Critical Issues in the Indian Ocean Region to 2020

13 September 2010 Critical Issues in the Indian Ocean Region to 2020 Ciara O'Loughlin FDI Researcher Indian Ocean Research Programme Leighton G. Luke Manager Indian Ocean Research Programme Summary The purpose of this paper is to identify a number of the critical issues that are likely to play a major role in the Indian Ocean region over the next ten years. These will then be examined in more detail in subsequent Strategic Analysis Papers. Defining the Region Covering an area of just over 68.5 million square kilometres and bounded by landmasses on three sides, the Indian Ocean is the world s third-largest ocean. The Indian Ocean region, though complex, is a discrete geographical entity. In comparison to the world s other oceans, defining the exact boundaries of the Indian Ocean has been something of an imprecise science and has been a long-standing source of disagreement for hydrological experts. Nevertheless, by drawing wherever possible on the general consensus of experts in the field of maritime boundaries, FDI delimits the Indian Ocean by the following points: A: latitude 60 S (the northernmost limit of the Southern Ocean); B: Cape Agulhas (the southernmost point of the African continent); C: the Suez Canal; Figure 1: Limits of the Indian Ocean

D: the northernmost reaches of the Persian Gulf; E: the Strait of Malacca; F: from the Singapore Strait to the eastern boundary of the Timor Sea (including the Java, Flores and Banda Seas that lie within the archipelagic waters of Indonesia); and G: the west coast of Tasmania (but not including the waters of Bass Strait). In addition to Australia and its External Territories, FDI defines the Indian Ocean region as comprising the following states (Indian Ocean Region key states ): Africa Middle East South Asia South-East Asia Island States South Africa Saudi Arabia Pakistan Malaysia Madagascar Mozambique Yemen India Singapore Mauritius Tanzania Oman Bangladesh Indonesia Seychelles Kenya United Arab Réunion Sri Lanka East Timor Emirates (France) Somalia Qatar Burma Mayotte (France) Djibouti Bahrain Thailand Comoros Eritrea Kuwait Maldives Sudan Egypt Iran British Indian Ocean Territory (UK) The following states, either adjacent to, or dependent on, the Indian Ocean (Indian Ocean Region peripheral states ) are also influenced by events in the region: Africa Middle East Asia Ethiopia Jordan Nepal Zambia Iraq Bhutan Malawi The Palestinian Territories Afghanistan Lesotho Syria Botswana Israel Zimbabwe Lebanon Uganda Iraq Rwanda Burundi On the basis of this conceptual framework, the Indian Ocean Region is comprised of 36 key states, and 19 peripheral states. The region also includes numerous island territories of littoral and other states. These territories generate valuable Exclusive Economic Zones (EEZs) and strategic outposts for the regional and extra-regional states that control them. Page 2 of 11

Wealth in the Indian Ocean Region The Indian Ocean Region contains an abundance of minerals, oil and natural gasses. The Indian Ocean Region s littoral states contain more than two-thirds of the world s known oil reserves, 35 per cent of the world s gas reserves, 60 per cent of uranium, 40 per cent of gold, 80 per cent of all diamond deposits and a large variety of other mineral substances. These natural resources have created a great degree of wealth in some key Indian Ocean Region states, while others have either been lacking in resources, or, for socio-historical reasons, have been unable to capitalise on such potential sources of wealth, largely due to conflict or poor governance. The Indian Ocean Region contains a huge diversity of economies. The figures for the Gross Domestic Product (GDP) of the Indian Ocean s key states vary enormously from India s estimated 2010 GDP of US$1,367.2 billion and that of Australia at US$1,192.9 billion twelfth and thirteenth-largest in the world, respectively to the likes of Somalia, East Timor, Djibouti, the Maldives, Zimbabwe and Comoros. The International Monetary Fund estimates Comoros 2010 GDP to be US$0.564 billion, the lowest of the Indian Ocean Region s key states, putting it in 177 th place in the global rankings of 183 national GDPs. 1 Given the relatively miniscule populations of many of the Indian Ocean s island states and territories, a more accurate measure of wealth disparities within the region is GDP per capita. On that basis, the key states of the Indian Ocean Region with the highest per capita GDP are Qatar, Singapore, Australia, Kuwait and the United Arab Emirates, with global rankings of first, fourth, tenth, fourteenth and eighteenth places respectively. 2 Conversely, the Indian Ocean states with the lowest per capita GDP are Mozambique, Madagascar, Eritrea and Somalia, 3 with per capita GDP of US$981, US$905, US$676 and US$298 respectively. All four states are, or recently have been, in a state of conflict and/or disarray, largely as a result of warfare or civil upheaval. Despite the poverty of states such as Mozambique, Somalia, Djibouti, Eritrea and Sudan, five of the Indian Ocean Region s key states Australia, India, Indonesia, Saudi Arabia and South Africa are members of the G20. This standing provides these wealthier Indian Ocean states with a position of influence which has the potential to be used for their collective advantage. Governance in the Indian Ocean Region Just as there is a huge variance of cultures and economies in the Indian Ocean Region, there is also a great diversity in governance. Many of the Indian Ocean Region s African states possess governments that are non-existent, weak or corrupt. Relative to their other African 1 Based on 2010 forecasts calculated by the International Monetary Fund in US dollars at current prices. Available from the IMF World Economic Outlook Database 2010. <http://www.imf.org/external/pubs/ft/weo/2010/01/weodata/index.aspx> 2 Based on 2010 forecasts calculated by the International Monetary Fund in US dollars using the Purchasing Power Parity method. Available from the IMF World Economic Outlook Database 2010. 3 Somalia figure from the National Accounts Estimates of Main Aggregates calculated by the Economic Statistics Branch of the United Nations Statistics Division using 2008 data, all others from the International Monetary Fund, as above. Page 3 of 11

counterparts, South Africa, Tanzania, Kenya, Seychelles and Mauritius have the most stable governments. All are republics providing for regular elections. Mozambique, Egypt, Rwanda and Madagascar perhaps form a second category of the next most stable African key states. Since the enactment of its new constitution on 20 November 1999, Mozambique, though stable and with some notable successes, has also faced some electoral controversies. As presidential republics, both Egypt and Rwanda hold regular elections, though presidential elections in Egypt remain effectively one candidate affairs and in both countries opposition parties have raised questions about government interference in the electoral process. Madagascar s post-1992 democratic record recently faced a challenge when, in March 2009, the democratically elected President, Marc Ravalomanana, stepped down, handing over government to the military, which then transferred power to opposition leader and former mayor, 36-year old Andry Rajoelina. As of mid-2010, the situation remains unclear and progress towards the elections scheduled for 2011 appears uncertain. The third political category of the Indian Ocean Region s African states includes the likes of Eritrea, Djibouti and Sudan. Democratic government is absent in Eritrea, where 2001 elections were postponed indefinitely, in Djibouti, which is effectively a one-party state, and in Sudan which, despite the 2010 elections, remains largely under the authoritarian control of President Omar al-bashir. As a long-term failed state, Somalia is perhaps best thought of as occupying a category of its own. Somalia s civil war resulted in the complete collapse of its central government. The country has existed in a state of anarchy since 1991. Although the internationally-recognised Transitional Federal Government backed by the United Nations, Ethiopia and the West has been in place since 2004, it lacks resources and effectively has no control beyond central Mogadishu. There is no central justice system and the growing influence of pirates and Islamist militias such as al-shabaab pose further challenges to its meagre authority a situation which looks likely to continue. Governance of the Indian Ocean Region s key Middle Eastern states takes a different form to that of their African neighbours. With some exceptions, most of these states, though far more stable than the African nations listed above, are not representative democracies. They vary from constitutional monarchies (Bahrain and Kuwait), to absolute monarchies (Saudi Arabia and Oman), republics (Yemen and Iraq), a theocratic republic (Iran) and a federation (the United Arab Emirates). Qatar has begun the first moves from an absolute monarchy to a constitutional monarchy. The Asian states of the Indian Ocean Region are comprised predominantly of republics, federal republics and parliamentary democracies. The most notable forms of government amongst these states are perhaps the Islamic Republic of Pakistan and the military junta in Burma. The aftermath of Sri Lanka s civil war and, in particular, the government offensive and victory in 2009, has arguably resulted in reduced faith in the country s democratic institutions. The most recent example is the vote by Parliament in the face of an Opposition boycott to amend the 1978 constitution by removing the two-term presidential Page 4 of 11

limit and granting the president ultimate authority over all public service, judicial and police appointments. The changes permit incumbent president Mahinda Rajapakse to seek re-election for an unlimited number of terms in office and further consolidate the powers of an already strong executive presidency. The array of government institutions amongst the states of the Indian Ocean Region is indicative of the region s diversity and may also suggest differences in political values. The political, cultural and economic variances between Indian Ocean Region states need to be better understood in order to facilitate greater dialogue, prosperity and co-operation within the region. Critical Issues to 2020 The Indian Ocean region is a dynamic, evolving strategic theatre which, having moved on from relative obscurity during the Cold War, will be increasingly at the forefront of geopolitical developments in the twenty-first century. Looking out to 2020, a number of likely critical issues stand out. These will be the subject of separate future Strategic Analysis Papers which will examine them in more detail. For now, it is sufficient to consider them in general terms. In no particular order of significance, the likely critical issues are: Interrelations of and Possible Rivalry between the Region s Three Major Powers Looking out to 2020, relations between the three major powers of the Indian Ocean region India, China and the United States will continue to evolve in complexity, heightened by the possible rise of India and China and a perceived decline of US power in the region. The perception of US strategic decline warrants caution and should not be taken too literally. Of the three powers indeed, of all the world s leading powers the United States alone has the ability to project significant and sustained force into the region. It is a capability which, to 2020 at least, other powers can only aspire to. Furthermore, the US presence is viewed positively by most, if not all, South and South-East Asian governments, which recognise it as a bulwark against Chinese expansion and assertiveness. US economic linkages with the region are also welcomed, as they provide an economic dimension to regional security. Indeed, it has been argued by some, such as former US Ambassador Dr Robert Sutter that, while it may appear counterintuitive, the United States trade deficit with Asia actually works in everyone s favour by providing a market for Asian products. For its neighbours, China is, on the other hand, more of a peer competitor. It thus brings regional economies into a (mostly) stable, Western-dominated system, which, in turn, benefits the US national interest. In the broadest possible sense, while a rising China seeks to counter the dominance of the United States and assert itself as the regional hegemon, an emerging India seeks, in turn, to balance against China. This is a situation which can serve US interests well, as the two regional rivals are left to do the work and take all or most of the risks involved. India s naval expansion is a case in point, as it adds additional weight to the US naval presence. Page 5 of 11

For the above reasons, the India-China rivalry may not be the principal fault line of regional tectonics. Although the two states have encountered difficulties in the past and the potential remains for further clashes probably more so along their land borders rather than in the waters of the Indian Ocean their relationship is perhaps ultimately overshadowed by the opportunities and challenges of the evolving China-US relationship. Competition for influence and resources The Indian Ocean Region contains substantial quantities of energy resources. This is particularly so in the case of oil, coal and natural gas. Crucially, it is also a transit zone for much of the world s energy resources. The Indian Ocean Region contains some of the world s fastest growing populations and economies, such as India and Indonesia. China, whilst not an Indian Ocean Region state, is also dependent upon, and seeking to influence, the Indian Ocean Region. These dynamics, and the finite nature of the globe s fossil energy supplies, have created a growing sense of energy nationalism, in which states compete for access to increasingly scarce energy resources. It is in this context, and on the basis of historical animosities, that China and India in particular have sought to gain greater influence in the region. Key sites of competition in a list which will undoubtedly expand over the coming decade include Mozambique, Tanzania, Sri Lanka, Nepal, Bangladesh, Burma and the Maldives. In addition to energy considerations, there is currently competition, and the potential for intensified competition, between Indian Ocean states seeking to attain greater shares of the region s fisheries and fresh water resources. Other states, some of them extra-regional actors, will also compete for the region s resources. Examples include South Korean attempts to purchase farmland in Madagascar and the expansion of both China and India into the resources sectors of various African countries. There is also more general competition between Indian Ocean states for power and influence within the region. While this competition for influence is inextricably linked to competition for resources, other geostrategic motives may also be significant, particularly as leading states such as India and China seek to balance against each other and smaller states choose to bandwagon with one or both for security. It is important to recognise, however, that the states of the Indian Ocean Region have significant common, and far less controversial, interests. If such interests are recognised, the capacity for co-operation would undoubtedly be enhanced. Examples of commonalities that will increasingly be recognised by the region s states in the coming years are the co-operative confrontation of unconventional security threats for the preservation of maritime trade routes and resource management co-operation. Indeed, this has already begun, with the multinational efforts to combat piracy undertaken in the western Indian Page 6 of 11

Ocean. The 1960 Indus Waters Treaty between India and Pakistan and the East African Nile Basin Initiative, while certainly not perfect, can provide templates for this purpose. Failed and Failing States The ongoing presence of current failed or failing states, such as Somalia and Afghanistan, and the existence of internal problems in other states, such as Yemen and Pakistan, which could lead to them also becoming failed or failing states, will continue to undermine regional and global security over the coming decade. Both Yemen and Pakistan will continue to be frontline states in attempts to confront or control non-state actors such as al-qa ida, the Taliban, Lashkar-e-Tayyiba and other Islamist extremist groups. Those groups, and others like them, will themselves continue to challenge a perceived Western cultural and geopolitical dominance and to overthrow regional governments seen as being allied with the West or otherwise un-islamic. For better or worse, states such as those above will continue to anchor Western forces including those of the US and Australia in the region. In the case of Somalia, militia groups such as al-shabaab will continue to challenge the limited authority of the Western-backed Transitional Federal Government. The accompanying instability and otherwise limited economic opportunities will likewise allow piracy to continue unimpeded. Piracy Piracy in the Indian Ocean Region is concentrated in but not confined to the waters of the Gulf of Aden, southern Red Sea, much of the Arabian Sea and the western Indian Ocean along the east African coast as far south as Madagascar and as far east as the Seychelles archipelago. Barring an end to the Somali Civil War and the return of some form of meaningful civil authority capable of patrolling the nation s territorial waters and enforcing the rule of law, thus providing a framework for long-term economic growth, piracy looks likely to continue to be one of Somalia s few growth industries. Over the next decade, international attempts to control Somali piracy will continue. It is very likely that the number of nations taking part in the various naval forces will expand. Given the vast, and increasing, distances to be patrolled, the obvious economic attractiveness of piracy and the anarchic conditions in Somalia, it remains to be seen just how effective those forces will be. As United Nations Secretary-General Ban Ki-moon noted in a March 2009 report to the UN Security Council: in the long term the issue of piracy and armed robbery at sea off the coast of Somalia will be resolved only through an integrated approach that addresses the Page 7 of 11

conflict, lack of governance and absence of sustainable livelihoods on land in Somalia. 4 Population Growth and People Movements Based on the FDI definition of the states in the Indian Ocean Region, the region has a population of approximately 2.4 billion people. Populations range from India, with a population of 1.21 billion and predicted to overtake China as the world s most populous country by 2030 to the Seychelles, with a population of just 85,000. 5 Further complications from population growth will be felt in countries where youthful populations outstrip economic growth rates, resulting in increased unemployment. In addition to negative sociological effects, it is a situation which could also have far-reaching political consequences as disenchanted youth query the legitimacy of governments that are seen as having failed them through an unwillingness or inability to ensure a reasonable standard of living. Indian Ocean Region states likely to be confronted with this situation include, among others, Djibouti, Comoros, Yemen and Bahrain, the latter both facing the exhaustion of their oil reserves over the next ten to fifteen years. Looking out to 2020, both Pakistan and Afghanistan in particular are experiencing high population growth rates at a time of great political instability, which does not offer a promising outlook for the future. Indeed, growth rates in Pakistan may actually exceed the UN estimates. South Asia is also predicted by 2025 to be home to the majority of the world s megacities. These megacities will contain populations of 10 million or more inhabitants. Of what the UN predicts will be the ten largest megacities in 2025, five are located in South Asia and all will have populations greater than 19 million: Mumbai (Bombay), Delhi, Dhaka, Calcutta and Karachi. 6 The distribution of food to such megacities will be a significant problem, as it will need to be transported from poorer quality farmland located further away from the ever-expanding population centres, given that the expanding cities generally push outwards into the productive farmland on their outskirts. In the event that food distribution networks to the megacities do breakdown for an extended period of time (such cities are, of course, agricultural consumers, not producers), the likely consequences could include starvation, rioting, political upheaval and, potentially, mass migration. 4 Report of the Secretary-General Pursuant to Security Council Resolution 1846 (2008), United Nations Organisation: New York, 16 March 2009, ss. 48 & 59. 5 Population Division of the Department of Economic and Social Affairs of the United Nations Secretariat, World Population Prospects: The 2008 Revision <http://esa.un.org/unpp/> 6 Population Division of the Department of Economic and Social Affairs of the United Nations Secretariat, 2008, Urban Agglomerations 2007. <http://www.un.org/esa/population/publications/wup2007/2007urban_agglo.htm> Page 8 of 11

The population movements that could result from large-scale famines would produce massive geopolitical challenges to such an extent that many, if not most, governments would struggle to cope with the influx of refugees. The many consequences of population growth will be examined in later Strategic Analysis Papers by FDI s Global Food and Water Crises and Indian Ocean research programmes. Increasing militarisation In the years to 2020 and beyond, increasing militarisation and arms build up among many of the region s major actors will be a continuing feature of the geopolitical landscape. Key points in this regard include the Iranian nuclear programme (and the responses to it of the Gulf States, Israel and the US) and a possible China-India arms race. The latter point is in light of India s naval expansion as it acquires the INS Vikramaditya aircraft carrier and its construction of a new naval base at INS Kadamba on the Arabian Sea, together with China s development of a blue-water navy to protect shipping routes and ensure the reliability of its energy supplies coming through key chokepoints such as the Strait of Malacca. Proliferation of militant Islamist movements The growth and spread of militant Islamist movements will continue to pose challenges to authorities across the Middle East, East African and South Asian sub-regions, where it is very closely related to issues (either real or perceived) of governance and population growth/economic opportunities. In the first instance, local governments are seen by Islamists, who call for the return of a pan-regional Islamic caliphate, as being too closely allied with the West. Pakistan and Saudi Arabia are perhaps the two most well-known examples, but it is a situation which the governments of Bangladesh, the Maldives and even Sri Lanka could find themselves confronted with over the next decade. Within South-East Asia, Indonesian Islamists, too, are receptive to the idea of a caliphate. In the second instance, Islamism may prove attractive to un- and under-employed youth in states such as Yemen or Djibouti, which are experiencing high rates of unemployment and population growth. The growth of schools, or madrassas, dedicated to extremist ideologies and targeting disenfranchised youth is a related problem and one which is already being experienced in Sri Lanka and Indonesia. Potential flashpoints While it is difficult to predict future flashpoints with any degree of certainty, a number of potential flashpoints standout: Somalia On both land and sea, the situation in Somalia appears unlikely to be resolved in the immediate future. Somali pirates will continue to threaten maritime security in the Gulf of Aden and western Indian Ocean, while Islamist militants, such as al-shabaab, will continue to pose a threat to security on land. Al-Shabaab has already attacked villages in neighbouring Kenya and has threatened to attack the Kenyan capital, Nairobi, and was responsible for the Page 9 of 11

July 2010 bombings carried out in Kampala, Uganda. Given that Ethiopia is seen by al-shabaab as being responsible for its removal from power in 2006 when, as the Islamic Courts Union, it held power in Mogadishu, the group may choose to target Ethiopian centres in the future. Equally, the group s admiration for al-qa ida could bode ill for stability in the wider region, particularly since, in February 2010, al-shabaab offered Somalia to al-qa ida for use as a training ground. Yemen A number of significant challenges will continue to confront Yemen, reducing the prospects for lasting stability. The government of President Ali Abdullah Saleh is facing the continuing Houthi rebellion in the far north of the country, a growing secessionist movement in the south, a declining economy as oil revenue peaks, a youthful and underemployed population and the destabilising presence of the al-qa ida in the Arabian Peninsula grouping. All of these factors will continue to undermine stability in a strategically located country, potentially making it difficult for the West to avoid greater involvement in Yemen. Iran and the Strait of Hormuz The Iranian Government s nuclear programme and its antipathy towards the West will continue to make it a focus of attention, as will domestic issues such as a reform movement, power plays within the governing élite and the pressures placed on it by a youthful population, large numbers of whom now doubt the legitimacy of that élite. While the current leadership of Supreme Leader Grand Ayatollah Ali Khamenei and President Mahmoud Ahmadinejad appears to enjoy a strong position despite the recent Green Movement, moderates and reformists have held power previously and will again jostle with hardliners for primacy at some point in the future. Adding to the possible confusion is that fact that there is no consensus among conservatives: clerics in the ruling power structure are distrustful of President Ahmadinejad, suspecting him of attempting to curtail their influence. An expansionist, nuclear-armed Iran headed by a reinvigorated hard-line leadership that has reclaimed some its lost legitimacy would be a potential flashpoint of the highest order capable of, or at least attempting to, cut the flow of energy shipments through the Strait of Hormuz or undermining regional stability through proxies such as Hezbollah. Pakistan Without a resolution to many of the pressures under which Pakistan finds itself, the outlook for this key South Asian state will remain uncertain. In addition to the pressures of population growth and the perennially turbulent relationship with India, Islamabad is also confronted by Islamist extremist groups and the spectre of the Taliban in the North West Frontier Province (Khyber Pakhtunkhwa) and Federally Administered Tribal Areas. The situation in Afghanistan is, of course, closely related. Over the next decade, as now, any Page 10 of 11

resolution, or absence of one, on the Afghan side of the porous border will have an effect on Pakistan s internal security. Egypt Tensions between the ruling National Democratic Party of President Hosni Mubarak and the rise of the Muslim Brotherhood grouping could have a profound effect on Egypt over the coming decade. This is particularly the case in light of President Mubarak s age and the presumed eventual succession to the presidency of his son, Gamal, at the same time as the Muslim Brotherhood gains in popularity and profile. Although not a political party as such, since religious based parties are banned under the 1971 Constitution, independents aligned with the Muslim Brotherhood hold the second-largest number of seats in the People s Assembly and are effectively filling the vacuum left by weak opposition parties. If Egypt were to enter into a sustained period of political uncertainty a situation hinted at by Mohamed ElBaradei, a former Director General of the International Atomic Energy Agency and rumoured candidate for the 2011 presidential election, who has called for a boycott of the poll the Muslim Brotherhood may be able to assert itself more fully by agitating for an end to the ban on religious parties and ultimately forcing a realignment of Egyptian foreign policy away from the West. Conclusion This paper has sought to offer a précis of what are likely to be some of the most critical issues and states in the Indian Ocean region over the next ten years, based on current situations and trends and noting the inherent difficulty in forecasting even the immediate future in a highly dynamic environment. The issues identified, and the actors involved, will be the topics of subsequent FDI Strategic Analysis Papers, in which they will be analysed in more detail. ***** Any opinions or views expressed in this paper are those of the individual author, unless stated to be those of Future Directions International. Published by Future Directions International Pty Ltd. Desborough House, Suite 2, 1161 Hay Street, West Perth WA 6005 Australia. Tel: +61 8 9486 1046 Fax: +61 8 9486 4000 E-mail: lluke@futuredirections.org.au Web: www.futuredirections.org.au Page 11 of 11