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
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
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.