chinese shipping there in the event of war. There are alternative shipping routes to the Malacca Strait, such as the Sunda Strait, and the Lombok and Makassar Straits, but these are considerably longer, adding to shipping costs and times. Thus, having an alternative route to the Indian Ocean is crucial for China. Myanmar fits the bill, and China has already started building oil and gas pipelines connecting it to the port of Kyaukpyu on the Bay of Bengal. However, Myanmar is vulnerable to political and ethnic instability, meaning that this transport corridor would still be at risk of disruption. This partly explains why Chinese maritime planners in the early 2000s investigated the possibility of building a new Panama-style canal across the Kra Isthmus in Thailand, which would also bypass Malacca. While the notion of building a canal across Thailand has existed for decades, the costs (at least US$20bn) are deemed prohibitive, and it is unlikely to be built.
In 2003, the Thai government proposed a pipeline across the isthmus instead of a canal, but ongoing violence in the country’s Muslim southern provinces has deterred construction. More recently, in 2007, Malaysia proposed a 312km TransPeninsular (Trans-Pen) pipeline across its own territory, along with two refineries. The US$7bn scheme has attracted interest from China. However, as of March 2010, the project remains in limbo. Myanmar thus remains China’s most important corridor bypassing Malacca. In light of this, it is essential for Beijing to maintain friendly relations with the ruling junta in Naypyidaw and support its efforts to preserve national stability. The last thing China wants is for Myanmar to break up, or for rebel groups to jeopardise new pipelines. Bangladesh’s port of Chittagong could serve as an outlet for Chinese trade and naval power projection. In recent years there have been reports of Chinese firms upgrading Chittagong’s port facilities, ostensibly for civilian functions. Bangladesh and China do not share a border, but Bangladesh and Myanmar do, and Beijing is keen to establish a logistical corridor incorporating the three states. However, in the last few years Bangladesh-Myanmar relations have often been tense due to disputes over their maritime boundaries (where there are oil and gas deposits) and the mistreatment of the Rohingya Muslim minority in Myanmar, which has led to waves of refugees into Bangladesh. Any tensions between Dhaka and Naypyidaw could
Business Monitor international ltd
be of concern to Beijing, although China is uniquely positioned to act as a mediator. Aside from serving as a trade outlet, a Chinese naval presence in Chittagong would boost the PLAN’s strength in the Bay of Bengal, thus guarding the approach to the Malacca Strait. At present, India has the advantage here, because it owns the Andaman and Nicobar Islands, which lie in the Andaman Sea. A base at Chittagong would also allow China to defend its oil exploration interests in the Bay, should they come under threat. China is already a major arms supplier to Bangladesh, which stands to benefit from greater Chinese investment and military cooperation. Although Bangladesh’s ruling Awami League (AL) party, which came to power in January 2009, is keen to boost ties with India – in contrast with the opposition Bangladesh Nationalist Party, which is more disposed towards Pakistan – Dhaka views New Delhi somewhat warily, and close relations with Beijing thus give it greater leverage vis-à-vis India. Sri Lanka’s port of Hambantota is also being developed with Chinese assistance. Although less directly useful to Chinese trade in terms of serving as an outlet, a naval presence at Hambantota, which is on the island’s southern coast, would allow the PLAN to project power further south into the Indian Ocean, as well as reinforce its power in the Bay of Bengal.
China has already emerged as a key ally of the Sri Lankan president, Mahinda Rajapaksa, who has generally been isolated from the West owing to human rights abuses committed in the government’s final offensives against the Tamil Tigers, who were finally defeated in May 2009. Beijing was also a major supplier of arms to Colombo, a factor likely to further ingratiate China with Rajapaksa, who will serve as president for the next six years. During this time, we expect the two countries to step up bilateral cooperation. Pakistan’s port of Gwadar is another key ‘pearl’ and the closest to the Middle East. From Gwadar, Middle Eastern oil could be transported by a proposed 2,000km road and rail link to Kashgar in China’s Xinjiang province. This would have the advantage of bypassing Malacca and indeed the bulk of the Indian Ocean sea route. However, transport could be jeopardised by heavy winter snowfalls (causing blockages), and regional instability – in Pakistan, the disputed territory of Kashmir, and in the Xinjiang Autonomous Region itself. Nonetheless, a Chinese naval presence in Gwadar would greatly enhance Beijing’s ability to project power into the Persian Gulf for the first time in the modern era, and allow it to guard the western part of its crucial energy lifeline.
www.businessmonitor.com
31
cHina Q3 2010
Pakistan has a clear interest in working with China, since Beijing has been its most consistent ally for decades. By contrast, Islamabad sees Washington as a fair-weather friend, with which it has experienced considerable tensions over the war in Afghanistan and issues such as democratisation. China has provided considerable aid to Pakistan (including for the costs of developing Gwadar) with far fewer strings than are typically attached to Western economic assistance. For the foreseeable future, we see no reason why Sino-Pakistani relations should deteriorate. From Beijing’s point of view, however, continued instability in Pakistan would be problematic, since this would jeopardise the planned Gwadar-Kashgar transport corridor. Middle east and africa crucial
North Africa 1.9%
china’s oil imports By origin, 2008 (% of total)
West Africa 17.8%
East & Southern Africa 4.9%
Middle East 42.0%
Even if China established full military bases in each ‘pearl’, there would still be the big question of whether host governments would actually allow Beijing to use them in war time. After all, there is a big difference between hosting visiting Chinese warships routinely and allowing ports to be used in a regional conflagration. For example, in the run-up to the Iraq War, Turkey, despite being a member of NATO and a longterm US ally, refused to allow the US to use its bases to invade Iraq. Much would depend on which country China ended up in confrontation with. If China were to go to war with either the US or India, then Indian Ocean governments hosting Chinese bases could certainly deny Beijing their use, fearing that Washington or New Delhi would bomb them (and other parts of their territory) to undermine China’s war effort. Indeed, Pakistan’s government would be unlikely to expose the new, modern port facilities at Gwadar (that it perceives as key to its economic future) to potential American or Indian airstrikes in the event of war. The same logic would apply to the Bangladeshi and Sri Lankan authorities. Furthermore, while the ‘string of pearls’ would augment China’s naval power projection in peacetime, the country’s energy supply line to the Middle East could still be cut if the US Navy chose to interdict Chinese shipping in the Persian Gulf or Gulf of Aden itself (ie well before oil tankers reached Gwadar, Chittagong or Kyaukpyu).
Therefore, China would need to expand its navy to the extent that it could defend its interests not just in the Indian Ocean, but in the Persian Gulf itself.
Australasia 0.4%
Japan 2.3%
Singapore 2.1%
Former Soviet Union 10.3% Europe 0.1%
S. & Cent. America 7.6%
US 0.4%
Other Asia Pacific 10.1%
Source: BP Statistical Review of World Energy, June 2009
The Gulf of Aden is another potential location of a Chinese naval base. At the end of 2009 a PLAN rear admiral, Yin Zhou, proposed setting up a permanent base in the region to improve China’s ability to combat international piracy in the waters off Somalia. However, Yin did not say whether the base would be in Djibouti (where the US already has a base) or Yemen and, at this stage, a Chinese base remains highly speculative.
india: Moving to counter china
India views China’s ‘string of pearls’, whether real or imagined, with a high degree of discomfort, fearing that this could constrain its naval operations and commercial shipping in times of crisis. Although India is slowly becoming more active on the world stage, it has lagged behind China in many respects. For example, Sri Lanka’s port at Hambantota was initially offered to India for development, but New Delhi rejected the offer, paving the way for China to step in. India’s interests in the Indian Ocean are virtually identical to China’s – ie safeguarding the sea route to the Middle East and Africa, and East Asia. India’s main advantage vis-à-vis China is that it is an Indian Ocean littoral state (China has no coastline on the ocean) and has a shorter supply route to the Persian Gulf. In addition, Washington sees New Delhi as a potential strategic ally, whereas it views Beijing as a strategic competitor. However, India has fewer allies than China in the immediate region. We expect India to actively counter Chinese expansionism
Business Monitor international ltd
some Disclaimers on the ‘string of pearls’
Taken together, future Chinese naval bases in Myanmar, Bangladesh, Sri Lanka, and Pakistan would give Beijing a significant strategic advantage over India. However, there is still considerable uncertainty as to whether China’s involvement in developing South Asia’s ports is civilian or military in nature. Governments and policy institutions that fear China’s rise naturally play up the military aspect, whereas China understandably plays this down, emphasising its ‘peaceful rise’ on the world stage. The lack of transparency over this issue only adds to the confusion.
32
www.businessmonitor.com
speciaL report
in the Indian Ocean. As of March 2010, New Delhi has one early advantage, as it already possesses an aircraft carrier it purchased from the UK in the mid-1980s. In addition, it is expected to take possession of the former Soviet carrier Admiral Gorshkov in 2012, although Russian refurbishment of the vessel has been delayed, and Moscow and New Delhi are in disagreement over the price of the carrier. Meanwhile, India is building two additional carriers that are due to enter service in the second half of this decade. Nonetheless, China is hardly standing still. It too purchased a former Soviet carrier, the Varyag, in 1998, and while the latter was an incomplete vessel, the PLAN is believed to have learned much about carrier design through studying it. Furthermore, China is building two new carriers due for completion this decade. Thus, by the end of the decade India and China will both have two or three aircraft carriers each. eyeing the Middle east
East & Southern Africa 0.5%
traffic management, nothing concrete emerged. Moreover, recent developments suggest that the Maldives is pursuing an ‘India first’ policy. Meanwhile, India and the Maldives are also cooperating to prevent the spread of radical Islam in the latter country. Maldivian leaders have warned that an increasing number of youths are embracing strict Islam and going to Afghanistan and Pakistan to wage jihad. Clearly, any radicalisation in the Maldives would be a threat to Indian security interests. Mauritius has traditionally been under Indian cultural influence, with the majority (around 70%) of its population being of North Indian ancestry. India is also the biggest source of Mauritian imports, and much of India’s inbound foreign investment is channelled through Mauritius, which has emerged as an offshore financial centre. Mauritius’ importance in Indian Ocean geopolitics stems from its key location in the ocean’s south-west quadrant, with the island guarding the approach to the trade route around the Cape of Good Hope and, beyond that, the Americas. In addition, India and China are both competing for influence in East Africa, and Mauritius appears to be emerging as a gateway to the region. Indeed, China is actively seeking to boost its influence in the island, with President Hu Jintao paying a visit in February 2009. China subsequently established a special economic zone in Mauritius, and is expected to invest US$750mn there over the next five years. However, unlike the other Indian Ocean states mentioned above, there have been no reports of Chinese or Indian military facilities being planned in Mauritius (although there is an Indian listening station there).
Overall, we believe Port Louis will seek to maintain a careful balance between Chinese and Indian interests, given its rising ties with Beijing and its traditional ties with New Delhi. The Seychelles is in a similar geopolitical position to Mauritius, and would confer the same advantages to whichever power were to develop a military presence there. India appears to have greater influence than China, having trained the Seychelles People’s Defence Force and police, and donated a navy craft and helicopters in recent years. India also owns a listening station there. However, China is courting the Seychelles, and President Hu Jintao became the first Chinese head of state to visit the island in February 2007. That Hu should visit countries with such small populations as Mauritius (1.3mn) and the Seychelles (85,000) demonstrates their strategic importance to China. As with Mauritius, there have been no reports of foreign
india’s oil imports By origin, 2008, %
Australasia 0.1%
Japan 0.4% Singapore 2.0% Other Asia Pacific 3.9% US 0.5% S. & Cent. America 3.9%
West Africa 17.8% East & Southern Africa 4.9%
West Africa 11.0%
Australasia 0.4%
North Africa 2.9%
Japan 2.3%
Singapore 2.1% Other Asia Pacific 10.1%
Middle East 71.9%
Former Soviet Union 1.3%
Europe 0.4%
Source: BP Statistical Review of World Energy, June 2009
The Maldives is a key country for India’s influence in the Indian Ocean. India’s defence minister, AK Antony, visited the archipelago in August 2009, and the two countries signed a pact bolstering defence cooperation. New Delhi is establishing a network of listening stations and other military facilities there, apparently as a direct response to China’s development of Hambantota in Sri Lanka. The Indian armed forces reportedly favour a base for their surveillance aircraft on the island of Gan, as well as basing for aircraft and ships in the capital Male and Hanimadhoo. India has long maintained security ties with the Maldives, even deploying troops there to quell a rebellion against then-president Maumoon Abdul Gayoom in 1988. Although there were reports in 1999 and the early 2000s that China was seeking to lease the island of Marao for maritime
Business Monitor international ltd
www.businessmonitor.com
33
cHina Q3 2010
bases in the pipeline. Madagascar is another key state in the Indian Ocean, sharing the geographic characteristics of Mauritius and the Seychelles, but being much bigger in area and population (20.6mn).
India activated its first overseas listening station in Madagascar in July 2007, but has no foreign bases. Madagascar’s domestic political scene is in a state of flux, with elections due in May 2010, but it could attract greater interest from China and India once the dust settles. Madagascar’s importance stems from its proximity to the Mozambique Channel, through which oil tankers pass en route to the Atlantic Ocean.
taBLe: inDian ocean poWers
population, ‘000
Major players china* india us* regional players australia france indonesia iran israel Japan* Malaysia Pakistan russia* singapore south africa south Korea* thailand united Kingdom passive players Bangladesh djibouti Kenya Madagascar Maldives Mauritius Mozambique Myanmar oman seychelles somalia sri lanka tanzania yemen 164,425 879 40,863 20,146 314 1,297 23,406 50,496 2,905 85 9,359 20,410 45,040 24,256 89.4 1.1 35.9 8.9 1.7 8.7 10.5 28.3 60.8 0.6 na 43.1 22.6 28.0 157,053 10,450 24,120 13,500 na 2,000 11,200 406,000 42,600 10,500 na 150,900 27,000 66,700 16,900 200 1,620 500 na 500 200 16,000 4,200 200 na 15,000 1,000 1,700 Bay of Bengal Gulf of aden south-west quadrant south-west quadrant north-west quadrant south-west quadrant south-west quadrant Bay of Bengal, andaman sea arabian sea south-west quadrant na east-west trade route south-west quadrant Gulf of aden 21,512 62,637 232,517 75,078 7,285 126,995 27,914 184,753 140,367 4,837 50,492 48,501 68,139 61,899 920.4 2,697.9 490.4 329.0 194.0 5,074.0 200.5 159.6 1,304.9 166.6 285.8 939.9 269.6 2,162.9 54,747 352,771 302,000 523,000 176,500 230,000 109,000 617,000 1,027,000 72,500 62,082 687,000 306,000 160,280 13,320 43,995 45,000 18,000 9,500 44,100 14,000 22,000 142,000 9,000 6,244 68,000 70,600 30,880 south-east quadrant, external territories south-west quadrant, external territories south-east quadrant, Malacca strait arabian sea arabian sea, Horn of africa east-West trade route east-West trade route arabian sea east-West trade route east-West trade route south-west quadrant, cape of Good Hope east-West trade route Malacca strait, andaman sea external territories 1,354,146 1,214,464 317,641 4,743.6 1,308.9 14,240.6 2,185,000 1,281,200 1,539,587 255,000 55,000 339,453 Pan-oceanic Pan-oceanic Pan-oceanic
united states: a powerful Force and a key Balancer
The new naval rivalry between China and India poses a key challenge to the United States. Since the end of the Cold War, Washington’s top strategic objective has been to prevent the emergence of a peer competitor, typically assumed to be China, but potentially a resurgent Russia, or even the EU. However, with the US running a record peacetime budget deficit as a result of the 2008-2009 recession; the fiscal shortfall expected to persist for at least the next 10 years by BMI’s forecasts; and the US military heavily stretched in Iraq and Afghanistan, there
GDp, us$bn
total armed forces
navy personnel
key areas of interest
* No direct access to Indian Ocean; na = not available/applicable. Source: UN Population Division, International Institute for Strategic Studies, BMI
34
www.businessmonitor.com
Business Monitor international ltd
speciaL report
are serious doubts as to whether the country can remain the world’s sole superpower indefinitely. Washington must therefore ‘manage’ the rise of China as best it can, hoping that Beijing will remain a cautious and non-aggressive power on the world stage. The US’s strategic outreach to India from 2000 is seen as a move by America to gain a new regional ally with which to jointly contain China. Proponents of such an alliance point to both countries’ democratic credentials, a common fear of Islamist militancy (and perhaps China), and the widespread use of the English language in India, as factors bringing Washington and New Delhi together. Nonetheless, we believe there is no guarantee that an IndoUS alliance, whether formal or informal, will emerge. Firstly, such cooperation would antagonise China, perhaps leading to a counter-alliance. Secondly, China and India are generally trying to improve relations, not to mention boost bilateral trade. Thirdly, an empowered India could in time conceivably challenge US interests in the region. With this in mind, it would make sense for the US to balance geopolitical power in the Indian Ocean.
breakaway Somali state of Somaliland in early 2008 offered the US a naval base at the port of Berbera, Washington has not taken up the invitation because it does not recognise the government in Hargeisa. Indeed, Somaliland remains unrecognised because the major powers believe that recognition would lead to a violent redrawing of borders in the Horn of Africa, which would negatively affect Ethiopia and Kenya. Although reports circulated in February 2010 that Israel was willing to recognise Somaliland, these could not be verified. However, Israel does have an interest in cultivating a new ally in the Horn of Africa, and would benefit from using Berbera as a base. This would also offset Iranian influence in the region.
the other players, present and Future
There are other potential Indian Ocean players, but they are only truly capable of projecting power in their own part of the ocean. Nonetheless, they can augment their power by cooperating with other littoral states. Heavily reliant on the Middle east
Japan’s oil imports By origin, 2008, %
Middle East The US has considerable leverage in the region. It is the only 80.4% country in the world with a truly global navy, and will thus flex its muscles if necessary. The key to US military power in the Indian Ocean is its base at Diego Garcia, which is part of the Australasia Japan 0.4% British Indian Ocean Territory. The joint Anglo-American base was leased to the US government in 1971 until at least 2016, Singapore 2.0% and Britain is expected to renew the lease when it expires. The Other Asia Pacific US has used Diego Garcia to attack Iraq and Afghanistan and, 3.9% because the base lies right in the middle of the Indian Ocean, US 0.5% Former Soviet the US can project power in all parts of the Ocean.
S. & Cent. Union America 3.4% 3.9%
North Africa West Africa 0.2% 0.4%
East & Southern Africa 2.0%
Australasia 1.1% China 0.6%
Singapore 0.6% Other Asia Pacific 8.6%
India 0.6%
Unidentified * At the present time, there are no indications that the US will Europe US Europe 0.4% Former Soviet 0.1% 0.6% 1.5% establish new bases in the Indian Ocean. In early 2002 reports Union 1.3% emerged that the US was seeking to establish a naval base at Sri Source: BP Statistical Review of World Energy, June 2009 Lanka’s port of Trincomalee, and in January 2009 a left-wing Japan has one of the world’s most modern navies and relies Sri Lankan opposition party stated that the US planned to set on the same East-West trade route as China. However, Japan’s up a missile base there. However, these rumours amounted to pacifist constitution has prevented it from exerting global milinothing and, given President Rajapaksa’s tense relationship tary influence. Japan’s highest-profile activities in the Indian with the West, are unlikely to be realised while he is president. Ocean have been restricted to refuelling Western warships in More recently, in late 2009 the US stepped up military cooperasupport of coalition operations in Afghanistan. However, even tion with the Seychelles, but there is no evidence to suggest a this modest deployment proved highly contentious domestically permanent presence there. and, in January 2010, the new prime minister, Yukio Hatoyama, terminated the mission after eight years. In addition, Japan lacks The US is also not in a position to establish bases in East Afforeign bases, and no Asian country would be willing to host rica, because African governments have rejected an American them due to the country’s record of atrocities during World War military presence under the auspices of its newly-created AfII. These two factors severely constrain Tokyo’s ability to be a rican Command (AFRICOM).
Although the president of the
Business Monitor international ltd
www.businessmonitor.com
35
cHina Q3 2010
major player in the region. If Japan increases its Indian Ocean activities, this will be under multilateral auspices, such as its participation in anti-piracy operations off Somalia. Overall, though, Japan is unlikely to become a major military power given its colossal fiscal and debt burdens (which reduce the scope for a bigger defence budget) and a lack of public support for such a role. In the event of intensified Sino-Indian rivalry in the Indian Ocean, we would expect Japan to be sympathetic to India and the US, but Tokyo cannot afford to antagonise Beijing, given that China is now Japan’s top trade partner. South Korea is arguably better positioned than Japan to become an Indian Ocean player, for it has neither the constitutional nor fiscal constraints that Tokyo faces. While South Korea’s immediate defence concerns will naturally focus on North Korea, the government is looking beyond the threat from Pyongyang and is seeking greater naval capabilities. Seoul has joined antipiracy activities, and we expect South Korea to increase its naval capabilities along the route to the Persian Gulf. However, it is probably too weak to exert influence independently. Australia has a modern navy, but with the bulk of its population concentrated on its Pacific coast and its security concerns largely focused on the South Pacific, Canberra has somewhat neglected the Indian Ocean. However, Australia has two external territories, Cocos (Keeling) Island and Christmas Island, in the eastern Indian Ocean, which could accommodate military facilities should the need arise, and it could thus increase its sphere of activities. However, the south-east quadrant of the Indian Ocean is arguably the least strategically important, since it is furthest away from key population centres and economies. Although China has emerged as Australia’s biggest trade partner, we expect Canberra to maintain strong defence cooperation with Washington and Tokyo as a hedge against China’s rise. Russia has a limited presence in the Indian Ocean, but its navy, like the rest of its armed forces, is a shadow of its former self. President Dmitry Medvedev has publicly called for a revival of the Russian navy, seeing this as a key part of his country’s global re-emergence, and the Kremlin plans to build at least one new carrier this decade. Russian officials had previously envisaged six operational carrier battle groups by 2025. However, budgetary problems and the time taken to build carriers raise doubts about the feasibility of such plans. Furthermore, Russia’s priority areas of interests are Central and Eastern Europe and Central Asia (ie continental rather than maritime spheres).
Rumours in early 2009 of the possible establishment of Russian navy bases in Yemen and its island of Socotra have
proved baseless. Furthermore, from a maritime point of view, the Kremlin is more interested in the opening up of the Arctic trade route rather than the Indian Ocean. Iran under the Shah’s rule (1941-1979) harboured hopes of becoming a major global power and acquiring a base in the Indian Ocean. While Tehran still aims to become a great power, its navy is only a small fraction of its armed forces, and its main areas of interests are the Persian Gulf and the Strait of Hormuz. Iran remains wracked by internal political schisms and economic weakness, which we expect will last for years. However, we see a possibility that a future Iranian government (whether clerical or secular) could seek to project power in the Arabian Sea. In recent years Iran has developed close relations with Sri Lanka, providing it with a regional ally. Meanwhile, it is pressing ahead with developing a new port at Chabahar on the Gulf of Oman, with Indian assistance. The port is intended to compete with Chinese-backed Gwadar as an outlet for Central Asian oil and gas deliveries. The port is also a portent of future Indo-Iranian cooperation, with the two countries maintaining good relations despite Tehran’s adverse relationship with Washington and other Western powers. Israel is believed to deploy nuclear-armed submarines in the Arabian Sea for potential retaliation against its enemies (principally Iran).
The submarine force represents a retaliatory capability in the event that much of Israeli territory is devastated in a nuclear attack. Aside from this force, Israel’s main naval foci are the Eastern Mediterranean and the Red Sea. Meanwhile, Israel has developed closer security ties with India in recent years, with the two countries sharing a fear of radical Islamist forces. It is reasonable to assume that Israel would be aligned with India and the US in any intensified competition in the Indian Ocean. Pakistan’s navy is by far the smallest branch of its 650,000-strong armed forces, which are geared towards a potential conflict with India. As an Indian Ocean littoral state, Pakistan has several key ports, including Karachi (its fleet headquarters), Ormara and Gwadar. However, India’s navy is vastly bigger than Pakistan’s and, in the event of a new Indo-Pakistani war (or Sino-Indian war, for that matter), it would blockade Pakistani ports. Overall, although China is an ally of Pakistan, we believe Beijing would probably stay out of an Indo-Pakistani war for fear of being drawn into a regional conflagration. For similar reasons, Pakistan would likely stay out of a Sino-Indian war. Indonesia, Malaysia, Singapore and Thailand all occupy key positions guarding the Malacca Strait. In recent years they have
Business Monitor international ltd
36
www.businessmonitor.com
speciaL report
conducted joint patrols to combat piracy in the region, and these have been essential to safeguard international shipping. Overall, though, none of these countries is expected to become a major power in the Indian Ocean. Rather, their focus will be regional. South Africa is arguably the only African country that is a candidate for regional power status. From a naval point of view, the country’s position is crucial because a significant proportion of intercontinental shipping passes around the Cape of Good Hope. In recent years, South Africa’s main security concerns have stemmed from regional issues such as political instability in Zimbabwe and the Democratic Republic of the Congo. However, as South Africa becomes wealthier and more developed, we would expect it to begin emerging as a regional maritime power. Pretoria has friendly ties with New Delhi and South Africa hosts one of the biggest Indian communities outside India. This serves as a useful commercial and cultural bridge between the two countries. The UK and France retain considerable long-range navies, although their Indian Ocean presence is substantially less than it was. Both have territories in the Indian Ocean: the UK owns the British Indian Ocean Territory (including Diego Garcia) in the middle of the ocean, and France owns a number of islands around Madagascar and in the southernmost part of the ocean. France also has a naval base in Djibouti, which is its largest external military facility and the home of its Indian Ocean task force. These possessions give London and Paris continued interests in developments in the region, although they are likely to have an auxiliary role to the US.
key risks to Minor players
The rivalry between China and India in the Indian Ocean means that they will compete for influence in the smaller countries. This will take the form of economic assistance, investment, infrastructure upgrades and military cooperation. If regional governments behave astutely, they can maximise the benefits offered by Beijing and New Delhi, essentially playing them off against one another and maximising their geopolitical independence. However, there is also a risk that the governments of smaller countries would not have the strength to rebuff Chinese and Indian advances, and thus would be forced to take sides in the Sino-Indian geopolitical struggle. Hosting foreign military facilities could also bring other problems, such as pollution, tensions between locals and foreign soldiers and a perceived loss of sovereignty.
conclusion: no Decisive Hegemon Likely
Overall, although China has had an apparent head start in the new competition for the Indian Ocean, no major power is likely to achieve hegemony over the whole ocean. From a military point of view, China’s ‘string of pearls’ is far from assured, and even if Beijing were to develop bases in each ‘pearl’, India is already taking counter-steps. Meanwhile, the US is still the only truly global naval power, and has considerably more maritime experience than China or India, which could take decades more development to match the US. Furthermore, the US already has 11 aircraft carrier battle groups, whereas China and India combined are unlikely to field as many for decades to come. Despite the rivalry between China and India, a Cold War-style confrontation, let alone a shooting war, is far from inevitable or even probable, and any tensions between the two could be reduced by promoting regional military cooperation by means of a NATO-like organisation that includes China, India, the US and other concerned powers. A pan-Indian Ocean security organisation would obviate the need for a more limited alliance created specifically to counter the influence of China. Indeed, any sign that the Indian Ocean was being divided into competing alliances led by China and India would be a highly negative development for the region and the wider world.
passive players: the east african coast
East Africa’s coastal states, Mozambique, Tanzania, Kenya, and especially Somalia, lack the means to project power into the Indian Ocean (although clearly Somali pirates have the means to disrupt international shipping).
Although African states have rejected the idea of hosting US military bases under the auspices of AFRICOM, we see a possibility that in time China and India will seek to establish bases in East Africa, or at least pursue some sort of logistical arrangements with these states for the purposes of defending their strategic interests and investments. However, much depends on how favourably existing Chinese and Indian investments in Africa are viewed. Anecdotal evidence suggests that there has already been a considerable backlash against Chinese investments in Africa, raising doubts about Beijing’s ability to win long-term local support.
Business Monitor international ltd
www.businessmonitor.com
37
Copyright of China Business Forecast Report is the property of Business Monitor International and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder’s express written permission. However, users may print, download, or email articles for individual use.