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Friday, December 14, 2018
Since 15th Century, Indian Ocean has been a source of disseminating cultural, political, economic & social transformation across the regions. Also it remained as a significant ‘trade agent’ due to its strategic location and abundance of natural resources. In comparison to Atlantic Ocean, the Indian Ocean had always been a perfect trading ground due to one crucial feature: predictable Monsoon currents. Therefore, Indian Ocean as an ancient trade hub was commonly known as ‘Monsoon Market’.
Feb 20 2018 (The Sunday Times - Sri Lanka) - Nevertheless, with globalization the economic and political concentration is shift from Western to Eastern countries and as a result, Indian Ocean & its significance has rapidly increased by becoming world’s busiest waterways. Moreover, India has been the ‘heart’ of trade in Indian Ocean famous for its aromatic species but China has been considered as the ‘brain’ of trade in Indian Ocean as a leader of initiating famous ‘Silk route’ to export its rich silk to Mediterranean and establishing trade.
Therefore, it’s evident that China and India continuously contest to gain the ownership and control in Indian Ocean unveiling Geopolitical trauma between China & India. These two Asian giants with hunger to thrive scuffle to gain control of Indian Ocean as their ‘power house’. This was apparent in 2013 when Chinese president Xi Jinping announced China’s most ambitious foreign policy and economic initiative; building 21st Century Silk Road and a Maritime Silk Road (MSR), collectively referred to as One Belt, One Road (OBOR). With OBOR, geopolitics of the Indian Oceans unfolded as India opposed the initiative worried about losing dominance in Indian Ocean and accused China for lack of transparency in the initiative. Many scholars & policymakers view that OBOR has emerged as a theater of present geopolitics.
Geopolitics between two Asian giants: China & India were ignited & brought into a new level when OBOR initiative was introduced. However, China’s economic awakening as a Geo-economic leader started flexing its economic muscle to achieve its ‘hidden’ geopolitical motives and intimidate other rising economies (like India) via introduction of MSR. This is evident as China is investing USD1trillion by providing loans at a low cost to the majority of 65 countries involved to realize MSR as a reality.
1: Comparison of Old Silk route and OBOR routes (Source: Economist, 2016).
Although China & India compete to gain control of resource-rich Indian Ocean, according to United Nations Convention on the Law of the Sea (UNCLOS), no ocean belongs to any one country. Therefore, Indian Ocean does not belong to India. Considering 95% of India’s trade volume and 68% of trade value is coming via the Indian Ocean & more importantly, 80% of India’s crude oil requirement is imported via the Indian Ocean. Comparatively, China receives 75% of its oil from Middle East via Indian Ocean. But overall, its estimated that 40% of the world off shore oil production comes from the Indian Ocean. Hence, Indian Ocean plays a pivotal role for the development of sea trade. Equally, sea routes through the Indian Ocean are very important to China’s maritime trade and energy supply. If MSR is implemented there is a direct threat not only to India (in terms of trade) but to other countries like Sri Lanka as well. Overall, MSR can be envisaged as an economic corridor with unprecedented scale and depth.
• Sri Lanka, the ‘pearl’ of Indian Ocean
From ancient times, Since Sri Lanka shares a vital ‘geostrategic’ position in Indian Ocean and it’s evident that India and China contest to gain supremacy in Indian Ocean by considering Sri Lanka as the strategic point. Many view that Sri Lanka is set to become a destination of choice among investors searching to tap opportunities in Indian Ocean trade due to its strategic location. Hence in order to gain trade & economic supremacy in Indian Ocean both countries have played well to gain access to Sri Lankan ports. This is evident by China buying Hambanthota port in 2017 & leaving Sri Lanka with USD8 billion debt. India has also shown interest in developing Sri Lanka’s Trincomalee port. Many researches view that aim of MSR is to transform Sri Lanka into a ‘trade hub’ in the Indian Ocean. Hence whoever gains majority of geopolitical ‘control/influence’ in Sri Lanka (ports) can win supremacy in Indian Ocean.
• India’s poor infrastructure may hamper the trade growth in Indian Ocean
As highlighted previously, it is evident that China is much competitive than India and assertive in gaining control in India Ocean via MSR by providing aids to build maritime infrastructure in countries that are ‘geo-strategic’. But India’s poor maritime infrastructure compared to China is the main barrier for it to gain control of maritime trade in Indian Ocean and to obtain ‘first-mover’ advantage. This is evident in Global Logistics Performance Index (LPI) (World Bank,2016) when comparing India’s & China’s Maritime infrastructure quality, China is ahead of India. As a countermeasure for this, Indian Government has launched “Sagarmala” in order to expand the capacity of ports across India.
Hence there are certain economic shortcomings (e.g.bureaucratic and physical impediments to the flows of goods) will hinder India being economically integrated in Indian ocean and hence from yielding full-benefits from MSR. Further, India has neither the resources nor the political and economic weight to put in place competitive and alternative trade networks on a global scale. Therefore, India’s failure to full-profit from MSR will lead it to become ‘isolated’ in the South Asian region and in global trade.
• If India refused to join MSR, it will have direct negative impact on its trade
Currently, among the BRICS (Acronym for an association of five major emerging national economies; Brazil, Russia, India, China, South Africa), India is dependent upon $60 billion worth of Chinese imports. Whereas China imports $11billion worth of goods from India. Hence, comparatively India’s dependency on China for trade is significant compared to China’s dependency for trade on India. If India refuses to adhere to MSR initiative, China may retaliate by imposing trade restrictions on India by intimidating other FTA like Association of Southeast Asian Nations (ASEAN) to control trade of India.
In ASEAN China Imports nearly 20% of total trade in ASEAN but India only accounts for 2% of the same. It can be evaluated that despite India’s ‘Act East’ initiative, its reluctance to open up to trade with ASEAN has ceded trade opportunity to China. Therefore, it’s evident that India lacks a strong international trade policy to yield the best from its strategic geo-location in Indian Ocean, in which China gained. Overall, China has gained better foothold in Asian region than India to benefit from trade negotiations especially with emerging economies like ASEAN.
MSR will help to develop India’s infrastructure that it presently unable to operate in full capacity due to certain internal shortcomings & considering high youth unemployment, India cannot merely ignore the economic benefits of MSR. But ultimately, MSR is viewed as an attempt by China to tie trade opportunities with India and other South Asian countries while steadily improving China’s economic and maritime posture in Indian Ocean.
India had always opposed MSR initiative viewing that China’s ‘hidden’ agenda on gaining supremacy in Indian ocean for better trade opportunities with its’ rising economic trade demands. Moreover, prolonged ‘strategic distrust’ between China-India is a disturbance on the success of China-India relationship for MSR. Although OBOR appears to be a promising economic development, it lacks transparency which makes it difficult to capitalize the initiative fully. Further MSR is viewed as a mechanism to promote Chinese hegemony in Indian ocean. Notably, via MSR China can keep running the ‘World’s factory’ of Chinese imports to the rest of the world. Hence, China will not likely to allow the relationship with India to deter as the relationship is valuable to them not only economically but also ‘geopolitically’.
• Win is only via mutual agreement
Its viewed that, over the next decade, Indian Ocean region’s countries can become emerging economies by utilizing their natural resources. Many researchers are optimistic on MSR’s effect globally, as the focus of MSR is to support and facilitate booming trade growth between Asia and Africa & MSR will create a new regional economic order once its implemented. Hence MSR is not only an economic project but also a very strategic geopolitical project.
Further, MSR initiative is an indication that China has identified this competence well-ahead of its main counterpart; India. With MSR there will be changes to Seaborne Energy trade for South Asian countries as its evident that both countries are ‘hungry’ for growing energy demand that is mostly satisfied via Indian Ocean’s sea trade. Hence, if India refuses to join MSR there can be disruptions to India’s seaborne energy trade hampering sustainability of India’s emerging economy.
In order to settle geopolitical tug-of-war between India and China, the only win method is entering into mutual agreement. It has been highlighted that China’s latest MSR proposal will be hindered by the strategic distrust and political risks between China and India. Furthermore, due to geopolitical spectrum that extends from peaceful collaboration to global conflagration, MSR is more of political-economic project with territorial consequence to diffuse China’s world dominance to other rising countries like India.
Finally, it’s time to reflect on the days beyond and maintain the same cordial relationships the countries maintained in ancient times for silk route. Also, considering current threats to maritime security, it is pertinent to note that overcoming such situations could only be possible through a combined effort. Hence in the current situation, respecting each other’s political and economic interests to safeguard the future prospects should be the prime concern of India and China.
(The writer can be contacted on email@example.com )
This story was originally published by The Sunday Times, Sri Lanka
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