Now that we are in 2014, many eyes will be focused on the Indian Ocean. The Indian Ocean covers a vast area stretching from the coasts of East Africa in the west, to Malaysia and Australia in the east, to South Africa in the south. Its broader territory runs from the waters of the Arabian Gulf to the South China Sea, covers 70 million sq. km, or 20 percent of world’s water surface, hosts one-third of the world's population, one-quarter of world's landmass, three-quarters of global oil reserves, iron and tin, and over 70,000 ships cross it every year. Around 65 percent of the world oil reserves belong to just 10 of the Indian Ocean littoral states. The Indian Ocean hosts the world’s most significant Sea Lanes of Communication (SLOCs) and as such plays a pivotal role in the global economy, in particular in the past 20 years.
The world’s major choke points are also located in the Indian Ocean, these are: Strait of Hormuz, Bab el-Mandeb (West) and Malacca Strait (East), creating “brackets of troubles” for seafarers, shipping companies, and international security. A large portion of the global trade and most of Gulf oil en route to Asia pass through these chokepoints. As such, they are strategically important for global trade and economic development.
Geo-strategic and geo-economic importance
Despite its significant strategic position as a major trade route and a home to a large part of world population, the Indian Ocean was for long time rather neglected. The sudden rise of India and China as global economic powers has significantly increased their energy needs and their dependence on the Gulf oil supplies. Consequently, their energy security interests give these two Asian players direct stakes in the security and stability of Indian Ocean, in particular the safety of transit lines form the Arabian Gulf towards the east coast of the Arabian Sea and the Bay of Bengal which surround India’s long coastal area. This has positioned India and China as major contenders for the share of the Ocean’s dominion.
For quite a long time the Indian Ocean has been largely dominated by the United States. With the sudden economic rise of both India and China in the past two decades, the division of world power has started to change from a unipolar towards a multipolar world. This shift has brought the Indian Ocean back into the center of geopolitical attention and strategic gravity as a potential field of conflict for Asian domination.
Indian Ocean security geo-strategic and geo-economic importance in the Gulf can be found in its vast, rich and diverse physical environment. As a major transportation route, it has a major role in distribution of the Gulf oil to Asia, and as such represents the lifeline for the majority of Arab Gulf countries. A yearly trade that passes the New Silk Route, from the Strait of Hormuz to the Strait of Malacca, has been estimated at a whopping US$18 trillion, roughly 17 million barrels, comprising a fifth of the world oil supplies pass through the Strait of Hormuz.
Five of the largest world oil producers - including the United Arab Emirates (UAE) - use the narrow passage for most of their energy exports as well as moving of other goods constituting its re-export industry. At the same time the Gulf Cooperation Council (GCC) as a whole is the number one India and China’s trading partner, with a two-way trade estimated at over $150 billion per annum.
The sudden rise of India and China as global economic powers has significantly increased their energy needs and their dependence on the Gulf oil supplies. Consequently, their energy security interests give these two Asian players direct stakes in the security and stability of Indian Ocean. This has positioned India and China as major contenders for the share of the Ocean’s dominion.Dr. Theodore Karasik
The Indian Ocean's (SLOCs) are also key factors in the global trade and economic stability since the oil and other trading stuff pass through its waterways on the way to Asia, Africa, Europe and other parts of the world. Any disruption in the trade would cause significant stress and strain in many world economies. In addition to significant trade volumes between the two regions, an estimate 3.5-5 million Indian nationals live in the Arab and Gulf countries, and contribute about US$8 billion a year to the Indian economy in form of remittances.
With the growing energy and other consumption needs of China and India, the GCC and UAE is extremely interested in the Indian Ocean security. In fact, the states of the Arabian Peninsula are increasingly focusing on Asian security as they do in the Middle East and North Africa (MENA) region. In 2014, how the GCC states focus on the Indian Ocean will determine the fate of dozens of countries in the medium and long term.
Impact on global power sharing
Who will call the shots in the Indian Ocean in the coming decades will depend on many factors. The world is progressively moving towards a new international energy order which for better or worse will be dictated by the supply and demand of key energy resources: oil, gas and coal. On the one hand there will be the key energy consuming countries, such as the U.S., China, India and Japan, all for the large part dependent on the imported energy. On the other, there are countries like Saudi Arabia, Russia, Qatar, Kuwait, Iran, or the key energy suppliers.
Although Saudi Arabia has the highest reserves of crude oil in the world, Russia and Iran combined have significant energy supplies of both oil and gas and will probably rise to more prominent roles in the future of energy trade. Thanks to this trade, Russia has already turned into an economy which will soon surpass Germany – which will in turn change many relations and share of global power.
There are multiple scenarios of how the Indian Ocean affects the global power sharing in the post-2020 period. American analysts mostly believe that America will remain the key power, while China would be the second most powerful. If India, Iran and Russia manage to complete the gas pipeline project – then the key players in the Indian Ocean would form be a power-coalition between Russia, Iran, China and India, with the U.S. power slightly declining. On the other hand, Japan, India and China, would enter into a different coalition to control the peace and security in the South China Sea and the eastern parts of the Indian Ocean.
The alternative scenario is if the United States maintains a strong presence in the Indian Ocean, possibly by 2030, while the key players would be Russia, Iran, China, India and Japan. Economic and political trajectories that seem the most likely for any of the concerned parties will, to a large extent, be determined by how much each of these countries will contribute.
Population control, wealth distribution, investment in human capital, development of new technologies and use of clean energy sources will be decisive factors in keeping both the supplier and consumer countries in the playing field.
As the countries of the GCC can be considered part of south Asia, they have key interests throughout the Indian Ocean. The GCC’s plans include greater growth through supply chain networks, closer international cooperation with all the states of the Indian Ocean, increased defense ties with those states, and the injection of money in states across a broad spectrum of security issues—whether maritime, food, climate, or economic.
With with this plethora of international security issues, the GCC states need to begin thinking long-term to guarantee the safety and security of this broad expanse of maritime activity.
Dr. Theodore Karasik is the Director of Research and Consultancy at the Institute for Near East and Gulf Military Analysis (INEGMA) in Dubai, UAE. He is also a Lecturer at University of Wollongong Dubai. Dr. Karasik received his Ph.D in History from the University of California Los Angles.
India, Iran must promote trade and economic links: Indian presidentIndia’s President Pranab Mukherjee has said that his country and Iran must work together to further promote trade and economic links, according ... News
Iran plans naval drill in Hormuz Strait flexing military muscleIran plans to demonstrate its “capabilities” by conducting six days of naval exercise in the strategic Strait of Hormuz in the Gulf later this week, ... News
Iran plans environmental disaster to block Strait of Hormuz reportIran’s Revolutionary Guards chief has drafted a plan to cause an environmental disaster in the Strait of Hormuz to block seaborne oil exports with the ... News
India set to halt $1 bln a month crude oil trade with IranIran is set to lose one of its biggest buyers as India announced Friday that its insurers will no longer cover refineries importing crude oil from the ... Business
China-Saudi Relations: Booming TradeTrade is at the heart of the growing links between Saudi Arabia and China, which centre on the crude oil and petrochemicals industries. The trade ... Opinion
The GCC and stability of oil marketsA number of global petroleum and economic agencies and organizations said the expected official petroleum production in the U.S. in 2020 will be ... Opinion