World

Britain should start paying the Indian Ocean Rim more attention

BY Alex Hickman   /  18 May 2018

Almost two years after the UK voted to leave the European Union, there is little clarity about what how Brexit will change our relationship with the world beyond Europe. Theresa May’s concept of ‘Global Britain’ is superficially appealing but needs defining. The government’s tortuous deliberations about exit negotiations make it difficult for business to look to the future. The Department for International Trade (DIT) is unable to strike new trade deals until the negotiations are successfully concluded, while the UK’s foreign policy establishment feels like it’s still in damage limitation mode. April’s Commonwealth Heads of Government Meeting in London was a celebration of this diverse network’s international potential, but it will take time. As Edward Elliott of the British Foreign Policy Group has argued “… if an innovative strategy … does not follow soon, Global Britain will lose substantial credibility and it will become difficult for the British public to get behind and support this vision for post-Brexit UK foreign policy.”

Joining the Comprehensive Trans-Pacific Partnership (TPP), a trade agreement between eleven Pacific Rim states including Australia, Canada, Japan, Malaysia, New Zealand and Vietnam, offers one possible opportunity for the UK to act out its global ambitions, while also drawing closer to a chunk of the Asia-Pacific economy. London has been holding informal talks with TPP countries but UK accession will have to wait until Brexit has happened, and it is not yet clear that the TPP will accept a European member, though the government argues that there is no geographical restriction to Britain joining, and the UK’s status as a G7 economy and a founder member of the Chinese-led Asian Infrastructure Development Bank count in its favour.

There is another emerging economic grouping which the UK should start taking more seriously – the Indian Ocean Rim. The Indian Ocean’s littoral states, stretching from South Africa in the west to Australia in the east, include some of the world’s fastest growing economies with a combined population of over 2.7bn people. By 2050, almost half of the world’s population will live around the ‘Ocean of the Centre’. Toronto University’s Global Cities Institute predicts that the Rim’s biggest cities – Karachi, Mumbai, Kolkata, and Dhaka – will be home to over 142m people by the middle of the century.

These disparate coastal communities share waterfront access to the world’s third largest ocean and the monsoon trade routes which have for centuries linked the Middle East, Africa, and South Asia with the broader Asian continent to the east and Europe to the west. Today the Indian Ocean carries 50 percent of global seaborne trade and two thirds of the world’s oil shipments. Almost 40% of the world’s offshore petroleum is now produced in the Indian Ocean, and there is growing competition to mine the precious metals and minerals buried beneath its seabed. The Indian Ocean’s Blue Economy, including tourism and fisheries, is potentially huge but vulnerable to the negative impacts of climate change, over-fishing, plastics pollution and fresh water scarcity.

While the Pacific Ocean’s geopolitics are increasingly weighed-down by intensifying rivalry between the US and China, the Indian Ocean’s politics feel open and unresolved. New Delhi regards the Indian Ocean as its backyard but China’s Maritime Silk Road, which connects China to the Middle East, Africa and Europe via a secure network of coastal bases, and Beijing’s proactive diplomacy across the region is a snub to the idea of Indian hegemony. China’s $46bn investment in Pakistan’s deep-water port at Gwadar and a development corridor connecting Gwadar with China’s One Belt, One Road is exacerbating tensions between Islamabad and Modi’s India. To the west of Gwadar runs the Straits of Homuz, a narrow opening between Iran and Oman which connects the Persian Gulf’s oil wells with the open seas. Around 30% of the world’s seaborne-traded crude oil passes through the Straits every day, making it one of the global economy’s most fragile choke points, and a marshalling point for the navies of the US, Europe and Iran. Over 3,000 miles to the east is another choke point, the Malacca Straits through which over 100,000 commercial ships a year pass as they travel between the Indian and Pacific Oceans.

The Indian Ocean Rim countries vary in size, economic development and military capability, as well as religious and cultural affiliation; they also identify with sub-regions (Australasia, Southeast Asia, South Asia, West Asia and Eastern & Southern Africa), and are members of local trade arrangements and co-operative mechanisms including the Association of South East Asian Nations, the Southern African Development Community and the Gulf Co-operation Council. The kaleidoscopic nature of the Rim’s waterfront limit will always limit regional integration but what unites them is the 44,000 square mile ocean, and the threats, opportunities and responsibilities that it brings them. In 2015 total trade and investment between IORA countries reached USD $777 billion, up 300 percent from 1994. This represented 10% of global GDP, and 13% of global foreign direct investment for a region that is home to 35% of the world’s population. Greater intra-regional collaboration to boost trade and development, and manage the ocean and its resources, is inevitable.

With 21 member states (including South Africa, India, Indonesia, Australia and Iran) and nine dialogue partners (including the US, China, the UK, France and Germany) the Indian Ocean Rim Association (IORA) is emerging as the IOR’s primary forum, and the only one that seeks to act on a regional basis. Operating from a small but high-powered Secretariat in Mauritius, the IORA was formed in 1997 to promote sustainable growth, regional trade and increase economic co-operation across the region. For many years the IORA went un-noticed, but this changed in 2015 when Australia assumed the 2-year rotating presidency and convened, for the first time, a meeting of the IORA’s foreign ministers. In 2017 the heads of state and government met to commit themselves to intensify regional collaboration in maritime security, fisheries management, disaster relief and trade and investment. Their host, Indonesia’s President Jokowi called the Jakarta Declaration a “a milestone in the renewal of commitment by IORA countries to intensify IORA cooperation.” South Africa currently holds the two-year presidency, and has sustained the focus on growing the region’s Blue Economy. In 2019 Pretoria hands over the presidency to the UAE.
As a global trading economy the UK has always had an interest in maintaining the free flow of maritime traffic across the Indian Ocean, and in growing the region’s prosperity. The UK operates a permanent naval base in Bahrain on the Persian Gulf; 50% of Royal Navy units deployed at any one time will be operating in the Indian Ocean. The UK and Indian Ocean Rim’s history are intertwined – thirteen of the IORA’s 21 member states are also members of the Commonwealth. Today the UK is one of the largest investors in the region: a ‘top 3’ investor in South Africa, Tanzania, Kenya, India, Bangladesh and Australia; the fifth largest investor in Singapore and the seventh largest investor in Indonesia. The region presents enormous opportunities for British expertise in renewable energy, climate science and conservation, AI, urban planning, telecoms, financial and business services, public service delivery and education. Around 7.5% of the UK population has an Indian Ocean heritage, including the Home Secretary and the Mayor of London, while over 1.5 million British expatriates currently live across the region (principally in Australia, South Africa, Pakistan, India, the UAE and Singapore).

This deep engagement is taking place without much help from Westminster and Whitehall. According to Hansard, the words ‘Indian Ocean’ have been spoken just 225 times in both Houses of Parliament since 2008, and during the last decade only 13 Written Statements by British ministers have made reference to the Indian Ocean (almost all dealing with UK’s treatment of the Chagos Islanders, who were forcibly deported from the British Indian Ocean Territory to allow for the UK and US to develop Diego Garcia as a military base). The phrases ‘Indian Ocean Rim’ and ‘Indian Ocean Region’ have not been used in Parliamentary debate in the last 10 years. While France is applying to become a full member of the IORA via Reunion’s status as a French overseas department, and Germany has recently committed a team of diplomats to join IORA’s Secretariat, the UK appears to be on the side-lines. Yet the IORA’s overstretched Secretariat could use British expertise and maybe some money, and the UK could use an opportunity to contribute towards the region’s future stability and prosperity, and win friends in the IORA’s increasingly influential fora.

There is much at stake for both markets. Of the ten non-EU countries sending students to UK universities in 2016-17, five are in the Indian Ocean Region (Malaysia, India, Saudi Arabia, Singapore and Thailand). Indian Ocean economies like India and Singapore are already important investors in the UK – Tata, an Indian firm that owns Jaguar Land Rover is now the UK’s largest manufacturer. The owners of Manchester City, Leicester City, QPR, Reading, Sheffield Wednesday and Blackburn Rovers are all based on the Indian Ocean. A stable, prosperous Indian Ocean Rim is likely to disproportionately benefit the UK. But if the region falters, UK interests and citizens could be at risk. The dynamics of the region will shape the 21st century; Global Britain needs to start meaning something.


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