Characterised by globalisation, the present times bear a new flavour for international relations. The economic liberalization undertaken by states has led to a frenzy of commercial interactions amongst them and their increased participation in global arrangements like International Monetary Fund (IMF) and World Trade Organisation (WTO). The Asia-Pacific has been the frontrunner in the process – Free Trade Areas (FTA) are mushrooming, causing an exponential growth in the flow of trade and investments.
Much of the insecurities of sea-lines stem from inherent vulnerabilities ““ unregulated nature of the maritime realm, fragile trading system and trans-national nature of shipping industry.
The maritime domain has always been a cost-effective medium for merchandise trade, particularly for voluminous commodities. These include fossil-fuel resources like oil, coal and natural gas, which constitute about half of sea-borne trade. While growing trade is increasing the reliance on mercantile shipping directly, it is doing so in an indirect manner too. The accelerating economic growth of countries is increasing their appetites for energy. The present global oil consumption has crossed 80 million barrels per day (Mb/d) and growing at an annual rate of 2.5 Mb/d.
Two-thirds of the world’s oil trade (including refined products) moves via the sea. Natural gas consumption, which stands at 2689 billion cubic metres (Bcm) today, is growing at the rate of 3.3% per year and is expected to overtake coal and rival oil as the leading fossil fuel by 2025, much of which will be shipped as Liquefied Natural Gas (LNG). This boom is stretching all facets of sea-transportation, from the availability of vessels to the economics of transit passage in terms of time and space.
Maritime trade is carried out along the routes that follow established sea-lines, viz. the shortest navigationally safe routes between ’source’ and ‘destination’. It therefore follows that these are akin to ‘jugular veins’ that channel the ‘lifeblood’ of countries for their economic sustenance and development, where economic strength is also a potent currency of state power. In naval parlance, these maritime highways are referred to as Sea-Lines of Communication (SLOC).
With communications being a crucial element of military operations, this is indicative of the military-strategic importance of sea-lines. It is no wonder then that much of the strategic calculations of states have been centered on security of sea-lines during hostilities, and particularly where these cross the constricted waterways. However, the recent past is witness to a transformation in the global security scenario.
The likelihood of major military conflicts has receded and states are realising immense stakes in freedom of navigation at sea to further their respective economic endeavours. Today, the sea-lines are largely imperiled by non-traditional security threats, particularly piracy and terrorism. One therefore tends to ask, are these calculations valid today? Not entirely. Are the sea-lines more secure for maritime commerce? Definitely not !
The paper examines the present-day peril to the sea-lines with particular reference to China and India, the two fastest growing economies in the world. It explores the possible geo-strategic convergence between the two, which could be translated into a symbiotic relationship. Within the theory of international relations, the paper believes in the ‘neo-liberal’ one, rather than that driven by ‘neo-realism’ – it advocates the importance of absolute rather than relative gain in bilateral cooperative arrangements.
Geo-economic Stakes in Overseas Transport
China
About 90% of China’s trade is carried out by sea. Analysis of the latest statistics of China’s top ten trading partners yields interesting results.1 Among these, the EU and India are the only ones that lie west of Malacca Straits. This implies that only about 22% of China’s trade transits the Southeast Asian straits.
The paper examines the present-day peril to the sea-lines with particular reference to China and India, the two fastest growing economies in the world. It explores the possible geo-strategic convergence between the two, which could be translated into a symbiotic relationship.
In 2003, China surpassed Japan to become the second largest global energy consumer. It presently accounts for 12% of global energy demand and its rate of growth is four to five times that of the world figure.2 In the past ten years, its demand for oil has doubled from 3.4 to 6.8 Mb/d. A forecast says that by 2030, this would rise to 11 Mb/d, when imports will account for 80% of its total need (up from the present 40%). By current trends, its dependence on West Asia would grow to the extent of 70% in 2015 (up from the present 60%). Natural gas contributes 3% to China’s energy needs, all of which is presently met through domestic production. However, with consumption increasing at a rate of 19%, LNG imports would commence in 2007. Although much of it would come from East Asia and Australia, a significant amount would also be sourced from West Asia.3 It is predicted that by 2025, gas imports will account for 40% of the need.
This has led to energy security emerging as a pressing national issue. China desired access to Russia’s vast energy reserves, but the recent Russo-Japanese pipeline agreement at the expense of China has raised anxieties further.4 Experts also assert that the offshore energy reserves of the East and South China Seas would not make any significant difference to China’s energy security.5
India
Upto 95% of India’s trade moves by sea. Its dominant trading partners are in the West. However, recent trends indicate a very rapid growth of trade with Eastern Asia.6 For example, India’s trade with ASEAN and China, which are individually worth about US$ 14 billion today, has increased by 5 and 20 times respectively in the last 10 yrs. Hence, the importance of sea-lines in the East is expected to increase considerably, particularly after the FTAs are in place.
India is also in the process of increasing the share of natural gas in its energy mix, which presently stands at 8%”¦ There have been significant gas finds off Indias east coast in 2002 and recently 2005, but being deep-sea finds, the production is not cost-effective.
India is presently the sixth largest global energy consumer. Its energy situation is more critical compared to that of China. Coal meets only half of its needs, and here too, some superior-quality coal is imported. While oil makes up 30% of energy mix, oil reserves are relatively poor. India’s mere 5 billion barrels of proven reserves (as against China’s 18) has led to it importing 70% of its needs (compared to China’s 40%), all from West Asia. It is estimated that consumption will rise from the present 2.6 Mb/d (2004) to 3.2 Mb/d by 2010, with India emerging as the fourth-largest oil consumer. This would lead to greater dependence on West Asia for oil.
India is also in the process of increasing the share of natural gas in its energy mix, which presently stands at 8%. Its consumption of 32.1 Bcm in 2004 was a rise of 7.1% over the previous year, faster than any other fuel in recent years. However, domestic production is limited. There have been significant gas finds off India’s east coast in 2002 and recently 2005, but being deep-sea finds, the production is not cost-effective. While overland imports are more economical, it remains to be seen whether the pipelines from Iran and Bangladesh/ Myanmar would fructify. Even if they do, a significant amount of LNG would continue to be imported from West Asia.
The ‘New Silk Route’
Block arrows are often used on statistical maps to depict the flow of commodities across the sea-lines, its width being directly proportional to the quantity being transported. The one depicting energy flow that extends from the Persian Gulf to the Western Pacific (through Indian Ocean) is particularly broad and widening. This is due to the concentration of fossil-fuel reserves in West Asia and the rising energy demand of growing economies in the Asia-Pacific. Some security specialists refer to it as akin to the fabled “Silk Route”, which is indicative of its importance as a crucial link.7 Other vital sea-lines also merge with this ‘New Silk Route’ (NSR).
The NSR passes through the Straits of Hormuz and Malacca. The former links Persian Gulf to Arabian Sea, through which 15 Mb/d or 40% of the world’s oil passes. The Malacca-Singapore strait connects Andaman Sea to the South China Sea, through which, a quarter of the world trade passes aboard more than 62,000 vessels each year, carrying about half of the world’s oil and two-third of its LNG. 11 Mb/d of oil (10 from Persian Gulf plus one from Africa) crosses it, which includes 80% of China’s imports.
Between the two choke points, the NSR extends through 8/9-degree-channel close to India’s Lakshadeep (islands) in Arabian Sea, passes south of Sri Lanka and then crosses 6-degree-channel (between India’s Great Nicobar Island and Indonesia’s Sumatra Island), before it leads the ships through the Malacca Straits to the East Asian energy consumers.
The Imperilled NSR
Much of the insecurities of sea-lines stem from inherent vulnerabilities – unregulated nature of the maritime realm, fragile trading system and trans-national nature of shipping industry.8 The energy shipments are especially assailable – the 4,000-odd slow-moving and tardy-to-manoeuvre tankers, some of these carrying hazardous cargo like chemicals and LNG. Among the global regulations, the new technological measures like the 9,000-volt electric fence around the ship cannot be employed by these vessels due to the inflammable nature of cargo. Besides, since the rules do not permit firearms on vessels, the high-pressure fire hoses are the only means for self-defence.
The major threat to shipping in the Malacca Straits is piracy. Until a few years back, the boarding of ships for petty theft was more common. The attacks have now become more violent and well orchestrated.
The NSR is particularly vulnerable at the straits of Hormuz and Malacca-Singapore. The former is only 1.5 miles wide at its narrowest point and has no alternative sea-route. The indiscriminate attacks on neutral vessels in the Persian Gulf during the 1984-87 Iran-Iraq Tanker Wars led to the US deployment of naval forces, which continues to this day. Since then, the Gulf has been relatively tranquil, but precariously. West Asia is a sub-region from where maritime-terrorism has struck oftentimes. In 1985, the Achille Lauro was hijacked by Palestinian militants. In 2000, the USS Cole was bombed at Aden by Al Qaeda operatives and the modus operandi was repeated in 2002 for the French supertanker Limburg off Yemini waters.
9/11 is indicative of the fact that terrorists are now increasingly resorting to new attack means for mass effect. Energy flow could be an attractive target, an attack on which could cripple global economy. The worst hit, of course would be the US and its allies; disruption of their economies would also impair their military might.
The above is not a mere conjecture – soon after the Limburg bombing, Bin Laden’s audio tape warned the West: “…the youths of God are preparing for you things that would… target your economic lifeline until you stop your oppression and aggression.9 The Al Qaeda cannot cut-off energy flow to the West by blocking the Strait of Hormuz since Saudi Arabia’s East-West 750-mile oil pipeline from Abqaiq to Yanbu (on Red Sea coast) provides an alternate route. This leads to a greater likelihood of attacks on the Gulf’s energy infrastructure, port facilities handling energy transportation and westbound tankers in port. Such attacks would have severe repercussions for China and India, directly starving them of energy. In any case, this would lead to skyrocketing of oil prices, shipping charges and insurance premiums. Overall, the process of their economic development undertaken by the two countries would be stalled. Even the overwhelming coalition naval presence in the Gulf has not been able to deter the jihadis. In April 2004, Al Qaeda carried out suicide-boat attacks on two Iraqi oil terminals at Al Faw. In June 2005, the super-tankers employed for exporting Iraqi oil were attacked.10 Thus, the energy infrastructure and transportation in West Asia remain lucrative targets waiting to be hit, particularly when the western military presence is scaled down.
The vulnerabilities of Malacca Straits are even greater – besides the inordinately dense mercantile traffic, the 800 km long waterway poses many navigational constraints. It is only 1.2 nm wide at its narrowest and 22 m deep at its shallowest. Intense fishing activity, shipwrecks and shoals pose additional pilotage problems, now further aggravated by the December 2004 Tsunami that has reconfigured the underwater topography. Alternative straits are available for shipping, but this would increase the sailing distance by at least 850nm. Besides, these routes are relatively poorly charted and lack good navigational aids/infrastructure.
The strategies of China and India are essentially centred on “˜avoidance ““ these incorporate either the “˜eggs-in-the-basket approach (resource and source diversification) or, in case of China, the “™shunt approach (to bypass insecure sea-lines).
The major threat to shipping in the Malacca Straits is piracy. Until a few years back, the boarding of ships for petty theft was more common. The attacks have now become more violent and well orchestrated. The Aceh rebels have often resorted to piracy, attacking ships carrying oil and other natural resources since they perceive that they have been unfairly denied access to the natural resource wealth of their province. The funds generated are used to finance their operations. The Sri Lankan separatist group, Liberation Tigers of Tamil Elam (LTTE) has also hijacked ships in the past for direct material gain or to disrupt energy supplies bound for the government forces.
The offshoot of Al Qaeda in Southeast Asia, Jammah Islamiyah, actively supports the sub-regional insurgencies in Muslim-dominated areas. It is now being feared that the JI operatives could also use the tactics of the pirates or even employ them to scuttle a hijacked ship in the most constricted portion of the Malacca Straits or to pilot a vessel carrying dangerous cargo into hub-port. Either one of these would have a severe impact on global economy. This would have cascading and chaotic effects – while time-sensitive freight11 would be hit directly, it would also lead to immediate rise of insurance and freight rates, especially for energy shipments, including dry bulk such as coal. Again, China and India would be among the worst hit in terms of the accelerated process of economic development that the two countries are currently undergoing.
Human activity does not imperil shipping alone -the recent Tsunami of 26 December 2004 may have been unprecedented, but cyclones in the Bay of Bengal are as frequent as two to four annually, which cause much devastation at sea and in the littoral. Considering that more than 100 tankers transit the NSR each day, any maritime disaster could easily lead to an oil spill and seriously degrade the environment.
Current Energy Strategies
The ‘lifeblood’ of countries includes trade in all merchandise. However, energy inflows would be of greater urgency to any energy-deficient country due to the grossly uneven global distribution of fossil-fuel reserves. In that direction, both China and India have worked out respective strategies.
China’s Strategy
China is at a relative advantage in terms of sea-borne trade since three-quarters of its trade flows are not geographically constrained by the choke points of Southeast Asia. It is aptly using this advantage in terms of its energy security too, seeking to source much of its LNG imports from Southeast Asia, Australia and Russia (Sakhalin).
It (China) is implementing its “string of pearls strategy” that seeks strategic presence in states that lie along the route ““ Pakistan, Maldives, Sri Lanka, Bangladesh, Myanmar, Thailand and Cambodia.
In the future, some of its oil could also come from Latin America (Venezuela) through the Pacific route. However, China’s dependence on West Asia would continue to be a cause for concern. Besides being insecure due to Islamic extremism, the sub-region is also under an overbearing influence of the USA. China is thus on the lookout for oil in Africa and Central Asia too.
Notwithstanding the diversification of sources, most of China’s energy would continue to flow through the NSR, with the attendant insecurities of being located at end of this principal energy route. In order to secure these ‘lifelines’, it is implementing its “string of pearls strategy” that seeks strategic presence in states that lie along the route – Pakistan, Maldives, Sri Lanka, Bangladesh, Myanmar, Thailand and Cambodia.12
Increasing the ‘reach’ of the Chinese navy and conduct of joint naval exercises with foreign navies have also been realized as an attendant imperatives. In order to obviate the insecurities connected with the Malacca Straits, it is considering alternative routes, including pipelines from Sittwe in Myanmar to Yunnan in China and another pipeline/canal across Isthmus of Kra (southern Thailand) to the Gulf of Thailand. These ’shunts’ would also cut down many miles of shipping distance.
India’s Strategy
Although India is geo-strategically located with respect to the Indian Ocean sea-lines, relative to China, it is at a greater disadvantage in terms of source-diversification options since it is straddled between the two choke points.
India’s is on the path of optimum resource-diversification and is also making efforts to expand domestic exploration/production. Besides, its source-diversification strategy is very similar to that of China’s – the first is to reduce dependence on oil imports from West Asia, for which, it is seeking alternatives in Africa and South America. The second is to diversify its LNG imports to the east such as from Indonesia, Russia (Sakhalin), Myanmar and Vietnam. In this case LNG shipping would have to pass through the straits of Southeast Asia.
The above strategies of China and India are essentially centred on ‘avoidance’ – these incorporate either the ‘eggs-in-the-basket’ approach (resource and source diversification) or, in case of China, the ’shunt’ approach (to bypass insecure sea-lines). However, in order to address the energy transit problem comprehensively for the long-term, the two countries would need to examine the feasibility of cooperative sea-line security mechanisms.
A Convergence?
It is obvious that despite the adoption of ‘cooperative mode’ during Premier Wen Jiabaos’s 2003 visit to India in terms of the possibility of joint bidding and the Asian Energy Market in the future, the rivalry between China and India in bidding for stakes in overseas oil and gas-fields has been manifesting itself time-and-again – Sudan, Russia, Angola, Iran and Kazakhstan.13 The intense rivalry could be attributed to the zero-sum nature of such bids, particularly when the hunger for energy resources back home is intensifying by the day.
However, securing the lifelines against the common non-state threats would accrue mutual benefit, not to one at the expense of the other. Prima facie, direct cooperation among maritime security forces does not seem to be feasible since China and India are not maritime neighbours. Nevertheless, it may be worthwhile to explore if a coordinated approach is possible in that direction.
The Way Forward
The unstable Persian Gulf and consequent threat to the Hormuz Strait is of concern to both India and China in terms of their energy imports, but neither can envisage a direct security role therein. Notwithstanding, both may play an indirect role through their naval interactions with Gulf-littorals and occasional naval presence. Considering the high probability of their navies operating in the same waters in future, it would be necessary for them to harmonise their activities, evolve confidence-building measures and maybe even complement each other.
While the Malacca Straits encloses Chinas principal energy sea-line, Indias stakes in it lie predominantly in trade interests in the East, which are rapidly gathering momentum. Despite the fact that the primary motivating factors of the two do not coincide, the security of this waterway is equally important to both for economic development.
Notwithstanding China’s ‘String-of-Pearls’ strategy, it is not conceivable for the Chinese Navy to maintain a continuous presence, let alone control, along the widely flung sea-lines of NSR. India could be of much help; geography has bestowed on it a favourable disposition for monitoring almost the entire NSR. The Indian maritime forces also have adequate reach and sustainability. In addition, the maintenance of ‘good order at sea’ is of much importance to India. This includes responding to all contemporary non-state threats including natural disasters. For example, the ’spontaneity’ of the Indian Navy in providing Tsunami assistance to the affected areas in India as well as in the neighbouring littorals simultaneously has been particularly noted in the region.
While the Malacca Straits encloses China’s principal energy sea-line, India’s stakes in it lie predominantly in trade interests in the East, which are rapidly gathering momentum. Despite the fact that the primary motivating factors of the two do not coincide, the security of this waterway is equally important to both for economic development. As in case of the Persian Gulf, China has been concerned about the overbearing US military influence here through its ‘War on Terror’. In April 2004, the US even sought military intervention in the form of Regional Maritime Security Initiative (RMSI).
Fortunately for China, the US operational involvement has been averted for the time being due to RMSI’s rejection by Indonesia and Malaysia. Their sensitivities over issues of sovereignty are genuine and the legitimate right of any nation. India is no different – having itself expressed this sentiment on numerous occasions. However, when a state wilfully accepts a ‘cooperative-mode’ for countering common non-traditional threats, it does so with a reasonable measure of trust and ought to forego extreme national sentiments.
The patrolling assets of the littoral states are grossly inadequate as the states themselves admit.14 The current coordinated patrol, MALSINDO has also been inadequate – after a brief lull following the December 2004 Tsunami, there has been a spate of violent pirate attacks. Hence, the acceptance of extra-littoral operational involvement in the security of these straits would be the prerequisite to any viable security arrangement. Using the naval bases in the Andaman and Nicobar Islands, India has been coordinating its patrols with the Indonesian Navy in the six-degree channel.
The Indian ships could easily extend its responsibility further southwards into the Malacca Straits to assist the littorals. In order to cater for the sensitivities of these states, alternatives could be explored. One of these may be patrolling by extra-littoral naval/coast guard vessels with law-enforcement officials of littorals embarked onboard.
During the ARF summit in July 2004, the littoral states informally discussed India’s possible security role in the Straits with the Indian External Affairs Minister, but this has not yet been followed up with a formal request. The discussions nevertheless indicated that the littorals are more at ease with the Indian, rather than the US role. In view of the current insecurities in this vital waterway, this ought to be acceptable to China too since the RMSI could become more assertive in future if the security deteriorates further. A major terrorist strike in the Straits or the need to intensify PSI activities could easily fuel a US military presence. China has never voiced its aversion to India’s involvement – but it could encourage the Malacca Straits littorals to accept it.
The patrolling assets of the littoral states are grossly inadequate as the states themselves admit. Using the naval bases in the Andaman and Nicobar Islands, India has been coordinating its patrols with the Indonesian Navy in the six-degree channel. The Indian ships could easily extend its responsibility further southwards into the Malacca Straits to assist the littorals.
Considering, the periodic shift of piracy, either westward into the Indian Ocean, or into the South China Sea, China and India could coordinate their efforts to combat the menace. The November 2004 Regional Cooperation Agreement on Combating Piracy (ReCAAP) against ships in Asia15 is a significant step towards this. Such a comprehensive approach would also secure India’s energy imports from the East, viz. the Russian Far East (Sakhalin) and Vietnam, which are expected to commence in the next few years.
Following the precedence of Indian Navy’s escort operations for the US high-value ships transiting through the Malacca Straits in 2002, some countries are also contemplating such escort of their vital shipping through the Straits. It is important to note that such missions through ‘international straits’ are well within the ambit of international law. If the insecurities In the Malacca Straits increase in the future, Indian and Chinese maritime forces could even escort each others’ selected vessels carrying vital commodities, the Indian Navy in Indian Ocean/Southeast Asian straits and the Chinese Navy in East/South China Sea.
At close examination, there may be many other convergences between India and China in the domain of maritime security. The two being important players in global security, their coherent voice in the new legal instruments could be useful to combat other non-traditional threats too. Their maritime security forces could conduct joint anti-piracy and disaster-relief exercises, probably alternately in the Indian Ocean and the Western Pacific. The WPNS is a major forum wherein the regional navies share their views on maritime security issues. India presently attends the meetings as an observer. China could play a useful role towards facilitating its full membership.
Conclusion
There have been predictions from many quarters that China and India would emerge as global powers in the decades to come. The interaction between the two Asian giants would be a major determinant not only of regional security but would also influence the global environment in a major way.
The two (India and China) need to synergize their respective strengths that flow out of their maritime capabilities and geo-strategic advantages, rather than the strength of one having a deleterious effect on that of the other.
It is thus not surprising that the two states are under keen scrutiny by other countries. It was probably for this reason that the October 2003 first-ever joint maritime exercise between the erstwhile military foes was keenly watched in the region.
Pragmatism leads one to acknowledge that Realpolitik would compel the two into competition for power status, more so since such eminence has hitherto been elusive to the two great civilizations of historic times. In the context of the current geo-political environment, soft power in terms of economic fortitude is among the major components of such status and its attainment would be the vision of Chinese and Indian policy makers.
However, the rapid development and growth of economies in China and India have increased their vulnerability to energy-supply disruptions. Confrontational energy security policies would not be in their long-term interest, particularly when the two are immediate neighbours. The two need to synergize their respective strengths that flow out of their maritime capabilities and geo-strategic advantages, rather than the strength of one having a deleterious effect on that of the other.
Notes
- Ministry of Commerce of the People’s Republic of China website at http://english.mofcom.gov.cn/aarticle/statistic/ie/200503/20050300024922.html
- Philip Andrews-Speed, “China’s Energy Woes: Running on Empty”, Far Eastern Economic Review, June 2005 at http://feer.com/articles1/2005/0506/free/p013.html
- Mikkal E. Herberg, “The Emergence of China Throughout Asia: Security and Economic Consequences for the U.S.”, June 7, 2005 at http://foreign.senate.gov/testimony/2005/HerbergTestimony050607.pdf
- The reference is to the Angarsk-Nakhadka oil pipeline project. Sudha Mahalingam, “Energy and Security in a Changing World”, IDSA Strategic Analysis, Vol. 28(2), Apr-Jun 2004, pp.257-258.
- Roland Dannreuther, “Asian Security and China’s Energy Needs”, International Relations of the Asia-Pacific, Volume 3 (2003), pp.207.
- Swati Lodh Kundu, “Asian surge in India trade”, Asia Times Online, May 28, 2005 at http://atimes.com/atimes/South_Asia/GE28Df01.html
- C Uday Bhaskar, “Regional Naval Cooperation”, IDSA’s Strategic Analysis, Vol. 15(8), November 1992, p.736. His paper refers to the 4000-mile ancient ’silk-route’ that linked China to Rome in the 2nd century BC.
- Cdr GS Khurana, “Maritime Terrorism in Southern Asia: Addressing the <Precursors>“, Indian Defence Review, Vol 20(1), Jan-Mar 2005, p.60
- “Station Airs Alleged Osama Tape”, CBS News, October 6, 2002 at http://www.cbsnews.com/stories/2002/09/13/attack/main522015.shtml
- “Tanker raided at Iraq oil terminal”, ABC News online, June 16, 2005 at http://www.abc.net.au/news/newsitems/200506/s1394116.htm
- For fresh fish and crustaceans, the value of time could be 20 percent per day or more. See, http://www.atse.org.au/index.php?sectionid=236
- Bill Gertz, “China build up Strategic Sealanes”, The Washington Times, January 18, 2005 at http://www.washtimes.com/national/20050117-115550-1929r.htm
- E Jayashree Kurup, “India outsmarted”, The Financial Express, September 03, 2005 at http://www.financialexpress.com/fe_full_story.php?content_id=101296
- Cdr GS Khurana, “Malacca Strait Security: Is Extra-Littoral Naval Response Exigent“‘, Indian Defence Review, Vol. 19(3) (Jul-Sep 04), p. 21.
- Singapore Ministry of Foreign affairs Press Statement, April 28, 2005 at http://app.sprinter.gov.sg/data/pr/2005042801.htm
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