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Several political, security, economic and socio-cultural factors are at play making Asia Pacific a highly dynamic region. India needs to have a long term strategy to make use of the opportunities arising in the Asia-Pacific while keeping in view the security challenges. The Asia-Pacific is marked by the following key trends: rise of China; the rebalancing strategy of the US; a regional architecture underpinned by centrality of ASEAN; the growing importance of the Indian Ocean region and maritime issues; the growing salience of non-traditional security threats.
This policy brief discusses some of the key trends in the Asia Pacific and sets out a long-term approach for India so as to maximise its security and developmental opportunities. The focus is on Indo-ASEAN relations while other countries are discussed in brief.
Rise of China
China's rise has created a flux. An economic giant, with a GDP of USD 7.3 trillion (2011-World Bank) & an annual military expenditure of Yuan 650 billion (approx USD 103 billion) in 2012, China has overtaken Japan in economic and military terms and may overtake the US’ economy in the next 10-20 years depending upon the growth rate differential between the two countries.
China’s rise is altering the balance of power globally & regionally. The confidence in China's peaceful rise and peaceful development has been seriously dented due to rising tensions in South China Sea and in East China Sea. The new leadership is nationalistic & sharply focused on China’s ‘core’ interests.
China's rapid military modernisation and projection of its power beyond immediate neighbourhood and in the West Pacific, has raised apprehensions among its neighbours. It has developed a powerful navy – with aircraft carriers, submarines, anti-ship missiles – which is rivalling that of Japan and the US. China is following Anti Access Anti-Denial (A2D) strategy to deter the US from entering the island chain in the area of Chinese influence.
The rising tide of nationalism in China has caused anxieties among neighbours. China’s formulations on ‘core’ interests with attendant focus on sovereignty, has created doubts in the minds of the neighbouring countries about China’s intentions. China regards the South China Sea as its internal waters. This will have major impact not only in the neighbourhood but also for international shipping.
On the flip side, it must also be recognized that China’s rise has also benefited the neighbours, particularly in the economic field. For most countries, China is number one trading partner. China-ASEAN trade is $ 380 billion. The ASEAN economies have got integrated with that of China. People-to-people contacts between China and its neighbours have also deepened with greater connectivity, openness and transparency.
China is getting integrated with the regional architectures. This has increased China’s role in regional stability. For instance, China has an FTA with ASEAN. The ASEAN countries are part of a global supply chain which passes through China to global markets. Thus the economic and social interdependence has increased. China is participating in RCEP negotiations. RECP will bring about a higher level of economic integration between the ASEAN, China, Japan, Australia and India.
The future is uncertain. China’s economic performance is suspect and riddled with many problems. How long will China maintain its growth and what will be the impact of the slow-down of Chinese economy in the region will be worth studying? China presents a complex picture. The talk of containment of China is problematic given the growing interdependence between China and most major economies of the region.
US rebalancing strategy
The US has been a key player in the security and economic architecture of the region. The biggest challenge before the US is to adjust to the rise of China. Having got entrapped in the highly expensive wars in Afghanistan and Iraq and having been affected by the economic slowdown, the US is in a perilous condition. The US has been compelled to reduce its defence budget due to lack of resources.
Many analysts believe that the US is declining vis-à-vis China although it will remain a military and economic power in the foreseeable future. The US also has the ability to bounce back due to its vast capabilities in innovation. Yet, according to some conjectures China will overtake the US as number one economy in the next two decades. That will be an important psychological moment for the world.
Beset by fundamental changes in the international order, the US has signalled a shift in its policies towards Asia. Doubts have arisen among the US allies in its ability to shore up its key military alliances in the region, for instance, with Japan, South Korea, the Philippines, Australia and Thailand. Faced with a rising China and a declining US, many countries are adopting hedging strategies vis-à-vis China. Essentially most of the countries are seeking greater engagement with China, while being on guard against its assertiveness.
The US has declared a policy of rebalancing and pivoting to Asia. The policy is imprecise and created considerable confusion. Did the US ever leave Asia? If not, why is this talk of return to Asia? What will be the nature of the US defence postures? Will the 60:40 ratio in military deployments between Asia and the rest of the world be sufficient to strengthen the US defence in Asia Pacific?
In recent times the rebalancing strategy has been further elaborated by officials in Obama 2 administration. Economic and cultural dimensions of the strategy have been elaborated. The aim of rebalancing strategy has been defined to be the strengthening of the existing alliances, searching for new partners (India, Indonesia), forging economic partnerships (TPP) and achieving a constructive relationship with China.
But, Beijing has taken rebalancing as an attempt to contain China. It clearly is suspicious of the US partnerships especially the one with India. The Chinese are developing their own A2D strategies to prevent the US from coming too close to the Chinese shores. The Chinese assertiveness in South China Sea, East China Sea and other areas are part of its strategy to keep the US away and to signal Chinese area of influence.
The US is concerned about China but it has to avoid open confrontation. The US statements on China indicate the US’ desire to engage with China as deeply as practical. The strategic and economic dialogue between the two countries has been institutionalised. Yet, the relationship between the two countries is far from smooth. Elements of competition and confrontation are manifest in the US-China relations. The rest of the world is also unsure about the direction in which the US-China relationship is proceeding.
How other countries are readjusting?
It is in this shifting background that other countries are adjusting their policies.
ASEAN
The ASEAN Region, traditionally a region divided by numerous internal fault lines, has sought to put its act together particularly since the 1997 Asian financial crisis. ASEAN countries have sought to resolve their disputes through consensus and dialogue. They have engaged with the outside world while emphasising the ASEAN centrality in so far as their region is concerned. With a combined GDP of over $ 2 trillion (2011) and total trade of $ 2.4 trillion (2011), ASEAN has emerged as a formidable economic force. Yet stability in ASEAN is crucially dependent upon internal as well as external factors. China and the US factors have brought ASEAN to a crossroads. ASEAN unity is under strain. Vietnam and the Philippines are directly affected by China's rise. The South China Sea is a hotspot of tension and is likely to remain so. The mistrust between China and ASEAN is increasing because of South China Sea issues.
The ASEAN is trying to forge an economic union by 2015. ASEAN+6 have Regional Comprehensive Economic Partnership (RCEP) even as the US is pushing for a Trans-Pacific Partnership (TPP) which excludes China. Some countries like Myanmar, Laos, Cambodia and Indonesia have doubts about joining the TPP negotiations.
Japan
Japan is getting revitalised. Prime Minister Abe is determined to restore Japan’s primacy. Japan’s New Defence Policy guidelines indicate that Japan is likely to devote increasing attention to recrafting its military strategy and enhancing its defence postures. China’s assertiveness and North Korea’s nuclear programme are serious security concerns for Japan. In the altered scenarios, Japan is focusing on India as a security partner. Prime Minister Manmohan Singh’s visit to Japan got worldwide headlines as it signalled deepening of India-Japan strategic and security partnership. Prime Minister Abe is reported to have proposed “a strategy whereby Australia, India, Japan and the US state of Hawaii form a diamond to safeguard the maritime commons stretching from the Indian Ocean region to the Western Pacific… I am prepared to invest to the greater possible extent, Japan’s capabilities in this security diamond.” The Indian Prime Minister spoke of India and Japan as “natural and indispensable partners for…a peaceful, stable, cooperative and prosperous future for the Asia Pacific and Indian Ocean regions.” Clearly, India-Japan relations are important in the context of peace and stability in Asia Pacific.
Australia
It would be useful to see how Australia is adjusting to the rise of China. Australia sees opportunities for itself in the so-called “Asian Century”. It welcomes the rise of China and accepts its military growth as “natural”. Australia is pulling out all stops to deepen its relations with China at every level. At the same time, Australia is also hedging against China by building its own defence capabilities and supporting US rebalancing & pivoting to the Asia Pacific. It is seeking partnerships with India, Japan and South Korea. In particular, Australia takes note of India’s growing strategic weight in the region and assigns special importance to India in the context of “Indo-Pacific”. It regards Indian and pacific oceans as “one strategic arch”. India needs to deepen its relations with Australia, particularly in the context of Australia’s emergence as a major supplier of coal and possibly uranium in the future. Australia is also helping India in education and skill developments.
South Korea
South Korea faces a volatile security environment, particularly in the context of North Korea’s nuclear and missile programme and its unpredictable behaviour. South Koreans pay major emphasis on the protection of the sea lanes of communication in the East Asian region and seek cooperation with India in this regard. They also take note of Chinese hegemonic outlook in the region. While maintaining close ties with India, the Cheonan incident and Yeon Pyieng Island shelling in 2010 have highlighted the increasing military trend in that area. The RoKs realise heavily on international maritime lanes and shipping. In recent track-2 level discussions, South Koreans have underscored desirability of a cooperative mechanism and dialogue between RoK and the Indian navy; institutionalising an official bilateral mechanism for planning and coordination of maritime issues on the lines of an annual maritime dialogue. The South Koreans also want maritime cooperation with India such as joint naval exercises.
Opportunities for India
The PM’s visit to Japan in May 2013 has been commented upon widely. Strong strategic relationship with Japan is in India’s favour. India has strategic partnerships with the US, Japan, South Korea and Australia. These countries want to have closer security cooperation particularly in the maritime sector. India-Japan-US trilateral dialogue should focus on Asia-Pacific issues including security cooperation. These partnerships would promote stability in the region. China should realise that India has legitimate interests in the region.
What should be India’s long term strategy in Asia-Pacific? With the shift of centre of gravity to the Asia-Pacific region, India must seek a role in the shaping of political, economic, social and security process in the region. Not doing so could adversely affect India’s interests. India’s strategy should be to seek deeper engagement & economic integration with the Asia-Pacific region. India should be particularly engaged in the security dialogues and processes in the region.
India enjoys high credibility in ASEAN and East Asia. India and ASEAN have raised their partnership to strategic level. The challenge is to deepen it further.
The ASEAN-India Commemorate Summit Vision Statement has identified a number of projects for cooperation in the fields of political and security, economic, socio-cultural and developmental, connectivity in regional architecture. Earlier, the ASEAN-India Eminent Persons Report (2013) had identified even a larger spread of projects for cooperation. Thus, there is no dearth of ideas. However, what is required is the identification of resources, establishment of institutional framework, monitoring mechanisms, coordination etc. to ensure a timely implementation of these projects.
The next big trend in ASEAN region will be ASEAN economic union & RCEP. This will open up opportunities for India. The success of ASEAN-India cooperation will depend upon how rapidly the two sides move towards economic integration through FTA in services and in future through RCEP. India has yet to weigh the costs & benefits of joining the RCEP. The connectivity between ASEAN and India has been talked about for a long time but the progress has been slow. Similarly, the regional cooperation, particularly within the framework of BIMSTEC and Ganga-Mekong Cooperation, the Trilateral Highway etc. has also been slow. The two sides need to focus on implementation issues.
One of the weaknesses of India’s Look East Policy has been the relatively less involvement of India’s North East in it. This lacuna must be addressed urgently. The benefits of the Look East Policy, particularly, the increased trade, better connectivity, greater socio-cultural links, cooperation in the area of capacity building, education, youth etc. must be felt by the people of North East, who are otherwise sceptical of the LEP. Therefore, it is essential that the governments in the North East and the social and cultural institutions in the region should be involved in the formulation and implementation of India-ASEAN policies. Of the numerous activities outlined in the Vision Statement1, some should be based in the North Eastern states. For instance, an India-ASEAN cultural centre could be set up in Guwahati. Similarly, Imphal could host an India-ASEAN sports academy. A study of local cultures can be undertaken through an NE university. A special programme can be designed for capacity building targeting the youth of the North-East. Trade facilitation centres encouraging trade between the North-East and the South-East Asia could be set up in the North-East. The government could also consider setting up the branches of these institutions in the North-East.
The Vision Statement talks about security cooperation between India and ASEAN. An institutional framework needs to be set up for this purpose. For instance, the India-Japan security statement of 2008 could be adopted for India-ASEAN security dialogue and cooperation. This will help set up a broad-based security dialogue between the Indian and ASEAN institutions. India-ASEAN counter-terrorism dialogue should be stepped up & information sharing should be facilitated. Mutual legal assistance treaties and extradition treaties should be set up. Maritime security dialogue should be initiated
Andaman and Nicobar Islands should be brought into the framework of India-ASEAN relations. Giving due consideration to the concerns of the tribes, it is possible to develop some of the islands, particularly, in Nicobar, for tourism. Nicobari youth are keen to take to modernism. Scholarships for A&N youth could be provided to make them a stakeholder.
In terms of trade linkages the Dawei port offers numerous opportunities. During the Thai Prime Minister India and Thailand agreed to develop Chennai-Dawei corridor project. Dawei is a city in southeastern Myanmar and is capital of Tanintharyi Region. Myanmar government has already approved plans to develop a large port and industrial estate in Dawei with the Italian-Thai Development Public Company Limited (ITD) as a major contractor. The entire project estimated to be at least US$58 billion. In November 2010, ITD signed a 60-year framework agreement with the Myanmar Port Authority to build a port and industrial estate on 250 square kilometres of land in Dawei. This is likely to transform Thailand into a major transit hub within the East-West Economic Corridor. Japan is also keen to invest in the Dawei project. India must invest in Dawei project as also work on the Chennai-Dawei corridor.
People-to-people connectivity needs to be improved. But this will require liberations of the visa regime between India & ASEAN countries.
India needs to pay special attention to Myanmar, Thailand, Vietnam, Indonesia and Singapore on bilateral level. These countries can help India in raising Indian regional profile.
Additionally, India needs to focus on Indian Ocean issues and those of Ocean governance. India needs to take active role in the shaping of the agenda of IOR-ARC. In recent times the Australians and the Japanese have talked about the concept of Indo-Pacific.
By Special Arrangement with The Institute for Defence Studies and Analyses (www.idsa.in)