The strategic value of the Strait of Malacca. MOKHZANI ZUBIR Researcher

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1 The strategic value of the Strait of Malacca MOKHZANI ZUBIR Researcher Every year, more than 60,000 1 ships pass through the Strait of Malacca 2 carrying various cargoes, from crude oil to finished products from all over the world. This number is nearly three times the number of ships that navigate through the Panama Canal and more than double the number that uses the Suez Canal. The strait which connects the Indian Ocean to the South China Sea and the Pacific Ocean, are one of the busiest ocean highways in the world. One third of the world trade is passing through the strait, making it to be touted as the artery of the world economy. Since the Strait of Malacca is so vital to the world community, its safekeeping, in terms of the security of sea lane of commerce especially, must be served in order to ensure that the strait will continuously facilitating world trade. Any disruption or blockage on the Malacca Strait, either by terrorist groups or by nation states will definitely prompt many parties to interfere and have a control it. Malaysia, which is obviously one of the littoral states, has to understand the dynamic power play in the strait. Before any engagement of policies can be made, it is imperative first to understand which parties that depend on the strait, what and how high their stakes are. This article will try to explain who are the major stakeholders in the strait and to what extent they are relying on the freedom of navigation in the strait. Understanding this basic strategic calculation is crucial as it could facilitate us to comprehend the latest development in the strait, why does it happen and what are the effects to Malaysia especially. Mokhzani Zubir 1

2 THE CONTEMPORARY STRAIT OF MALACCA Strait of Malacca is the longest international navigational route through a strait, where it connects the Indian Ocean via Andaman Sea on the north with South China Sea on the south via the Straits of Singapore. Nevertheless, the strait provides the shortest route for ships to reach between East Asia and Europe. With an average width between 11 to 200 nautical miles, the seaway in this strait is not always wide as at certain parts of the strait, the navigable route is less than 1 nautical mile, and certain part of its navigable area is less than 30 meters deep. At a particular point on the strait, the maximum draught recommended by the International Maritime Organization for passing ships is 19.8 meters. 3 Even with the unfriendly navigational features in the Strait of Malacca, the strait is still an attractive and preferred navigational route for international shippers compared to other alternative routes like Sunda or Lombok-Makassar straits. The 50 miles long Sunda Strait is 15 miles wide on its northeastern entrance but the strong currents and limited depth has prevented deep-draftships of over 100,000 deadweight tones (DWT) from transiting this strait. 4 The Sunda Strait has a tricky channel, depth limitations, and a live volcano, and is not favoured by oil tankers. 5 Moreover, according Chia (1995), the Sunda Strait unsuitable as it has highly irregular bottom topography of the Straits and the presence of rip tides render it unsuitable for vessels drawing over 18 meters of water to use the Straits. In addition, there are hazards posed by the numerous oil drilling platforms to the north of western Java. The Sunda Straits have as yet no available detailed navigation charts. 6 With a minimum passage width of 11.5 miles and depth of more than 150 metres, the Lombok Strait, on the other hand is the safest route for supertankers because it is wider, deeper and less congested than the Strait of Malacca. Both Lombok and Makassar Straits do not feature serious navigational hazards along the navigational channel but the routes require an additional of three and a half days navigating at full commercial speed of knots, an extra mileage of 1600 nautical miles, which add to transportation cost where in the long term operation it is not profitable to the tanker operators. 7 Based on these facts, fears and concern has been raised by international community that the closure of the Strait of Malacca would immediately raise freight rates. Freight rates around the world would be affected, thus adding costs to many nations imports and exports. The closure of the Suez Canal infers that the freight rates for ships navigating through Southeast Asia might increase as much as 500 percent 8 if the Strait of Malacca is bound to closure. The closure of Mokhzani Zubir 2

3 the Strait of Malacca is not a big problem because there are alternative routes. In reality, on the other hand, the cost of re-routing maritime traffic, especially oil tankers, can be expensive. To divert the tankers on the Middle East-Japan route from Malacca to the Lombok Strait would involve more than USD$340 million per year to the Japanese petroleum industry. The Strait of Malacca is a critical chokepoint of world oil trade because huge quantity of oil passes through it, and this number is expected to increase significantly in the next coming decades. THE POWER STRUGGLE IN THE STRAIT OF MALACCA The strategic feature that makes the strait exceptionally important to the world is that the Strait is the main entrance for merchant ships and oil tankers that sail from East to West and vice versa. The Strait of Malacca is the main sea lane of communication to East Asia, a region that is predicted to have the most progressive economy in the world. There are many countries yearn to have full control on the Strait of Malacca or at least possess a commanding power on the strait because of various reasons. However the most visible or prominent countries that have strongly shown their desire on the strait are the United States and China. The Strait of Malacca becomes the focus of strategic and geostrategic calculations by these two countries because of three intertwined factors i.e. the economic, military and oil factors. These factors are interrelated and produce distinct dynamic impacts and outcomes to each of the state. The pursuance of strategies to make the outcome favorable to them has made the Strait of Malacca a venue and a subject of silent struggle between a superpower and a rising great power. The Economic Factor East Asia is a region with dynamic economic growth, with increasing share to the world s output and trade. It is estimated that by the year 2010, 34 per cent of world s total output will be contributed by East Asian region, surpassing Western Europe and North America with 26 per cent and 25 per cent respectively. As with the trade, East Asia s share to the world s trade will account almost 40 percent, leaving behind Western Europe and North America with about 37 per cent and 20 per cent respectively. 9 Because of its impressive economic growth that could promise riches to the world, East Asia has long been regarded as a region that could promise prosperity and security to the United States. In 1993, the Assistant Secretary of State for East Asian and Mokhzani Zubir 3

4 Pacific Affairs, Winston Lord, stated that East Asia is "the most relevant to the President's (Bill Clinton) highest priority namely his domestic agenda, the renewal of the American economy, getting the deficit down, getting more competitive, promoting jobs and exports." 10 The statement was strengthened by President Bill Clinton himself when he described the region as the most promising and dynamic area for American foreign policy." The high priority the United States gave to East Asia has not changed even when the leadership in the White House has changed from the Democrats to Republican. Trade volume between U.S. and East Asia is steady and getting higher although the region suffered economic hiccup in In his speech to the Heritage Foundation, Donald Rumsfeld has once again pledge the U.S. priority on East Asia when he stated that Asia s success will mean so much to America s own security and prosperity. 11 In 2002, the U.S. export volume to East Asia was impressive where the region becomes the biggest market to U.S. leaving behind long-established U.S. market; Canada and European Union. 12 Export to East Asia 13 is accounted at $169 billion which generated more than 3 million U.S. jobs 14. Japan itself is the third largest single market for U.S. after Canada and Mexico where U.S. export to Japan is accounted at USD$51.44 billion in With that high stakes of economic interests (and still growing), the U.S also has a growing economic interest in the security of sea line of communication (SLOCs) in East Asia, particularly in view of the impact of the SLOCs disruption on U.S. trading partners. The wealth, prosperity and even economic security of the United States will remain dependent on continued linkages with the East Asian economies. East Asia represents the most important locus of American economic engagement. 16 Economic crisis or slumped economic growth in East Asia particularly Japan, South Korea and ASEAN (Association of Southeast Asian Nations) countries will directly affecting U.S. economy. However, U.S. markets in East Asia are threatened by the rise China s economy. With its rapid economic growth, China is strengthening its market across Asia, attracting immense amount of foreign direct investment 17 and pushing away the United States position as East Asia s economic engine. In 2003, the United States import from Japan, South Korea, Taiwan and ASEAN countries were accounted at USD$268 billion. 18 Even though U.S. is still a vital trading partner for East Asian countries, its presence is being shadowed by China s rise. China s ravenous appetite in importing goods, parts and raw materials from regional countries has made its neighbors economy, particularly ASEAN countries grow and the leaders are praising China s rapid development as a benefit to their economies. China's trade with ASEAN hit a record high of USD$78.25 billion in 2003, surging Mokhzani Zubir 4

5 by 42.8 per cent year-on-year. China's import jumped by 51.7 percent to USD$47.33 billion and export grew 31.1 percent to USD$30.93 billion, with a trade deficit of USD$16.4 billion. 19 China s remarkable economic growth, followed with its entrance in the World Trade Organization is seen as a process of replacing the U.S. as the dominant power in Asia. 20 Progressive trade relationships between China and East Asian countries have produced a mutual courtship and as a result, many Asian countries are shifting their economic alliances from the U.S. to China. The growing economic interdependence between the East Asian states and China is not preferred by the U.S. as it could threaten the U.S. market share in the region. Moreover, smooth economic relationship could lead to warm bilateral and multilateral diplomatic relationships where in the long term, China could assert its influence in the region. In a testimony before the House of International Relations Committee, Washington, James A. Kelly said that the U.S. cannot ignore the fact that China's growing economic power has created a competition for influence in the region, which makes it all the more important for the United States to remain actively engaged with our Asian allies. While China has not moved aggressively to garner political capital from its growing economic strength, there is no denying its prominence on the Asian political stage. We need only to look as far as Taiwan -- where firms are queuing up to move operations to China and whose executives lobby for freer access to the Chinese market -- to see how quickly economics can change a political dynamic.. 21 China, with a sturdy and progressive economy could hamper and dilute U.S. influence in East Asia that in the long term would diminish U.S. huge market share in the region. East Asia is projected to produce more middle class society with strong buying power than any other region in the world. With a strong buying power, China could influence East Asian countries to bandwagon with it and support its foreign policy that from the U.S perspective would jeopardize its interest in East Asia. The U.S. can be denied its economic, military and political access to East Asia if countries in the region feel comfortable and prosper under the Chinese economic influence. Therefore, the U.S. has no other option except to reassert and strengthen its influence in East Asia. The Oil Factor With its dynamic economic growth, energy demands in East Asian countries are expected to increase in the future decades. In the year 2020, the energy demand for China alone is expected to be at 1,353 Mokhzani Zubir 5

6 million tonnes of oil equivalent (mtoe), while other Northeast Asian countries (Japan, Korea, Taiwan) will touch 745 mtoe, and Southeast Asian countries will demand for 525 mtoe. 22 While the sources of energy are oil, coal, natural gas, nuclear power plant, hydroelectricity and renewable sources, oil rises to be the most needed resource to generate the economic growth of East Asian countries. China, Japan and South Korea demand enormous amount of energy to progress in their economic development. In fact, energy is probably the most important issue of international economic development. According to an UNCTAD report: energy is one of the most important drivers of economic development and is a key determinant for the quality of our daily lives it is probably the biggest business in the world economy, with a turnover of at least $1.7 2 trillion a year global investment in energy between 1990 and 2020 will total some $30 trillion at 1992 prices. 23 Northeast Asian countries, particularly China, Japan and South Korea, are the biggest oil consumer in East Asia. Consuming about million barrels a day (mbd), these countries sit at the top ten oil importers in the world. With that huge amount of oil needed to assist their economy, these countries are heavily depending on the Middle East to supply their huge chunk of oil demand. Oil imported from the Middle East will be transported across the Indian Ocean, navigating through the Strait of Malacca and across the South China Sea destined to the oil consumers. The Strait of Malacca becomes an important oil route because the oil demand and production does not happen at the same place. Persian Gulf countries are the main oil producer for Northeast Asian countries. According to Energy Information Administration (EIA), in the year 2003 it is estimated that about 11 million barrels a day of crude oil passed through the Strait of Malacca destined to consumers in East Asia. Because of this dynamic demand for oil in Northeast Asia, the Strait of Malacca becomes an important route to transport oil where in 2003 alone, 19,154 tankers passing eastbound transporting the much needed oil. 25 In year 2000, Northeast Asia s (China, Japan, South Korea, Taiwan) oil demand, was accounted at 620,858 ktonnes but this figure is expected to skyrocket up to 1,023,614 ktonnes in High percentage of this demand will be fulfilled by Persian Gulf s oil and obviously the oil will be transported through the Strait of Malacca. China, a country that is prophesized to rival the US, demanded 5.56 mbd in 2003 which enabled it to emerge as the world s second largest oil consumer surpassing Japan for the first time. 27 In 1950s and early 1960s, China was an oil importer from the Soviet Union but with the discovery of the Daqing oil field in 1959 and the withdrawal of Soviet advisers from China s oil industry in 1960, China has positioned itself to Mokhzani Zubir 6

7 produce enough oil to fulfill its domestic needs by the mid 1960s and was able to export small amount of oil in However due to its rapid economic growth and market reform, China has become net oil importer in With the gross domestic product expected to average 6.6 per cent per year until 2020, China is forecasted to import 8.8 mbd in the year compared to 3.4 mbd as at April China s anticipation on the growing amount of imported oils has pushed it to dispense a lot of money to acquire interests in oil exploration and production all over the world like Russia, Venezuela, Kazakhstan, Peru, Azerbaijan, Sudan, Iran and Iraq. 30 Apart from that, China is trying to reduce its dependency on oil as a major source of energy by expanding the natural gas production and consumption. Currently China s oil imports from the Middle East have amounted about 58 per cent from its total oil import. Still, with all its efforts, the quantity of imported oil will continue to be high. It is estimated that by 2015, the total of Middle East oil will account about 70 per cent of China s oil import. 31 Japan, the world's fourth largest energy consumer and second largest energy importer, requires as much as 5.57 mbd of oil in 2003, up from 5.30 mbd in This significant amount of increase is attributed mainly from the recovery of its economy from stagnancy, where its industries are demanding more energy for production, and the shutdown of a large number of nuclear power plants in Without a substantial quantity of natural resources needed to generate energy to satisfy its industrialized economy, Japan needs to import large amount of crude oil, besides natural gas, and other energy resources, including uranium for its nuclear power plants. 32 Oil constituted for 52 per cent of its total energy supply, and is expected to remain as a major energy source in the 21st century. 33 With its proven oil reserves only 57 million barrels (virtually none) Japan imports almost all of its crude oil and as much as 88 per cent of Japan s crude oil supply came from OPEC, particularly Persian Gulf countries like the United Arab Emirates, Saudi Arabia, Kuwait, Qatar, and Iran. In 2001, Japan imported around 3.7 mbd from the Middle East which made the country the single largest customer for the region, where Japan took around 21 percent of that region s exports. 34 South Korea s energy sources are made up of crude oil, liquefied natural gas (LNG), coal, nuclear power plant and hydroelectric. However, oil constitutes the largest apportion of its total energy sources. 35 Approximately 97.3 per cent of South Korea s energy sources came from overseas. 36 As of 2001, South Korea is the fourth largest net oil importer and the sixth largest oil consumer in the world. In 2002, South Korea imported 208 mtoe of crude oil in which 73.4 per cent of it came from the Middle East. 37 Nonetheless, South Korea s Mokhzani Zubir 7

8 dependence on oil has decreased from 60.4 per cent in 1997 to 50.6 per cent in 2001, but dependence on the Middle East for oil has increased from 72.3 per cent in 1999 to 77 per cent in South Korea must import its entire crude oil requirement because the country has no domestic oil reserves. As an industrialized country with progressive economic growth, South Korea is expected to increase its oil consumption. The Asia Pacific Energy Research Centre projected that South Korea s oil demand will grow to be around 2.4 per cent per annum to Saudi Arabia and United Arab Emirate supply about 30 per cent and 16 per cent respectively to South Korea s oil demand. For South Korea, The shipping routes connecting the Strait of Hormuz, Malacca-Singapore straits and Southeast Asian waters form the most important ocean routes used to import strategic commodities. 40 It is clear that the Middle East is the biggest oil supplier to China, Japan and South Korea. Oil becomes the much needed commodity as it is the major source of energy for these countries. For China, even though it has many unexplored oil basin, its incapacity in oil production technology prevented the country from producing enough oil for domestic demand. Furthermore, the low quality of its oil which contain high amount of sulphur requires expensive refinery technology for desulphurization. Both Japan and South Korea, lack of domestic oil reserves forces the countries to import almost all of its oil demand. For the three Northeast Asian countries, energy determines their survival in the globalized world. Without enough energy, many of their industries will fail to maximize the production and eventually the gross domestic products of these countries will shrink. Uninterrupted flow of imported energy must be secured as not to jeopardize the economic growth. Thus energy security determines directly the economic security of Northeast Asian region. The huge chunk of sources of energy for these countries is crude oil. As almost 80 per cent of oil imported by China, Japan and South Korea comes from the Middle East, the issue of energy security emerges. For these countries, energy security is focused on the effect of supply interruptions and sudden rise in oil prices in international market. Fear of short term unstable oil supply has led Japan and South Korea to develop strategic petroleum reserves. Japan has a sizeable strategic petroleum reserve, currently around 310 million barrels 41 that can last for 119 days. 42 South Korea s strategic petroleum reserve, which is managed by stateowned Korea National Oil Corporation (KNOC) has a capacity of 109 days of stocks which account for 49 days of strategic and 60 days of private stocks as end of July Both countries have prepared themselves for unpredicted supply disruptions where the strategic petroleum reserves serve Mokhzani Zubir 8

9 as safety nets or cushions to their economy from direct impact of oil shortages or sudden increase of oil price. By 2007, South Korea has targeted to stockpile its strategic oil reserve to141 million barrels of oil and increase to 146 million barrels by China, on the other hand, has no strategic oil reserve. 45 Beijing realizes that without the reserve that works as buffer, the country s economy is vulnerable not only to the heighten tension in the Middle East but also to the possible disruption on oil supply route. China s current domestic supply can only last a few days. 46 While China is incapable in stabilizing the situation in the Middle East because of lack of influence, China is serious in keeping sealanes open and securing the ships that are navigating through the chokepoints carrying crude oil from the Middle East. The security of the transport corridors is a big concern to China, chiefly in the Strait of Malacca, through which all Middle Eastern oil reaches China and other Northeast Asian customers. The People s Liberation Army (PLA) Navy has been assigned to secure the sealanes open and to escort Chinese tankers navigating the strategic chokepoints. In the recent France- China joint navy exercise, Beijing has clearly showed that the exercise is centered on maintaining its sealanes of control. Beijing has stated that oil supply routes are one of its strategic interests and would use naval force to control these critical shipping lanes. Hu Jintao, President of the People s Republic of China commented that the Malacca dilemma is a key element to China s energy security. Hu stated, "Certain powers (the United States) have all along encroached on and tried to control the navigation through the strait." A Chinese military expert recommended China to pursue both offensive and defensive naval strategies by building up massive warships and submarines to challenge the domination of the United States forces on the high seas. Offensive military option is to deploy rapid reaction forces when a crisis occurs while defensive posture is by creating credible deterrence capability. Both strategies will show China s determination and strength to safeguard the country s interests. 47 The Military Factor In Asia, the US has two vital interests that it must secure in order to ensure its survival. The first vital interest is to prevent, deter, and reduce the threat of attack on the continental United States (CONUS) and its extended territorial possessions from threats posed by weapons of mass destruction (WMD) in Asia. 48 In Asia, Russia, China, North Korea, Pakistan, India and Iran are said to have the mature Mokhzani Zubir 9

10 nuclear, biological, and chemical (NBC) warfare programs that could inflict serious damage to the U.S. Among these countries, only Russia, China and India have the sophisticated delivery systems, such as ballistic and cruise missiles and advanced attack aircraft. China is the most worried country economically and militarily 49 that could pose real threats to US. Strong economy means China has a lot of money to spend on Research & Development of warfare technology and has the buying power to procure the latest and most sophisticated military equipments. The United States worry about this situation is clearly expressed by James A. Kelly when he testified...neither can we ignore the fact that the Chinese military is a beneficiary of the country's rapid economic growth, which underscores the necessity of sustaining a modest military-to-military relationship with the People's Liberation Army within the guidelines established by Congress. U.S. Trade and Commercial Policy Toward Southeast Asia. 50 The United States therefore has to prevent potential adversaries (China) from acquiring a credible military capability that could challenge its superiority. To achieve this vital interest, the U.S. also has to prevent the rise of a hegemonic state in Asia. The existence of a hegemonic state that dominates the internal and external Asian land mass and the SLOCs could pose an offensive challenge to the safety, prosperity, and power position of the United States. 51 The rise of a powerful country particularly in East Asia could deny the U.S. access to the region s capital, market, goods and technology. This act of denying access could choke the US economy, drying up its wealth to sustain its military which lead to the weakening of the U.S. foreign policy. The combination of the multiple effects of denying access would threaten the U.S. economic security and prosperity that would threaten the relative power position of the United States in international politics. 52 To preempt the rise of a hegemonic state in East Asia, the US needs to prevent a concentration of resources in one state. To do this, it has to control the SLOCs that are vital to a particular country as a mean to cumulate wealth and resources in order to become the hegemonic state. The second vital interest the United States has in Asia is to ensure the survival of American allies. 53 In East Asia in particular, the U.S. most important allies are Japan and South Korea. The main reason that requires the U.S. to protect its allies is the U.S. has treaty obligations to Japan and South Korea. This treaty also serves to ensure the economic growth of Japan and South Korea from external aggression. The assurance of security to Japan and South Korea together with massive investments and technical assistance by the U.S. to both countries have helped the countries to prosper and developed. The highly industrialized Mokhzani Zubir 10

11 Japan and South Korea, once the recipients of U.S. money, are the main trade partners of the US. In 2003 South Korea s import from the U.S. amounted to USD$24 billion, which is the United States third biggest market in East Asia. Since the U.S. economic growth is directly influenced by the success of these two countries, the U.S. must ensure that the industrial output and the gross domestic product of these countries are not threatened. One of the situations that can directly affect the economic growth of Japan and South Korea is the outbreak of war in Korean peninsular and across the Taiwan Strait. To prevent both limited and large scale war, the US stations 100,000 troops which consist of the U.S. Eighth Army and Seventh Air Force in South Korea, and III Marine Expeditionary Force and Fifth Air Force in Japan, and the U.S. Seventh Fleet. This large number of troops represent as deterrent capability and rapid response strategy in the Korean Peninsular and Taiwan Strait where the U.S. is responsible in assisting Taiwan to maintain a military balance across the Taiwan Strait until a peaceful resolution of the political standoff between Taipei and Beijing can be reached. For the U.S., maintaining an overseas military presence is a keystone of U.S. National Security Strategy and a key element of U.S. military policy of shape, respond, and prepare. 54 As the U.S. military bases are scattered throughout the world, access to the bases at any time, either during peace, conflict, crisis or war, requires secured airspace and freedom of navigation especially in the choke points or SLOCs. The U.S. military bases in Japan and South Korea are effectively accessed via sea and sealift is the main strategy for deployment and logistics during conflict either with North Korea or even China. If a crisis conflagrates or war breaks in Northeast Asia, U.S. Navy reinforcements from the Middle East is needed to neutralize the situation. To reach the battlefield in Northeast Asia as soon as possible, the SLOCs in Southeast Asia especially the Strait of Malacca provide the fastest route. According to a U.S. source, if a conventionally powered six-ship carrier battle group traveling from Japan to the Persian Gulf or vice versa were denied transit through the Strait of Malacca and the Indonesian archipelago, rerouting around Australia would add some 5,800 nautical miles and delay the arrival of the battle group by sixteen days and result in US$ 2.9 million additional fuel costs. 55 For the U.S., denial of free passage and freedom of navigation through Southeast Asia s choke point especially that limits the movement of warships is their greatest concern. In 1996, the U.S. experienced their concern when Indonesia announced that it intended to restrict military and commercial shipping lane on three of its waters which are the Sunda Strait, the Lombok Strait and the Moluccan Sea. Furthermore, access to the Strait of Malacca will be restricted. The sudden access restriction by Indonesia could hinder Mokhzani Zubir 11

12 the U.S. Navy s movement during a crisis either in Northeast Asia or in the Middle East. An angry protest lodged to the Suharto government by the U.S. managed to return the U.S. rights for freedom of navigation in the archipelago but concerns on the closure of the choke points especially the Strait of Malacca remains higher than before. In 1997 the importance of the Strait of Malacca to U.S. became evident when the U.S. aircraft carrier Nimitz that was in Asian waters was ordered by the Clinton administration to reinforce the Persian Gulf fleet so as to pose a credible military threat to Iraq which was having a crisis with the United Nations over the weapons inspection. With guaranteed navigation rights, the Nimitz was allowed to sail through the South China Sea, through the Strait of Malacca, off the coast of Western India, and then up to the Gulf. If the Nimitz was denied its navigation rights in the Strait of Malacca, it would have been impossible for the Nimitz the reach the Persian Gulf on time and the whole crisis scenario could have turned out differently. In the early 1990s after the end of Cold War the U.S. has lessen its concentration in Southeast Asia but with the renewal of policy on East Asia by the Clinton administration and the rise of China, the US reshaped its strategy in East Asia. The U.S. Navy and Air Force established bunkering, Rest and Recuperation, and joint exercise access to even more Southeast Asian states than were available during the Cold War. 56 Agreements and arrangements are made with Australia, Thailand, Malaysia, Brunei, Indonesia, the Philippines and Singapore to secure the navigation rights on the SLOCs and for logistic purposes. The Changi naval base has been newly expanded to accommodate Nimitz-class aircraft carriers and other large ships of the U.S. Seventh Fleet that are transiting from the Indian Ocean to the Taiwan Strait. 57 The policy of places not bases developed by U.S. forces in the Pacific for Southeast Asia is intended to enhance U.S. strategic interests in maintaining regional stability and a credible power projection capability in the region and beyond, including the Arabian Gulf when necessary, 58 and to retain its influence in Northeast Asia securing its economic, capital and military access vis-à-vis the emerging powerful China through the domination of SLOCs. During the Cold War, the US top strategic objective was in maintaining freedom of navigation of SLOCs in Southeast Asia for American military vessels while denying that same freedom to the Soviet Union in the event of a conflict. 59 According to Mark J. Valencia, the US flexibility of Southeast Asia's SLOCs during the Cold War was meant to create options for the U.S. Navy to navigate its warships and nuclear submarines from East to West and vice versa. This navigation options will create uncertainty and confusion" to the enemy to locate the nuclear submarines. The probability of the Mokhzani Zubir 12

13 carrier battle group for example, to use the Lombok Strait is small as it can use other straits as well. If China is able to dominate the Strait of Malacca, China has reduced the US ability to confuse its rival by making the probability of the U.S. Navy to use certain straits higher. The U.S. warships can be expected to use either Lombok Strait, Sunda Strait or re-routing around Australia. Therefore, the warships can be detected, targeted or marked easier than before. It seems that the resurgence of Chinese naval superiority in the 21 st century prompt the US to execute the same strategy it once imposed during the Cold War. China, a country that depends heavily on seaborne trade for economic vitality and energy needs, has projected the build up of its naval capability to secure its sea lane of communication in the South China Sea, Strait of Malacca and even up north to the Indian Ocean and further to the Persian Gulf. As part of China s effort to secure the Strait of Malacca sea lane, China has built strategic infrastructure in Myanmar that includes roads, communication and intelligence networks, and military bases. Electronic intelligence systems are installed in the Great Coco Island in the Bay of Bengal, Sittwe and Zedetkyi Kyun off the Terrasserim coast in South Myanmar for the purpose of maritime reconnaissance and intelligence to monitor any activity on the Malacca Strait and Indian Ocean that could threaten their sea lane security. China s intelligence infrastructure build up in Myanmar is also related to its strategic step to counter India s influence in Southeast Asia. India has a vital interest in seeing the Strait of Malacca will not be controlled by countries that are hostile to it. 60 The Look East policy that India pursues is meant to establish a stronger political and naval presence in Southeast Asia. The policy has led the country to augment its engagement with Southeast Asian countries where India has increased its attention to ASEAN. For New Delhi, the sea lanes in Southeast Asia have grown its importance in terms of energy security because New Delhi is looking for oil and gas supplies from Myanmar, Vietnam and Indonesia. 61 Thus it is not surprising that in 1999, India announced that its strategic interests extended all the way from the Persian Gulf to the Strait of Malacca. India s seriousness in securing its strategic sea lane is evidenced in 2001 when India deployed its navy to East Asia, from Singapore to Japan. India s Andaman and Nicobar Command (ANC) in the Andaman and Nicobar Islands was established partly to check the growing Chinese presence in the waters close to India. The ANC also is an infrastructure to facilitate India s force projection up to the Strait of Malacca. 62 For China, India s naval power projection in the Strait of Malacca and its Look East policy is inauspicious because China s merchant ships and oil tankers are Mokhzani Zubir 13

14 subject to blockade or harassment by Indian Navies if Indo-China war breaks again. The 1962 war has led China to seize more than 3,000 kilometer long Himalayan border on which India deems its own territory. The last time tensions escalated on the border of the disputed territory was in 1986 and since then the situation is stalemate. Even though high-level bilateral talks took place since 1994, the conflagration of tension of Indo-China border dispute cannot be ruled out. China realizes that its energy supply from the Middle East is easily interrupted in the Indian Ocean but the situation will get worse if the Indian Navy is able to encroach in the Strait of Malacca and even to South China Sea. If that happen, China s trade route and oil supply from Southeast Asia are really threaten. In the event of Indo-China border war, the Indian Navy which is roaming free in the Strait of Malacca and the South China Sea could disrupt China s seaborne trade and oil supply from both the Middle East and Southeast Asia and that could make China s economy totally collapse. The waters in Southeast Asian are important to China s strategic projection and Beijing has devoted so much of its resources for political, economic and military purposes. India is probably seen as an unwanted actor in Southeast Asia by China and its presence must be brought to a standstill or it could imperil China s strategic posture in the 21 st century. CONCLUSION It is obvious that in the Strait of Malacca, the United States is the biggest stakeholder followed by China. For the US, the importance of the strait has grown significantly in relation to the rise of China. Although there are other straits in the Indonesian archipelagic waters that can be used both for military and civilian purposes, the U.S. must retain its dominance in the Strait of Malacca for these reasons. First, to show its rival (China) that the US presence is the barometer of its influence in East Asia. The U.S. Navy s regular traverse in the strait is the indicator that it has the capability both to influence and pressure littoral states. Second, the U.S. Navy s firm hold on the strait is a warning to China that its seaborne trade and oil import is at the mercy of the U.S. Any attempt by China to assert its influence and pushing aside the US role and market share from East Asian countries will be punished by the US by blocking the SLOCs especially in the Strait of Malacca. Third, to secure the merchant ships and oil tankers that belongs to U.S. allies. Japan and South Korea use the Strait of Malacca extensively to export its finished products and to Mokhzani Zubir 14

15 import oil from the Middle East. The U.S. has to guarantee its allies that it can protect their economic interest. Failing to do so, Japan and South Korea might seriously consider securing their merchant ships and oil tankers unilaterally by dispatching their own navies and self defense force. If this happen, China would feel threaten and the power struggle in the Strait of Malacca will become fury. Fourth, to prevent the rise of hegemonic state in East Asia and possibly in the world. China s impressive economic growth, its advancement in science and technology, its achievement in sending man to the atmosphere by using its indigenous technology (partly assisted by the Soviet) are the testimony that China is rising as a superpower. Although it is still far for China to be at par with the US, China has shown the trend, pattern and attitude to become a superpower. The United States has no other choice except to monitor this pattern closely and possibly check China s progress in the Strait of Malacca. China may dominate the Asian land mass therefore the U.S. has to deny China s domination in Southeast Asian SLOCs especially the Strait of Malacca. Fifth, the US cannot afford to lose the Strait of Malacca to China because of morale and dignity factor. If the PLA Navy successfully controls the strait, it will boost up the Chinese morale and encourage them to control other straits as well. The U.S. will lose its dignity as a superpower and its allies will lose confidence towards U.S. as a reliable guarantor for universal freedom of navigation. For China, its concern on the security of oil supply prompts their defense apparatus to project their naval power in the Strait of Malacca and further to the Persian Gulf. It is imperative for China to hold a strong position in the Strait of Malacca. As the Strait of Malacca is the main entrance to East Asia from the West, China could secure its seaborne trade and oil supply within Southeast Asian countries. China needs to create a perimeter of sea defense for its ships that navigates within Southeast Asia. China s trade with ASEAN countries must be contained or sealed from external aggression that could invade via the Strait of Malacca and other straits in the Indonesian archipelagic water. In fact, China has made its first step to secure its position in the Indonesian water by investing in Indonesia s oil and gas industry. In January 2002 the Chinese stateowned offshore oil company CNOOC bought the Indonesian oil and gas fields owned by the Spanish company Repsol-YPF for $585 million. Five months after that, the PetroChina Company won a bid to acquire the Indonesian assets of the Devon Energy Corporation for $262 million. 63 By investing in oil and gas industry in Indonesia, China has the reasons to deploy its warships in the Indonesian waters. Besides to Mokhzani Zubir 15

16 secure its oil tankers, the warships can be used to patrol Indonesian straits and plug the straits from belligerent elements that might threat China s tankers and merchant ships. In the future Indonesia will likely become China s main destination of oil and gas investment. With huge amount of money poured into Indonesia, China could assert its influence on Indonesia regarding the navigational rights in Indonesian waters that will benefit China and push aside the U.S. China also needs to ensure that the Strait of Malacca will not be used to threaten its vessels in the event of China s crisis with Taiwan. China experienced the U.S. gun boat diplomacy in 1997 when China warned Taiwan not to hold election. The level of tension during the crisis is high that it could escalate into limited war. 64 Thus in the future the possibility of the U.S. Navy harassing the Chinese vessels that are traversing the Strait of Malacca cannot be ruled out. The Strait of Malacca is a subject of struggle between the United States and China. The Regional Maritime Security Initiative (RMSI), a maritime security arrangement advocated by the U.S. is regarded by China as a strategy to strengthen the U.S. domination in the Strait of Malacca and other SLOCs in Southeast Asia and China strongly opposed to it. China is surely designing its own strategy to counter the RMSI. The struggle of the two powers will continue in the long term and Malaysia and Indonesia as littoral states, are feeling the heat. ENDNOTES 1 In 2003, at least 62,334 ships passed through the Straits of Malacca, ranging from VLCC to fishing vessels. These ships were compulsory to report to the Vessel Traffic System under the IMO s Mandatory Ship Reporting System in the Straits of Malacca and Singapore (STRAITREP). See 2 There are many interpretations of the geophysical aspects of the Strait of Malacca. In this article, I will use Dr. Vivian Forbes s delineation of the strait, where the strait s northern limit is at Pulau Rondo to Koh Phuket and the southern limit is at Pulau Karimun to Tanjung Piai. These northern and southern limits of the Malacca Strait bring about the total length of 500 nautical miles or 926 kilometers with a surface area approximately 52,000 square nautical miles. See Vivian Louis Forbes, The Malacca Strait in the Context of the ISPS Code, MIMA Conference Papers on The Straight of Malacca: Building A Comprehensive Security Environment, Kuala Lumpur, October Sumihiko Kawamura, Shipping and Regional Trade: Regional Security Interests, in Sam Bateman and Stephen Bates ed., Shipping and Regional Security, Canberra Papers on Strategy and Defence, No. 129, Australian National University, 1998, p Ibid Mokhzani Zubir 16

17 5 Ji Guoxing, Asian Pacific SLOC Security: The China Factor, Royal Australian Navy Sea Power Centre. April Chia Lin Sien, Protecting the Marine Environment of ASEAN from Ship-Generated Oil Pollution and Japan's Contribution to the Region, Institute of Developing Economies, Tokyo, Chia Lin Sien, Marine Carriage of Petroleum with Special Reference to Northeast Asia, Policy Paper 33. The paper is on the World Wide Web at [accessed on 12 September 2004] 8 John H. Noer, Southeast Asian Chokepoints: Keeping Sea Lines of Communication Open, Institute for National Strategic Studies, Strategic Forum, Volume 98, December Ashley J. Tellis, Chung Min Lee, James Mulvenon, Courtney Purrington, and Michael D. Swaine, Sources of Conflict in Asia, in Zalmay Khalilzad and Ian O. Lesser ed, Sources of Conflict in the 21st Century: Regional Futures and U.S. Strategy, RAND, Focus on Asia-Pacific Economic Cooperation, U.S. Department of State Dispatch, 20 September 1993, p Donald Rumsfeld, Strategic Imperatives in East Asia, speech to the Heritage Foundation, March 3, 1998, available at [accessed on 20 September 2004] 12 Growth of U.S. Exports to ASEAN & Other Major Markets, The statistics is available at [accessed on 18 September 2004] 13 East Asia includes Northeast Asia and Southeast Asia. Northeast Asia refers to China, Japan, the, the two Koreas, Taiwan, and Hong Kong. Southeast Asia comprises the ASEAN countries (Brunei, Indonesia, Malaysia, the Philippines, Singapore, Vietnam, and Thailand), Cambodia, Laos, Myanmar. 14 According to U.S. Commerce Department calculations, USD$1 billion of exports correlate to between K to 19K jobs. U.S. Trade Promotion Coordinating Committee, National Export Strategy, October 1995 and October Growth of U.S. Exports to ASEAN & Other Major Markets, The statistics is available at [accessed on 20 September 2004] 16 Stanley B. Weeks, Sea Lines of Communication (SLOC) Security and Access, IGCC Policy Paper. The paper is on the World Wide Web at [accessed on 16 September 2004] 17 China became the largest recipient of foreign direct investment (FDI) in 2003, surpassing the United States, which has previously enjoyed the biggest inflows of FDI. The Organization for Economic Cooperation and Development (OECD) said China attracted $53 billion in 2003 compared to $40 billion for the U.S. economy. See [accessed on 22 September 2004] 18 U.S. annual merchandise imports data made available by United States International Trade Commission. See [accessed on 4 November 2004] 19 China-ASEAN trade records new high in See [accessed on 10 September 2004] 20 Jane Perlez, China Races to Replace US as Economic Power in Asia : NY Times. [accessed on 17 September 2004] 21 James A. Kelly, Assistant Secretary of State for East Asian and Pacific Affairs Testimony before the House International Relations Committee Washington, DC, June 25, Asia Pacific Energy Research Centre, APEC Energy Demand and Supply Outlook 2002, Institute of Energy Economics, Japan, 2002, pg UNCTAD, Analysis of Ways to Enhance the Contribution of Specific Services Sectors to the Development Perspectives of Developing Countries: Energy Services in International Trade: Mokhzani Zubir 17

18 Development Implications, Note by the UNCTAD Secretariat, TD/B/COM.1/46, 10 December According to the United States Energy Information Administration, China consumed about 5.56 mbd (2003E), Japan 5.57 (2003E) and South Korea 2.1 mbd (2001E). 25 Figures taken from Malaysia s Marine Department on ships that reported to Klang Vessel Traffic Separation Scheme (VTS) in There were 3,487 VLCC/deep draft carrier and 15,667 tanker vessel reported to Klang VTS. See [accessed on 16 September 2004] Each crude oil shipment requires the tanker operator to consider the voyage length, port and canal constraints and volume to maximize the economic benefit. Usually crude oil exports from the Middle East which carry high volumes that travel long distances are moved mainly by VLCC s typically carrying over 2 million barrels of oil on every voyage. See [accessed on 3 September 2004] 26 Asia Pacific Energy Research Centre, APEC Energy Demand and Supply Outlook 2002, pg Country Analysis Brief, Environment Information Administration. The article is on the World Wide Web at [accessed on 11 September 2004] 28 Erica Strecker Downs, China's Quest for Energy Security, RAND, 2000, pg Chinese net oil import up 1.4 mbd IEA, INTERTANKO online news. The news is available on the World Wide Web at [accessed on 9 September 2004] 30 Gal Luft, Fueling the dragon: China's race into the oil market, Institute for the Analysis of Global Security. The article is on the World Wide Web at [accessed on 10 September 2004] 31 Mehmet Ogutcu, China s Energy Security: Geopolitical Implications for Asia and Beyond, Oil Gas and Energy Law Intelligence, Volume I, issue #02 - March Country Analysis Brief, Environment Information Administration. The article is on the World Wide Web at [accessed on 11 September 2004] 33 Fundamental Philosophy of Japan's Oil Policy, Agency for Natural Resources and Energy, Government of Japan. The paper is on the World Wide Web at [accessed on 21 September 2004] 34 Asia Pacific Energy Research Centre, Energy Security Initiatives: Some Aspects of Oil Security, Institute of Energy Economics, Japan, pg Ministry of Commerce, Industry & Energy (MOCIE), Korea s Emergency Response Measures in Perspective: Short term vs. mid & long term energy security policy programs, IEA/ASEAN Workshop, Republic of Korea, September The paper is on the World Wide Web at [accessed on 21 September 2004] Ibid 37 Ibid 38 Ministry of Commerce, Industry & Energy (MOCIE), Towards a 2010 Energy Policies. The paper is on the World Wide Web at [accessed on 21 September 2004] 39 Asia Pacific Energy Research Centre, Energy Security Initiatives: Some Aspects of Oil Security, pg Seo-Hang Lee, ''SLOC Security in Northeast Asia: Korean Navy's Role'', in Dalchoong Kim and Doug-Woon Cho ed., Korean Sea Power and the Pacific Era, Institute of East and West Studies, Yonsei University, 1990, p Asia Pacific Energy Research Centre, Energy Security Initiatives: Some Aspects of Oil Security, pg China no strategic oil reserves FT. The article is on the World Wide Web at [accessed on 21 September 2004] Mokhzani Zubir 18